We’ve all seen the cases on the news—another local government falls victim to fraud. Incidents of corruption in local municipalities—many involving the theft of staggering amounts of public funds—occur far too often for comfort. Fraud can take place even when an organization undergoes annual audits and implements preventive policies. So, what can you do to make sure your municipality isn’t the next victim? Relying on an annual audit alone won’t be enough. In fact, a proper system of internal controls for any municipality requires monthly examinations of financial records and reconciliation of accounts.

So, why are timely bank reconciliations so important for local governments? Let’s talk about it.

Why are bank reconciliations necessary?

For local governments, bank reconciliation—the process of comparing the municipality’s financial records against its bank statements to ensure they match—is a critical internal control that serves several important purposes:

• Identifies errors and discrepancies in financial statements.
• Helps to detect and prevent fraudulent activity.
• Safeguards the municipality’s cash and reinforces accountability.
• Provides an up-to-date picture of the municipality’s cash position, leading to more effective cash management.
• Helps to maintain public trust by demonstrating responsible stewardship of taxpayer dollars.

How often should reconciliations be done?

Reconciliations should be prepared monthly, typically at month-end after the municipality receives its bank statement. Waiting weeks, months, or years to reconcile your books significantly increases the risk of fraud going unnoticed. The sooner you can catch discrepancies or inconsistencies, the less damage that can be done.

Bank Reconciliation Best Practices

The Office of the New York State Comptroller provides guidelines for local government bank reconciliations, summarized below.

1. Bank reconciliations should be performed monthly. Any discrepancies between net bank balances and general ledger cash accounts should be researched and explained. Reconciliations should be reviewed by a supervisor, who can authorize any necessary adjustments.
2. To ensure the proper segregation of duties, bank reconciliations should be performed by an employee or official who does not have (1) access to or custody of cash or (2) the responsibility of recording cash receipts, cash disbursements, or journal entry transactions.
3. During bank reconciliation, bank statements and check images should be examined for potential indicators of fraud, such as suspicious payees, large dollar amounts, and secondary endorsements. Check images should be saved in a digital format for audit purposes.
4. Bank statements and checks should be stored in a secure location to protect account numbers.
5. All banking documents not required to be maintained should be shredded to prevent unauthorized access to bank account information.

Work with RBT CPAs to Safeguard Your Municipality Against Fraud

RBT CPAs’ government accounting team is here to guide you through the bank reconciliation process and support all of your municipality’s other accounting, tax, audit, and advisory needs. We’ll help put you in the best position to safeguard your municipality’s financials and reputation. Call us today to find out how we can be Remarkably Better Together.

On July 4, the president signed into law the One Big Beautiful Bill Act (OBBBA), implementing many significant tax and spending policy changes. The law’s provisions are wide sweeping, encompassing policies on tax rates and incentives, education funding, healthcare programs, defense spending, and more. This article highlights some of the key provisions of the legislation most likely to impact local governments, according to the Government Finance Officers Association (GFOA).

Please note that IRS guidance on the new legislation is still forthcoming. RBT CPAs will continue to provide updated information as this guidance is issued.

Tax Exemption on Municipal Bonds

Under the OBBBA, tax exemptions on municipal bonds, 501(c)3 bonds, and private activity bonds are preserved. The GFOA emphasizes the importance of these financing instruments in funding critical public projects, including essential infrastructure and community improvement projects. The OBBBA also expands the tax code to include additional provisions authorizing tax-exempt bond financing for spaceports. The National League of Cities (NLC) recognizes the preservation of tax-exempt municipal bonds and private activity bonds as a “critical financial win for cities, towns, and villages across America.”

Increased SALT Cap

The OBBBA temporarily increases the federal deduction limit for state and local taxes (SALT cap) from $10,000 to $40,000, adjusted each year for inflation until 2029. The deduction phases out for taxpayers with modified gross income (MAGI) greater than $500,000 in 2025, with the MAGI threshold adjusted for inflation until 2029.  In 2030, the SALT cap will revert to $10,000.

Removal of Clean Energy Incentives

The OBBBA terminates or phases out many clean energy tax incentives, including Section 179D (energy-efficient commercial buildings deduction), Section 45L (new energy-efficient home credit), Section 48E (clean electricity investment credit), and Section 45Y (clean electricity production tax credit), among others.

Expansion of Low-Income Housing Tax Credit (LIHTC)

The OBBBA permanently increases allocations for 9% LIHTC by 12%, and also permanently reduces the private activity bond financing requirement for 4% LIHTC from 50% to 25%. These changes will become effective January 1, 2026. These provisions will encourage more investment in the LIHTC program.

Child Tax Credit

The OBBBA permanently increases the Child Tax Credit (CTC) to $2,200 per qualifying child under the age of 17, effective for tax year 2025 and indexed annually for inflation. The maximum refundable portion has been raised to $1,700, also adjusted annually for inflation.

Qualified Opportunity Zones

The OBBBA makes the Opportunity Zones tax incentive permanent, with several modifications including a narrower definition of “low-income community” and expanded reporting requirements. Every ten years, state governors will propose new opportunity zones. The OBBBA also includes additional incentives for rural opportunity zones. This provision becomes effective January 1, 2027.

Changes to Medicaid

The OBBBA makes several significant changes to Medicaid programs, including a new requirement that able-bodied adults aged 19 to 64 enrolled in Medicaid must spend at least 80 hours per month working or participating in other qualifying activities (i.e., community service, job training, educational programs) to maintain eligibility. Some exemptions exist, such as for pregnant women, caregivers of young children, and people with certain qualifying medical conditions. The legislation also reduces Medicaid eligibility based on legal status. Eligibility must be reassessed by the state at least every 6 months.

Changes to SNAP

The OBBBA also makes significant changes to the Supplemental Nutrition Assistance Program (SNAP). Under the new legislation, states will have to contribute to food benefits beginning in FY 2028. The amount that each state contributes depends on that state’s payment error rate from three fiscal years prior (cost share rates for FY 2028 will be based on FY 2025 payment error rates). The OBBBA also extends work requirements to adults aged 55-64 and parents of children 14 and older, requiring these individuals to work for at least 20 hours a week in order to qualify for SNAP benefits.

Additional Guidance

The One Big Beautiful Bill Act is an expansive piece of legislation containing many significant policy changes. RBT CPAs will continue to keep our clients apprised as additional information and guidance is released regarding the OBBBA. GFOA is offering a webinar on August 21, 2025 for government finance professionals seeking to understand and implement the new legislation. In the meantime, if you have questions regarding the recent tax law changes, please don’t hesitate to reach out to our experts at RBT CPAs.

In December 2024, the Office of the NY State Comptroller (OSC) issued a report titled “Transparency and Accountability of Fiscal Activities in Villages.” The report examined financial transparency in the 532 villages that comprise New York State, specifically focusing on the villages’ accounting records and Annual Financial Reports (AFRs) from the 2023 fiscal year. The OSC’s report raises concerns about many villages’ lack of timely reporting of financial information.

Why is transparency important?

The report emphasizes the need for transparency in village governments, especially when it comes to fiscal processes. Village officials are responsible for planning and managing operations in the village, including financial operations. Village boards are trusted with deciding how to spend villagers’ tax dollars, and as such, these boards must maintain high levels of transparency and accountability. According to the report, “transparency means ensuring that reliable, complete and timely information is readily available and accessible.” Not only does transparency allow villagers to know how their tax dollars are being spent, but it also gives the public the opportunity to provide feedback on important matters.

What are the financial reporting requirements for villages?

Villages are required by law to file Annual Financial Reports (AFRs) with the OSC between 60-120 days after the close of the fiscal year. AFRs are to be submitted by village CFOs (Chief Financial Officers). The AFR details the village’s financial transactions such as revenue, expenditures, debts, cash reserves, and fund balance. The village must make the AFR available to the public on the village’s official website and publish a notice in the village’s official newspaper within 10 days of the AFR being filed. According to the OSC report, consistent filing is important as it creates a comprehensive financial picture for stakeholders, including local officials, taxpayers, researchers, and legislators, among others.

What were the findings?

Below are some of the findings highlighted in the report for fiscal year 2023:

• Of the 532 villages in New York State, only 246 (46%) filed their 2023 Annual Financial Report with the OCS by the required due date
• 210 villages (40%) filed their Annual Financial Reports after the due date
• 76 villages (14%) did not file their Annual Financial Reports at all

Though there was a 16% improvement in villages filing AFRs on time between 2019 and 2023, the percentage of villages that did not file an AFR at all has gone up from 1% in 2019 to 14% in 2023. The report calls this increase a “concerning trend.”

Why are villages not filing AFRs?

The OCS homed in on 30 villages to examine their financial records more closely. They found that 25 of the 30 villages did not file an AFR with OSC and four filed significantly late, while only one village filed within the required time period. In addition, 28 of the selected villages lacked any records of annual audits.

Village officials in the 25 villages who did not file AFRs stated the following as the primary reasons for not filing:

• Incomplete accounting records (number one reason for not filing)
• Vacancies or high turnover in CFO role
• Loss of accounting staff
• Lack of training/technical help for filing process
• Delays encountered by CPAs
• Delayed filing due to CFO taking significant leave
• CFO was unaware of the filing requirement

What is the importance of timely and accurate financial reporting and audits?

Inadequate or untimely financial reporting leads to a lack of transparency in village operations and a lack of information for taxpayers and other stakeholders. Timely and accurate financial information is necessary for village boards to develop budgets, decide property tax levies, and make other financial plans. Annual audits are also crucial for monitoring the status of the village’s financial records, reducing the risk of mismanagement, and ensuring the proper use of public funds.

Looking for guidance?

The OSC provides training sessions for board members, which can be accessed here. In addition, RBT CPAs’ specialized government team offers auditing and consulting services to villages in the Hudson Valley and beyond. For assistance with financial reporting requirements, please don’t hesitate to reach out to one of our experts today. Give us a call today and find out how we can be Remarkably Better Together.

The Governmental Accounting Standards Board (GASB) Statement No. 101 updates GASB Statement No. 16 and addresses the matter of compensated absences for employees of state and local governments.

What is GASB 101?

GASB 101 is an update to the guidelines for state and local governments regarding paid employee leave, otherwise known as “compensated absences.” The purpose of this statement is to update the guidance for recognition and measurement of compensated absences.

What is the effective period?

The requirements of GASB 101 are effective for fiscal years beginning after December 15, 2023. All governmental entities with fiscal year ends of December 31, 2024 or later must implement the new guidance.

What is considered a compensated absence?

Compensated absence: leave for which employees receive compensation in the form of cash payments for time off, cash payments for unused leave if terminated, or a non-cash settlement.

Examples of compensated absences: paid time off, sick leave, holidays, parental leave, military leave, jury duty, bereavement, sabbatical, floating holidays.

When are liabilities recognized?

Liabilities for compensated absences must be recognized in the following cases: for unused leave and leave that has been used but not yet compensated.

1. Unused leave (unused leave must meet the following criteria to be recognized as a liability):
   1. The employee has performed the services required to earn the leave
   2. The leave accumulates (carries forward into future pay periods)
   3. The leave is more likely than not to be used for time off, or otherwise paid in cash or settled through non-cash means
2. Leave that has been used but not yet compensated (that is, paid in cash or settled through non-cash means)

As is the case under GASB 16, salary-related payments ­— including the employer’s share of payroll-related taxes (FICA, Medicare), defined pension contributions, and other post-employment benefit plans — should also be part of the compensated absence liability calculation.

Note: Liabilities for certain types of compensated absences that are sporadic in nature, such as parental leave, military leave, and jury duty leave, should not be recognized until the leave commences.

How to measure liability for compensated absences

For unused leave: To measure liability for unused leave, municipalities should use the employee’s pay rate as of the date of the financial statements, unless a compensated absence arrangement calls for a different pay rate at the time of payment (for example, sick pay based on 50% of the employee’s pay rate).

For leave that has been used but not yet paid or settled: To measure liability for leave that has been used but not yet paid or settled, municipalities should use the amount of the cash payment or non-cash settlement to be made.

What has changed from previous guidance?

• The most significant change brought about by GASB 101 is the application of the “more likely than not” condition when calculating the unused leave liability. This lower threshold will likely result in a higher compensated absences liability than under the previous “probable” threshold.
• Under the new guidance, liability for sick leave should now be calculated the same way as all other compensated absences.
• GASB 101 updates the previous requirement (established by GASB 16) to disclose gross increases and decreases in a liability for compensated absences. Governments can now choose to disclose only the net change in the liability, but they must identify this figure as the net change.
• In addition, under the new statement, government entities are no longer required to disclose which funds have been used to liquidate the liability for compensated absences.

What actions do municipalities need to take?

• Municipalities should look at their current compensated absences policy and make adjustments in line with GASB Statement No. 101.
• Municipalities should also review employee contracts and assess whether a change needs to be made to the compensated absence calculation.
• Municipalities will need to assess leave usage by asking key questions (the answers to these questions will depend largely on employee contracts):
  • What is the likelihood the leave will be used?
  • What is the likelihood the leave will be paid out upon termination, death or retirement?
  • At what rate will the leave be used or paid out?

Additional Resources

For more details on GASB 101, visit the GASB pronouncements page. For advice or assistance with your GASB 101 implementation, please don’t hesitate to reach out to us at RBT CPAs. We’re happy to answer your questions and help guide you through the most recent GASB updates.

New York State appears to be stepping up to get a grasp on the EMS crisis and plotting a potential course for what’s next.

Across the nation, EMS is in crisis. Response times are longer. More workers are leaving the field than entering it, with mental health and burnout to blame. Costs are up and funding is dwindling. Pay is on par with fast food restaurants (although many rural areas depend largely on volunteers). The public, in general, doesn’t realize EMS is not funded the same way as the local police but still counts on municipalities to ensure services are in place should they need them.

It’s a national problem that many say is due to an approach established 50 years ago that no longer works. Back then, emergency services were paid by an individual’s insurance. Today, Medicare only reimburses for transportation. So, if EMS goes to a home and resolves an issue without having to transport a patient to the hospital, there’s no federal reimbursement.

In January, the New York Association of Counties (NYSAC) acknowledged counties are being asked to help shore up resources, but local laws and other issues are exasperating the challenge. Still, NYSAC presented  proposals and legislation to address the issue. (By the end of the legislative session, one bill made it through both chambers, awaiting the Governor’s signature. It calls for ambulance services to be reimbursed by Medicaid when treatment in place is administered and/or when transportation is provided to a health care setting other than a general hospital.)

In March, New York State Comptroller Thomas P DiNapoli issued a report on “The Growing Role of Counties in Emergency Medical Services.” It discusses the variety of ways EMS is provided and funded in New York, and how a lack of data makes it difficult to assess what’s needed. It also points to counties playing a more active role in assessing and supplementing EMS services, as well as the need for greater State involvement.

According to the report, there were 989 agencies providing EMS in New York, with almost 64% classified as corporations and the majority being non-profit. The remaining 36% were owned by local governments, including 162 owned by fire districts.

Less than 20% rely solely on paid staff; about 50% rely solely on volunteers; and the balance work with a combination of the two. However, when it comes to city and county EMS agencies, most have paid staff like private for-profit EMS agencies. Some EMS staff also serve as firefighters.

In New York, patients are treated and transported regardless of ability to pay or coverage. Many agencies cover expenses by billing for services. At times, property taxes and other sources help with funding, as does fundraising by volunteer fire departments.

The report refers to the State Emergency Medical Services Council’s State EMS Sustainability Technical Advisory Group pointing out that most reimbursement is for transportation services, not medical services. Inadequate federal reimbursement rates and uncompensated care are issues. They also highlight a surge in county involvement with backup or mutual aid to meet residents’ needs.

The report concludes, “The current circumstances call for direct State involvement to support the efforts of counties and other local governments to turn fragmented and ad hoc responses into comprehensive solutions. While Regional EMS Councils and local government providers should conduct regular needs assessments, solutions need to start at the State level and include better statewide data collection, management and analysis to help EMS agencies identify where services are falling short and provide options for improving response times and outcomes. Better centralized guidance from the State about funding sources can help local officials make more informed decisions about how to pay for these services.”

It sounds like there’s more to come. As your municipality continues standing up to the many challenges associated with meeting residents’ needs, you can count on RBT CPAs for accounting, audit, tax, and advisory services. Why not give RBT CPAs a call to see how we can be Remarkably Better Together!

RBT CPAs never offshores work outside of the U.S. so you always know who is handling your financial information.