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Annual Expenditure Limitation R eports

Annual Expenditure Limitation R eports. Preparing an AELR. Meghan Hieger and Megan Smith Office of the Auditor General Accounting Services Division. ELR Basics. Webinar available on our Web site www.azauditor.gov/ASD/Webinar/Cities_Towns_Webinar.html. ELR Format. Support for the AELR.

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Annual Expenditure Limitation R eports

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  1. Annual Expenditure Limitation Reports Preparing an AELR Meghan Hieger and Megan Smith Office of the Auditor General Accounting Services Division

  2. ELR Basics • Webinar available on our Web site • www.azauditor.gov/ASD/Webinar/Cities_Towns_Webinar.html

  3. ELR Format

  4. Support for the AELR • Notes to the Financial Statements • Schedule of Expenditures of Federal Awards • Financial Statements • Notes to the ELR • Reconciliation • Part II • Part I

  5. Reconciliation Do not include transfers out

  6. Reconciliation

  7. Reconciliation: Subtractions

  8. Reconciliation: Subtractions Two ways to determine subtraction amount for future costs Subtract the increase in the related liability Subtract the ending liability balance Both amounts can be found in the Notes to the Financial Statements

  9. Reconciliation: Subtractions Municipal Property Corporation Fund Expenditures of Separate Legal Entities • General Revenues transferred in • SLE Revenues transferred out • Total expenditures of fund • Separate Legal Entity Subtraction

  10. Reconciliation: Subtractions

  11. Reconciliation: County Subtractions

  12. Reconciliation: Additions Principal on LT Debt Capital Asset Acquisitions • Payment recorded as reduction of a liability • Related interest already included on Line A • Assets that are not fully expensed when purchased • Assets acquired through non-cash transactions are not included

  13. Reconciliation: Additions OPEB, Claims, and Landfill Closure Costs Paid in the Current Year but Reported as Expenses in Previous Years Add the decrease Add the beginning balance

  14. Questions

  15. Part II: Exclusions What is an exclusion? Arizona Constitution: Article 9, Section 20

  16. Part II: Exclusions • Revenue-driven • Expenditure-driven • Determined by revenue source: • Dividends, interest income • Grants and aid from federal government • Amounts received from State • HURF revenues • Unspent revenues carried forward • Determined by expenditure purpose: • Debt service payments • Excludable no matter what type of revenue is used • Can’t exclude both revenue used and expenditure made • Cannot be carried forward and excluded in future years Only excludable once the expenditure is made

  17. Part II: Exclusions Spent Fund A Revenue Taxes $50,000 Interest Income $100,000 Federal Grants $150,000 State Grants $200,000 Total $500,000 Expenditures General Government $250,000 Debt Service $150,000 Total $400,000 Taxes $50,000 Federal Grants $150,000 State Grants $100,000 Interest $100,000 Excluded Debt Service $150,000 • Federal Grants • $150,000 State Grants $100,000 Carried Forward State Grants $100,000

  18. Part II: Exclusions Flow Assumption – Maximizing Carryforward Nonlocal (excludable) Revenues Local (nonexcludable) Revenues Carried Forward Expenditure Limit Total Expenditures

  19. Part II: Exclusions Flow Assumption – Maximizing Exclusions Local (nonexcludable) Revenues Nonlocal (excludable) Revenues Total Expenditures

  20. Part II: Exclusions Transfers: Exclusions follow the money • Fund A: • Receives $5,000 grant revenue • Transfers grant revenue to Fund B • Grant revenue spent from Fund B • Exclusion taken in Fund B • No exclusion in Fund A

  21. Notes to the AELR Revenue reported in F/S $2,000,000 Exclusion claimed on AELR $1,500,000 Difference $500,000 Note to the AELR Required

  22. Part II: Exclusions

  23. Part II: ExclusionsGrants and Aid from the Federal Government • Audited Financial Statements • Schedule of Expenditure of Federal Awards Exclusions claimed on the AELR

  24. Part II: ExclusionsAmounts Received from the State Not Excludable Excludable • State Grants • Judicial Collection Enhancement Fund • Sales Tax • Motor Vehicle License Tax • HURF

  25. Part II: ExclusionsQuasi-External Interfund Transactions General Fund Water and Sewer Fund • Revenues • $75,000 • Transfers In • $5,000 • Expenditures • $75,000 • $5,000 • Local Revenues • $500,000 • Expenditures • $75,000 • Transfers Out • $5,000 Excludable Not Excludable

  26. Part II: ExclusionsHighway User Revenue Funds • Road (HURF) Fund • HURF Revenue • Miscellaneous Revenue • Investment Income

  27. Part II: ExclusionsContracts with Other Political Subdivisions • School District • Community College • State of Arizona County, City, Town Political Subdivision • City/Town Excludable Expenditures

  28. Part II: ExclusionsRefunds, Reimbursements, or Recoveries • FY 2014 • $50,000 expended • $10,000 reimbursement • Reduces expenditures • $5,000 reimbursement from FY 2013 expenditures • Expenditure of $5,000 reimbursement received in 2014 • FY 2013 • FY 2015

  29. Part II: ExclusionsPrior Years Carryforward • General Fund • Utilities Fund • Carry-forward • Road Fund • Water & Sewer Fund

  30. Part II: ExclusionsCarryforward • Flow Assumption • Determines which revenues were spent and in which order • Determines carryforward earned and spent • Fund Balance • Should be considered in flow assumption • Limits the amount of carryforward available

  31. Part II: ExclusionsCarryforward General Fund Beginning Fund Balance Local Revenue $6,000 Non-local Revenue $4,000 Total $10,000 Revenues Local Revenues $7,000 Non-local revenues $11,000 Expenditures $20,000 Beginning Fund Balance $10,000 Ending Fund Balance $8,000 Carryforward Accumulated $4,000 Used $ -0-

  32. Part II: ExclusionsCarryforward General Fund Beginning Fund Balance Non-local Revenue $4,000 Total $4,000 Revenues Local Revenues $7,000 Non-local revenues $11,000 Expenditures $20,000 Beginning Fund Balance $10,000 Ending Fund Balance $8,000 Carryforward Accumulated $ -0- Used $2,000

  33. Part I: AdjustmentsNatural or Man-Made Disasters • Declared by the Governor • Approved by Voters • Not Declared by Governor or Approved by Voters • Expenditures authorized by 2/3 of Board • Expenditures authorized by 70% of Board • Expenditures authorized by 70% of Board • Expenditures subtracted from total expenditures subject to the limit • Expenditures subtracted from total expenditures subject to the limit • Expenditures added to total expenditures subject to the limit in following FY

  34. Part I: AdjustmentsOne-time Override • What it Is • Voter approval to exceed the constitutional expenditure limit by a specific amount One-Time Override • What it Isn’t • Approval to establish an alternative expenditure limit for one year • Reporting • The specific amount the voters approved the city/town to exceed it’s limit by should be included on Part I, Line 7.

  35. Questions Contact Us Meghan Hieger and Megan Smith Office of the Auditor General Accounting Services Division 602-553-0333 www.azuditor.gov

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