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  • 1. California Redevelopment DissolutionConnect your Facebook account to check outwhat your friends are sharing on SlideShare Connect ×SlideShare UploadBrowse Popular Downloaded Favorited Channels Videos Featured Go Pro 0 0 melshannon View my profile page My UploadsAccount SettingsAnalyticsPRO dashboardLogoutSupportEmailFavorite Favorited × Save file Flag Private Content Embed Copy and paste this code into your blog or website Copy Customizeâ—¦ Without related content Start from slide number 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 Size (px) 344 × 292 429 × 357 514 × 422 599 × 487 Shortcode for WordPress.com blogs ? Copy Close Flagged as inappropriate Flag as inappropriate Flag as inappropriateSelect your reason for flagging this presentation as inappropriate. If needed, use the feedback form to let us know more details. None Pornographic Defamatory Illegal/Unlawful Spam Other Terms Of Service Violation Cancel File a copyright complaint We have emailed the verification/download link to "mels@lahabracity.com". Login to your email and click the link to download the file directly. To request the link at a different email address, update it here. Close Validation messages. Success message. Fail message. Check your bulk/spam folders if you cant find our mail. Favorited! You could also add tags Cancel Edit your favorites Cancel« â—¹ â—º »/47 × RelatedMoreUpload your own The Demise of RDAs-Joseph Buchman Essentials of Accounting for Governmental and Not-for-Profit Organizations Essentials_of_accounting_for_governmental_and_not_for_profit_organizations Implementing GASB Statement No. 54 2010 cafr Chap012 GASB Statement no. 54 International Journal on Governmental Financial Management, 2010 Vol 2 2008 ijgfm vol_1 CPA 2012 Review Ppd 619 group_1_final_paper Ppd 619 group_1_final_paper Joseph Buchman - Weathering the Financial Storm ppl annual reports 2007 Humc Bond Prospectus 2009 Lao pdr public_expenditure_mangement_review_2008 2008-international-journal-on-governmental-financial-management-vol8-no2 interpublic group 2006ar interpublic group 2006ar Larry Kosmont - Weathering The Financial Storm IT & the Auditor New Pension Rules Tweet Wordpress+ Follow California Redevelopment Dissolutionby Linda Forbes on Jun 06, 2012 192 viewsAccounting & Financial Moreâ—¦ Accounting & FinancialReporting Considerations forSuccessor Agencies ofCalifornia RedevelopmentAgenciesLessAccessibilityView text versionCategoriesBusiness & MgmtBusiness & MgmtUploadDetailsUploaded via SlideShare as Adobe PDFUsage Rights© All RightsReservedStatisticsFavorites0Downloads0Comments0Embed Views0Views on SlideShare192Total Views192No comments yetNotes on Slide 1 melshannon
  • 2. Subscribe to comments Edit your comment Cancel Linda - Welcome and housekeeping remarks. Linda to cover administrative items Linda - will include in intro of Dave: David has frequently presented various topics to MGO employees, to clients, and to professional organizations, including the Association of Government Accountants, the California County Audit Chiefs Association, and BDOâ——s Government Industry Group. David - Thank you Linda,and welcome everyone â—¦ glad you could join us on such short notice. I gave a similar presentation almost two weeks ago on May 10 th to the east bay chapter of CSMFO, but was waiting for the release of the CCMA White Paper before going with the larger webinar broadcast. As it just got finalized on Monday, we wanted to get the information out to our clients as quickly as possible. Hence, short notice. We plan to revisit â——redevelopment agenciesâ—— in ourannual client trainings â—¦ so stay tuned for another opportunity to discuss these matters. Before we get started â—¦ we have two quick polling Qs â—¦ in orderto get a feel of those in attendance. Very closely â—— meaning, you are on the distribution list or have been forwarded copies of the drafts all along or you have read the final document. Somewhat closely â—— meaning, you are aware ofthe White Paper and have seen a draft somewhere along the way â—¦ aware of key points. On a limited basis â—— meaning, you have heard about it through others .. But have not actually seen it. Not at all â—— meaning, who the heck isCCMA, and the only white paper Iâ——ve seen is the paper Iâ——ve stuck into my printer this week â—¦ which has nothing to do with redevelopment. Whoâ——s in theaudience? Here is todayâ——s agenda â—¦ the objectives of this webinar is to provide abetter understanding of the suggested guidance outlined in the CCMA White Paper, as listed in the following categories â—¦ (read categories on slide). David â——We wanted to share an abridged version of something our Oakland clients wrote which impressed us â—¦ as they were able to find some levity in the challenges theyâ——re facing. Linda â—— to read story. David â—— Theyâ——ve identified avery good point â—— that the dissolution of redevelopment agencies has some similarityto dealing with someoneâ——s estate after theyâ——ve passed away. First of all, Successor Agencies are â——the county, city or city and countyâ—— â—¦ thatauthorized the creation of each redevelopment agency â—¦ or, as provided by the Healthand safety code, could be another entity if the county or city did not accept this responsibility. Legal counsel for the State Controllerâ——s Office made a determination that Successor Agencies are not legally separate entities, corporate or politic. This is consistent with the organizational structure written up in the Goldfarb Lipman law alerts earlier this year (1/19/12 and 2/10/12), which stated that the governing board of the Successor Agency will be the Sponsoring Communityâ——s governing board (City Council or the Board of Supervisors). Therefore, if it does not have separate legal standing â—¦ then, it cannot be a component unit. CCMA is the â——California Committee onMunicipal Accountingâ——, a joint committee comprised of representatives of the League of
  • 3. California Cities and the California Society of Certified Public Accountants . The CCMA publishes â——White Papersâ—— as needed from time to time. While CCMAdoes not promulgate GAAP, it is a widely recognized body for providing accounting and reporting guidance, and therefore, most likely will be the general consensus. CCMAâ——s basis of conclusions, supporting a position of Private Purpose Trust Fund, is based on the premise that Successor Agencies are not a separate legal entities, and instead, acting as custodians over the assets and activities of the former RDA post-dissolution with substantial control by an oversight board. As such and with the concurrence of senior staff at GASB and GFOA â—¦ it was determined the nature of this custodial role should bereported as a fiduciary fund (specifically, a private-purpose trust fund), acting on behalf of taxing entities and creditors of enforceable obligations. While there is no specific trust document, the Bill acts in lieu. Economic resources measurement focus and accrual basis of accounting Combine individual sub-funds into one reporting fund The government-wide financial statements should display information about the reporting government as a whole (for instance, the primary government and its component units), and should NOT include any fiduciary activities â—¦ therefore, while the beginning balances willcarryover FY2011 position â—¦ the ending balances at June 30, 2012 will no longercontain assets and liabilities of the former RDA. For many organizations, the redevelopment funds were treated as a blended component unit and often presented as Major Funds. Thus, the impact to governmental funds may be significant â—¦ the governmental funds of the former RDA will be brought tozero and transferred to the Successor Agency (now a fiduciary fund) and to the Housing Successor Agency (which may be another governmental or enterprise fund or may even be outside the organization). If the former RDA funds were significant governmental funds, than it stands to reason that it will have a huge impact to the major fund determination for purposes of presenting funds in the basic financial statements. Read last two bullets. Transmittal Letterâ—— discuss the impacts of dissolution â—¦ however, GASB encourages not toduplicate information contained in MD&A. More of a global discussion. MD&A - should focus on the primary government, and NOT fiduciary funds. However, there should be significant discussion on changes as a result of comparing 2012 amounts to 2011. FN â—— separating fiduciary activity from governmental activities. Combining â—— changes related to any non-major governmental fundsof the former RDA and possibly new fund related to the Housing successor agencyâ—¦ and possibly Private-Purpose Trust Fund, if needed at combining level. Statsâ—— mostly 10 year trend information and lots of debt disclosures. Successor Agency means â——the county, city or city and countyâ—— that authorized the creation of each redevelopment agency or another entity, as provided by the Health and Safety Code. Legal counsel for the SCOâ——s Office has made a determination that successor agencies are not separate legal entities ! Therefore, no longer a Component Unit. Under the Bill, agencies that accept the role of successor agency will serve as a custodian for the assets of the former redevelopment agency pending distribution to the appropriate taxing entities. Based upon the nature of this custodial role, upon dissolution of assets of the former redevelopment agency should be reported in a fiduciary fund (private-purpose trust fund) of the City. This determination was made by
  • 4. the CCMA after consultation with senior staff members of GASB and GFOA. This is the general definition of governmental funds This is an agency fund. Purely custodial capacity means that assets equal liabilities. Correct answer. GASB 34 states that trust funds generally are associated with a trust agreement. A formal trust agreement may or may not exist with respect to the fiduciary role served by the successor agency. However, the use of the term â——generallyâ——in paragraph 69 of GASB 34 suggests that there are circumstances when professional judgment would lead to a proper reporting of a private-purpose trust fund without the existence of a trust agreement. Because of the fiduciary responsibilities that are assigned to successor agencies by the Bill, the Bill may be considered to effectively function as an informal trust arrangement for the purposes of applying this definition. This is an enterprise fund. Dissolution February 1, 2012 â—¦ split the year between old presentation and new presentation. CRA provided guidance earlier this year to simply change the name of the fund, rather than create new funds. If you followed that guidance, it might add complexity to the accounting as the previous treatment may have been governmental funds, but now fiduciary funds, which has different measurement focus and basis of accounting. Important to have clear â——cut-offâ—— between the old and new activity! New fund isrequired (34170.5) â—¦ Redevelopment Obligation Retirement Fund, which is intended asthe repository for property taxes received from the County Auditor-Controller to pay enforceable obligations and administrative costs listed on the ROPS as payable from the Redevelopment Property Tax Trust Fund (RPTTF) administered by the County, as indicated in 34185. Extraordinary items are transactions or other events that are both unusual in nature and infrequent in occurrence. Accounting Principles Board (APB) Opinion No. 30, Reporting the Results of Operationsâ——Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions , as amended and interpreted, defines the terms unusual in nature and infrequency of occurrence. Extraordinary items should be reported separately at the bottom of the statement of activities, after general revenues and special items, if any, and before transfers. For the Fiduciary Fund â—¦ we would suggest totreat the establishment of the fund as an addition .. Not an extraordinary gain/loss. Read slide. For example, Capital Assets â—¦ need to calculate depreciation through 1/31/12 â—¦ to get proper carrying value to FiduciaryFund on 2/1/12. Same for long-term debt related items .. Premiums, discounts, deferred amounts on refunding â—¦ etc. Read slide. For unpaid advances fromthe City/County (for example, the General Fund) â—¦ due to being invalid, should recognize an extraordinary gain in the redevelopment fund and an extraordinary loss in the fund that reported the interfund receivable (advance). At this point, this treatment assumes you will not collect it â—¦ however, if yourlegal counsel has a basis that the collection of the interagency loan is probableâ—¦ then you may have basis to keep it on the books. Uncertainty over these areas. Property held for resale = net realizable value Capital assets = historical cost, less depreciation Read slide. Bullet #1 â—— extraordinary gains/losses Bullet #2 â—— Transfers in/out Read slide. a - Special Item - Significant transactions or other events within the control of management that are either unusual in nature or infrequent in occurrence d - 143 Extraordinary items are
  • 5. transactions or other events that are both unusual in nature and infrequent in occurrence. APB Opinion No. 30, Reporting the Results ofOperationsâ——Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions , as amended and interpreted, defines the terms unusual in nature and infrequency of occurrence. As discussed in paragraph .141, extraordinary items should be reported separately at the bottom of the statement of activities. [GASBS 34, ¶55] a - Special Item - Significant transactions or other events within the control of management that are either unusual in nature or infrequent in occurrence d - 143 Extraordinary items are transactions or other events that are both unusual in nature and infrequent in occurrence. APB Opinion No. 30, Reporting the Results of Operationsâ——Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions , as amended and interpreted, defines the terms unusual in nature and infrequency of occurrence. As discussed in paragraph .141, extraordinary items should be reported separately at the bottom of the statement of activities. [GASBS 34, ¶55] Unencumbered balances of Low and Moderate Income Housing Fund to the successor agency Pending legislation Assets transferred to the housing successor agency If the City/County elected to be the housing successor, then should be reported within its governmental funds Unencumbered balances of Low and Moderate Income Housing Fund to the successor agency Pending legislation Assets transferred to the housing successor agency If the City/County elected to be the housing successor, then should be reported within its governmental funds Read slide. Read slide. Read slide. b) Review the actions of the County Auditor-Controllerâ——s Office =State Controllerâ——s Office c) Verify the Recognized Obligation Payment Schedule = Oversight Board d) Review the redevelopment asset transfers made after 1/1/11 = State Controllerâ——s Office Moreâ—¦California Redevelopment Dissolution â——Presentation Transcript 1. Accounting & Financial Reporting Considerations for Successor Agencies of California Redevelopment Agencies David Bullock, CPA Macias Gini & Oâ——Connell LLP May 2012© 2012 Macias Gini & Oâ——Connell LLP. All rights reserved. This Macias Gini & Oâ——Connell LLP session provides information and comments on current accounting issues and developments. It is not acomprehensive analysis of the subject matter covered and is not intended to provide accounting or other conclusions with respect to the matters addressed in this issue. All relevant facts and circumstances,including the pertinent authoritative literature, need to be considered to arrive at accounting that complies with matters addressed in this publication. For additional information on topics covered in thispublication, contact a Macias Gini & Oâ——Connell LLP client service partner. 2. Administrative Detailsï—§ Continuing Professional Education (CPE)regulations require online participants take part in online poll questions. ï—§ You mustbe registered and logged in online. ï—§ You must respond to a minimum of six questions in order to be eligible for 1.5 CPE credits. ï—§ To ask a question during todayâ——s session, use the Q&A feature in LiveMeeting to type in and submit your question. ï—§ Download a copy of todayâ——s slides or accompanying handout from the â——Handoutsâ—— section in the top right corner of yourscreen. ï—§ Help Desk: 916-642-7012 2 3. Todayâ——s Speaker: David Bullock, CPADavid is an Assurance and GovernmentAdvisory Services Partner in the San FranciscoBay Area office of MGO. He has 18 years ofprofessional experience providing auditing,accounting and consulting services. During thepast year, David has served as the engagementpartner for diverse clients such as the Cities ofOakland, Palo Alto, and Pleasant Hill, County ofAlameda, and the San FranciscoRedevelopment
  • 6. Agency. In addition, Davidcurrently serves as the contracted controller forthe Contra Costa County RedevelopmentAgency. www.mgocpa.com 3 4. Polling Question #1To what extent have you been following the draftsof the CCMA White Paper on RedevelopmentAgencies â—¦ or have you had the opportunity toread the final copy?c) Very closelyd) Somewhat closelye) On a limited basisf) Not at all 4 5. Polling Question #2What are your roles and responsibilities relating tothe Accounting and Financial Reporting ofSuccessor Agencies?c) Accounting Department of a Successor Agencyd) Auditor-Controllerâ——s Office of aCalifornia Countye) An Independent Auditor of a CPA Firmf) Other 5 6. Todayâ——s Agendaï—§ Structure and Presentationï—§ Accounting andReportingï—§ Audit Requirementsï—§ Q&A 6 7. Finding Levity Amidst the ChallengesIN MEMORIAM â——â—— OAKLANDREDEVELOPMENT AGENCY, 1956â—— 2012OAKLAND, CA â——â—— The Oakland Redevelopment Agency passedaway peacefully atmidnight on February 1 at age 55. Cause of death was listed as ABX 26 flu, complicatedby acute EOPS poisoning. ORA, as she was affectionately known, was born on October10, 1956. During ORAâ——s busy life, she was bestknown for transforming downtownOakland... She was especially proud of the thousands of affordable housing units shehelped produce for low income renters and homeowners. She even helped build the Stateof Californiaâ——s downtown headquarters, but was later abandoned by an ungrateful Statelegislature and supreme court. She was estranged from her former CEO, Edmund G.Brown of San Francisco, Calif. They had a whirlwind romance in the early part of thiscentury as ORA worked hard to make Mr. Brownâ——s 10K housing plan areality; but he laterleft her for higher office and even tried to seize her life savings, which he claimed was hiscommunity property. 7 8. Structure and Presentation ï—§ Successor Agency means â——the county, cityor city and countyâ—— that authorized the creation of each redevelopment agencyor another entity, as provided by HSC. ï—§ Legal counsel for the SCOâ——s Officehas made a determination that successor agencies are not separate legal entities! ï—— Therefore, no longer a Component Unit 8 9. Structure and Presentationï—§ CCMA: Reporting Fund is to be a PrivatePurpose Trust Fund â—¢ What does that mean? â—— Fiduciary Fund â—— Report assets heldin a trustee or agency capacity for others, therefore cannot be used to support the governments own programs â—— Economic resources measurement focus and accrual basis of accounting â—— Combine individual sub-funds into one reporting fund 9 10. Structure and Presentationï—§ No balances in Government-Wide financial statements at June 30, 2012!ï—§ Impact to Governmental Fundsï—§ Major Fund Determination â—¢ For 2012, could be a significant change in the calculationof major funds â—— No ending assets or liabilities and only seven months of revenues and expenditures â—¢ Suggestion: keep the treatment consistent with 2011, regardless of quantified results 10 11. Structure and Presentationï—§ Other Considerations â—¢ Transmittal letter (CAFR only) â—¢ Managementâ——s Discussion and Analysis â—¢ Notes to the basic financial statements â—¢ Combining statements and schedules â—¢ Statistical section (CAFR only) 11 12. Polling Question #3Successor Agencies should be reported in thefinancial statements as:c) Component unitd) Governmental fundse) Enterprise fundsf)
  • 7. Fiduciary funds 12 13. Polling Question #3 DebriefSuccessor Agencies should be reported in thefinancial statements as:d) Fiduciary funds 13 14. Polling Question #4A private purpose trust fund is used to:b) Account for tax-supported activities.c) Report resources held by the reportinggovernment in a purely custodial capacity.d) Report all trust arrangements under which theprincipal and income benefit individuals, privateorganizations, or other governments.e) Report an activity for which a fee is charged toexternal users for goods and services. 14 15. Polling Question #4 DebriefA private purpose trust fund is used to:c) Report all trust arrangements under which the principal and income benefit individuals, private organizations, or other governments. 15 16. Accounting and Reportingï—§ AB X1 26 requires dissolution on 2/1/12 â—¢Final seven months will continue to be reported in the governmental funds or as a discrete component unit â—¢ After dissolution, activity of the successoragency will be reported in a fiduciary fundï—§ For entities that followed the CRA guidance - Activity will have to be distinguished between the former Redevelopment Agency and the Successor Agencyï—§ New Fund Required: â——Redevelopment Obligation Retirement Fundâ—— 16 17. Accounting and Reportingï—§ Transfers of assets and liabilities of the former RDA to the successor agency â—¢ Reported as extraordinary gains/lossesin governmental funds and governmental activities â—— Since government-wide financial statements have capital assets and long-term debt, among other differences, there will need to be a reconciliation of these differences when compared to governmental funds â—¢ Reported as extraordinary gains/losses inthe trust fund or as additions (â——net assets received upon dissolution of redevelopment agencyâ——) 17 18. Accounting and Reportingï—§ All transfers of assets and liabilities needto be at carrying value (e.g. net book value) â—— Same methodology proposed inGASB Exposure Draft â—— Governmental Combinations and Disposals of Governmental Operations â—— Extremely important to establish the carrying value at the transfer date (i.e., cut-off) 18 19. Accounting and Reportingï—§ Extraordinary Items may include â—¢ Unpaid advances from the City/County â—¢ Transfers of properties held for resale and capital assets at carrying value â—¢ Transfers of outstanding bonds atcarrying value â—¢ Transfers of all other assets and liabilities (including compensated absences, accrued employee benefits, etc. that go to the successor agency) 19 20. Accounting and Reportingï—§ Housing Funds â—¢ Unencumbered balances of Lowand Moderate Income Housing Fund goes to the successor agency â—— Pending legislation â—¢ Assets transferred to the housing successor agency â—— If the City/County elected to be the housing successor, then the transferred assets should be reported within its governmental funds â—¦ or possibly an enterprise fund in the case where a housing authority of the City/County elected to be the the housing successor 20 21. Accounting and Reporting â—— February 1, 2012Preliminary and Tentative -For Illustration Purposes OnlyExample of Select Governmental Funds Reported in the Primary Government (i.e., city-wide) CITY OF EXAMPLE Governmental Funds - SELECT FUNDS ONLY Balance Sheet Note: Normally, the reporting date Note: Housing Successor February 1, 2012 would be 6-30-12, however, we are showing 2-1-12 for illustration of the impact of the dissolution (closing the Low and Tax Allocation former redevelopment funds). Moderate Refunding New City Project Area Income Bonds Housing One Housing Debt Service Fund TotalAssets:
  • 8. Interest receivable $ - $ - $ - $ 10,000 $ 10,000 Notes and loans receivable - - - 1,058,000 1,058,000 Land held for redevelopment - - - 500,000 500,000 Total assets $ - $ - $ - $ 1,568,000 $ 1,568,000Liabilities and Fund Balances: Liabilities: Deferred revenue $ - $ - $ - $ 600,000 $ 600,000 Fund balances: Restricted for: Low and moderate income housing - - - 968,000 968,000 Total liabilities and fund balances $ - $ - $ - $ 1,568,000 $ 1,568,000 21 22. Accounting and Reporting â—— February 1, 2012 Preliminary and Tentative - For Illustration Purposes Only Example of Select Governmental Funds Reported in the Primary Government (i.e., city-wide) Note: Excludes new CITY OF EXAMPLE activity in the "New Governmental Funds - SELECT FUNDS ONLY City Housing Fund" Statement of Revenues, Expenditures and Changes in Fund Balances subsequent to 2/1/12. For the Year Ended June 30, 2012 Low and Tax Allocation Moderate Refunding New City Project Area Income Bonds Housing One Housing Debt Service Fund Total Revenues: Property taxes $ 712,000 $ 928,000 $ 3,000,000 $ - $ 4,640,000 Use of money and property 15,000 20,000 5,000 - 40,000 Other - 80,000 - - 80,000 Total revenues 727,000 1,028,000 3,005,000 - 4,760,000 Expenditures: Current: Community development 1,849,000 900,000 130,000 - 2,879,000 Debt service: Principal - - 570,000 - 570,000 Interest and fiscal charges - - 597,000 - 597,000 Total expenditures 1,849,000 900,000 1,297,000 - 4,046,000 Excess (deficiency) of revenues over (under) expenditures (1,122,000) 128,000 1,708,000 - 714,000 Other financing sources (uses) Transfers in 200,000 - - 968,000 1,168,000 Transfers out (1,100,000) (1,668,000) (200,000) - (2,968,000) Total other financing sources (uses) (900,000) (1,668,000) (200,000) 968,000 (1,800,000) Extraordinary loss (562,000) (1,258,000) (1,552,000) - (3,372,000) Change in fund balances (2,584,000) (2,798,000) (44,000) 968,000 (4,458,000) Fund balances, beginning of year 2,584,000 2,798,000 44,000 - 5,426,000 Fund balances, end of year $ - $ - $ - $ 968,000 $ 968,000 22 23. Accounting and Reporting â—— February 1, 2012Preliminary and Tentative -For Illustration Purposes OnlyExample of Footnote Disclosure Reconciling Extraordinary Loss in Governmental Funds CITY OF EXAMPLE Reconciliation of the Extraordinary Loss Reported in Governmental Funds to the Extraordinary Loss Recognized in the Fiduciary Fund Financial StatementsTotal extraordinary loss reported in governmental funds - increase to net assets $ 3,372,000 Capital assets recorded in the government-wide financial statements - Increase to net assets 500,000 Long-term liabilities reported in the government-wide financial statements - Decrease to net assets: Long-term debt (5,700,000) Interest payable (190,000) Total changes to net assets of the successor agency as a result of initial transfer $ (2,018,000) 23 24. Accounting and Reporting â—— February 1, 2012Preliminary and Tentative -For Illustration Purposes OnlyExample of a Private Purpose Trust Fund CITY OF EXAMPLE Statement of Fiduciary Net Assets Successor Agency to the Example Redevelopment Agency Private Purpose Trust Fund February 1, 2012Assets: Cash and investments: Note: Normally, the reporting date Held in City Treasury would be 6-30-12, however, we are $ 2,750,000 showing 2-1-12 for illustration of Held with trustees initial balances transferred from the 650,000 Interest receivable former redevelopment agency. 8,000 Land held for redevelopment 86,000 Nondepreciable capital assets 500,000 Total assets 3,994,000Liabilities: Accounts payable and accrued liabilities 122,000 Interest payable 190,000 Long-term debt: Due within one year 700,000 Due in more than one year 5,000,000 Total liabilities 6,012,000Net Assets: Held in trust for other purposes $ (2,018,000) 24 25. Accounting and Reporting â—— February 1, 2012Preliminary and Tentative -For
  • 9. Illustration Purposes OnlyExample of a Private Purpose Trust Fund CITY OF EXAMPLE Statement of Changes in Fiduciary Net Assets Successor Agency to the Example Redevelopment Agency Private Purpose Trust Fund For the Period February 1, 2012 through June 30, 2012 Establishing the "Extraordinary Loss"â—¦ at February 1, 2012Additions: Note: Excludes new activity in the private purpose trust fund Property taxes $ - subsequent to 2/1/12, in order to Investment earnings isolate the initial transfer of - Other assets and liabilities. - Total additions -Deductions: Program expenses of former redevelopment agency - Administrative expenses - Interest and fiscal ageny expenses of former redevelopment agency - Total deductions -Extraordinary loss (2,018,000)Change in net assets (2,018,000)Net assets - beginning -Net assets - ending $ (2,018,000) 25 26. Accounting and Reporting â—— January 31, 2012 Preliminary and Tentative - For Illustration Purposes Only Example of a Stand Alone Audit of the Redevelopment Agency, before Dissolution CITY OF EXAMPLE REDEVELOPMENT AGENCY Statement of Net Assets January 31, 2012 Governmental Activities Assets: Cash and investments: Held in City Treasury $ 2,750,000 Held with trustees 650,000 Interest receivable 18,000 Notes and loans receivable 1,058,000 Land held for redevelopment 586,000 Nondepreciable capital assets 500,000 Total assets 5,562,000 Liabilities: Accounts payable and accrued liabilities 122,000 Interest payable 190,000 Long-term debt: Due within one year 700,000 Due in more than one year 5,000,000 Total liabilities 6,012,000 Net Assets: Invested in capital assets 500,000 Restricted for: Low and moderate income housing 2,826,000 Debt service 1,742,000 Unrestricted (deficit) (5,518,000) Total net deficit $ (450,000) 26 27. Accounting and Reporting â—— January 31, 2012Preliminary and Tentative -For Illustration Purposes OnlyExample of a Stand Alone Audit of the Redevelopment Agency, before Dissolution CITY OF EXAMPLE REDEVELOPMENT AGENCY Statement of Activities For the Period July 1, 2011 through January 31, 2012 Governmental ActivitiesProgram Expenses: Community development $ 2,319,000 Pass-through agreements 150,000 Developer tax sharing reimbursements 410,000 Intergovernmental 1,800,000 Interest and fiscal charges 617,000 Total program expenses 5,296,000General Revenues: Property taxes 4,640,000 Investment earnings 40,000 Other 130,000 Total general revenues 4,810,000 Change in net assets (486,000)Net assets, beginning of year 36,000Net deficit, end of year $ (450,000) 27 28. Accounting and Reporting â—— January 31, 2012 Preliminary and Tentative - For Illustration Purposes Only Example of a Stand Alone Audit of the Redevelopment Agency, before Dissolution CITY OF EXAMPLE REDEVELOPMENT AGENCY Governmental Funds Balance Sheet January 31, 2012 Low and Tax Allocation Moderate Refunding Project Area Income Bonds One Housing Debt Service Total Assets: Cash and investments: Held in City Treasury $ 650,000 $ 1,200,000 $ 900,000 $ 2,750,000 Held with trustees - - 650,000 650,000 Interest receivable 6,000 10,000 2,000 18,000 Advances to other funds - 60,000 - 60,000 Notes and loans receivable - 1,058,000 - 1,058,000 Land held for redevelopment 86,000 500,000 - 586,000 Total assets $ 742,000 $ 2,828,000 $ 1,552,000 $ 5,122,000 Liabilities and Fund Balances: Liabilities: Accounts payable and accruals $ 120,000 $ 2,000 $ - $ 122,000 Deferred revenue - 600,000 - 600,000 Advances from other funds 60,000 - - 60,000 Total liabilities 180,000 602,000 - 782,000 Fund balances: Restricted for: Low and moderate income housing - 2,226,000 - 2,226,000 Debt service - - 1,552,000 1,552,000 Assigned for redevelopment 979,000 - - 979,000 Unassigned (417,000) - - (417,000) Total fund balances 562,000 2,226,000 1,552,000 4,340,000 Total liabilities and fund balances $ 742,000 $ 2,828,000 $ 1,552,000 $ 5,122,000 28 29. Accounting and Reporting â—— January 31, 2012Preliminary and Tentative -For Illustration Purposes OnlyExample of a Stand Alone Audit of the Redevelopment Agency, before Dissolution CITY OF EXAMPLE REDEVELOPMENT AGENCY Reconciliation
  • 10. of the Balance Sheet of Governmental Funds to the Statement of Net Assets - Governmental Activities January 31, 2012Total fund balances reported on the governmental funds balance sheet $ 4,340,000 Amounts reported for governmental activities in the statement of net assets are different from those reported in the governmental funds above because of the following: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds 500,000 Receivables not available: Certain receivables are not available to pay for current period expenditures and therefore are deferred in the governmental funds. 600,000 Long-term liabilities: The liabilities below are not due and payable in the current period and therefore are not reported in the governmental funds: Long-term debt (5,700,000) Interest payable (190,000) Net deficit of governmental activities $ (450,000) 29 30. Accounting and Reporting â—— January 31, 2012 Preliminary and Tentative - For Illustration Purposes Only Example of a Stand Alone Audit of the Redevelopment Agency, before Dissolution CITY OF EXAMPLE REDEVELOPMENT AGENCY Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances For the Period July 1, 2011 through January 31, 2012 Low and Tax Allocation Moderate Refunding Project Area Income Bonds One Housing Debt Service Total Revenues: Property taxes $ 712,000 $ 928,000 $ 3,000,000 $ 4,640,000 Use of money and property 15,000 20,000 5,000 40,000 Other - 80,000 - 80,000 Total revenues 727,000 1,028,000 3,005,000 4,760,000 Expenditures: Current: Community development 1,419,000 900,000 - 2,319,000 Pass-through agreements 150,000 - - 150,000 Developer tax sharing reimbursements 280,000 - 130,000 410,000 Intergovernmental 1,100,000 700,000 - 1,800,000 Debt service: Principal - - 570,000 570,000 Interest and fiscal charges - - 597,000 597,000 Total expenditures 2,949,000 1,600,000 1,297,000 5,846,000 Excess (deficiency) of revenues over (under) expenditures (2,222,000) (572,000) 1,708,000 (1,086,000) Other financing sources (uses) Transfers in 200,000 - - 200,000 Transfers out - - (200,000) (200,000) Total other financing sources (uses) 200,000 - (200,000) - Change in fund balances (2,022,000) (572,000) 1,508,000 (1,086,000) Fund balance, beginning of year 2,584,000 2,798,000 44,000 5,426,000 Fund balance, end of year $ 562,000 $ 2,226,000 $ 1,552,000 $ 4,340,000 30 31. Accounting and Reporting â—— January 31, 2012Preliminary and Tentative -For Illustration Purposes OnlyExample of a Stand Alone Audit of the Redevelopment Agency, before Dissolution CITY OF EXAMPLE REDEVELOPMENT AGENCY Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities - Governmental Activities For the Period July 1, 2011 through January 31, 2012Net change in fund balances - total governmental funds $ (1,086,000)Amounts reported for governmental activities in the statement of activities are different because of the following: Long term debt transactions: Repayment of bond principal is an expenditure in the governmental funds, but in the statement of net assets the repayment reduces long-term liabilities. 570,000 Accrual of noncurrent items: The amounts below included in the statement of activities do not provide or (require) the use of current financial resources and therefore are not reported as revenues or expenditures in governmental funds: Change in deferred revenue 50,000 Change in interest payable (20,000) Change in net assets of governmental activities $ (486,000) 31 32. Accounting and Reporting ï—§ Disclosure of dissolution and transfer of assets and liabilities â—¢ A sample disclosure is included as part of the CCMA White Paper â—¢ Good starting point, but must be tailored to fit the eventsand circumstances unique to your organization â—¢ Suggests to reconcile the difference between the extraordinary gain/loss reported in the governmental funds versus the fiduciary fundâ——s extraordinary gain/loss or additions 32
  • 11. 33. Polling Question #5Extraordinary items are:b) Within the control of management that are eitherunusual in nature or infrequent in occurrencec) Unusual in nature not in the control ofmanagementd) Only infrequent in nature.e) Both unusual in nature and infrequent inoccurrence. 33 34. Polling Question #5 DebriefExtraordinary items are:d) Both unusual in nature and infrequent in occurrence. 34 35. Polling Question #6The Low and Moderate Income Housing Fund (20%Fund) balances are to be disposed as follows:b) Encumbered balances are transferred to theSuccessor Agencyc) Unencumbered balances are transferred tothe Successor Agencyd) Total balances transferred to the SuccessorAgencye) Transferred to the Cityâ——s General Fund 35 36. Polling Question #6 DebriefThe Low and Moderate Income Housing Fund (20%Fund) balances are to be disposed as follows:b) Unencumbered balances are transferred to the Successor Agency 36 37. Audit RequirementsState and Local Audits/Oversightâ—¢Actions of the Oversight Board = DOFâ—¢Agreed-upon procedures engagements, directedby the County Auditor-Controllers â—¢ Due by 7/1/12 and submitted to SCO by 7/15/12â—¢ Purpose (1) establish assets/liabilities, (2) pass- through obligations, (3) determine the amount and terms of indebtedness, and (4) â——Certifyâ—— theinitial ROPSâ—¢Actions of the County ACO = SCOâ—¢SCO also reviews redevelopment asset transfersmade after 1/1/11 to determine if appropriate 37 38. Audit Requirementsï—§ Transition Audits are highly recommended but not required by the SCO (no legislative basis â—— either for former RDA or SA) â—¢No direct funding for audits under ABX1 26 â—¢ Bond covenants may require a separate auditï—§ Two separate engagements are contemplated as two separate entities involved 38 39. Audit Requirementsï—§ The RDA Audit Guide â—— Auditing Procedures for Accomplishing Compliance Audits of California Redevelopment Agencies (August 2011) is no longer in effect (i.e., no compliance audit required)!!!ï—§ SCO states there is no legislative basis to require State Controllerâ——s Reportsor Statements of Indebtednessï—§ Not yet known whether HCD reports will berequired 39 40. Polling Question #7The State Department of Finance is responsible to:b) Review the actions of the Oversight Boardc) Review the actions of the County Auditor-Controllerâ——s Officed) Certify the Recognized Obligation PaymentSchedulee) Review the redevelopment asset transfers madeafter 1/1/11 40 41. Polling Question #7 DebriefThe State Department of Finance is responsible to:c) Review the actions of the Oversight Board 41 42. Polling Question #8A â——Stubâ—— period audit of the formerredevelopmentagency is:b) Required by the State Controllerâ——s Officec) Required by the State Department of Financed) Directly funded under ABX1 26e) Not required, but recommended 42 43. Polling Question #8 DebriefA â——Stubâ—— period audit of the former redevelopmentagency is:d) Not required, but recommended 43 44. Whatâ——s Next?ï—§ Pending legislationï—§ DOF has proposed trailer bill,with significant changes to the existing laws and regulations in the Health and Safety Codeï—§ Administrative Costs will start to drop (5% to 3%, stillsubject to $250,000 â—¦ administrative budget to be approved by the OversightBoard)ï—§ Oversight Boards will consolidate on July 1, 2016 44 45. ReferencesCCMA White Paper (CalCPA members only) -http://www.calcpa.org/Content/24325.aspxDOF -http://www.dof.ca.gov/assembly_bills_26-27/view.phpSCO
  • 12. -http://www.sco.ca.gov/ard_local_info_resources.htmlLeague of California Cities -http://www.cacities.org/Home 45 46. Closing Itemsï—§ Play this and previous MGO Academy webinars at www.mgocpa.com/go/mgo/thought-leadershipï—§ If you are eligible for CPE credit for todayâ——s session, you will receive the certificate electronically in oneto two weeks.ï—§ Please complete and return the evaluation survey, which you will receive via email. 46 47. Questions & Contact InfoNorthern California Central CaliforniaSan Francisco Bay Area: Sacramento:David Bullock, Partner Richard Green, Partnerdbullock@mgocpa.com rgreen@mgocpa.com(925) 395-2835 (916) 642-7046Southern CaliforniaLos Angeles: Orange County:Jim Godsey, Partner Linda Hurleyjgodsey@mgocpa.com lhurley@mgocpa.com(310) 746-2177 (949) 296-4340San Diego:Kevin Starkey, Directorkstarkey@mgocpa.com(619) 618-7211 Thank you for attending. 47 Connect on LinkedInFollow us on TwitterFind us on FacebookFind us on Google+Learn About Us About Careers Our Blog Press Contact us Help & SupportUsing SlideShare SlideShare 101 Terms of Use Privacy Policy Copyright & DMCA Community Guidelines SlideShare on mobilePro & more Go PRO New Business Solutions Advertise on SlideShareDevelopers & API Developers Section Developers Group Engineering Blog Blog Widgets© 2012 SlideShare Inc. All rights reserved.RSS Feed ENGLISH EnglishFrançaisDeutsch× × Sign up for SlideShare PRO account Remove ads from all SlideShare pages with SlideShare PRO Improve your slideshare content browsing experience.Engage your content viewers better by removing ads.Upgrade to PRO See what else you get

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