Financial statement audits are crucial to any organization’s financial health, and government entities are no exception. A financial statement audit provides an independent assessment of an organization’s financial statements, which in turn ensures transparency, accountability, and a strong foundation for future planning. Preparation is key to ensuring a smooth audit process and avoiding delays. Here are some ways municipalities can prepare for a financial statement audit.

1. Create an audit committee.

An audit committee, made up of members of the governing body, oversees the audit process. The committee acts as the primary point of contact between the auditor, the governing board, and the appropriate staff or departments. The committee also reviews audit findings and assists in recommendations for improvement. The Government Finance Officers Association (GFOA) makes certain recommendations for the establishment of audit committees, which can be found under the “Best Practices” section of their website.

2. Know the regulations and requirements.

The audit committee should be familiar with the various regulations governing financial reporting for municipalities. The Generally Accepted Accounting Principles (GAAP) and Governmental Accounting Standards Board (GASB) guidelines lay out the rules for financial reporting for government entities. This guidance is frequently updated, so municipalities must stay up to date with the latest updates and revisions to these standards.

3. Understand the audit process.

The audit committee should understand the scope of the audit (what will be assessed), the timeline, and the roles and responsibilities of everyone involved. The audit committee should also understand that audit-ready means that all supporting documentation should reconcile to the trial balance before the auditor’s review. The auditor’s role is to verify accuracy, not to make adjustments. Any necessary corrections should be identified and addressed before the audit begins to ensure a smooth and efficient process.

4. Gather all necessary documentation.

The municipality must request, collect, and organize documentation and information from the appropriate departments and staff, per the audit requirements. This includes general ledgers, detailed schedules of account balances, bank statements, invoices, receipts, payroll records, purchase orders, contracts, and other financial documents. The documentation should be easily accessible for the auditor, and all financial records should be reviewed for accuracy prior to an audit.

5. Review internal controls.

Regular internal control assessments help to strengthen the mechanisms for preventing fraud and abuse within an organization. Internal controls include procedures for authorization, record keeping, reconciliations, and auditing. These processes must be periodically reviewed to ensure that they are achieving their objectives in preventing risk to the municipality.

6. Review prior year’s audit findings.

Ensure that corrective actions have been taken for any deficiencies identified in the prior year’s audit. This will not only reduce the likelihood of repeated findings but also demonstrate your commitment to improving your financial management practices.

7. Communicate with your auditor and prepare for questions.

It’s important to keep an open line of communication with your auditor, maintaining transparency throughout the audit process. Make sure you disclose any changes to your financial systems or operations. Be prepared to answer questions regarding your municipality’s financial procedures and processes, internal controls, documentation, operations, and personnel.

A financial statement audit can be a daunting and sometimes stressful event, but through preparation, the opportunity for error and disorganization can be reduced. Municipalities can follow the guidelines above to ensure the audit process runs as smoothly and efficiently as possible. If you have any questions about the audit process for municipalities—or if you need any other audit, accounting, tax, or advisory support, please know RBT CPAs is here for you. We’ve been proudly serving municipalities, businesses, non-profits, and individuals in the Hudson Valley for over 50 years. Please don’t hesitate to give us a call and find out how we can be Remarkably Better Together.

Procurement is in the spotlight on global, federal, state, and local stages. Driven by rising costs, supply chain fragility, the beyond-fast evolution of technology, social and environmental concerns, ever-changing legislation, staffing challenges, and more, all levels of government are being challenged like never before to modernize procurement with a keen eye toward cost savings, sustainability, and compliance.

One survey identifies the complexity of systems and processes as the top procurement challenge across industries, with rising costs and preparing for unexpected challenges being the next two biggest challenges for government.

The National Association of State Procurement Officers (NASPO) defined top priorities for state procurement in 2024 as modernizing the procurement process (moving up from the fifth priority in 2023), continuous process improvement, talent management and succession planning, and more.

Cybersecurity, sourcing requirements, climate/sustainability, supplier diversity, and more are converging to put more demands on procurement. Agility to promote repeatable quality processes that offer flexibility, deliver results faster, incorporate user feedback, and respond to changing needs while addressing talent challenges and upholding the myriad of regulations appears to be central to addressing today’s procurement challenges.

E-procurement is taking the lead as a prominent trend, with municipalities increasingly adopting digital solutions for tendering, bidding, and contract management in an effort to shorten the procurement cycle, enhance transparency, reduce paperwork, and improve efficiency. At the same time, it promotes equal opportunities among suppliers to bid by providing greater access to information.

Sustainability is increasingly being embedded into procurement practices, with a focus on acquiring services and goods in a manner that protects and supports the environment, while promoting ethical practices and supporting social welfare. (New York’s Green Purchasing Community provides a framework for local governments to ensure purchasing has a lower environmental impact while earning points toward Climate Smart Communities Certification.)

Data analytics and artificial intelligence point to increased opportunities for municipalities to use data for insights on spending, performance, and market trends. AI can help detect fraud, improve decision-making, and automate processes, while predictive analytics improves forecasting and increases cost savings. According to NASPO, there may be ways for AI to help vet suppliers, track supplier performance, identify problem suppliers, and detect fraud.

Beyond technology, municipalities are looking to create job opportunities and drive economic growth with a greater focus on supporting small and medium-sized businesses (SMBs) via their procurement processes. Some are adopting policies to award a percentage of contracts to SMBs while making bidding easier and providing assistance to help SMBs navigate the process.

As your municipality explores opportunities to modernize procurement while operating within New York State laws, you can count on RBT CPAs to focus on your accounting, audit, tax, and advisory needs. Give us a call to find out how we can be Remarkably Better Together.

RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your organization’s confidential financial data.

With budget season around the corner, the following are some strategies and changes you may want to consider.

Rethinking How You Budget

While line-item budgets for municipalities served their purpose for a long time, in 2022 the International City/County Management Association (ICMA), the Government Finance Officers Association (GFOA), and the National League of Cities (NLC) came together to explore modernizing local government budgeting to be more responsive to community needs, reflect today’s technological capabilities, and better align with the way the world works via their Rethinking Budgeting Initiative.

At the heart of the initiative is the transition from line-item budgets to priority- and program-based budgeting.

Priority-based budgeting puts community needs and requirements at the forefront of the municipality budget planning process. This approach offers the added benefits of having a budget that serves as a strategic plan and decision-making tool to ensure a community’s top priorities – for example, having a safe community where residents, workers, and businesses can thrive – are resourced appropriately.

Program-based budgeting defines the programs and services a municipality provides in a manner that’s more understandable and useful to residents. For example, showing the budget for police patrols is a lot more meaningful to residents than embedding those costs into line items for salaries, benefits, contractual services, etc.

At a time when inflation is stretching residents’ and municipality budgets, while demands for services and mandates increase, taking a new approach to budgeting may help promote community understanding, trust, and support when you need it most.

Minimum Wage and Exempt Threshold Changes

Pivoting from the strategic to tactical, we just want to provide a friendly reminder that 2025 wage and pay-related-benefit budgets will need to reflect January 1, 2025:

• Minimum wage increase (of $.50/hour);
• Higher NYS DOL thresholds for administrative and executive employees exempt from overtime (increasing from $58,458.40 to $60,405.80 in upper New York and from $62,400 to $64,350 in NYC, Westchester, and Long Island); and
• Higher FLSA threshold (jumping from $43,888/year to $58,656/year) for professional employees exempt from overtime.

If during your budget or strategy development you need assistance, please know, RBT CPAs professionals are available to provide advisory, accounting, audit, and tax services, while our Visions Human Resources Services affiliate can help with all things people-related.

RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data.

Since 2021, we’ve been hearing about Safeguarding Tomorrow Revolving Loan Fund (RLF), a program designed to help communities address vulnerabilities to natural hazards and disasters attributed to climate change. Eligible communities in New York may benefit from the program starting later this year.

From February to April of 2023, states, eligible federally recognized tribes, territories, and the District of Columbia were invited to apply for the program. In September 2023, FEMA announced eight states will receive grants in the amount of $50 million combined to help communities address vulnerabilities to natural hazards and disasters. New York is slated to receive just over $6.2 million (it had requested just over $15 million).

As explained on the FEMA website, “Local governments may use capitalization grant funding through low-interest loans to make structures more resilient to natural hazards.” The website also notes funds can be applied to satisfy cost-share requirements for FEMA hazard mitigation (HM) assistance grants and will serve as a sustainable financing source because, as loans are paid back, funding can finance additional projects. The program promotes funding to disadvantaged communities, which should be slated to receive at least 40% of revolving fund loans.

New York’s Intended Use Plan, developed as part of its application for the Safeguarding Tomorrow RLF, provides more details and insights into how the program may work in our state. Here are a few highlights:

…“The state will use these capitalization grants to establish a revolving loan fund from which direct loans will be provided to local governments for projects and activities that mitigate the impacts of drought, intense heat, severe storms (including hurricanes, tornadoes, windstorms, cyclones, and severe winter storms), wildfires, floods, earthquakes, and other natural hazards.”

…“DHSES (a.k.a. NY Department of Homeland Security and Emergency Services) will administer the HM RLF to support various hazard mitigation activities that address natural hazards such as severe storms and wind events, and flooding. Flooding includes highwater levels, inland flooding, and storm surges. Loan applications will also be evaluated against the NY State Hazard Mitigation Plan.”

….“Standard loans will be issued with an interest rate of 1.0 percent. Loan term will be 20 year or less following completion of the funded project. Loans for low-income geographic areas or underserved communities will be issued with an interest rate of 1.0 percent. Loan term will be 30 year or less following completion of the funded project.”

…“The loan application and instructions will be posted to the DHSES website and will follow a similar process to an existing revolving loan program that DHSES currently administers.”

…“DHSES anticipates disbursing funds within 9 months of receiving funding from FEMA by working closely with all applicants.”  So, we’ll likely be hearing something by mid-year.

There’s more. At year-end 2023, the 2024 Notice of Funding Opportunity for Safeguarding Tomorrow through Ongoing Risk Mitigation Revolving Loan Fund (RLF) was announced, tripling the total amount of grants available to $150 million. The application period is open and will close on April 30, and New York is eligible to apply, which is likely according to the 2023 IUP.

For now, your municipality may want to keep all of this in mind as it develops local plans to address infrastructure vulnerabilities due to severe weather events and climate change. We will keep an eye out for more information for you.

In the meantime, if you need any accounting, tax, audit, or advisory support, please know RBT CPAs is here for you. We’ve been proudly serving municipalities, businesses, non-profits, and individuals in the Hudson Valley for over 50 years. Please don’t hesitate to give us a call and find out how we can be Remarkably Better Together.

RBT CPAs is proud to say 100% of its work is prepared in America. Our company does not offshore work, so you always know who is handling your confidential financial data.