GFOA ANNUAL CONFERENCE
County Fiscal Affairs Session – County CAP’s
September 18, 2014
Gerry Seneski, Chief Financial Officer, The County of CumberlandDave Miller, Chief Financial Officer, The County of MercerJoe Kovalcik, Chief Financial Officer, The County of Morris
COUNTY CAPS
Two CAP’s – 1977 and 2010 both Levy CAPS
Problem – which one do we use Alternative Minimum CAP CAP’s can equal Have to choose which CAP
IMPACT ON RATINGS
There is a greater emphasis on CAP room
Financial Flexibility – Fund Balance provides this Can also lead to issues once your fund
balance begins to diminish
SOURCES OF ADDITIONAL CAP ROOM Increase revenues
Review rates and charges Greater use of Cost Allocation Plan Increase in New Construction Greater use of Fund Balance – Can lead to
future financial issues
PLANNING IS KEY
Hope is not an action plan Watch labor contracts with back end
deals or high step movement Other arrangements that escalate over
time Try to raise your taxes annually Work your way to one CAP START PLANNING
NOW!!!!!!!!!!!!!!!!!!!!!!!!!!!!
ARE CAP EXCEPTIONS REALLY EXCEPTIONS
Good news – with exceptions your levy can go up 6%
Bad news – there is no way that your Freeholders will approve this levy increase
Public expects minimal tax increase – 2% CAP
LEGISLATIVE RELIEF
None – the two CAP’s are here to stay Learn how to manage and plan within
the 2 CAP environment Alternatives:
Increased CAP Banking – allow for more years or permit a reserve of 3% of budget ongoing. This will help with Credit Ratings
Allow each year CAP Bank even when switching between the 1977 and 2010 CAP
GFOA ANNUAL CONFERENCE
County Fiscal Affairs Session – County Finances
September 18, 2014
Gerry Seneski, Chief Financial Officer, The County of CumberlandDave Miller, Chief Financial Officer, The County of MercerJoe Kovalcik, Chief Financial Officer, The County of Morris
COUNTY FINANCES
What are the effects of Managed Medicaid going forward? Do you have a Nursing Home?
Do you have plans on selling your nursing home? What’s the market? CAP Based Adjustment in the next year
COUNTY FINANCES
Housing Market – What are the effects on your County Clerk Revenues? As the interest rates begin to rise what will
be the effect on our revenues? Plan wisely
COUNTY FINANCES
Health Care – what is the effect of the ACA? HCR Tax kicking in in 2015 To go self-insured or not to go self-insured The exceptions are not the same for the
1977 and 2010 CAP’s
COUNTY FINANCES
Cash Flow Items – Still very low interest earnings Change in how our County Aid Funds being
received in 2015 Reimbursements from your grants
COUNTY FINANCES
Rating Agencies Planning, Planning and more planning
Fund Balance Projections Future year budget projections Policies – Fund Balance and Debt Succession Planning
COUNTY FINANCES
P Card usage Do we have the proper internal controls
and procedures in place? Sign off and reviewing Ensure compliance with TAD 85-1
Vendor Claimant Certification What is it’s purpose? Why do we still have it?
GFOA ANNUAL CONFERENCE
County Fiscal Affairs Session – Internal ControlSeptember 18, 2014
Gerry Seneski CPA, RMA, CCFO, CMFOChief Financial OfficerThe County of Cumberland
COSO
Committee of Sponsoring Organizations of the Treadway Commission
Original Report 1992 Essentially a response to the S&L Crisis
Embraced by most as the National Standard Including GFOA & AICPA Plenty of written guidance available
WHAT IS INTERNAL CONTROL?
Internal Control is a process, effected by management, designed to provide reasonable assurance regarding the achievement of objectives relating to operations, reporting and compliance.
How does the role of Management differ from that of the Auditor?
OBJECTIVES
Operations – Effectiveness and Efficiency; operating and financial performance goals; and safeguarding assets.
Reporting – Reliability, timeliness and transparency. Proper decisions based upon proper information.
Compliance – Laws and Regulations.
INTERNAL CONTROL COMPONENTS
Environment
Risk Assessment
Activities
Information and Communication
Monitoring
ENVIRONMENT
The “Tone at the Top” how are problems handled?
Management demonstrates a commitment to Integrity and Ethical Values. Accountability.
Proper hierarchy of staff. Commitment to attract, develop and
retain competent individuals. Do things right AND do the right things.
RISK ASSESSMENT
Risk = the possibility that an event will occur that adversely affects the achievement of objectives. Mistakes/Errors vs. Theft/Fraud
Misunderstandings due to inadequate knowledge
Performance Risk Risk from external influences (storms, the
economy, legislation)
ACTIVITIES
Mgt Directives designed to mitigate risk.
INFORMATION AND COMMUNICATION
Relevant quality information to support controls Policies and Procedures Manuals Training Sessions
MONITORING
Evaluate Internal Controls Are they working as designed? Role of the Auditor
LIMITATIONS
Human judgment - mistakes Management Override Collusion Extraordinary external events
APPLY COSO FRAMEWORK TO PURCHASING & ACCOUNTS PAYABLE
Group Exercise Identify Risk Identify activities designed to mitigate risk
QUESTIONS?
Thank you!
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