New Reporting Deadline for FY2020



Auditor of Public AccountsComparative Report transmittal UpdateFiscal year 2023Transmittal FormsThe Locality FY 2023 updated transmittal workbooks are available on the APA website located at: transmittal files are locality and fiscal year specific. It is imperative that you use the correct file to prepare each locality’s data. The files contain prior year and locality specific information to assist you in performing a review to ensure accuracy of the forms. Preparers should follow the requirements and guidance documented in the Uniform Financial Reporting Manual. Please submit the transmittal file and the Auditor’s Report on Agreed-Upon Procedures by e-mail to localgovernment@apa.. For CPA firms submitting the transmittals on behalf of the localities, please send a separate e-mail for each locality. Please do not attach more than one locality files on a single e-mail submission. Transmittal ReportingThe Uniform Financial Reporting Manual (UFRM) sets the requirements for the Comparative Report data submitted to the APA. The UFRM includes detailed chart of accounts designed to meet the Comparative Report transmittal reporting requirements. The manual also includes explicit instructions for completing the individual transmittal forms. The UFRM has been updated for FY2023 to incorporate necessary updates, clarifications, and reminders; refer to the tracked changes included throughout the document. A copy of the UFRM is located on the APA website: Financial Reporting Manual.docxARPA Funding and COVID-19 Expenditure Transmittal ReportingExpenditure Transmittal Reporting: Localities should report any COVID-19 related expenditures on Transmittal Form 100 in the same manner as reporting any other applicable expenditures incurred by function and activities, as outlined in the UFRM. For example, Public Safety is likely an area that incurred a high amount of COVID-19 expenditures—the locality should classify COVID-19 expenditures as appropriate when classifying all other expenditures related to Law enforcement-Sheriff Line 3.11, Other Law Enforcement Line 3.12, Fire and Rescue Services Line 3.20, etc. Do not classify COVID-19 expenditures as “Non-Departmental” since these expenditures do not meet the UFRM definition for classifying expenditures on Line 8.00.Revenue Transmittal Reporting:Updated guidance for American Rescue Plan Act (ARPA), Coronavirus State and Local Fiscal Recovery Funds (CSLFRF):Since the ARPA SLFRF grant funding disbursed to local governments was significantly higher than CARES Act funding, there is broader allowability for using ARPA funds on various eligible expenditures and projects, and there is a longer time frame for spending these funds, the APA has determined a more accurate revenue classification in the Transmittal is to classify SLFRF monies as sources of revenue on Form 100 according to how these funds were spent, as applicable. The locality should classify in this manner if the locality can easily allocate the source of revenues to applicable expenditures (i.e.: based on internal tracking and reporting) and it does not cause additional reporting burden. Sources of Revenue for SLFRF grant funding should be reported as follows:Reporting ARPA SLFRF grant funding received directly from the federal government—Classify applicable SLFRF revenues on Form 100 Column LD, Federal Categorical Direct Aid, according to how these funds were spent during the fiscal year by major expenditure function. For example, if the locality used SLFRF monies for projects in the area of Public Works, such as stormwater management, the locality should classify as Sources of Revenue at Column LD on the Form 100, at the applicable line item under Line 4.00 Public Works.Form 700 alternative reporting: Localities may report their SLFRF grant funding on Form 700, Revenue from the Federal Government: Non-Categorical Federal Aid: Other (Line 1.32.3), if allocation of the revenue on the Form 100 proves too difficult and burdensome. In addition, if the locality has elected to expend SLFRF monies under Treasury’s 2022 Final Rule revenue replacement/revenue loss allowable use category, the locality may report the applicable SLFRF revenue on Line 1.32.3 of Form 700. Reporting ARPA SLFRF grant funding received as pass through from the Commonwealth—Classify applicable SLFRF revenues on Form 100 Column LP, Federal Categorical Aid Pass-Through, according to how these funds were spent during the fiscal year by major expenditure function. For example, if the locality received SLFRF grant funding from the Virginia Department of Education required to be used for applicable educational purposes, the locality should classify as Sources of Revenue at Column LP on the Form 100, at the applicable line items under Line 9.00 Education.GASB 87 LeasesDue to the implementation of GASB 87 effective during fiscal year 2022 reporting, the distinction between operating and capital leases no longer exists. Contracts meeting the GASB 87 definition of a lease will now be reflected as right to use intangible assets and lease liabilities on the statement of financial position. The following guidance has been updated in the Uniform Financial Reporting Manual specific to changes from GASB 87.Forms 300 and 700Note that the financial reporting of leases under GASB 87 does not change the Transmittal reporting of new lease proceeds and related lease expenditures (as reported in the fund statements or for any enterprise activity required to be re-classified as “General Government”). The same guidance applies as in prior years’ reporting.Form 300: Any lease proceeds specific to land or buildings continue to be reported on Form 300. Any lease related expenditures specific to land or buildings are classified as applicable capital project expenditures on Line 10.00 of Form 300.Form 700: Any lease proceeds specific to equipment, furniture, or vehicles continue to be reported on Form 700. Any lease related expenditures specific to equipment, furniture, or vehicles are classified on Form 100 as capital outlay according to the applicable functional expenditure.Form 400The transmittal reporting prior to FY2022 required debt service reporting of the principal debt and interest payments for capital leases on Form 400; this has now changed due to the implementation of GASB 87, since the distinction between operating and capital leases no longer exists. In accordance with GASB 87, paragraph 19, “lease-related” contracts that transfer ownership of the underlying asset without termination options should be reported as a financed purchase; these types of contracts are now typically referred to as “financed purchases” (or installment purchase contracts/notes). As noted in the GASB Implementation guidance (see Questions 12.20.1, 12.20.2, and 12.20.4): “provisions applicable to a financed purchase by a governmental buyer, including disclosures, are those related to capital assets and long-term debt or payables, depending on the terms of the financing.” That is, if the contract meets the definition of criteria in GASB 87, para. 19, the accounting and reporting is no different than if the local government purchased the capital asset and financed it with a bank loan, an installment agreement with the seller, or the issuance of bonds or notes. For Transmittal purposes, the debt service activity specific to “lease” related financed purchases should be reported on lines 5.12 and 5.22 of Form 400.Form 500The outstanding long-term liabilities related to leases under GASB 87 are reported on Line 3.10. The outstanding liabilities associated with “lease” related contracts that are classified as financed purchases should be classified as long-term contracts and notes on Line 3.20. Refer to the important note below about the EDITS worksheet tab of the Transmittal. Note for the Edits Worksheet Tab:At the Edits worksheet tab in the Transmittal, Edit Check #29 related to outstanding GASB 87 lease liabilities reported at Line 3.10 on Form 500, may result in an “error” alert message for financing leases debt retirement to be entered on Form 400—this is because of how the forms were originally set up for “capital lease” activity reported as debt service activity under old reporting guidance. If the locality does not have applicable debt service activity related to a “lease” financed purchase for reporting on the Form 400, the preparer does not need to make an adjustment to clear any error that may populate at Edit check #29. The preparer may add an explanation that this is not an error/Form 400 adjustment is not necessary, and the APA will note accordingly during the desk review process. Due to changes with reporting lease activity under GASB 87, the APA will remove this Edit check #29 starting with the FY2024 Transmittal forms, as this Edit check is no longer necessary for the transmittal review process.GASB 96 SBITAsNote that changes resulting from the implementation of GASB 96 for subscription-based IT arrangements (SBITAs) do not impact the standard UFRM reporting classifications of a locality’s revenue and expenditure activity for the FY 2023 Transmittal process. Any applicable governmental fund expenditures that a locality would now record from implementing GASB 96 would flow through the typical Transmittal Form 100 reporting process like any other capital outlay related expenditures. GASB’s definition of SBITA assets as a right to use asset related to IT software and support services does not meet the APA’s specific UFRM definition of a “capital project” for the Transmittal Form 300 reporting. Accordingly, new SBITA activity should not be reported as a capital project on Form 300. The typical activity that a locality should classify on Form 300 remains the same, as described in the UFRM Section 4.8 (relevant UFRM definition copied below for reference).A capital project is defined as an expenditure of funds for the acquisition of land and buildings or the construction of major facilities having a relatively long life. Examples of capital projects include buildings and new streets, roads and bridges. Major improvements that increase the useful life of structures are also treated as capital projects, except for improvements to existing streets, roads and bridges. For Form 500 reporting, localities should report outstanding liabilities associated with subscription-based IT arrangements (SBITAs) as long-term contracts and notes on Line 3.20. Various Other ReportingOpioid Settlement FundsLocalities should also refer to the APA Guidance for Locality Financial Reporting of Opioid Settlement Payments document for additional information.Revenue Reporting – Direct DistributionsFor the city and county Direct Distributions received from the external settlement administrator, the locality should account for this inflow of settlement payments as local revenue in the same manner as receiving any other legal settlement. For Transmittal reporting, Direct Distributions should be classified as miscellaneous revenue, Form 200, Line 7.30, Miscellaneous. The Direct Distributions of opioid settlement payments are not pass-through funds and are not considered Revenue from the Commonwealth.ACFR Reporting: Locality Direct Distributions should be classified as Other Revenue in the Fund statements; Direct Distributions are most appropriately classified as Program Revenues-Charges for Services in the Government-wide statements since the revenue has program restrictions and derived from an entity outside the reporting local government resulting from an exchange transaction.Revenue Reporting – OAA DistributionsDistributions directly received by the Commonwealth Opioid Abatement Authority (OAA) is considered state pass-through funding designated for a specific use since localities are required to follow specific guidelines and requirements set forth by the OAA for spending these funds. For Transmittal reporting, OAA Distributions should be reported on the Form 100 as State Categorical Aid (Column K) sources of revenue according to the applicable expense function(s) depending on how the locality spent the funds.Expenditure ReportingEligible expenditures for both Direct Distributions and OAA Distributions of opioid settlement payments. For Transmittal reporting, expenditures should be reported on Form 100 according to the applicable function(s) for how the locality has spent the settlement funds. For example, if the locality spent settlement funds on approved social services or behavioral health related programs that meet the requirements of abatement and remediation efforts, the expenditures would be reported at the applicable Health and Human Services Function 05, at applicable line items under Transmittal Form 100, line 5.00.Casino Tax RevenueApplicable localities receiving a share of the Commonwealth’s casino tax revenue should classify its allocation of this revenue as Non-Categorical Aid, Revenue from the Commonwealth. For Transmittal reporting, this revenue should be classified on Form 700, Line 1.22.9, Other.Note: Based on APA discussions with the Virginia Lottery (who oversees Casino gaming on the state level), along with review over Code of Virginia §58.1-4100, the Commonwealth has not imposed restrictions on the locality’s spending of this tax revenue. However, there could be potential restrictions on spending this funding for those applicable localities that are receiving their distributions directly from their transportation district’s Regional Improvement Commission. Section 58.1-4107.1 of the Code of Virginia discusses the establishment of Regional Improvement Commissions for the purposes of receiving, distributing, and “establishing funding priorities for member localities related to improvements in the areas of education, transportation, and public safety.”? As such, a regional Commission could potentially set forth spending restrictions as they establish funding priorities and distribute the funds; however, these restrictions would not be imposed at the state level. Applicable localities that are a part of the host city, City of Bristol, seek guidance from their Commission as to any question on possible restrictions for spending their share of the casino tax revenue.Transmittal Form Preparation TrainingElectronic, web-based transmittal preparation training materials are available on the APA website. The training includes the preparation of transmittal forms by working through a case study. Training materials can be downloaded from the Comparative Report Transmittal Preparation Training website page located at: . The Instructions Document provides additional information and explanation for using the files. Should you have any questions or comments while working through the web-based transmittal training, please feel free to contact the APA Local Government team; localgovernment@apa..Joint ActivitiesMany localities have entered into agreements with other local governments to provide general government services regionally. These local governments are required to report the total costs and funding of the joint activity on a Form 110. The participating local governments are responsible for obtaining the Form 110 from the joint activity or the information necessary to prepare the form. As soon as you have prepared a joint activity form, please email a copy to the APA (localgovernment@apa.) so that we can provide to any other localities who may request a copy. A template Joint Activity form updated for FY2023 is available on the APA website. Forms.xls All authorities, boards, and commissions are required to submit audited financial statements to the Auditor of Public Accounts 5 months after the end of their fiscal year. Entities should ensure their financial data is available in sufficient time for preparation of any applicable Form 110. Localities that act as the fiscal agent or otherwise have authority over the entity should review the controls and processes to ensure compliance with reporting deadlines. Ensuring Accuracy of Transmittal FormsThe local government is responsible for the accuracy of the data presented in the Comparative Report. The APA provides several tools to assist the localities and their auditors with identifying errors and improving the accuracy of reported amounts. Please review the first tab of the transmittal workbook called “PY COMMENTS” for any comments that may give applicable future reference guidance or details about adjustments the APA posted during our review process over the prior year transmittals. Due to time constraints during the completion of our desk reviews, the APA will often directly post an adjustment or reclassification to the transmittal as needed for our final Comparative Report. Please ensure the prior year comments are appropriately considered as you are preparing the transmittal forms. Please also keep in mind that a comment does not always indicate an issue was noted or an adjustment was needed during our review; some comments may relate to the APA reviewer seeking additional information or explanation to help us understand the transmittal amounts as it relates to the audited financial report. If you have a question about a comment or an adjustment made to the prior year transmittal, please contact Rachel Reamy or Laurie Hicks at localgovernment@apa.. The Transmittal Edits Report checks forms for certain key amounts that frequently contain errors. An explanation must be provided for all unresolved errors on the Edits Report.The Transmittal Analysis Report highlights significant differences between the current and prior year forms that might indicate misclassifications or omissions. You should review the variances for possible current year errors. An explanation must be provided for remaining flagged variances.The Transmittal Local Review Report uses locality specific information on joint activities, local taxes, and specific locality services to determine potential misclassifications or omissions in the forms. Unresolved errors remaining on this report will likely result in a desk review comment from the APA. The preparer should include an explanation for remaining errors. The prior year’s desk review comment sheet is included as a separate worksheet in each locality’s transmittal file to eliminate repeat comments. The locality should ensure that corrections are made on the original submission so subsequent adjustments are minimized.The APA has developed an optional transmittal desk review checklist for items where the APA frequently encounters errors. The checklist also serves as an excellent summary of transmittal preparation requirements. The Transmittal checklist is available on the APA website at this link.Transmittal preparers and reviewers must take responsibility for the accuracy of the Transmittal Forms. Although the APA performs a desk review on the transmittal forms, it is the auditor’s responsibility to review the forms for compliance with the Uniform Financial Reporting Manual prior to submission. Each year the transmittal file includes a worksheet with the prior year’s review comments. Local government officials should discuss significant findings with their auditors to determine how to prevent similar errors in future submissions. Auditor's Agreed Upon Procedures for the TransmittalThe Auditor's Report on the Application of Agreed-Upon Procedures must be submitted to the Auditor of Public Accounts. The signed report should be submitted electronically to localgovernment@apa.. This report typically accompanies the completed Transmittal workbook; however, the APA will accept submission of the report at a later date as there may be instances where the report may need to be submitted later (i.e.: after the December 15 deadline) due to timing, etc. A template copy of the AUP report is available on the APA website at this link. Note that this template report was significantly updated last year during the FY2022. Please ensure you are using the most up-to-date report template. Financial Reporting DeadlinesThe Code of Virginia requires that local governments submit their audited financial reports and Comparative Report transmittal data to the APA by December 15. Local governments that do not submit this data timely will be identified in the Comparative Report and may be left out of the report all together if there are significant delays. The APA prefers to receive an electronic version of the locality’s audited financial reports instead of hardcopy; please email the financial reports to localgovernment@apa.. It is important that the financial reports and transmittal files are emailed to the central Local Government email, as other APA staff assist the Local Government manager in reviewing and saving the locality’s submissions. Please remember that the auditor and/or locality should only submit the final audited financial report to the APA to comply with the December 15 deadline in accordance with Code §15.2-2510. The auditor and/or locality should not email or send any “draft” version of a financial report to the APA; the APA will only accept a final copy of the audited financial report.If the audited financial report is not final by December 15 but the locality’s Transmittal file is complete, please send us your completed transmittal file and AUP report by December 15 with notification of when the APA can expect to receive the final, audited financial report. Because the December 15 submission due date is a Code mandated deadline, the Auditor of Public Accounts has no authority to grant an extension for submissions past this deadline. Locality officials should provide written notification to the APA if the locality cannot submit the final audited financial report and/or transmittal forms by the December 15 deadline. Audit Delay NotificationThe Code of Virginia §15.2-2511 requires local officials to post a statement on its website if the audit is delayed, make this statement available to the public at the next scheduled meeting of the local governing body, and send a copy of this statement to the Auditor of Public Accounts. Refer to the Reporting Requirements and Distribution document on the APA website for further guidance on providing this written audit delay notification for the December 15 reporting submissions. Locality Notarized Statement to the APA Section 15.2-2510 of the Code of Virginia also requires the locality’s December 15 submission of its audited financial report and transmittal data to the Auditor of Public Accounts to include a notarized statement from the chief elected official and the chief administrative officer of the locality stating that the locality’s audited financial report has been presented to the local governing body. The timing of submitting the notarized statement will vary depending on the timing of when the governing body meeting occurs—either by December 15 or between December 15 and December 31. Accordingly, the locality should submit this notarized statement to the Auditor of Public Accounts as soon as the results of the audit have been presented to the local governing body.The locality should submit its final audited financial report and transmittal data by the December 15 deadline. If the CPA/external auditor has presented the results of the audit to the governing body by December 15, the locality should also submit the notarized statement stating as such (if this is administratively feasible to complete the statement by this timing). However, if the Auditor is not scheduled to present the results of the audit until after December 15, the locality should still submit its final audited financial report and transmittal data by the December 15 deadline. After the audited financial report has been presented to the governing body, the locality should then submit the notarized statement to the APA. The intent of the notarized statement is to provide assurance that the governing body is appropriately made aware of the results of the audited financial statements, along with any internal control findings or management letter comments that the Auditor may have issued. Refer to the Reporting Requirements and Distribution document on the APA website for further guidance. ................
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