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Info and Checklists to Get Your Annual Financial Report Done Accurately and On Time


March 23, 2015 by Toni Nelson
Category: Financial Reporting

Info and Checklists to Get Your Annual Financial Report Done Accurately and On Time

Yearend issues are behind us and it’s time to focus on the preparation and submittal of the annual financial report to the Washington State Auditor’s Office (SAO).  RCW 43.09.230 requires all local government entities to submit a report to the SAO within 150 days from the end of the fiscal period which makes the deadline for filing May 30th. Below is some useful information to help make sure your financial reports are done right. Also, be sure to download our financial report Preparation and Internal Review Checklists, great tools to make sure you've dotted all the i's and crossed all the t's.

There are two distinct types of annual financial reports, those prepared according to generally accepted accounting principles (GAAP) and those using the SAO prescribed “Cash Basis” option.  At a recent SAO training they advised that over 80 percent of annual report filers are “cash basis”, so this post will speak primarily to 2014 “cash basis” requirements and changes.  

For those of you who have been around awhile, like I have, each year we anxiously await the January release of the SAO BARS manual updates so that we know what has changed in the financial reporting section.  This year was no exception, although with the SAO’s ability to update the online manuals at any time I wonder if we will continue with this yearly ritual.  In fact one of the SAO changes this year is a link on the BARS manual page that informs us of the latest update.

So what has been the most significant change in filing the annual report over the past five years?

I would have to say that it’s filing the report online with the SAO Online filing portal.  For cash basis reporting entities it is the SAO online filing that actually generates the financial statements for your city, county or special purpose district.  How does it do this? Entirely through the BARS (account code) system prescribed by the SAO.  Each fund number and BARS code is read and channeled to the financial statement based upon the data that you submit in the upload process with the SAO.  Because of this fact, it is critically important that your fund numbers and BARS codes are accurate and have been used as prescribed by the SAO.  If you are worried about the accuracy of these codes be sure to test your numbers by going to the SAO online filing portal and uploading your Schedule 01 to see what, if any, errors you may have.  Red flags must be corrected, while yellow flags are cautions that should be considered but not necessarily changed.   If you have red or yellow flags and are unable to determine why, be sure to ask questions!!  You can contact the SAO helpdesk or Ask MRSC

So what are the changes this year? 

  • Let’s start with the BARS manuals themselves, the separate manuals for fire, library, conservation and regional EMS and trauma care councils have been incorporated into a single “Cash Basis” BARS manual.  The “Cash Basis” manual is now for all cash basis cities, counties, and special purpose districts (exception: Port Districts still have their own manual).
  • Notes to Financial Statements – in 2014 the most significant changes are to the Notes
    • Note 1 – Summary of Significant Accounting Policies – has been rewritten to accommodate both the combination of the special purpose districts into the cash basis manual, as well as to modify the language about the method of accounting and reporting being presented “Cash”. 
      • Items A – M have been changed, modified and/or eliminated.  Careful review of each of these sections will be needed.
    • Investment Note – the title has changed to read: “Deposits and Investments” and the descriptive language for the note has been modified.
    • Other Disclosures – expanded to include:
      • Construction Commitment
      • Conditions and Plans – for those entities with substantial doubt of their ability to continue
      • Component Unit disclosure
  • Changes to Supplement Schedules
    • Schedule 15 – added to create a separate schedule for State Financial Assistance
    • Schedule 22 – modified each year, requires online filing

What are some of the emerging issues that we should be concerned about for next year?

  • GASB 68 – reporting of pension liability on the Schedule 09.  According to the SAO there is more to come on this reporting requirement for “cash basis” entities.  As we learn more (and there is a lot to be learned) we will be sure to pass this information along so that you can prepare for this new reporting requirement.

What tools can I use to assure that I have completed the annual financial report as accurately as possible?

  • SAO Online filing portal – will prepare your financial statements C4 and C5 for you, but it is critically important that the data on Schedule 01 is accurate which will require careful review of the BARS code data being submitted. 
  • MRSC's preparation checklists for local governments to use as a tool to prepare annual financial reports.
  • MRSC's interal review checklist that should be completed by someone other than the preparer.

Last but not least, ask questions!!  Contact Toni Nelson or phone: 206-625-1300 x109

About Toni Nelson

Toni has over 24 years of experience with Local Government finance and budgeting. Toni's area of expertise include "Cash Basis" accounting and reporting, budgeting, audit prep and the financial issues impacting small local government.

VIEW ALL POSTS BY Toni Nelson

Comments

"To clarify, the Schedule 15 is not new. It is simply a re-numbering of the Schedule 16 - State & Local, which has been in existence for many years. The re-numbering occurred to better distinguish it from the Schedule 16 - Federal."

Scott DeViney on Apr 7, 2015 5:06 PM

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