STATE OF MINNESOTA - osa.state.mn.us

1 STATE OF MINNESOTA . office of the STATE Auditor Rebecca Otto STATE Auditor Reporting and publishing Requirements City Audited Financial Statements For Cities Reporting in Accordance with Generally Accepted Accounting Principles Description of the office of the STATE Auditor The mission of the office of the STATE Auditor is to oversee local government finances for MINNESOTA taxpayers by helping to ensure financial integrity and accountability in local governmental financial activities. Through financial, compliance, and special audits, the STATE Auditor oversees and ensures that local government funds are used for the purposes intended by law and that local governments hold themselves to the highest standards of financial accountability. The STATE Auditor performs approximately 150 financial and compliance audits per year and has oversight responsibilities for over 3,300 local units of government throughout the STATE .

2 The office currently maintains five divisions: Audit Practice - conducts financial and legal compliance audits of local governments;. Government Information - collects and analyzes financial information for cities, towns, counties, and special districts;. Legal/Special Investigations - provides legal analysis and counsel to the office and responds to outside inquiries about MINNESOTA local government law; as well as investigates allegations of misfeasance, malfeasance, and nonfeasance in local government;. Pension - monitors investment, financial, and actuarial reporting for approximately 700 public pension funds; and Tax Increment Financing - promotes compliance and accountability in local governments' use of tax increment financing through financial and compliance audits. The STATE Auditor serves on the STATE Executive Council, STATE Board of Investment, Land Exchange Board, Public Employees Retirement Association Board, MINNESOTA Housing Finance Agency, and the Rural Finance Authority Board.

3 office of the STATE Auditor 525 Park Street, Suite 500. Saint Paul, MINNESOTA 55103. (651) 296-2551. This document can be made available in alternative formats upon request. Call 651-296-2551. [voice] or 1-800-627-3529 [relay service] for assistance; or visit the office of the STATE Auditor's web site: Reporting and publishing Requirements City Audited Financial Statements For Cities Reporting in Accordance with Generally Accepted Accounting Principles February 2016. Government Information Division office of the STATE Auditor STATE of MINNESOTA 525 Park Street, Suite 500. St. Paul, MN 55103. (651) 296-2551. This page was left blank intentionally. Reporting and publishing Requirements - Audits on the GAAP Basis of Accounting Table of Contents Introduction 1. Enforcement Provisions 2. Form and Style of Financial Statements 3.

4 Description of City Audited Financial Statement 4. Description of City Summary Financial Report and Statements for Publication 8. Sample Financial Statement Publication Format 9. Appendix - Applicable MINNESOTA Statutes 14. MINNESOTA office of the STATE Auditor This page was left blank intentionally. Reporting and publishing Requirements - Audits on the GAAP Basis of Accounting Introduction Reporting Requirements for Cities Over 2,500 in Population The Legislature adopted Minn. Stat. , to improve the financial reporting, including the uniformity of financial data submitted, of cities with populations over 2,500. The law is applicable to both statutory and home rule charter cities, and assigns the responsibility for preparing and publishing annual financial reports to city clerks or finance officers. In addition, the Governmental Accounting Standards Board (GASB) issued Statement No.

5 34 - Basic Financial Statements - and Management's Discussion and Analysis - for STATE and Local Governments; Statement No. 54 - Fund Balance Reporting and Governmental Fund Type Definitions;. Statement No. 63 - Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position; Statement No. 65 - Items Previously Reported as Assets and Liabilities;. and Statement No. 68 - Accounting and Financial Reporting for Pensions - an amendment of GASB. Statement No. 27. These statements established new financial reporting requirements for STATE and local governments throughout the United states . The reporting requirements prescribed in this publication reflect the financial presentations defined in GASB Statements 34, 54, 63, 65, and 68. The city clerk or finance officer must prepare a detailed statement of the city's operations in a format prescribed by the STATE Auditor.

6 The format is presented in this manual on pages 4 - 7. The statement must be published within 210 days after the close of the calendar year in a qualified newspaper of general circulation in the city. If there is no such newspaper, the statement shall be posted in three of the most public places in the city as directed by the city council. In addition, a copy of the audited financial statements and the Local Government Financial Reporting Form must be submitted to the office of the STATE Auditor within 180 days after the close of the calendar year. MINNESOTA office of the STATE Auditor 1. Reporting and publishing Requirements - Audits on the GAAP Basis of Accounting Enforcement Provisions Cities are statutorily required to submit a copy of the financial statement and the Local Government Financial Reporting Form to the office of the STATE Auditor in order to receive local government aid.

7 If a city fails to comply with the applicable requirements, the STATE Auditor is authorized by the law to: A. Notify the MINNESOTA Department of Revenue (DOR) that the city did not comply with the reporting requirements. Local government aid to the city will be withheld until the office of the STATE Auditor notifies DOR that the city has complied with the reporting requirements. Minn. Stat. If the city fails to comply by September 30 of the reporting year, aids may be permanently forfeited for that reporting year. B. Send staff auditors to the city or to contract with independent auditors in order to complete the appropriate reports. The costs related to completing and filing the financial statement or report will be charged to the city. If any city fails to pay such cost within 30 days of billing, the amount shall be deducted from any STATE -shared taxes or aids due the city.

8 Minn. Stat. MINNESOTA office of the STATE Auditor 2. Reporting and publishing Requirements - Audits on the GAAP Basis of Accounting Form and Style of Financial Statements Pursuant to MINNESOTA Statute The STATE Auditor is authorized by Minn. Stat. to prescribe the form of the financial statements for cities over 2,500 in population. Such reports must contain financial statements and disclosures that present the results of city operations in detailed statements. This statement must be submitted to the STATE Auditor within 180 days of the close of the calendar year. The Governmental Accounting Standards Board Statement 34 established new financial reporting standards for STATE and local governments. The financial statement described in this manual is designed to meet these requirements and accounting standards issued after Statement 34.

9 In addition, the financial statement should provide the level of detail necessary to complete the Local Government Financial Reporting Form. The sample summary report and financial statements, beginning on page 9, meets the publication requirements of Minn. Stat. , subd. 1 (a). The reporting and publication formats shown in these statements, including the level of detail, are the minimum requirements as prescribed by the STATE Auditor. MINNESOTA office of the STATE Auditor 3. Reporting and publishing Requirements - Audits on the GAAP Basis of Accounting Description of City Audited Financial Statement The items in the prescribed city audited financial statement are based on generally accepted accounting principles. Independent Auditor's Report (Opinion). Management's Discussion and Analysis The Management's Discussion and Analysis provides an objective and easily readable analysis of the government's financial activities based on currently known facts, decisions, or conditions.

10 The use of graphs, charts, and tables are encouraged to assist the reader in understanding the information. Basic Financial Statements Statement of Net Position The statement is in the format defined by GASB Statements 34 and 63. This statement is on a government-wide basis and includes columns for the governmental activities, business activities (enterprise funds), and a total column for the primary government. An additional column is shown for any discretely presented component units. Statement of Activities This statement is in the format defined by GASB Statement 34. The statement should present financial information for governmental activities at the level of detail presented in the fund financial statements. In general, that means at the functional category level. Functional categories are General Government, Public Safety, Public Works, Health, Sanitation, Cemetery, Culture and Recreation, Community Development, Interest, and similar activities of government.