Behind on Filing Your AFRs? This OSC Webinar May Help

Behind on Filing Your AFRs? This OSC Webinar May Help

Annual Financial Reports (AFRs) are essential for maintaining transparency, accountability, and financial health in local governments. Municipalities are legally required to file their AFRs with the State Comptroller’s Office within 60-120 days after the close of the fiscal year. And yet, a growing number of local governments are failing to file these crucial reports on time—or at all. Late or missing reports leave taxpayers and other stakeholders without a clear picture of the municipality’s financial position and how public funds are being managed. Each year an entity fails to file an AFR, the task of catching up grows larger and more daunting. To compound the issue, when attempting to catch up on delinquent reports, local government employees often face the challenge of limited formal accounting records.

For this reason, the Office of the New York State Comptroller released a webinar last month aimed at assisting local governments in completing their delinquent Annual Financial Reports. The webinar focuses on helping local government employees understand the financial data needed to complete their Annual Financial Reports and where to find this data when formal accounting records are unavailable or limited. Here’s a broad overview of the key points covered in this webinar:

Questions addressed in this webinar:

  • How do you complete your AFR when accounting records are missing?
  • What source documents can you use to complete AFRs in the absence of formal accounting records?

Completing Delinquent AFRs: Webinar Key Points

  • Consequences of not filing your AFR include reduced transparency and confidence in management, potential impacts on credit rating, exclusion from the OSC fiscal stress monitoring system, and reduced ability to assess financial condition and manage fiscal emergencies.
  • Reasons for delinquent reports: the CFO did not meet fiscal responsibilities or was unaware of filing requirement, the municipality’s contact information is not up to date in OSC’s system, lack of board oversight.
  • Source documents that can be used to complete AFRs include bank statements, reconciliations, debt records, claims abstracts, payroll and benefits reports, tax warrants, user accounts (sewer/water/electric), and board meeting minutes.
  • Steps to follow when you need to complete a delinquent AFR with limited to no accounting records:
    1. Identify the significant events that occurred within that fiscal year.
    2. Compile the given financial data (i.e., bank statements, bank reconciliations, debt records, tax levies, etc.).
    3. Reconcile the beginning-of-year fund balance.
    4. Calculate the end-of-year fund balance (refer to the webinar for details on how to calculate this).
    5. Define revenues and expenditures.
    6. Review OSC’s AFR resources (e.g., training videos) and fill in AFR data.

Additional Resources

The webinar itself goes into much further detail regarding each step of this process, including examples and explanations. Other OSC resources that may be helpful include the following:

Achieve Financial Health with RBT CPAs

RBT CPAs is committed to helping local governments address the unique challenges they face, including staying on top of their day-to-day accounting and preparing Annual Financial Reports. Our specialized government accounting team is here to support all of your municipality’s accounting, tax, audit, and advisory needs, so that you can focus on meeting the needs of your community.  Give RBT a call today and find out how we can be Remarkably Better Together.

CAP Audits—What Are They and How Can You Prepare?

CAP Audits—What Are They and How Can You Prepare?

A CAP audit (CAP standing for “Compliance Audit Program”) is an investigation conducted by the U.S. Department of Labor’s Office of Labor-Management Standards (OLMS). CAP audits are specially designed for unions covered by the Labor-Management Reporting and Disclosure Act (LMRDA) and the Civil Service Reform Act (CSRA). The purpose of these audits is to verify union compliance with these laws, investigate potential violations, and provide compliance assistance. CAP audits are broader in scope than audits conducted by independent auditors and require extensive preparation. Let’s talk about what is involved in a CAP audit and what you can do to ensure your union is prepared.

How is a union selected for a CAP audit?

Your union may be selected for a CAP audit for several reasons. A small number of unions are selected at random each year for CAP audits. Otherwise, factors considered by OLMS when selecting a union to audit include:

  • Union size
  • Geographic location
  • Length of time since last audit
  • Availability of investigators
  • Failure to file required annual financial reports in a timely manner
  • Discrepancies in financial reports
  • Complaints received by OLMS regarding the union’s finances

What does a CAP audit entail?

A CAP audit begins with an interview of the primary financial officer, during which the investigator gathers detailed information regarding the union’s financial records, bookkeeping, and internal controls. The OLMS investigator may also request the presence of other employees involved in maintaining union financial records, such as bookkeepers or accountants. Union presidents are also often present for these interviews. During a CAP audit, the OLMS investigator reviews various financial records. Investigators may request any information from the union’s financial disclosure reports from the previous five years. Financial records typically reviewed during a CAP audit include, but are not limited to, original records (not copies) of the following:

  • Bank account records: bank statements, duplicate deposit checks, debit/credit memos, and bank reconciliations
  • Records for investments and all other assets, including inventories of fixed assets
  • Receipts records: duplicate receipts, receipt journals, member ledger cards
  • Disbursement records: canceled checks, check stubs, disbursement journals, payroll ledgers, vouchers, expense receipts, bills, credit card statements, and other supporting documents
  • Audit reports prepared by union auditors or external accountants
  • Minutes from executive board meetings and membership meetings
  • Current constitution and bylaws
  • Financial policy documents

Audit findings and recommendations will be shared with key union officials upon completion of the audit in the form of an exit interview and a closing letter. The investigator will offer compliance and technical guidance related to LMRDA and CSRA requirements. At this stage of the process, union officials have the opportunity to ask questions and contribute comments. The closing letter will then be made accessible to union members on the OLMS website.

How can you prepare for a CAP audit?

  • Ensure your union’s financial records for the last five years are complete and accurate
  • Review your union’s policies for compliance with LMRDA and CSRA requirements
  • Ensure accurate and timely LM-2 reporting
  • Review and strengthen your union’s system of internal controls

 Have Confidence in Your Union’s Compliance

When you partner with RBT CPAs, you can be confident in your union’s compliance with financial reporting and recordkeeping regulations. Beyond assistance with DOL audits, RBT CPAs’ union accounting team provides a full range of accounting, bookkeeping, and CFO services. Our union-specialized services include internal control reviews, financial statement preparation, forensic audits, LM-2 preparation, and more. Call RBT CPAs today for all of your union’s accounting needs and find out how we can be Remarkably Better Together.