How to Read Your Audit Report Massachusetts Collectors Treasurers - - PowerPoint PPT Presentation
How to Read Your Audit Report Massachusetts Collectors Treasurers Association August 14, 2013 Roselli, Clark & Associates www.roselliclark.com Contents Presenter: Chad Clark, Partner Tony Roselli, Partner What do financial
Massachusetts Collectors Treasurers Association August 14, 2013 Roselli, Clark & Associates www.roselliclark.com
Presenter:
Chad Clark, Partner Tony Roselli, Partner
What do financial statements represent? Who are the users of financial statements? Treasurer’s Role Financial Statement Contents
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O Snapshot of where the community stands at the end of the
fiscal year
O Disclosure of revenues and expenditures for a fiscal year
and how well a community performed
O MD+A describes current year to prior year and why
changes occurred
O Footnote disclosures discuss major financial aspects of the
community
O Budget to actual – how well did we manage ourselves
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O Bond Rating Agencies O Management O Oversight Agencies O Other Interested Parties
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O Moodys O Standard and Poors O Fitch
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O Assess credit worthiness O Assign rating O Part of bonding process and critical
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O Finance Committee O Town Manager/Administrator O Board of Selectmen O Finance Director/Town Accountant O Treasurer/Tax Collector O School Business Manager O Superintendent O School Committee
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O Assess trends O Maintain financial policies O Develop financial forecasts with focus on
O Review budget results
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O Department of Revenue
O Various Federal and State Agencies
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O Bond investors O Banks O Taxpayers
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O Treasurer should understand financial statements O Treasurer is a key contact for bond rating agencies O An important valuation metric is the qualifications
getting back to Bond Rater the next day is not desirable
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O Independent Auditor’s Report
O Management’s Discussion and Analysis O Basic Financial Statements O Required Supplementary Information
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O Government-Wide Financial Statements O Fund Financial Statements
O Notes to Financial Statements
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O Unassigned Fund Balance (reserve ratio) O Cash (liquidity) O Statement of Revenues and Expenditures (solvency) O Enterprise Funds O Budget to Actual Report (compliance) O Footnote Disclosures – Debt (liquidity) O Footnote Disclosures – OPEB (management of long
term liabilities)
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undesignated fund balances plus General Stabilization Fund
expenditures = reserve ratio
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O > 10% = wish list – consider funding long term
liabilities such as OPEB or Capital to avoid borrowings
O 10% = high end metric O 6.7% = State average O 5.0% = low end metric O < 5.0% = Red Flag area
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0.0% 2.0% 4.0% 6.0% 8.0% 10.0% High end metric State average Low end metric
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verses semi-annual?
disclosure
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O Do revenues and other financing sources
exceed expenditures?
O Are we experiencing deficits? O How do we compare to the previous year? O How do we compare to other communities?
www.emma.msrb.org
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O Do Enterprise Funds cover the cost of the
O Are there deficits that need to be raised? O Is debt covered by user charges?
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O How did we manage our expenditures?
O Did revenues exceed forecast? O Do we have deficits we need to raise? O How much did we rely on use of one-time
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O Important to the bond rating agencies O Are we over leveraged (general rule is net debt
after subsidies should be around 5% of budget)
O What portion of debt is reimbursed by State
(MSBA, MWPAT, etc.)
O Use to plan future capital needs
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O Management of long-term liabilities is becoming a
critical component of the bond rating process
O Does Town have an OPEB plan in place? O Has Town established an OPEB trust? (MGL Ch.
32B, Sec. 20)
O Is Town funding OPEB liability?
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