2014 Audit Report
This report was prepared in accordance with TCOG’s bylaws. We believe the data as presented is accurate in all material aspects; that it is presented in a manner designed to fairly set forth the financial position and results of TCOG operations as measured by the financial activity of its various grants and contracts; and, that all disclosures necessary to enable the reader to gain maximum understanding of TCOG’s financial affairs and to satisfy Federal and State requirements of applicable grants are included. Standards issued by the Office of Management and Budget (Circulars A-87 and A-133) and GASB Statement No. 34, Basic Financial Statements – and Management’s Discussion and Analysis – for State and Local Governments, as amended and interpreted, as of April 30, 2014, as well as all current GASB statements, were followed in the operation and audit of TCOG.
ACCOUNTING SYSTEM AND BUDGETARY CONTROL
TCOG’s accounting records are maintained on a modified accrual basis, with revenues recorded when susceptible to accrual and expenditures recorded when liabilities are incurred, if measurable. This policy is implemented by generally accepted accounting principles and the Common Rule. Budgetary amounts reported on the schedule of revenues and expenditures in memorandum form are monitored monthly for variances by TCOG staff. Variances are dealt with on an individual basis, according to contractual requirements of the specific grant or contract.
In developing and improving TCOG’s accounting system, consideration is given to the adequacy of internal controls. Internal controls are designed to protect TCOG assets, prevent fraud and to insure economy and efficiency of operations within limitations. Internal controls are developed to assure management, and funding sources, of the integrity of the accounting and reporting systems.
REPORTING ENTITY AND SERVICES
TCOG operations are controlled by grant, or contract arrangements, with the United States of America and the State of Texas. For the fiscal year ended April 30, 2014, the largest sub-grantee of TCOG is Tri-County Senior Nutrition Project (Tri-County). Tri-County contracts with an independent public accounting firm for an annual audit of its operations. The resulting audit report will be presented to the Governing Body for review and approval upon receipt.
During the fiscal year ended April 30, 2014, TCOG, through grants and contracts, operated the Area Agency on Aging of Texoma, Community and Economic Development and Planning Activities, Criminal Justice Planning, Homeland Security Planning, Emergency 911, Weatherization Assistance Program, Comprehensive Energy Assistance Program, Section 8 Housing, Public Housing Authorities of eighteen cities, and other programs for the Texoma Region.
Cash maintained in the general account is not invested in interest bearing instruments because of the restrictions placed on federal funds by the United States Treasury. Funds received from local units of government for matching grants are deposited into an interest bearing account and TexPool, a division of the Texas State Treasury. The interest earned on local funds is used to match grant requirements, reduce future local government contributions, and satisfy any costs not allowed by grant conditions.
Fixed assets are recorded at cost from grant funds or local funds. Fixed assets purchased from local funds are depreciated and grants are charged accordingly in conformity with Office of Management and Budget Circular A-87.
TCOG’s bylaws require that an annual audit be made of its financial accounts and transactions for the preceding fiscal year. In 1997, the Office of Management and Budget revised Circular A-133 to include units of local government. This circular requires that granters of the United States of America perform audits which meet the requirements of the Single Audit Act. In accordance with these requirements, the Annual Audit Report is contained herein for your review and consideration.
CERTIFICATION OF INDIRECT COST PERCENTAGE
The undersigned Executive Director and Finance Director hereby certify that based upon the enclosed audited financial data, TCOG’s indirect cost for fiscal year ended April 30, 2014, did not exceed 15 percent of total expenditures, as defined by The Local Government Code. Chapter 391, 586.(f)(1).
The Annual Audit Report contains an unmodified opinion from the auditors. There is one (1) audit report finding that is addressed below. There are no questioned or disallowed costs, instances of noncompliance, or other reportable conditions. The audit firm has issued a separate management letter.
Item 2014-1. The accounting software used by the Council for financial statement accounting purposes is not set up to be self-balancing by grant/fund. Management decided to upgrade the accounting software to ensure the financial system requires all funds to be self balanced. The upgrade will ensure all general ledger entries be balanced accounting entries resulting in automatic self-balancing funds. In the interim, the governmental accounting principles of self balancing funds has been addressed with new policy under new leadership.
We would like to express our appreciation to everyone associated with the preparation of this Annual Audit Report. We would also like to thank the Members of the Governing Body for their direction and support in the financial operations of Texoma Council of Governments.