“Keeping your money in your pocket, where it belongs.” Chart of Accounts Update Florida Court Clerks & Comptrollers - New Clerk Academy March 13, 2014

Chart of Accounts Update  Statutory Requirements  Reporting Entities  Project Approach  Recommendation  Cost Estimate Results 2

Chart of Accounts Project Section , F.S. 3

Statutory Requirements SB1292 was introduced by Senator Alexander during the 2011 Legislative Session and eventually adopted into Law Intent of the law is: “that a mechanism be provided for obtaining detailed, uniform reporting of government financial information to enable citizens to view compatible information on the use of public funds by governmental entities” “that uniform reporting requirements be developed specifically to promote accountability and transparency in the use of public funds” 4

Statutory Requirements Law requires DFS to propose a Draft Uniform Chart of Accounts (COA) for uniform reporting by all units of government The statutory timeline:  July 1, 2013 – Publish the Draft COA  November 1, Comments on COA due from reporting entities  January 15, Submit recommended COA and estimated costs of adopting and implementing to Governor and Legislature 5

Reporting Entities Reporting entities effected by the provision in F.S. are:  State Agencies (34)  Local Governments Cities/Municipalities (411) Counties (66) Water Management Districts (5) Special Districts (1,672)  Educational Entities School Districts (72) State Universities (12) State Colleges (28)  There are a minimum of 2,305 Reporting Entities impacted. Does not include component units. 6

Project Approach 7 Creating the draft Chart of Accounts  Presented the Project’s concept, challenges, and timelines to cities, counties, universities, and colleges in over 20 presentations statewide.  Reviewed Comprehensive Annual Financial Reports (CAFR) and audit reports of reporting entities  Developed a crosswalk of current to proposed COA  DFS collected informal feedback from reporting entities from October 2011 to June  In July 2013 DFS published the draft COA and posted a formal comment form for reporting entities to submit comments. By November 1, 2013 DFS received 61 comment forms and 41 letters and other correspondence to the CFO.

Project Approach 8 Collecting implementation cost estimates  Awarded contract to KPMG to collect, validate, and summarize cost estimates  Distributed over 2,300 s/letters to reporting entities regarding survey  Developed material for webinars to educate reporting entities on the cost estimate process  Conducted 3 webinars that included live Q&A Sessions

Reporting Recommendations 9 Account Type Reporting Level Reporting Frequency Assets Entity and Fund Level recorded in the Financial Statements Annual Liabilities Entity and Fund Level recorded in the Financial Statements Annual Equities Entity and Fund Level recorded in the Financial Statements Annual Revenues Monthly - Lowest Level recorded for the organization and fund in the accounting system Annual - Entity and Fund Level recorded in the Financial Statements Monthly and Annual Expenditures Monthly - Lowest Level recorded for organization and fund in the accounting system Annual - Entity and Fund Level recorded in the Financial Statements Monthly and Annual Other Sources and Uses Monthly - Lowest Level recorded for organization and fund in the accounting system Annual - Entity and Fund Level recorded in the Financial Statements Monthly and Annual

Draft Uniform Chart of Accounts  The proposed Chart of Accounts lists each account with a definition that should ensure there is no overlapping of financial information reported in other accounts  Reporting Entities may not utilize all accounts and are required to report only on the accounts applicable to their operations  The amount reported for each account will need to be broken down to a specific level for the organization and fund  The Department anticipates modifying the current transparency application for Local Government Reporting (LOGER) to support COA reporting 10

Cost Estimate Results 11  Received 600 completed surveys, 474 from primary government units.  KPMG’s targeted response rate was 15%; an actual response rate of 21% (474 out of 2,271 primary government units) was achieved.  Cost estimate includes monthly recurring costs, additional annual recurring costs, and one-time transition costs.  Reporting entities were not asked to provide their current cost for financial reporting  The cost estimates do not consider any cost reductions associated with the potential elimination of current reporting requirements.

Cost Estimate Results 12  KPMG analyzed and validated the cost estimate data as received from reporting entities during the survey process.  Using SPSS methodology KPMG was to validate over 159 responses including 81 samples of the high cost estimates and 78 samples of the low cost estimates.  KPMG also validated responses from the special districts and the component units responses from the contacts listed for more than one entity.  KPMG collected validations for 136 entities and noted changes to responses from 81 entities based on discussions with the survey respondent.

Cost Estimate Results Local Education State of Gov’ts Entities Florida Total Recurring Annual Costs: $50,812,530 $9,156,521 $72,515 $60,041,566 One Time Transition: $36,134,206 $36,354,541 $80,560 $72,569,307 13

Cost Estimate Results 14

Concerns Raised by Reporting Entities  Costs to implement and maintain the new reporting requirements, particularly the monthly revenue and expenditure reports;  Quality of the data provided to the public on a monthly basis due to the different basis of accounting being used and limited time for verification/reconciliation;  Duplicative reporting due to current reporting requirements issued by state and federal agencies;  Difficulty in obtaining financial information from component units, constitutional officers, and direct support organizations on a monthly basis. 15 Several reporting entities recommended an alternate approach where legislation is enacted that prescribes the minimum desired transparency reporting each reporting entity shall post on their website.

Chart of Accounts Report Available on COA Project Website: Redesign2014/default.htm 16

Questions? 17