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Financial Reporting

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Sharon H. Lawrence, CPA, Director
Voice: (804) 225-2414
Email: Sharon.Lawrence@doa.virginia.gov or finrept@doa.virginia.gov
Fax: (804) 225-2430

New Information

Overview

The financial reporting activity includes preparation of three annual financial reports, three Financial Statement Directives and the Schedule of Expenditures of Federal Awards for inclusion in the Statewide Single Audit Report. The Preliminary Report is issued on August 15 for the previous fiscal year and summarizes the ending cash-basis position of the General Fund. The data in this report is used to implement the subsequent year's budget and provide the undesignated (surplus) balance, if any, which is available for future appropriation.

The audited December 15 Comprehensive Annual Financial Report (CAFR) is prepared on the basis of generally accepted accounting principals (GAAP) and is used extensively by rating agencies, investment banks and other involved in the issuance and marketing of Commonwealth bonds. Virginia has produced a GAAP-basis report that has received an unqualified audit opinion every year since 1986.

The Code of Virginia establishes the basis for statewide financial reporting. Principal Code directions include the following.

The Comptroller shall...make a preliminary annual report to the Governor on or before August 15...(and)...a final report on or before December 15...the final report shall be prepared, insofar as practical, in conformance with generally accepted accounting principles. (§2.2-813)

DOA's Financial Reporting unit also houses the statewide fixed assets monitoring and reporting activity because the purchase of land, buildings and equipment represents a particularly important type of disbursement involving assets of relative high value and longer useful life.

Organization

Financial Reporting has several subactivities.

Accounts Receivable Reporting

The Code of Virginia (§2.2.4811 et seq., the Virginia Debt Collection Act) assigns DOA the responsibility to provide oversight reporting, and monitoring for the procedures used by state agencies to collect accounts receivable. Data on accounts receivable balances are compiled quarterly. These data are also used for the Comprehensive Annual Financial Report of the Commonwealth (CAFR) and the Report to the Citizens of the Commonwealth (PAFR).

Cash-Basis Reporting

The Virginia Constitution requires that accounts be maintained and reported based on when cash is received and paid out. This subactivity involves ongoing reporting of cash activity in the state accounts throughout the year. Reports typically produced for the Governor, Secretary of Finance and General Assembly include monthly reports on the cash position of the Commonwealth as reconciled to the Department of the Treasury and other selected General Fund and Non-General Fund cash basis financial information. This subactivity also produces the August 15 Preliminary Report to the Comptroller that is required by law.

Decentralized Management Standards for Colleges and Universities

The Commonwealth's institutions of higher education are required to meet five basic Management Standards each year to become, or remain, eligible for certain rewards specified in the Appropriation Act. The Department of Accounts determines compliance by institutions with three of the standards. The Auditor of Public Accounts determines compliance by institutions with the other two standards.

Financial Statement Directives

This subactivity produces the State Agency, Higher Education, and Component Unit Financial Statement Directives. It is through this subactivity that Financial Reporting provides guidance and assistance to State Agencies, Institutions of Higher Education, and Component units on the GAAP presentation of financial statement information.

Fixed Asset Accounting and Control

This subactivity accounts for all major land, building and equipment assets of the Commonwealth. Also included is the accounting for certain capital leases which are reflected as assets in the Commonwealth financial statements.

GAAP-Basis Reporting

This subactivity produces the Comprehensive Annual Financial Report (CAFR) of the Commonwealth which is audited by the Auditor of Public Accounts. Generally accepted accounting principles (GAAP) are promulgated by the Governmental Accounting Standards Board (GASB) and include the recognition of accrued assets and liabilities along with other non-cash accounting requirements. Planning, information gathering, and preparation of this report take approximately 6 1/2 months. During the late winter and spring, efforts within this subactivity are focused on the technical analysis necessary to incorporate new standards for GAAP, as well as Code of Virginia changes, which will become effective for the next reporting year. The volume of technical analysis increases each year.

The GAAP Master List

provides information regarding accounting pronouncements used during preparation of the Commonwealth's CAFR. It is non-authoritative and should not be viewed as an all-inclusive source of information.

Indirect Cost Plans

This subactivity is responsible for preparing two indirect cost allocation plans. The first is prepared in accordance with OMB Circular A-87 and is used by agencies entitled to recover indirect costs from federal grants and contracts. DOA's plan is audited and approved by the federal government on behalf of the Commonwealth. The second "full costing" plan is developed for DPB that supports the recovery of indirect costs borne by the General Fund on behalf of nongeneral funded agencies and programs. The Appropriation Act is used to recover these costs for the General Fund.

Intergovernmental Cash Management (CMIA)

Title 31 U.S.C. (the Cash Management Improvement Act of 1990) imposes on the states a responsibility to develop and negotiate agreements governing the flow of cash from the U.S. Treasury to the Commonwealth. Careful analysis and monitoring of this program is critical due to the interest penalty that accrues for the time that a state agency holds federal cash.

IRS Information Returns - 1099 Reporting

This activity provides guidance and assistance in compiling and reporting annual information returns in accordance with Internal Revenue Service requirements. The Financial Reporting unit maintains and updates CAPP Topics related to 1099 reporting, prepares an on-line training program, and provides a CARS-compatible 1099 Adjustment and Reporting System for optional use by state agencies and institutions.

Popular Annual Financial Report (PAFR)

This subactivity summarizes and simplifies the presentation of information contained in the Commonwealth's Comprehensive Annual Financial Report. This type of report is often referred to as a "popular report." It is intended to better inform the public about the Commonwealth's financial condition without excessive detail or the use of technical accounting terms.

Prompt Payment

The Code of Virginia (§2.2-4347 - 2.2-4356. et seq.) assigns DOA the responsibility to provide oversight reporting, and monitoring for the procedures used by state agencies to promptly pay invoices. Data on prompt payment of invoices are compiled quarterly. This data is used in the Report on Statewide Financial Management and Compliance (Quarterly Report) issued by the Comptroller's Office. Data by agencies and institutions are reported quarterly on DOA's web-based Reportline application.

Schedule of Expenditures of Federal Awards

This subactivity produces the Schedule of Expenditures of Federal Awards for inclusion in the Statewide Single Audit Report, available from the Auditor of Public Accounts. The schedule is prepared in accordance with the requirements of OMB Federal Circular A-133. This subactivity provides guidance to State Agencies, Institutions of Higher Education and Component Units on the preparation of their federal Schedules. This subactivity requires the services of a highly technical financial analyst for about two months.