For Ohio governmental entities focused on their 2018 calendar year audit, here’s a list of updated reporting requirements as well as process changes to be aware of.
Auditor of State (AOS) filing deadlines for unaudited December 31, 2018 financial statements through Hinkle System:
- Friday, March 1, 2019: Cash basis financial statements, including OCBOA 34 look-alike statements
- Thursday May 30, 2019: GAAP basis financial statements
Additional compliance testing requirements for 2018 audits:
- National Instant Criminal Background Check System (NICS): In accordance with executive order 2018-03K, signed by Governor Kasich, the 2018 audit procedures for compliance will include testing the timeliness and accuracy of the data submitted by subdivisions to the National Instant Criminal Background Check System (NICS). The executive order included a provision requiring the testing of procedures used and the accuracy of the required information provided to NICS. Virtually any subdivision with a law enforcement department or court function has reporting responsibilities to NICS which will be reviewed during the upcoming audit. Please contact CSH if you would like a copy of the executive order and/or the list of entities with reporting requirements.Deficiencies and noncompliance noted in NICS reporting will not only be communicated through the management letter at the end of the audit, but also will be included in an aggregated special annual report to be posted on the Auditor of State’s website.
- House Bill (HB) 312: HB 312 requirements regulate the use and reporting of credit and debit cards, with certain exceptions. Both the custody and control model and the compliance officer model are permitted by HB 312. The custody and control model requires the physical custody of all credit cards to reside with the fiscal office where they are then checked out by the appropriate individual(s) for each individual use of the credit card(s). The compliance officer model requires the appointment of a “compliance officer” who is not the fiscal officer/treasurer and whose responsibilities include quarterly reviews of the number of credit cards the subdivision has open, the number of active cards for the subdivision, and the credit limits for each of those cards.
Regardless of the type of internal control model adopted by a subdivision, HB 312 requires the legislative authority to adopt a written policy for the use of credit cards to include the following: 1) authorized users or authorized positions, 2) credit limits for cards issued, 3) allowable expenditures, 4) procedures for acquisition, use, and management of cards, 5) procedure for submitting itemized receipts from use of creditcards, 6) procedure(s) for reporting lost or stolen credit cards, and 7) the appointment of a compliance officer, when appropriate.Credit card requirements of HB 312 do not apply to counties, colleges or universities. The debit card requirements of HB 312 do not apply to law enforcement agencies.For additional details on HB 312 requirements, please see Auditor of State Bulletin 2018-003 at http://www.ohioauditor.gov/publications/bulletins/2018/default.html or contact CSH for additional details.
- Tax Credits / Reductions: At the direction of the Auditor of State’s office, 2018 audits will include additional control and substantive auditing procedures over the appropriateness of the tax credits/reductions related to the property tax transaction cycles at counties. These procedures have been put in place to ascertain that the credits/reductions in property taxes are appropriate, properly authorized and complete. The types of credits/reductions subject to these procedures include: 1) non-business credit (10% rollback), 2) homestead reduction, and 3) owner occupied credit (2.5% rollback).
GASB Standards with CY2018 implementation date:
- GASB 75: GASB Statement No. 75, Accounting and Financial Reporting for Post-Employment Benefits Other Than Pensions, requires recognition of the entire OPEB (Other Post-Employment Benefits) liability and a more comprehensive measure of OPEB expense (similar to GASB 68 for pensions). Enhanced note disclosures and required supplementary information (RSI) schedules are also required related to OPEB liability(ies) reported and employer contributions made. For more information on GASB Statement No. 75 requirements please see this article.
- GASB 85: GASB Statement No. 85, Omnibus 2017, address several topics including: 1) blending requirements for component unit(s) where the reporting government is a single business-type activity, 2) reporting requirements for goodwill, 3) measurement of certain money market accounts at amortized cost, 4) timing and measurement of pension/OPEB liabilities and expenditures in financial statements prepared using current financial resources, 5) recognizing on-behalf of payments for pension/OPEB in employer financial statements, 6) presenting payroll-related measures in RSI for employer statements, and 7) other OPEB related issues.
- GASB 86: GASB Statement No. 86, Certain Debt Extinguishment Issues, increases the consistency in accounting and financial reporting for debt extinguishments by establishing uniformed guidance for derecognizing debt that is defeased in substance, regardless of how cash and other monetary assets placed in an irrevocable trust for the purpose of extinguishing that debt were acquired. The note disclosure will enhance the information provided regarding debt that has been defeased in substance.
- GASB 89: GASB Statement No. 89, Accounting for Interest Cost Incurred Before the End of a Construction Period, requires interest cost incurred before the end of a construction period be recognized as an expense in the period the cost has incurred, instead of being included in the historical cost of a capital asset. While this Statement is not effective until the December 31, 2020 reporting period, early implementation is encouraged.
CSH is here to provide guidance at each step of the audit process. If you have questions, or would like more information on any of the material presented in this article, please contact us.