Author: Shannon Mannese

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:

AFR Information Page
OSC Academy AFR training videos
OSC data management unit (DMU)

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.

New Financial Reporting Requirements Under GASB 103 and 104

Two statements issued by the Governmental Accounting Standards Board (GASB)—Statement 103 and Statement 104—have become effective for fiscal years beginning after June 15, 2025. Here’s what school districts need to know about the updated financial reporting requirements under these two statements.

GASB 103: Financial Reporting Model Improvements

The purpose of GASB 103 is to improve certain aspects of the financial reporting model in order to enhance its effectiveness in conveying essential information. These changes, effective for fiscal years beginning after June 15, 2025, are intended to improve clarity, quality, consistency, comparability, and accountability within the financial reporting process for governmental entities.

Below are the components of the financial reporting model that have been modified under GASB 103:

Management’s Discussion and Analysis

- Information in MD&A must be limited to the topics discussed in these five sections: Overview of Financial Statements, Financial Summary, Detailed Analyses, Significant Capital Asset and Long-Term Financing Activity, and Currently Known Facts, Decisions, or Conditions.
- Analyses should explain why balances and results of operations changed, rather than merely stating the amounts or percentages by which they changed.
- Explanations provided in the MD&A section should not be duplicated across multiple sections, and “boilerplate” discussions should be avoided. Discussions should focus on the most relevant information specific to the primary government.

Unusual or Infrequent Items

- “Unusual or Infrequent items” are transactions or other events that either occur infrequently or are unusual in nature.
- School districts must display the inflows and outflows related to each “unusual or infrequent item” separately.

Presentation of the Proprietary Fund Statement of Revenues, Expenses, and Changes in Fund Net Position

- Note: Though not typical, proprietary fund statements are occasionally required for school districts operating business-type activities.
- GASB 103 requires that governments continue to distinguish between operating and nonoperating revenues and expenses in the proprietary fund statement of revenues, expenses, and changes in fund net position.
- “Nonoperating revenues and expenses” include:
  - subsidies received and provided,
  - contributions to permanent and term endowments,
  - revenues and expenses related to financing,
  - resources from the disposal of capital assets and inventory, and
  - investment income and expenses.
- “Operating revenues and expenses” include all revenues and expenses that are not nonoperating revenues and expenses.
- A subtotal for operating income (loss) and noncapital subsidies must be presented before reporting other nonoperating revenues and expenses.
- “Subsidies” are defined as:
  - resources received from another party or fund (a) for which the proprietary fund does not provide goods and services to the other party or fund and (b) that directly or indirectly keep the proprietary fund’s current or future fees and charges lower than they would be otherwise,
  - resources provided to another party or fund (a) for which the other party or fund does not provide goods and services to the proprietary fund and (b) that are recoverable through the proprietary fund’s current or future pricing policies, and
  - all other transfers.

Major Component Unit Information

- School districts must present each major component unit separately in the statement of net position and statement of activities (as long as it does not reduce the readability of these statements).

Budgetary Comparison Information

- School districts must present budgetary comparison information as required supplementary information (RSI).
- Districts must present (1) differences between the original and final budget amounts and (2) differences between the final budget and actual amounts.
- Significant variances must be explained in notes to RSI.

GASB 104: Disclosure of Certain Capital Assets

The objective of GASB 104, which is also effective for fiscal years beginning after June 15, 2025, is to provide users of government financial statements with important information regarding certain types of capital assets. Certain assets must now be disclosed separately, by major asset class, in the capital assets note disclosures.

Below are the capital assets that must now be separately disclosed:

Lease assets recognized under Statement No. 87, Leases,
Intangible right-to-use assets recognized under Statement No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements,
Subscription assets recognized under Statement No. 96, Subscription-Based Information Technology Arrangements, and
Intangible assets other than the three types listed above.

GASB 104 also requires additional disclosures for capital assets held for sale. An asset meets the definition of a “capital asset held for sale” if (1) the government has decided to pursue the sale of the capital asset and (2) it is probable that the sale will be finalized within one year of the financial statement date. Capital assets held for sale should be evaluated each reporting period. Governments should disclose the following: (1) the ending balance of capital assets held for sale, with separate disclosure for historical cost and accumulated depreciation by major class of asset, and (2) the carrying amount of debt for which the capital assets held for sale are pledged as collateral for each major class of asset.

Additional Guidance

RBT CPAs’ education accounting team is here to support your district as you prepare for the new reporting requirements under GASB 103 and 104. Please don’t hesitate to reach out for additional guidance and support.

Now that External Audits Are Over, Time to Focus on Internal Audits

With the October 15^th deadline for external audits behind us, it’s time for school districts to start thinking about internal audits. This article provides a broad overview of internal audits and their role within school districts.

As of 2006, all school districts and BOCES in New York State are required to establish and maintain an internal audit function and to conduct internal audits at least annually. The only districts exempt from this requirement are districts that employ fewer than eight teachers, those with general fund expenditures totaling less than $5 million in the previous school year, and districts with enrollment of less than 1,500 students in the previous school year. Exempt districts must certify their exemption annually. A school district may hire an independent contractor or utilize a district employee to conduct an internal audit. In either case, the internal auditor must be independent of district business operations and also meet certain professional auditing standards.

The purpose of an internal audit is to review the district’s financial operations, identify risks, and assess the district’s system of internal controls. In conjunction with external audits, internal audits help to safeguard your district’s assets, prevent waste and abuse, and maintain your district’s compliance with applicable policies and laws. It is the responsibility of the board to take corrective actions based on the findings of the internal audit. The audit committee is required to assist in the oversight of the internal audit function, review the findings of the internal auditor, and monitor the implementation of the internal auditor’s recommendations by management.

The internal auditor is responsible for the following:

Developing a risk assessment of district operations that reviews the district’s financial policies, procedures, and internal controls (i.e., segregation of duties, authorization processes, recordkeeping, reconciliations).
Annually reviewing and updating this risk assessment.
Periodically testing one or more areas of the district’s operations.
Preparing reports (at least annually) stating risk assessment findings and recommended changes, with timeframes for implementation.

The New York State Office of the State Comptroller highlights some of the questions that internal audits aim to answer. These include:

Efficiency of operations: Are the district’s resources being used in the most efficient manner possible?
Effectiveness of operations: Is a particular program or operation successfully achieving its intended results?
Compliance: Is a particular area of operations being conducted in compliance with the relevant laws, regulations, agreements, policies, and procedures?

Financial operations that may be evaluated include, but are not limited to:

Payroll and personnel
Cash receipts and revenue
Accounts payable
Cash disbursements
Travel and conference expenses
Extra-classroom activity funds

Internal audits can extend beyond risk assessments of financial operations. Some other operational areas that internal auditors can assess include, but are not limited to:

School security
Bus routes
Insurance coverage
Performance evaluations
Energy conservation programs
Portable inventory items
Fuel facilities

Conclusion

Internal audits represent a critical function that, in conjunction with annual external audits, help school districts monitor and maintain their financial health. For additional guidance regarding the internal audit process, please do not hesitate to reach out to our experts at RBT CPAs. RBT is here to support your district’s accounting, tax, audit, and advisory needs. Give us a call today to learn more.

The Importance of Timely Bank Reconciliations

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.

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.
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.
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.
Bank statements and checks should be stored in a secure location to protect account numbers.
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.

New York Allocates $13.5 Million for Distraction-Free Schools

It’s that time of year again—school has started back up in New York. And with the new school year comes new state mandates, including a major policy change—no more smartphones in schools.

Beginning with the 2025-2026 school year, all New York public schools are required to implement distraction-free school policies. These policies must prohibit the use of non-school-issued internet-enabled devices during the entire school day (“bell to bell”) on school grounds. Such devices include, but are not limited to, cellphones, smartwatches, and tablets. The law applies to all public school districts, BOCES, and charter schools serving students in grades 7-12.

The policy includes certain exemptions to cellphone restrictions, such as when a cellphone is needed to manage a students’ healthcare needs (i.e., monitoring insulin levels), for an educational purpose authorized by a teacher or principal, for translation services, for use by a student in family caregiving, in the event of an emergency, and when included in a student’s IEP or Section 504 plan.

New York is the largest state to enact a statewide bell-to-bell smartphone restriction policy.

Policy Requirements

The law mandates that schools develop and implement distraction-free policies, beginning with the 2025-26 school year. Districts were required to adopt a policy by August 1, 2025. Local stakeholders, including teachers, parents, and students, must be consulted in the development of the policy. Policies must include a plan for storing devices and a method by which parents can contact their children during the school day. Schools can choose which storage solutions work best for their needs. The policy must be posted and accessible on the school’s website.

What funding is available for implementation?

Funding for policy implementation totals $13.5 million. Schools will be granted $10.90 per secondary student, based on 2023-2024 school year enrollment. These funds must be used exclusively to support distraction-free learning policies.

According to NYSED, allowable uses of funds include:

Device storage, such as lockers, lockable pouches, and centralized secure storage.
Policy development, including policy drafting and stakeholder consultation.
Professional development to train staff on policy implementation and enforcement.
Family and student outreach, including communicating and translating the policy.
Student education to teach responsible device use.
Other implementation costs (must be documented).

Why was the law passed?

The goal of a bell-to-bell distraction-free learning environment, according to the NYSUT Bell-to-Bell Local President Toolkit, is “to create a space where students can think critically, stay present, and build strong academic and social-emotional skills free from the pull of notifications or social media.”

Reasons for the law’s enactment include the following:

To remove the influence of digital distractions during the school day.
To encourage students to engage meaningfully with learning and with their peers.
To protect youth mental health and support student wellbeing.
To enhance educational outcomes.

What are the benefits of distraction-free learning?

According to NYSUT’s Bell-to-Bell Toolkit, the benefits of distraction-free learning include:

Academic benefits: improved student focus, engagement, test scores, and academic performance, and more efficient use of instructional time.
Social-emotional benefits: improved socialization in lunchrooms and hallways, stronger communication skills, decreased social anxiety, and reduced cyberbullying.
Instructional benefits: fewer discipline referrals and fewer bathroom requests to check phones.
Mental health benefits: decreased stress and anxiety, less social media-related drama, reduced bullying, and fewer visits to school counselors for mental health.
Benefits for educators: improved staff morale and job satisfaction, more instructional time, and more meaningful interactions with students.

Many school districts that implemented distraction-free policies prior to the statewide mandate have already noticed positive impacts, including increased focus and classroom engagement, improved student interactions, decreased burden on teachers, a reduction in fights and suspensions, and improved test scores.

How We Can Help

While you focus on keeping your district distraction-free and navigating the state’s new mandates, remember that RBT CPAs is here to support all of your district’s accounting, tax, audit, and advisory needs. Call us today to find out how we can be Remarkably Better Together.

Key Provisions of the One Big Beautiful Bill Impacting Local Governments

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.

New York State 2025-26 Enacted Budget: Impact on Education

In early May, after a delay of several weeks, the Senate passed the Fiscal Year 2025-2026 State Budget. New York lawmakers have emphasized the need to safeguard economic security in the state, particularly in light of recent cuts to federal funding. This year’s budget is centered on the priority of affordability for New York’s working families, focusing on financial relief, investment in education, housing initiatives, healthcare, mental health, and support for workers, among other initiatives. The $254.3 billion enacted budget—the largest in New York’s history—allocates significant funding towards various education and child-focused programs, with the aim of supporting New York’s children from early childhood through college. Below are some of the State’s key investments in education and youth for the year 2025-2026, according to the New York State Senate website.

Early Childhood

Additional $400 million for Child Care Block Grant funding to provide affordable child care to families in the state (totaling $2.2 billion).
Establishment of a Child Care Substitute Pool.
$100 million in capital funding for expansion of existing child care centers and establishment of new centers.
$10 million in federal funds for home-based child care facility renovations.
$21.6 million for youth development programs.
$12.5 million for “Get Offline, Get Outside 2.0” to support youth programming, including sports teams, theater programs, community garden programs, music programs, and more.
$76.5 million for NY PLAYS for the construction and renovation of playgrounds.
$100 million for NY BRICKS for the construction and renovation of community centers.

K-12 Education

$37.6 billion for school aid (an increase of $1.7 billion).
$26.4 billion for Foundation Aid (a $1.4 billion increase).
$59.3 million to expand non-BOCES career and technical education (CTE) programs to 9th grade.
Increased salary cap for BOCES instructors, phasing from $30,000 to $60,000 by 2028-29.
$340 million for free universal school meals, providing free breakfast and lunch to all students in New York State public schools regardless of income.
$13.5 million for school storage solutions to support “distraction-free learning” cell phone policies.

Higher Education

$2.3 billion in capital funding for SUNY (an additional $160 million).
$580.4 million in capital funding for CUNY (an additional $83 million).
$14 million in operational funding for SUNY community colleges (an increase of $6 million).
$9.3 million in operational funding for CUNY community colleges (an increase of $4 million).
Establishment of the New York Opportunity Promise scholarship, a program designed for adults ages 25-55 pursuing associate degrees in high-demand fields such as teaching, nursing, engineering, and technology.
Restored funding for the Higher Education Opportunity Program (HEOP), providing access to higher education for educationally and economically disadvantaged students.

The 2025-2026 state budget expands opportunities for education and youth development across all age groups in New York. While your school district navigates state-funded programs and initiatives, know that RBT CPAs is here to support all of your accounting, audit, tax, and advisory needs. Contact us today to find out how we can be Remarkably Better Together.

OSC Report Raises Concerns Over Financial Transparency in New York State Villages

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.

Implementing GASB 101’s Guidance on Compensated Absences: What School Districts Need to Know

As government entities, school districts are required to implement GASB 101’s updated guidelines for the treatment of compensated absences for employees of state and local governments.

What is GASB 101?

The Governmental Accounting Standards Board (GASB) Statement No. 101 (GASB 101) updates the guidelines for state and local governments regarding paid employee leave, or “compensated absences.” Replacing GASB Statement No. 16, GASB 101 modifies the procedures for the recognition and measurement of compensated absences. 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.

A compensated absence is 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 include paid time off, sick leave, holidays, parental leave, military leave, jury duty, bereavement, sabbatical, and 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.

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
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 is Liability Measured?

For unused leave: To measure liability for unused leave, 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, 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 absence 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 liability for compensated absences. School districts 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, school districts are no longer required to disclose which funds have been used to liquidate the liability for compensated absences.

What Actions Do School Districts Need to Take?

School districts should review their current compensated absences policy and make adjustments in line with GASB Statement No. 101.
School districts should also review employee contracts and assess whether a change needs to be made to the compensated absence calculation.
School districts will need to assess leave usage by asking key questions (the answers to these questions will depend largely on employee contracts):
1. What is the likelihood that the leave will be used?
2. What is the likelihood that the leave will be paid out upon termination, death, or retirement?
3. 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. Our experts are happy to answer your questions and help you navigate the latest GASB requirements.

GASB 101 Update: Implementing the Latest GASB Guidance

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.

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
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.

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.