1. Jennifer Rodenbeck, CPA, CPFO City of Cedar Falls July 27, 2016 Jennifer.rodenbeck@cedarfalls.com

2. Class Today Class List with Email Handouts Definitions for testing Breaks

3. Introductions What City you are from Approximate size of City What is your position How long in your position Most difficult thing you are dealing with currently at work as it relates to finances

4. You are full of Bologna (Baloney)

5. On Cloud nine

6. Try to Understand

7. Basic Accounting Assets – Definition: Resources of the City that may or may not be currently available to conduct the activity of the City. Ex. Cash, investments, equipment (Debit Balance) Liabilities – Definition: Demands and obligations upon the City. Ex. Accounts Payable(Credit Balance) Fund Balance (Equity) – Credit Balance Revenues – Credit Balance Expenses – Debit Balance Double Entry – Definition: Every entry has two parts, a debit and a credit Journal Entry – Definition: A balanced set of entries used to reflect transactions.

8. Basic Accounting - Tools Entries – Write them out Debit = left Credit = right Debit balances – Assets & Expense Accounts Credit balances – Liabilities/Equity & Revenue Accounts T Accounts – Visual aid (like buckets)

9. Assets Liabilities Expenses Revenues Fund Balance (Net Difference)

10. Governmental Accounting Why different??? Funds Double - Double Entries for everything

11. Manual Accounting Why is it important??? Understanding what your software is doing! Why??? Doesn’t Balance Make Corrections Setting up new software

12. General Ledger Why is it important to us??? Accurate information for annual reporting, budgeting Audit Public record

13. MY CITY: LEDGERS Three Ledgers needed General Ledger Subsidiary Ledger Budget Ledger Double Entry Accounting: Every entry has two parts, a debit and a credit within each of the ledger types.

14. GENERAL LEDGER Definition: The fund summary or monthly recording of activities which combine the values of the subsidiary and budgetary ledgers to establish financial position of the City.

15. MY CITY FINANCIAL PICTURE

16. SUBSIDIARY LEDGER Definition: The record of detail used for individual accounts within a cost center and/or fund. Each line item or account number has a running total throughout the year Each line item or account number must belong to a larger grouping: revenue type or department or function

17. MY CITY FINANCIAL PICTURE

18. BUDGET LEDGER Definition: The record of budgetary expenditures compared to the allocated budget for that function, fund or project. Used to monitor or control revenues by type Used to monitor or control expenditures by functions Usually some portion of account number or code is used to generate totals for ledger (chart of accounts)

19. MY CITY FINANCIAL PICTURE

20. Budget

21. City Standard Chart of Accounts Definition: A standardized method to insure consistency between budget, accounting, and financial reporting activities.

22. Account Numbers Expense: 001-1010-6010 – General Fund – Police – Full Time Salary Revenue: 001-1010-1-4765 – General Fund – Police – Misc Revenue - Fines Cash: 001-1110 – General Fund – Cash Accounts Payable: 001-2020 – General Fund – Accounts Payable Fund Balance: 001-3860 – General Fund – Unreserved Fund Balance

23. A PRACTICAL GUIDE

24. GENERAL LEDGER Assets Liabilities Fund Balance Revenue Control Expenditure Control

25. SUBSIDIARY LEDGER - Revenue Property Taxes Hotel/Motel Taxes Revenue Control Interest Income

26. SUBSIDIARY LEDGER - Expenditures Office Supplies Professional Fees Expenditure Control Capital Outlay

27. BUDGET LEDGER Estimated Revenues Appropriations Budget Fund Balance

28. GENERAL LEDGER 001-1110 Cash 001-2020 Accts Payable 001-3860 Unreserved Fund Balance $5,000 Dr. Cash $5,000 Cr. Equity $5,000 - To record beginning balance

29. BUDGET LEDGER Estimated Revenues Appropriations Budget Fund Balance $50,000 $0

30. Received the following revenues: $40,000 Property Tax Revenue $2,000 Building Permits $1,000 Interest Income

31. Dr. Cash$43,000 Cr. P/T Rev $40,000 Cr. Bldg Permit Rev $ 2,000 Cr. Int Income $ 1,000 Total$43,000 $43,000

32. SUBSIDIARY LEDGER - Revenue 001-4000 Property Taxes 001-4122 Building Permits 001-1900 Revenue Control 001-4300 Interest Income $40,000 $2,000 $1,000 $43,000

33. GENERAL LEDGER 001-1110 Cash 001-2020 Accts Payable 001-3860 Unreserved Fund Balance $5,000 $43,000

34. BUDGET LEDGER Estimated Revenues Appropriations Budget Fund Balance $50,000 $0 $43,000

35. Paid the following expenditures: $3,000 New City Clerk Desk $10,000 Audit Fee $20,000 Police Car

36. Dr. Office Supp $3,000 Dr. Prof Fees $10,000 Dr. Cap Outlay $20,000 Cr. Cash $33,000 Total$33,000 $33,000

37. SUBSIDIARY LEDGER - Expenditures 001-6506 Office Supplies 001-6401 Professional Fees 001-2900 Expenditure Control 001-6700 Capital Outlay $3,000 $10,000 $20,000 $33,000

38. GENERAL LEDGER 001-1110 Cash 001-2020 Accts Payable 001-3860 Unreserved Fund Balance $5,000 $43,000 $33,000 $15,000

39. BUDGET LEDGER Estimated Revenues Appropriations Budget Fund Balance $50,000 $0 $43,000 $33,000 $7,000 $17,000 $10,000

40. Annual Financial Report

42. City of Boondocks Cash on Hand at Beginning of Year = $10,000 Only One Fund – General Fund Received the following revenues: Property taxes - $75,000 Mobile home taxes = $1,000 Interest Income = $2,000 Electrical Permits = $5,000 Swimming Pool receipts = $20,000 Library donation = $30,000 Paid the following expenses: Staff training = $2,000 Building repair = $10,000 Auditor = $25,000 Engineer Study = $50,000 Clerk’s desk = $5,000 Total budgeted revenues = $200,000 Total budgeted expenses = $180,000

43. Entries & Annual Financial Report Preparation

45. Payroll Gross Payroll - –payroll + city share of benefits = TOTAL COST OF PAYROLL EE ER Gross Wages $500 FICA/Medicare (7.65%) 38 IPERS (5.95%/8.93%) 30 45 Fed/State W/H 10 Net Wages $422 Total Benefits Paid by City 83 Total Cost to City $583

46. Dr. Salaries$500 Dr. FICA$ 38 Dr. IPERS$ 45 Cr. Cash $422 Cr. Cash $ 83 Cr. W/H Liab $ 78 Total$583 $583

47. GENERAL LEDGER 001-1110 Cash 001-2120 Accrued Payroll Taxes 001-3860 Unreserved Fund Balance $422 $583 $78 $83 $505

48. SUBSIDIARY LEDGER - Expenditures 001-6020-6010 Salaries 001-6020-6110 FICA Expenditure Control 001-6020-6130 IPERS $500 $38 $45 $583

49. GENERAL LEDGER 001-1110 Cash 001-2120 Accrued Payroll Taxes 001-3860 Unreserved Fund Balance $422 $583 $78 $83 $505 $78 $583 Assets + Liab = Equity

50. Voided Checks 001-1110 Cash on Hand001-4310 Rents Journal Entry: DRCR 001-4310 25.00Returned: Bad check for rental 001-1110 25.00

51. Sale of Bonds 300-1110 Cash on Hand300-4820 Proceeds from Bonds and Premiums Journal Entry: DRCR 300-1110 250,000Bond Fund 300-4820 250,000

52. Investment 001-1110 Cash on Hand001-1140 Investments Journal Entry: DRCR 001-1140 2,500.00Purchased a CD for General Fund 001-1110 2,500.00 $2,500.00

53. Investment 001-1110 Cash on Hand001-1140 Investments Journal Entry: DRCR 001-1140 $2,500.00CD Redeemed for General Fund 001-1110 $2,600.00 001-4300 $100.00interest income $2,500.00 $0 ________

54. Co-Mingled Investments 001-1110 Cash on Hand001-1140 Investments Journal Entry: DRCR 001-1140 2,500.00Purchase a CD for General, Refuse & Sewer 051-1140 2,500.00 052-1140 5,000.00 001-11102,500.00 051-11102,500.00 052-11102,500.00 999-1110 10,000.00 999-1140 10,000.00

55. Petty Cash 001-1110 Cash on Hand001-1120 Petty Cash Journal Entry: DRCR 001-1120 200.00Set up a petty cash fund 001-1110 200.00 $200.00

56. Transfers Journal Entry: DRCR 001-6910 20,000.00Transfers Out 001-1110 20,000.00Cash 206-1110 20,000.00Cash 206-483020,000.00Transfers In Are they authorized or budgeted?

57. Refunds Do you have a revenue line item for refunds? Do you allow refunds against expense line items? How do you handle credits from a vendor?

58. Who cares? How can the City monitor and control it?

59. Control/monitor? Budget Control Definition: A limit of expenditures imposed when the Council adopts the budget. Expectation of revenues based upon information availability during the budget process. Budget Amendment Definition: Alternation of adopted budget approved by the Council after conducting a public hearing (384.18) Unappropriated Surplus Definition: Available cash and investments in excess of all revenues, expenditures and reserve liabilities.

61. Type of Reports Budget to Actual Reports Bank Reconciliation Annual Financial Report Audit Report Annual Budget Forms List of Long-Term Liabilities (Bonds, separate by type of bond) Street Report Grant Reports TIF Report

62. Type of Double Checks Bank Reconciliation A/R Billing to Subsidiary Ledger 941 to Salary Accounts Analytical Review

63. Audit Report Cash Basis vs. GAAP GAAP – Definition: Generally Accepted Accounting Principles

64. New Annual & Periodic Exams Findings

66. Fund Balance/Reserves Reserves – Definition: Accounts used to earmark funds designated for a special purpose by the Council. GASB – Definition: Governmental Accounting Standards Board GASB 54 – New Classifications of Fund Balance (Governmental Funds only): Nonspendable – By nature can’t be spent (Reserved for inventories) Restricted – Limitation established by external creditor or law, or legislation Committed – Self imposed - highest level of authority (Council) Assigned – Self imposed – intended use by decision making body or official designated Unassigned

67. GASB 54 Exercise Street Fund (Road Use Tax) - Local Option Sales Tax Fund – Tourism Fund (H/M Tax) – TIF Fund – Block Grant Fund – Bond Fund – Cemetery Perpetual Care Fund – Pool Capital Fund - Sewer Fund -

68. GASB 54 Exercise Street Fund (Road Use Tax) – Restricted – Iowa Code Local Option Sales Tax Fund – Restricted - Voters Tourism Fund (H/M Tax) – Restricted - Voters TIF Fund – Restricted – Iowa Code Block Grant Fund – Restricted – Grantor Parking Fund – Committed – Council by Ordinance Bond Fund – Restricted – Bond Restriction Cemetery Perpetual Care Fund – Restricted – Iowa Code Pool Capital Fund – Assigned – Internally decide to keep the capital fund Sewer Fund – N/A – only governmental funds

69. GASB 54 – Fund Types GASB 54 also gives more clarification on fund types: Special Revenue – used to account for and report specific revenue sources that are restricted or committed for a specific purpose Capital Projects – used to account for and report financial resources restricted, committed, or assigned for capital outlays.

70. Other Accounts Library Funds Fire Funds “Friends” groups Donations – separate foundation

71. Other Topics GASB 63/65 – Use of the term Deferred and Equation GASB 68 – Reporting IPERS and 411 liabilities Capital Assets Imaging Systems Computer Software Internal Controls New Audit Requirements Other????

72. Resources Code of Iowa – Chapter 384 Auditors State Auditor’s Office Government Finance Officers Assoc. GFOA League of Iowa Cities Mentors Department of Management Software support