Preparing an AELR Meghan Hieger and Megan Smith Office of the Auditor General Accounting Services...
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Transcript of Preparing an AELR Meghan Hieger and Megan Smith Office of the Auditor General Accounting Services...
Annual Expenditure Limitation ReportsPreparing an AELR
Meghan Hieger and Megan SmithOffice of the Auditor GeneralAccounting Services Division
ELR BasicsWebinar available on our Web site
www.azauditor.gov/ASD/Webinar/Cities_Towns_Webinar.html
History and
Background
Uniform Expenditur
e Reporting System
Purpose of the ELR
Structure and
Overview of the ELR
ELR Format
Reconciliation
• Total Expenditures
• Additions and Subtractions
Part II
• Exclusions• Expenditures
subject to expenditure limit
Part I
• Expenditures under (in excess of) expenditure limit
Support for the AELR
Reconciliation
Part IIPart I
Financial Statements
Notes to the
Financial Statements
Schedule of Expenditur
es of Federal Awards
Notes to the ELR
ReconciliationLine A –
Total Expenditur
es
Governmental Funds
Total Expenditur
es
Other Financing
Uses
Special or Extraordinar
y Items
Enterprise and Internal
Service Funds
Total Operating Expenses
Non-operating expenses
Special or extraordinar
y items
Fiduciary Funds
Total Deductions
Do not include transfers out
ReconciliationUERS
Expenditures
Financial Statement
Expenditures
OPEB
Present Value of Lease Payments
Separate Legal Entities
Depreciation
OPEB
Acquisition of Capital Assets
Principal Payment on
Debt
Reconciliation: Subtractions
Items not requiring use of working capital
Depreciation
Loss on disposal of capital assets
Bad debt expense
Other post employment benefits expense
Claims incurred but not reported
Landfill closure and postclosure care costs
Two ways to determine subtraction amount for future costs
Subtract the increase in the related liability
Subtract the ending liability
balance
Both amounts can be found in the Notes to the Financial Statements
Reconciliation: Subtractions
Separate Legal Entity Subtraction
Total expenditure
s of fund
General Revenues
transferred in
SLE Revenues
transferred out
Reconciliation: Subtractions
Expenditures of Separate
Legal Entities
Municipal Property Corporation Fund
Present value of net minimum capital lease payments
Governmental Funds only
Only in the year the entity enters into a new lease agreement
Should not be used if the entity receives cash that will be expended for the lease
Involuntary Court Judgments
Must be the result of an involuntary acts
Court judgments arising from a contract are voluntary
Attorney General Opinion I86-031
Reconciliation: Subtractions
Contributions to Fire Districts
• Tax levied by county for fire districts
• Portion of tax proceeds received paid to fire district
• 1980’s court ruling determined not subject to expenditure limit
CCD Reimbursement
Payments
• Required by statute for counties that are not part of a CCD
• Payments are for pupils admitted to CCDs in other counties
• Amount withheld from county sales tax distribution
Long-term Care Contributions Withheld by
State• Contributions
paid to ALTCS• Amount
withheld from county transaction privilege taxes
• Counties base limits have been adjusted for required payment
Payments Made to Reimburse AZ
DHS
• Contributions required by session laws
• Session law specifies they are not subject to expenditure limit
• Cities also required to make contributions but cannot be subtracted
Reconciliation: County Subtractions
Principal on LT Debt
• Payment recorded as reduction of a liability
• Related interest already included on Line A
Capital Asset Acquisitions
• Assets that are not fully expensed when purchased
• Assets acquired through non-cash transactions are not included
Reconciliation: Additions
Subtracted the increaseSubtracted the ending balance
Reconciliation: Additions
OPEB, Claims, and Landfill Closure Costs Paid in the Current Year but Reported as
Expenses in Previous Years
Add the decrease Add the
beginning balance
Questions
Part II: Exclusions
What is an exclusion?
Arizona Constitution: Article 9, Section 20
Revenue-driven Expenditure-driven
Part II: Exclusions
Onl
y ex
clud
able
once
the
expe
nditu
re is
mad
e
• Determined by revenue source:
• Dividends, interest income
• Grants and aid from federal government
• Amounts received from State
• HURF revenues
• Unspent revenues carried forward
• Determined by expenditure purpose:
• Debt service payments
• Excludable no matter what type of revenue is used
• Can’t exclude both revenue used and expenditure made
• Cannot be carried forward and excluded in future years
Part II: ExclusionsFund A
RevenueTaxes
$50,000Interest Income
$100,000Federal Grants
$150,000State Grants
$200,000Total
$500,000
ExpendituresGeneral Government
$250,000Debt Service
$150,000Total
$400,000
Excluded
Federal Grants
$150,000
Debt Service$150,00
0
Interest$100,00
0
Carried Forward
State Grants$100,000
Spent
Taxes$50,000
Federal Grants
$150,000
State Grants
$100,000
State Grants
$100,000
Flow Assumption – Maximizing Carryforward
Local(nonexcludable)
Revenues
Nonlocal (excludable) Revenues
Total Expenditures
Carried Forward
Part II: Exclusions
Expenditure Limit
Flow Assumption – Maximizing Exclusions
Total Expenditures
Local (nonexcludable
) Revenues
Nonlocal (excludable)
Revenues
Part II: Exclusions
Part II: Exclusions
Fund A:Receives
$5,000 grant revenue
Transfers grant revenue
to Fund B
Grant revenue spent from
Fund B
Exclusion taken in Fund
B
No exclusion in Fund A
Transfers: Exclusions follow the money
Notes to the AELR
Revenue reported in
F/S$2,000,000
Exclusion claimed on
AELR$1,500,000
Difference$500,000
Note to the AELR Required
Part II: Exclusions
Debt Service Requirements
Principal and Interest payments
Governmental Funds: Statement of Revenues, Expenditures & Changes in Fund BalanceEnterprise/Internal Service Funds: Statement of Cash Flows & Statement of Revenues, Expenses & Changes in Fund Net Position
Part II: Exclusions Grants and Aid from the Federal Government
Audited Financial
Statements
Schedule of Expenditure of Federal
Awards
Exclusions claimed on the AELR
• State Grants
• Judicial Collection Enhancement Fund
• Sales Tax• Motor
Vehicle License Tax
• HURF
Part II: Exclusions Amounts Received from the State
Excludable Not Excludable
General Fund
Local Revenues $500,000Expenditures $75,000Transfers Out $5,000
Water and Sewer Fund
Revenues $75,000Transfers In $5,000Expenditures $75,000 $5,000
Excludable
Not Excludable
Part II: Exclusions Quasi-External Interfund Transactions
Road (HURF) Fund
HURF Revenue
Miscellaneous Revenue
Investment Income
Part II: Exclusions Highway User Revenue Funds
Part II: Exclusions Contracts with Other Political Subdivisions
Excludable Expenditures
City/Town
School District
Community College
State of Arizona
County, City, Town
Political Subdivisi
on
• $50,000 expended
• $10,000 reimbursement
• Reduces expendituresFY
2013
• $5,000 reimbursement from FY 2013 expenditures
FY 2014 • Expenditure of
$5,000 reimbursement received in 2014
FY 2015
Part II: Exclusions Refunds, Reimbursements, or Recoveries
Carry-forward
General Fund
Road Fund
Water & Sewer Fund
Utilities Fund
Part II: Exclusions Prior Years Carryforward
Flow Assumption• Determines which
revenues were spent and in which order
• Determines carryforward earned and spent
Fund Balance• Should be considered
in flow assumption• Limits the amount of
carryforward available
Part II: Exclusions Carryforward
Revenues Local Revenues $7,000Non-local revenues $11,000
Expenditures $20,000
Beginning Fund Balance $10,000
Ending Fund Balance $8,000
General Fund Beginning Fund Balance
Local Revenue $6,000Non-local Revenue
$4,000Total $10,000
Carryforward
Accumulated $4,000Used $ -0-
Part II: Exclusions Carryforward
Revenues Local Revenues $7,000Non-local revenues $11,000
Expenditures $20,000
Beginning Fund Balance $10,000
Ending Fund Balance $8,000
General Fund Beginning Fund Balance
Non-local Revenue
$4,000Total $4,000
Carryforward
Accumulated $ -0-Used $2,000
Part II: Exclusions Carryforward
Part I: AdjustmentsNatural or Man-Made Disasters
Declared by the Governor
Expenditures authorized by 2/3 of
Board
Expenditures subtracted from total expenditures subject
to the limit
Approved by Voters
Expenditures authorized by 70%
of Board
Expenditures subtracted from total expenditures subject
to the limit
Not Declared by Governor or
Approved by Voters
Expenditures authorized by 70%
of Board
Expenditures added to total expenditures subject to the limit
in following FY
Part I: AdjustmentsOne-time Override
One-Time Override
What it Is• Voter approval to exceed the constitutional
expenditure limit by a specific amount
What it Isn’t
• Approval to establish an alternative expenditure limit for one year
Reporting• The specific amount the voters approved the
city/town to exceed it’s limit by should be included on Part I, Line 7.
Contact UsMeghan Hieger and Megan Smith
Office of the Auditor GeneralAccounting Services Division
602-553-0333www.azuditor.gov
Questions