Monday, August 18, 2014

Clean audit presented today-County finances well maintained per Government Accounting Standards

Today in public hearing the Commissioners received a presentation from the Certified Public Accounting firm of Chadwick, Steinkirchner, Davis & CO, P.C. The presentation concludes the annual audit of the financial statements of the Mesa County governmental activities, for the year ended December 31, 2013.

The annual financial audit contained no material findings and that while conducting the audit the firm did not encounter any disagreements with management. Mesa County staff believes that the "clean" audit demonstrates that Mesa County's finances are well maintained per Government Accounting Standards (GAS).

As a matter of fact, Mesa County is audited many different times during a given fiscal year by various groups. When the word “audit” is used, most people think of an annual audit. Annual financial audits are conducted under a very stringent and highly technical set of rules. Fundamentally, and this a great oversimplification, financial audits are conducted to make sure that the Finance function is being operated as the Board of County Commissioners has directed it to and that the expected controls are in place and functioning as expected and the Commissioners can rely on the financial statements that have been issued. That is to say, that as far as the auditors have been able to determine, GAS are being followed. Ultimately, the audit documents are released to the general public so that the public may also determine whether they think the right decisions are being made.

During the audit of the activity taking place in fiscal year 2013 (January 1, 2013 - December 31, 2013) the auditors had no material findings to report to the Commissioners (see the audit report). However, during the audit a question regarding the Taxpayer Bill of Rights (TABOR) calculation arose and the auditors requested that the Commissioners be notified that certain payments from governmental agencies had been excluded from the TABOR calculation for a number of years. The Commissioners, as a matter of policy, directed Finance to restate the financial statements for the current year and all previous years to include the governmental payments and this change was instituted prior to the conclusion of the audit. The change in the TABOR calculation did not result in a tax refund. The audit team also conducted an audit of Mesa County’s handling of federal funds. This Federal Awards audit is conducted under the auspices of the Government Auditing Standards as issued by the Comptroller General of the United States and this report may be found here. The Federal Awards audit found that Mesa County Finance needed to increase our monitoring of certain “pass-through” funds that were obtained from the Federal Government. Mesa County Finance agreed to comply with the auditors’ recommendations.

The financial management of Mesa County is complex. As a government entity the County Finance system is based on the Government Accounting Standards (GAS) as issued by the Government Accounting Standards Board (GASB). Therefore while there are many similarities to private and nonprofit accounting standards there are also differences. One of these differences is that public entities like the County utilize fund accounting. Fund accounting can be complicated to someone who is not well versed in GAS rules. At times, fund accounting seems downright illogical to the uninitiated.

As with most public entities Mesa County Finance is operated on a modified accrual basis for governmental funds and on an accrual basis for proprietary funds. This will be familiar to anyone conversant with Generally Accepted Accounting Principles (GAAP). However, one of the challenges faced in Mesa County is that the Treasurer’s Office (think the collection part of the County) operates on a cash basis. Therefore, part of the financial system of the County (collections) is on a cash basis while the remainder of the system (Budget, Accounts Receivable, Accounts Payable, etc.) operates on a modified accrual basis. That means that there is a tremendous amount of work on a daily basis that is required in order to reconcile the two systems. The Assessor’s Office also plays a part in the system as they work to set the appropriate taxable basis of all the appropriate entities within Mesa County.

To view Mesa County’s financial reports, please follow this link: http://www.mesacounty.us/finance/cafr.aspx

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