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Beyond the Annual Financial Report: Communicating Your Agency's Financial Data


May 12, 2015 by Toni Nelson
Category: Financial Reporting

Beyond the Annual Financial Report: Communicating Your Agency

Most of us are wrapping up and filing our annual financial reports with the State Auditor’s Office.  RCW 43.09.230 requires that the report be filed on or before 150 days after the fiscal year end, which is May 30 this year. As part of your report process, don’t forget the internal review. The statement of auditing standard (SAS) 115 requires sufficient internal controls to minimize the likelihood of making a material misstatement in the finance statements. We have a checklist for the internal review available on the website to assist you with this process. Additionally, SAS 115 evaluates the oversight of financial reporting and internal control by those charged with governance. It is important to provide your board members, councilmembers, and commissioners with an overview of the annual financial report to meet this audit standard.

Now that the annual report is complete, it’s time to consider the other types of financial reports that we should be providing to management and elected officials. 

How often do we need to report our financial information to…

…our legislative body?

Cities are required to report quarterly financial information to their legislative body and chief administrative officer according to RCW 35.33.141 (second, third, town, and first class cities with populations less than 300,000) and RCW 35A.33.140 (noncharter code cities). Cities that budget on a biennial basis have the same quarterly reporting requirement under RCW 35A.34.240 and 35.34.240.

Noncharter counties are required to make monthly financial reports to the county commissioners on or before the 25th day of each month (RCW 36.40.210).

…department heads?

There is no requirement in the statutes to provide department heads or managers with specific financial reports or comparative analysis. However, frequent financial reports to those responsible for the oversight of programs, activities, and services will assist in meeting best practices for efficiency in government operations and performance evaluation through analysis of financial results. 

What do we need to be reporting?

All cities have the same requirement (RCW reference shown above), which states in part:

...a report showing the expenditures and liabilities against each separate budget appropriation incurred during the preceding reporting period and like information for the whole of the current fiscal year to the first day of the current reporting period together with the unexpended balance of each appropriation. The report shall also show the receipts from all sources.

In other words, a budget comparison report that reflects actual revenue and expenditure activity for the reporting period, plus year-to-date totals compared to budget projections and appropriations with the remaining budget expectation for each appropriation.

Counties have the same requirements as the cities except that the reporting is on a monthly basis.  The statute reads in part:

...a report showing the expenditures and liabilities against each separate budget appropriation incurred during the preceding calendar month and like information for the whole of the current fiscal year to the first day of said month, together with the unexpended and unencumbered balance of each appropriation. He or she shall also set forth the receipts from taxes and from sources other than taxation for the same periods.

What should the reports look like?

While the basic structure of the report is outlined in the RCW’s shown above, it is worth stating that a condensed, user-friendly report is more appropriate for the majority of readers. All local governments are unique, so think carefully about what financial information will most effectively help your leaders in making critical decisions. The Government Finance Officers Association (GFOA) encourages governments to supplement their reporting requirements with simpler, "popular reports” designed to assist those who need or desire a less detailed overview of a government's financial activities.

Where can I learn more about local government financial reporting?

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

"Toni, I have been enjoying the articles you have provided since joining MRSC. Always relevant and I usually find something I can use in them. Thanks."

Vickie Storey on May 29, 2015 4:49 PM

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