Financial Management

During this pandemic, many governments are feeling the pressure on their general fund and looking at cost cutting and other measures. Acting early can be very beneficial. We noticed some local governments during the Great Recession (2007-09) that seemed to fare better because they did just that. Another strategy we observed was the use of teams to flush out financial options and strategies, to take advantage of some creative but legally allowable solutions. Even if you have a small staff, you can potentially reach out to peers to work on this together.

At least initially, the general fund typically bears all general operating costs, such as for information technology, human resources, accounting, and facilities maintenance. But some local governments develop a plan to share these overhead costs with other funds that jointly benefit from the services provided. A cost allocation plan is optional and requires some work to set up and carry out, but it can take some pressure off of the general fund. This blog post will share some helpful tips and resources should you decide to go that route.

If the COVID-19 crisis is hurting your local government's cash flow, you might be looking to borrow from restricted funds. A restricted fund is one containing revenues that are intended for a certain purpose due to legal or contractual constraints. However, if such a fund is holding cash that's not needed currently and it's legally available to be invested, then it may be loaned to other funds. Here are a few things to keep in mind:

The Federal Emergency Management Agency's (FEMA) Public Assistance Program was activated March 13, 2020, when President Trump declared the ongoing coronavirus pandemic an emergency under the Stafford Act. With recent passage of the CARES Act, the program has received an influx of resources available to state and local governments.

Based on our years of experience auditing FEMA public assistance grants and FEMA's current guidance, we have a few suggestions and resources for you:

Document your expenses

We know there's a lot of information coming out right now about federal grant programs and other federal financial assistance. It can be challenging to find information and resources you might be interested in, so we have done some legwork for you. Here are some resources you might find helpful as you seek and apply for federal grant funding:

Local governments are navigating many new areas while managing operations in response to coronavirus. Here is some information and links to resources. Thanks go to the Municipal Research and Services Center (MRSC) for its timely guidance provided in several important areas of this guidance.

Guidance from SAO on accounting-related matters

Do you use a checklist to prepare or review your financial statements? If not, maybe you should! Checklists are a great way to make sure you remember important steps.

Nothing is more synonymous with accounting and finance than the monthly reconciliation. Recall even your most basic memory of “finance,” and the importance of balancing your personal checkbook. This essential control activity to government finance not only ensures that banking and accounting records are accurate, but is also a component of identifying unusual transactions that might result from fraud.

Accounting and reporting standards and guidance for leases are changing for both GAAP and cash basis local governments, effective for fiscal years ending December 31, 2020, and after.

Although you won't be preparing your financial statements and notes until early 2021, those first lease payments under the new standard will begin to flow in January 2020. Will you be ready?

Accounting and reporting principles are changing

Segregation of duties, or separating conflicting duty assignments in your government, can help protect your local government's assets. But which duties do you segregate, and what are your options if you cannot feasibly do this? What if you are a very small entity with limited resources?