This small government AOS basis shell should be used forPRE-GASB54 financial statement presentations.
GASB 54 shells are available on the AOS Audit Employees Briefcase and / or AOS Internet / IPA Resources.
Auditor of State Bulletin 2011-004 mandated Governmental Accounting Standards Board Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions for financial statements for periods beginning after June 15, 2010.AOS will not require regulatory basis presentations to revise statements presented for earlier periods.
- For example, a two-year audited presentation covering FYE 2011 and 2010 must apply Statement 54 to its 2011 statements, but may present the 2010 statements without applying 54.
- So, separate presentations for 2010 and 2011 are not required, and one set of notes / opinion / GAGAS report suffices.
- AOS-basis entities must apply both the fund balance reporting and fund type definitions when they adopt Statement 54.
- Audit opinions would refer to the change effective in FYE 2011, but would not qualify (include “except for” language) for 2010 “pre 54” statements.
- Applying Statement 54 to 2010 statements is certainly acceptable, and even preferable. Opinions thereon would mention the change occurring during 2010.
[LIBRARY NAME]
[COUNTY NAME] COUNTY
Revised January 2012[1]
DELETE ALL HIGHLIGHTED TEXT
search and replace:
20BB replace with beginning fiscal year
20EE replace with ending fiscal year
TABLE OF CONTENTS
TITLEPAGE
Cover Letter......
Independent Accountants’ Report......
Combined Statement of Cash Receipts, Cash Disbursements, and Changes in
Fund Cash Balances - All Fund Types -
For the Year Ended December 31, 20EE......
Combined Statement of Cash Receipts, Cash Disbursements, and Changes in
Fund Cash Balances - All Fund Types-
For the Year Ended December 31, 20BB......
Notes to the Financial Statements......
Independent Accountants’ Report on Internal Control Over
Financial Reporting and on Compliance and Other Matters
Required by Government Auditing Standards......
Schedule of Findings (IF APPLICABLE)......
Schedule of Prior Audit Findings (IF APPLICABLE)......
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[ENTITY NAME]
[COUNTYNAME] County
[STREET ADDRESS]
[CITY], Ohio [ZIP CODE]
To the [GOVERNING BODY]:
As you are aware, the Auditor of State’s Office (AOS) must modify the Independent Accountants’ Report we provide on your financial statements due to an interpretation from the American Institute of Certified Public Accountants (AICPA). While AOS does not legally require your government to prepare financial statements pursuant to Generally Accepted Accounting Principles (GAAP), the AICPA interpretation requires auditors to formally acknowledge that you did not prepare your financial statements in accordance with GAAP. Our Report includes an adverse opinion relating to GAAP presentation and measurement requirements, but does not imply the amounts the statements present are misstated under the non-GAAP basis you follow. The AOS report also includes an opinion on the financial statements you prepared using the cash basis and financial statement format the AOS permits.
Dave Yost
Auditor of State
[REPORT DATE]
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1
[ENTITY NAME]
[COUNTYNAME] County
Independent Accountants’ Report
Page 2
Insert AOS basis opinion letter
1
WORD PROCESSOR
WILL INSERT
FINANCIAL
STATEMENT
HERE
WORD PROCESSOR
WILL INSERT
FINANCIAL
STATEMENT
HERE
1
[ENTITY NAME]
[COUNTYNAME] COUNTY
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 20HH AND 20BB
(Continued)
Note: UAN provides proprietary and agency fund types for Libraries. Should a Library establish a proprietary or agency fund, you should insert the appropriate fund type descriptions and make any other necessary footnote and financial statement modifications. There are examples in other report shells which you can cut and paste into this example.
1.Summary of Significant Accounting Policies
- Description of the Entity (Modify as needed.)
The constitution and laws of the State of Ohio establish the rights and privileges of the [Entity Name], [CountyName] County, (the Library) as a body corporate and politic. (Board or Entity) appoint a (number)-member Board of Trusteesto governthe Library. The Library provides the community with various educational and literary resources.
The [name of foundation] is also associated with the Library. Since the Foundation’s tax exemption is based on the Foundation’s intent to support the Library, its financial statements are included in this report. MODIFY AS NEEDED. FOUNDATIONS CAN BE A DIFFICULT AND CONTENTIOUS ISSUE. YOU SHOULD ALWAYS CONSULT WITH YOUR CHIEF AUDITOR REGARDING FOUNDATIONS. CONSIDER CONSULTING WITH A&A.
Note: The above foundation note is only an example. The following summarizes the Auditor of State’s policy (from the cash-basis representation letter) regarding AOS-basis reporting of component units:1) Use GASB 14 & 39 to determine if an entity is or is not a component unit.
2) If a component unit(s) exists, the auditee should disclose it using any of the following presentations:
a) Discrete presentation (this obviously requires obtaining financial statements from the CU):
b) Supplemental information We may rely on another auditor’s opinion per AU 543, but could not use an "in relation to opinion," if the CU's statements were not derived from information that we have audited. This option might be useful if the primary government reports using the cash basis and CU issues GAAP financial statements.
c) Include footnote disclosure that a CU exists, and how audited CU statements can be obtained (assuming the CU was audited). Briefly disclose why the entity is deemed a CU, such as by appointing a voting majority of the CUs board, or if the fiscal dependency criteria of GASB 14 apply. No financial information is required.
Item 2(c) above is sufficient to satisfy disclosure requirements for cash basis entities with component unit, and should not be a burdensome requirement. Following 2(a) or 2(b) in addition to 2(c) would obviously be a more complete presentation, however.
3) If entity refuses to disclose component information in accordance with (2) above, qualify the cash basis opinion for inadequate disclosure/omission of information.
It is conceivable that we could present unaudited information as a discrete presentation or supplemental data. If so, we'd obviously have to disclaim on it.
4) If a component unit is not audited, we can use our judgment to determine whether to use our statutory authority to require an audit. We should consider the amount of public money the component unit receives and other risks.
The Library’s management believes these financial statements present all activities for which the Library is financially accountable. (Continue the sentence with the following, if applicable.), except the financial statements do not include debt service funds external custodians maintain. Note 6to the financial statement describes these assets.
B.Accounting Basis
These financial statements follow the accounting basis the Auditor of State prescribes or permits. This basis is similar to the cash receipts and disbursements accounting basis. The Libraryrecognizes receipts when received in cash rather than when earned, and recognizes disbursements when paid rather than when a liability is incurred. Budgetary presentations report budgetary expenditures when a commitment is made (i.e., when an encumbrance is approved). [DELETE PRECEDING SENTENCE IF ENCUMBRANCE ACCOUNTING IS NOT USED. NEITHER THE REVISED CODE NOR THE NEW OHIO ADMINISTRATIVE CODE REQUIRE LIBRARIES TO ENCUMBER AFTER 2000.]
These statements include adequate disclosure of material matters, as the Auditor of State prescribes or permits.
C.Deposits and Investments
The Library’s accounting basis includes investments as assets. This basis does not record disbursements for investment purchases or receipts for investment sales. This basis records gains or losses at the time of sale as receipts or disbursements, respectively.
The LibraryU.S. Treasury Notes and common stock at cost (or fair value when donated).<DELETE IF NO DONATED INVESTMENTS. Money market mutual funds (including STAR Ohio) are recorded at share values the mutual funds report. Modify this note as needed. Only describe investments actually held during the audit period. Equity securities (stock) are normally illegal, unless donated. Consult with the Legal Division if in doubt about an investment’s legality. Also, if equity securities have an impaired value deemed “other than temporary,” write them down to fair value. Consider consultation on the matter.)
D.Fund Accounting
The Library uses fund accounting to segregate cash and investments that are restricted as to use. The Library classifies its funds into the following types:
(Delete all unnecessary fund types)
1.General Fund
The General Fund reports all financial resources except those required to be accounted for in another fund.
2.Special Revenue Funds
These funds account for proceeds from specific sources (other than from private-purpose trusts or for capital projects) that are restricted to expenditure for specific purposes. The Library had the following significant Special Revenue Funds: (Include a one or two sentence description of any special revenue fund constituting at least 20percent of combined special revenue disbursements or are deemed significant.
3.Debt Service Funds
These funds account for resources the Libraryaccumulates to pay bond and note debt. The Library had the following significant Debt Service Funds:(Include a one or two sentence description of any debt service funds constituting at least 20percent of combined debt service fund disbursements or are deemed significant.)
4.Capital Project Funds
These funds account for receipts restricted to acquiring or constructing major capital projects (except those financed through enterprise or trust funds). The Library had the following significant capital project funds:(Include a one or two sentence description of any capital project funds constituting at least 20percent of combined capital project disbursements or are deemed significant.)
5.Permanent Funds
These funds account for assets held under a trust agreement that are legally restricted to the extent that only earnings, not principal, are available to support the Library’s programs. The Library had the following significant permanent fund: (Include a one or two sentence description of any permanent funds constituting at least 20% of combined permanent fund disbursements or other funds deemed significant. The following is an example that must be modified.)
6.Private-Purpose Trust Funds
Private-purpose trust funds account for assets held under a trust agreement for individuals, private organizations, or other governments which are not available to support the Library’s own programs.
The Library’s private purpose trust fund(s)are for the benefit of certain individuals, a non profit organization and the Library of X. (<Modify as needed. Omit¶ if there are none).
(Note: classifying private purpose funds requires judgment. If the intent generally benefits the government’s own programs, permanent or special revenue fund classification is appropriate. However, if the intent is to benefit a specific individual, private organization, or an other government which is not available to support the Library’s own programs, trust fund classification is more appropriate. See Bulletin 2005-05 for additional classification guidance.)
E.Budgetary Process
The Board must annually approve appropriation measures and subsequent amendments. Unencumbered appropriations lapse at year end. (Delete the word “unencumbered,” if there were no encumbrances outstanding at year end, or the Library did not use encumbrance accounting.) Budgetary expenditures (that is, disbursements and encumbrances)< DELETE THE HIGHLIGHTED PHRASE IF THE LIBRARY DID NOT ENCUMBER may not exceed appropriations at the fund, function, and object level of control(modify to describe the legal level of control used).
A summary of 20EE and 20BB budgetary activity appears in Note 3.
F.Property, Plant, and Equipment
The Library records disbursements for acquisitions of property, plant, and equipment when paid. The accompanying financial statements do not report these items as assets.
G.Accumulated Leave
In certain circumstances, such as upon leaving employment, employees are entitled to cash payments for unused leave. The financial statements do not include a liability for unpaid leave. (Delete this note if no employees are entitled to these benefits)
2.Equity in Pooled Depositsand Investments
The Library maintains a deposit and investments pool all funds use. The Ohio Revised Code prescribes allowable deposits and investments. The carrying amount of deposits and investments at December 31 was as follows:
Note: The above is an embedded Excel Spreadsheet. Double-click to edit. Do not enter $ signs.)
At December 31, 20EE, (Insert other time period noted, if any, or other ineligible investments, if any. Also, disclose material amounts as a material violation in the Compliance Report. Note that entities may be allowed to hold equity securities, if required under a trust agreement. Check with the Legal Division.)theLibrary held $XXX in equity securities. Equity securities are not eligible investments for the Library under Ohio law.
Deposits: Deposits are insured by the Federal Depository Insurance Corporation; [or] collateralized by securities specifically pledged by the financial institution to the Library;(delete if there is no specific pledging) or collateralized by the financial institution’s public entity deposit pool. (deleteif no pool is used)
At December 31, 20EE, (Insert other time period noted. Also, disclose as a material violation in the Compliance Report.) $XXX of deposits were not insured or collateralized, contrary to Ohio law.
Investments: (The following MUST be modified, based on the entity’s circumstances. It may be best to discuss the arrangement with a knowledgeable officer of the financial institution.) The Federal Reserveholds the Library’s U.S. Treasury Notes in book-entry form by, in the name of the Library’s financial institution. The financial institution maintains records identifying the Library as owner of these securities.
[The following three sentences describe some repurchase agreements / sweep accounts. However, circumstances may require modification to this disclosure. Also, not all sweep accounts are repurchase agreements. The Library’s financial institution transfers securities to the Library’s agent to collateralize repurchase agreements. The securities are not in the Library’s name.
[The following may describe some equity securities, but you should check with the broker-dealer or financial institution.] A financial institution’s trust department holds the Library’s equity securities in book entry form in the Library’s name.
Investments in STAR Ohio and mutual funds are not evidenced by securities that exist in physical or book-entry form.
3.Budgetary Activity
OAC 117-8 DOES NOT REQUIRE LIBRARIES TO BUDGET RECEIPTS. HOWEVER, SOUND BUDGET PRACTICE SUGGESTS A GOVERNMENT CANNOT APPROPRIATE RESPONSIBLY UNLESS THEY HAVE AN ESTIMATE OF RESOURCES TO SUPPORT THE APPROPRIATIONS. IF THE GOVERNING BODY USES A REVENUE/RESOURCE ESTIMATE TO SUPPORT APPROPRIATIONS, WE CAN INCLUDE IT IN THE TABLE BELOW. A LACK OF EVIDENCE THE GOVERNING BODY USES A RESOURCE ESTIMATE WOULD BE A MANAGEMENT COMMENT.
Budgetary activity for the years ending [End of Years Audited] follows:
Note: The above is an embedded Excel Spreadsheet. Double-click to edit. Do not enter $ signs.)
Disclose any material budgetary violations here and in the compliance report. The description should list the individual funds affected (i.e., don’t say “the special revenue funds were in violation,” unless all the special revenue funds violated a requirement). The disclosures here should be brief, do not repeat the full text of the citation appearing in the GAGAS report. For example:
Contrary to Ohio law, budgetary expenditures exceeded appropriation authority in the ABC fund by $XXX for the year ended December 31, 20XX. Also contrary to Ohio law, at December 31, 20XX, the XYZ fund had a cash deficit balance of $XXX.
4.Grants-in-aid and Tax Receipts
The primary source of revenue for Ohio public libraries is the Public Library Fund (PLF). The State allocates PLF to each county based on the total tax revenue credited to the State’s general revenue fund during the preceding month. The County Budget Commission bases the amount for distribution on the needs of such library for the construction of new library buildings, parts of buildings, improvements, operation, maintenance, or other expenses. The County Budget Commission cannot reduce its allocation of these funds to the Library based on of any additional revenues the Library receives.
The following applies only when the Library has a tax levy. If the Library does not have a tax levy delete the following:
Real property taxes become a lien on January 1 preceding the October 1 date for which the taxing authority of the subdivision to whose jurisdiction the Library is subject adopts rates. The State Department of Taxation, Division of Tax Equalization, adjusts these rates for inflation. Property taxes are also reduced for applicable homestead and rollback deductions. The financial statements include homestead and rollback amounts the State pays as Other Governments’ Grants In Aid. Payments are due to the County by December 31. If the property owner elects to pay semiannually, the first half is due December 31. The second half payment is due the following June 20.
Public utilities are also taxed on personal and real property located within the taxing district.
Property owners assess tangible personal property tax. These owners must file a list of tangible property to the County by each April 30.
The County is responsible for assessing property, and for billing, collecting, and distributing all property taxes on behalf of the Library.
5.Debt
Note: County library districts and regional library districts can issue any securities authorized by ORC 133. Other libraries can only issue TANs & RANs, though they may have debt issued by the taxing authority of the subdivision to whose jurisdiction the Library is subject. In such instance, the debt is normally a liability of the taxing authority, not the library. Such debt should not be listed here as a library liability. However, consider disclosing that the debt has been issued on the library’s behalf, and whether the library has any contingent obligation for repayment.