PLANNING FOR THE 2009 AUDIT

Over the next three months, our auditors will be performing the initial phase of our 2009 audits for our 27 City and Township clients. In most cases this will include preliminary meetings with City officials as well as performing certain audit procedures. The types of procedures that can be performed prior to year end include:

- Review of council minutes

- Observation of capital assets

- Updating internal control documentation

- Testing of year to date transactions

- Review of new bond issues

- Updating financial statements for new funds, new GASB requirements, etc...

In addition, for our smaller Cities, we will be working with City staff to assess the impact of the required implementation of GASB 45 related to Other Post Employment Benefits, as discussed in an article in this newsletter.

This important phase of the audit allows us to plan for a more effective and less time consuming audit after year end. So thank you, in advance, for your assistance.

Tom Wente,

Principal

Rochester, Minnesota

LMC PROVIDES RESOURCES FOR GASB 45 - OPEB IMPLEMENTATION

All Minnesota Cities will need to have implemented GASB 45 related to Other Post Retirement Benefits (OPEB) by December 31, 2009. The League of Minnesota Cities is providing assistance with this implemenation in the form of 1) a discussion of the issues related to recording an OPEB liability; 2) an OPEB Estimator Worksheet; and 3) a contract for discounted actuarial services (if necessary).

This information is available on the League of Minnesota's website at www.lmc.org.

GASB ISSUES NEW STANDARD ON FUND BALANCE REPORTING

The Governmental Accounting Standards Board (GASB) has issued GASB Statement No. 54 "Fund Balance Reporting for Governmental Fund Type Definitions". This standard must be implemented by 2011 for calender year governments. As usual, earlier implementation is encouraged.

Under current standards, governments report the following fund balance classifications:

- Reserved

- Unreserved, Designated

- Unreserved, Undesignated

Under the new standard, governments will be required to report the following classifications of fund balance:

- Nonspendable (items that aren't spendable like inventory, or dollars that per contract must must be set aside)

- Restricted (restricted by law, or by credit agreement, grant agreement, etc...)

- Committed (subject to constraints imposed by formal action of the council)

- Assigned (constrained by the government's intent - includes all fund balances remaining in funds other than the general fund)

- Unassigned - (general fund balance not included in one of the categories above)

STATE AUDITOR ISSUES SEVEN SOP's RELATED TO FIRE RELIEF ORGANIZATIONS

In 2009, the Office of the State Auditor has issued numerous Statements of Position (SOP) related to Fire Relief Organizations. The SOP's and related links are as follows:

- 2009-2001 Required Municipal Contributions to Volunteer Firefighters’ Pension Plans

- 2009-2002 Records Management for Volunteer Firefighter Relief Associations 

- 2009-2003 Fire Relief Assoc. Funds: Special & General Funds, & Charitable Gambling Funds 

- 2009-2004 Fire Relief Association Investment Policies 

- 2009-2005 Volunteer Fire Relief Member’s Return to Service 

- 2009-2006 Volunteer Fire Relief Association Investment Authority 

- 2009-2007 Vol Fire Relief Assoc. Allocations and Deductions: Defined Contribution Plans 

GASB ISSUES PROPOSED STATEMENT ON SERVICE CONCESSION AGREEMENTS

GASB issued a proposed new statement "Accounting and Financial Reporting for Service Concession Agreements" which attempts to clarify the recording of capital assets subject to service agreements between governments and private or other public entities. These arrangements are sometimes referred to as "public-private partnerships".

The exposure draft would require Cities to record all capital assets constructed and operated by a private company (or other public entity) if the City is determined to "control" the use of the facility and the City has a residual interest in the facility.