Association of Government Accountants
The Central Kentucky Chapter
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Association of Government Accountants
The Central Kentucky Chapter
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April 2003 - Volume XXIV, Issue 10 |
Chapter meeting notes for March
By Mary Hudson, Secretary
The Central Kentucky Chapter held its monthly membership meeting
on March 6, 2003, at the Office Pub & Deli. Lee Ann Watters, Education and Training Coordinator, introduced
the guest speaker, Mr. Michael B. Mountjoy, CPA, ABV, founding member and
Managing Director of Carpenter, Mountjoy & Bressler, P.S.C., a regional
public accounting firm with offices in Louisville, Lexington, Covington, and
Frankfort, Kentucky. Mr.
Mountjoy is a former president and an active member of the Kentucky Society of
Certified Public Accountants. He is also a member of the AICPA, where he has
served as a member of the Board of Directors and Chair of the Finance
Committee.
Mr.
Mountjoy discussed the new Sarbanes-Oxley Act and the related concerns of the
AICPA.
Congress
enacted the Sarbanes-Oxley Act as a result of recent high-profile business
failures. The Act is an attempt to improve the public perception of
independence of accounting firms that are engaged to perform audits of publicly
traded companies. The Act imposes new restrictions on the profession.
Accounting firms engaged to perform audits of publicly traded companies cannot
perform any other services for the company that would affect the audited
financial statements (i.e. consulting, bookkeeping, etc). The Act also requires
that auditors be rotated to perform engagements for different clients.
Mr. Mountjoy emphasized the AICPA supports self-regulation and
not government regulation of the profession. The AICPA is concerned the Act
will have a negative impact on the profession.
Audit risk and costs will likely increase due to the number of new
engagements and small accounting firms may struggle to keep afloat in an
attempt to comply with the provisions of the Act. However, Mr. Mountjoy also pointed out the Act should restore
public confidence by setting new standards for independence.
“GASB’s New Model Implementation Well Underway”
By James M. Williams
More than 450 state and local governments have notified the
Governmental Accounting Standards Board (GASB) that they early implemented the
new financial reporting model required by GASB Statement No. 34, Basic Financial Statements—and Management’s
Discussion and Analysis—for State and Local Governments. Ohio has been a
recognized leader with over 45 governments early implementing GASB Statement
34. Implementation was required for fiscal years ending after June 15, 2002 for
the largest governments and will be required over each of the next two years
for the other governments.
What is new about the new financial reporting model? The new
model’s major changes include government wide financial statements on the
accrual basis of accounting, which includes infrastructure and other capital
assets; enhanced fund reporting; a required management’s discussion and
analysis; and resolution of a number of troublesome financial reporting issues.
The GASB also issued two question and answer implementation guides to help
preparers understand and implement the new model’s changes.
How has the implementation been going? GASB Chairman Tom Allen
recently stated, “Responses received from those who have implemented [GASB
Statement 34] early have been overwhelmingly positive and often have included
encouraging comments from city and county managers and government board members
once they have been informed by finance officials and auditors of the additional
finance information contained within the reports.”
How have users reacted to the new financial reporting model?
User reaction has been very positive since GASB Statement 34 was issued in June
1999. The GASB has issued a series of guides to assist users in understanding
the financial statements prepared under the new model. These guides primarily
target citizens, taxpayers, elected officials, and financial analysts. The GASB
will monitor reactions and the need for additional guidance as users gain experience
in understanding and evaluating financial statements following GASB Statement
34.
The above information only hits some of the highlights about
GASB Statement 34 and its implementation. For more information, refer to the
GASB web site at GASB-Statement
34.
* * * * * * * * * * * * *
* * * * * * * * * * * *
AGA Cleveland Chapter member Jim Williams is a GASB member and
retired Ernst & Young LLP partner and National Director of Public Sector
Accounting and Assurance Services.
The views expressed in this article are those of Mr. Williams.
Official positions of the GASB are determined only after extensive due process
and deliberations.
Avoiding
a common fraud
Money stolen from a bank account is a very common fraud. This usually happens in small organizations.
These include small businesses, non-profit groups, churches, scout groups, and
clubs. In most of these situations, a
minimum level of controls would have greatly reduced the fraud risks. Adequate controls protect innocent people
from suspicion of wrongdoing, which protects their reputation.
The individuals who perpetrate these frauds usually have been
given a high degree of control over bank account duties. The perpetrators are usually people who are
trusted by those with management responsibilities over the bank account.
The people who commit these frauds are often among the most
trusted people in these organizations.
Auditors often say, “Trust, but verify.” If people with management responsibilities and adequate staff
use the “trust, but verify” approach, they can avoid many frauds.
The key bank account duties include:
1.
Preparing checks to be signed by an authorized check signer;
2.
Reviewing and signing checks;
3.
Matching invoices or other supporting documentation to the
checks being issued;
4.
Issuing the checks whether in person or by mail;
5.
Preparing deposit slips and making deposits;
6.
Matching supporting documentation to the deposit slips;
7.
Posting the deposits, the checks issued, and the other
transactions to a check register;
8.
Receiving and reconciling the monthly bank statement (this
should include comparing each check payee and amount to source documents and/or
the check register); and,
9.
Reviewing the bank reconciliation to ensure that it is
consistent with the check register and other accounting records.
When one person handles all of these key bank account duties,
there is a high risk of fraud. A way to
reduce fraud risk is to have each duty performed by a different person or group
of people, but this is usually only feasible in large organizations. If these duties can be separated among two
or more people, the fraud risk drops. When two signatures are required on
checks, or at least checks over a threshold level (such as over $500), the
fraud risk is lower. Another risk reduction technique is to have other people
randomly perform these duties once every six months, or at least once a
year. Bank employees are required to
have a 2-week vacation or a 2-week separation of duties.
The most critical duties to separate are those related to
receiving the bank statement, reconciling the bank statement, and approving or
verifying the reconciliation (#8 and #9 above). If the person who handles the reconciliation duties (#8 and #9)
is different from the person who handles the other duties (#1 through #7),
fraud risk can be reduced to an acceptable level.
Money stolen from a bank account is a common fraud. Separating and rotating the bank account
duties can avoid these frauds.
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Copyright © 2003 by Tom Crouch
This article may be forwarded via e-mail or fax so long as the
copyright is shown. This article may be
reprinted or placed on a web site so long as the copyright is shown. All other rights are reserved.
The
benefits of earning the CGFM certification
By
Joan Schwartz, Deputy
Executive Director of Professional Certification
What are the most common benefits of CGFM
certification as reported by applicants and certificate holders?
Although many organizations emphasize
job promotion and higher salaries when promoting their certification programs,
the reality is that these tangible benefits usually fall at the bottom of the
list. What comes out at the top?
Intangible benefits such as increased knowledge, enhanced credibility,
and personal satisfaction in attaining a goal.
Interestingly, this pattern holds
true across a wide variety of professions, including those for which possessing
the credential is tied directly or indirectly to increased income. It appears, then, that much of the value
derived from the credential stems from: (a) the visibility and image of the
credential and (b) the degree to which participation in certification and
re-certification enhance professional development.
This question was excerpted from
Certification Navigator, Copyright 2003, Knapp and Associates
International, Inc. Fall, 2002.
The CGFM Regional and Chapter
Coordinators continue to work energetically and diligently to inform the
financial management profession about the many benefits of earning the
Certified Government Financial Manager (CGFM) designation.
We appreciate each and every AGA
member's contribution to informing others about the CGFM - from wearing a CGFM
ribbon at AGA meetings and seminars, to offering chapter scholarships to those
members who are planning to take the CGFM exam, to gaining state government
recognition for the CGFM. Every action,
however small or large, helps to raise the visibility and image of the CGFM
designation. Those who have earned
their CGFM indicate the increased confidence and knowledge they bring to their
jobs. From our anecdotal experience, we find that our holders mirror the
reasons cited in the answer above.
The Association of Government
Accountants invites you to attend the 52nd Annual Professional Development
Conference & Exposition (PDC), on June 29 – July 2, 2003, at the Sheraton Chicago
Hotel & Towers in Chicago, IL.
Themes
for each day of the conference are:
¨
Defining the
Business Challenges
¨
Meeting the
Business Challenges
¨
Becoming More
Customer-Centric
On
the first day, speakers will identify the strategic challenges facing federal,
state and local governments and, in particular, their financial managers. On
the second day, sessions will focus on how our organizations—and financial
leaders—can address the business challenges of the next decade. On the final
day, attendees will hear top-notch speakers address how we, as public servants,
can help our organizations deliver cost-effective and efficient services and
products to our customers. This four-day conference has something for
everyone. Sessions cover all levels, from basic to advanced. Volunteer
committees of your peers select both the topics and speakers—because they know
the issues that are most important to you.
We
will be using some innovative techniques such as a series of Town Hall
Meetings, which will allow the
morning
speakers to further share their expertise by giving them and their audience
time to explore the topics more in-depth and in a more interactive manner.
These Town Halls will involve significant audience interaction through
questions and answers and debates among the panelists and the participants
managed by a facilitator. Other sessions will allow participants to obtain more
specific, technical updates on a variety of subjects of interest to our
community.
In
addition to an outstanding educational program, the 2003 PDC offers unmatched
networking opportunities and world-class exhibits by leading suppliers. No
other conference provides the opportunity to interact with top-ranking,
influential government financial executives, as well as leaders in private
sector financial and technology management. Combine the great educational
content and the ability to earn up to 26 CPE hours with exhibits and networking
opportunities, and you'll realize that this conference is a must.
Who will attend the PDC?
More
than 1,400 financial executives from federal, state and local governments will
attend the conference, all looking to enhance their careers and learn from
other leaders in government financial management.
What are the benefits of attending a
PDC?
¨
Educational
sessions with practical information.
¨
Opportunity to
earn valuable CPE hours while increasing knowledge and skills for career
enhancement.
¨
Networking
opportunities—time to meet with your colleagues to discuss current issues.
¨
Access to the
newest products and services available to financial managers in the Exhibit
Hall.
¨
Personal and
professional growth as a financial executive.
¨
Join your
colleagues. Take this opportunity to share your successes and challenges with
them and be a part of this premier conference.
¨
David M. Walker,
CPA, Comptroller General of the United States, General Accounting Office;
¨
Sean O’Keefe,
Administrator, NASA;
¨
Ed Barlow,
President, Creating the Future, Inc.;
¨
Dov Zakheim,
Under Secretary (Comptroller) and Chief Financial Officer, DoD;
¨
Steve Cooper,
Chief Information Officer, U.S. Department of Homeland Security (DHS);
¨
Capt. Gail
Harris, U.S. Navy;
¨
Sheila Fraser,
Auditor General of Canada; and,
¨
Mark Forman,
Associate Director for Information Technology and E-Government, Office of
Management and Budget.
Join
your colleagues, take this opportunity to share your successes and challenges
with them and be a part of this premier conference.
NASBA Certification
The
Association of Government Accountants is registered with the National
Association of State Boards of Accountancy (NASBA), as a sponsor of continuing
professional education on the National Registry of CPE Sponsors. State
boards of accountancy have final authority on the acceptance of individual courses
for CPE credit. Complaints regarding registered sponsors may be addressed
to the National Registry of CPE Sponsors at 150 Fourth Avenue North, Suite 700,
Nashville, TN 37219-2417, 615.880.4200.
The TOPICS newsletter is now available online
The
April 2003 issue of the Government Financial Management TOPICS newsletter is
now online for viewing. To access this month’s issue, go to http://www.agacgfm.org/publications/m_pubstopics.htm.
Just a reminder, beginning in April 2003, TOPICS is now an entirely electronic
publication. If you have a colleague or friend who does not have access to the
Internet at home or at work, please have them call AGA's Customer Satisfaction
Center at 800.AGA.7211.
Newsletter Notes
If you know of any news, promotions,
presentations, awards, certifications, retirements, etc. affecting our chapter
members, please email your comments and suggestions to the newsletter editor,
Jennifer Harper at mailto:Jharper@kyauditor.net.
Chapter Executive Committee
Office CEC Officers E-mail Address Phone President Cindy Upton (502) 564-8100 President-Elect Roy Hunter (502) 695-1040 Past President Phil Nally (502) 564-7750 Secretary Mary Hudson (502) 573-0050 Treasurer Rick Waddle (502) 564-7750 Program Coordinator Margaret Hurst (502) 564-8100 Early Careers Director Sharon Parrish (502) 564-6910 Education & Training Coordinator Lee Ann Watters (502) 695-1040 Newsletter Editor Jennifer Harper (502) 573-0050 Historian Linda Sagraves (502) 573-0050 Community Service Rex Gregory (502) 564-7334 Attendance Coordinator Don Fields (502) 564-7334 Membership Coordinator Amy Small (502) 573-0050 CGFM Coordinator Jonathan Smith (502) 564-2532 Website Development Coordinator Dan Flaherty (502) 564-8890 (502) 291-3889 Central Kentucky AGA Website
