Did you miss the accounting update at the Financial Strategies Conference? Don’t worry – we’ve got the highlights for you!
The Michigan School Business Officials Financial Strategies Conference, held in Grand Rapids January 20–21, was very well attended by business officials across the state.
A few important items and reminders were covered with the attendees, as follows:
Section 147 accounting
The main point here is a mid-year check on your accounting would be a good thing to avoid any surprises! Take a look at the accounting for the current year payroll (remember you can use the gross rate to record expenditures, even to grants); the Section 147c and 147d accruals and project forward what year-end adjustments will be needed. What are we talking about? Here is what you should examine in your liability accounts:
- If you are recording Section 147c and 147d accruals using the rates provided by MDE (7.63 and 1.13 percent, respectively) on your current year payroll, those amounts will NOT equal the payments you are making to ORS from your state aid status report. The resulting difference may create an additional expenditure (or reduced expenditure) that should be considered in your final budget amendment of the year.
- Avoid surprises and do some analysis now, as the amounts could be large and will likely require explanation. Need help? Just give us a call and we are happy to help – journal entries included.
Implementation is finally here. ORS is working hard on the final numbers and reporting examples for each school district. We are working closely with them to determine what will be provided, when it will be available, and what you, as the district, will be required to do in addition to the data provided. We also discussed the financial presentation and revisited possible communication ideas to consider. ORS has posted district level information using the September 30, 2013, numbers on its website. There is a lot of data and information on disclosures on the site. We suggest visiting the site to begin to get an idea of what will be involved as we adopt the pronouncement for the District’s June 30, 2015, financial statements.
A quick review of the website highlights that there is more than just a big liability to record on the Statement of Net Position in the government-wide statements. Tracking of district data, deferrals amortized over future periods, information for footnotes, and additional RSI schedules will all be part of the implementation challenges.
More information to come. As we get data from ORS and determine how best to apply it, we will be working with our clients on their next steps to make sure implementation is as smooth as possible.
Super circular changes: They are effective right now!
The federal government has consolidated its various circulars governing federal program operations into one Super Circular, intending to cover all types of federal grants. These rules are effective for new or updated grants awarded after December 26, 2014, so pay attention to any mid-year grant award amounts. For most, the rules will not apply until July 1, 2015, but be aware.
- Key changes – higher focus on internal controls
- Might need to make changes in your procurement policies
- Might see greater flexibility for smaller purchases
- Maybe a way to simplify payroll reporting/certifications
- Increased responsibility for subrecipient monitoring
While the rules for completing the audit of federal awards have also changed, those requirements will not be effective until the District’s June 30, 2016, federal program (single) audit.
Most school districts, although subject to the new federal regulations, will need to pay particular attention to their funding source, which often is the Michigan Department of Education. The department can institute different rules and it will tend to be more stringent than the federal guidelines. The Department is working on its interpretation of the circular and will provide guidance once it has made its conclusions.
Audit due date: Don’t let the new date surprise you!
Currently, the audit filing due date with the Michigan Department of Education is October 15, 2015 for the June 30, 2015 year end. While there was proposed legislation to move the due date to November 1st, nothing has passed yet, so the due date is one month earlier than it was last year. Plan accordingly for your audit preparation and board communication!
The one constant is change and we are committed to keeping you as informed as possible. Look for future updates on these topics and our annual “Audit Preparation Reminders” this spring. In the meantime, if we can provide any guidance or support, please don’t hesitate to contact anyone from Plante Moran and we are happy to help!