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2014 Local Government Benchmarking Study

Results Overview by

Krista Edoff, Partner Cherry Bekaert LLP

Government Services Group

Learning Objectives

At the end of this course, participants should be

able to:

Understand current management trends for local

government entities

Gain insight into the current areas of concern shared

by government finance professionals

Gain an understanding of what finance professionals

believe the future holds for government financial

management

Have data for internal benchmarking and budgeting

Presentation Objectives

Review Participant Data

Review responses in the following functional areas: Work Force & Benefits

Financial Reporting

Use of Technology

Debt Structure

Grant Reporting & Administration

Budget

Risk Assessment & the Audit Process

Participant Data

Type of Entity

5

21%

37%

18%

24%

County

Municipality

School

Authority/Commission/Other

By Title

6

38%

31%

30%

1%

CFO/Director of Finance or Equivalent

Controller/Accounting Manager or Equivalent

Accounting Staff

Elected Official

Size of Entity

32%

25%

23%

20%

0 – 500 employees

501 – 2500 employees

2501 – 5000 employees

>5000 employees

24%

25% 31%

20%

0 - 50 million

50.1 - 250 million

250.1 million – 1 billion

> 1 billion

7

By number of employees By revenue

Workforce and Benefits


7%

28% 29% 30%

6% 5%

32%

37%

19%

7%

16%

37%

23%

20%

4%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Fully Agree Partially Agree No Opinion PartiallyDisagree

Fully Disagree

2014 2013 2012

9

It is easier today to find qualified candidates for vacant financial and accounting positions than in the last budget cycle.


17% 12%

71%

9%

19%

74%

6%

46% 48%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Increased Decreased Stayed the Same

2014 2013 2012

10

In the last budget cycle, has your staffing level for financial and accounting positions:


11

16%

8%

76%

Increased Decreased Stay the Same

In the next budget cycle, do you anticipate that the number of filled financial and accounting staff positions will:

14%

13%

73%

Virginia


12

50%

2%

48%


In the past year, have salaries throughout the entity:

60%

3%

37%

Virginia


13

8%

22%

70%


Over the last year, has the benefits package you offered to new employees:

11%

29% 60%

Virginia


16%

23%

43%

8%

5%

61%

7%

Other (please specify)

We have not implemented any new measures

Increased employee premium

Reduced spouse and dependent coverage

Account-based healthcare plans

Wellness programs or incentives

In-house pharmacy operations

0% 20% 40% 60% 80%

14

Given rising healthcare costs, has your entity implemented any of the following to help reduce healthcare costs: (check all that apply)


11%

13%

56%

13%

10%

73%

4%


We have not implemented any new measures

Increased employee premium

Reduced spouse and dependent coverage

Account-based healthcare plans

Wellness programs or incentives

In-house pharmacy operations

0% 20% 40% 60% 80%

15

Given rising healthcare costs, has your entity implemented any of the following to help reduce healthcare costs: (check all that apply)

Virginia


11%

29%

1%

30%

50%

37%


The Affordable Care Act has not impacted myentity

Have been assessed penalties

Implemented changes to our insurance plans

Increased time and effort to ensure compliance

Increased healthcare cost

0% 20% 40% 60%

16

What impact has the Affordable Care Act had on your entity? (check all that apply)


7%

23%

1%

36%

60%

50%


The Affordable Care Act has not impacted myentity

Have been assessed penalties

Implemented changes to our insurance plans

Increased time and effort to ensure compliance

Increased healthcare cost

0% 20% 40% 60% 80%

17

What impact has the Affordable Care Act had on your entity? (check all that apply)

Virginia

Financial Reporting

Financial Reporting

19

13%

43% 21%

20%

3%

Fully Agree Partially Agree No Opinion Partially Disagree Fully Disagree

In general, the new standards issued by GASB meet the needs of its users.

13%

43% 21%

20%

3%

Virginia

Financial Reporting

20

8%

45%

10%

27%

10%


The current financial reporting model is understandable to elected officials and constituents.

7%

49%

6%

33%

5%

Virginia

Financial Reporting

21

11%

46% 11%

25%

7%


The current financial model is useful and valuable to elected officials and constituents.

6%

54% 8%

29%

3%

Virginia

Financial Reporting

22

32%

55%

13%

Yes No GASB 65 does not impact my entity

Did you early implement GASB 65?

31%

61%

8%

Virginia

Financial Reporting

24%

38%

42%

58%

42%

50%

We did not have any challenges/consultations

Restating prior year numbers in MD&A

The restatement footnote

General presentation in the statements

Identifying all deferred inflows and outflows at thefund level

Identifying all deferred inflows and outflows at theentity-wide level

0% 20% 40% 60% 80%

23

If your entity early implemented GASB 65, what challenges did you face or what consultations with your auditor did you have in early implementing: (check all that apply)

Financial Reporting

11%

56%

56%

61%

50%

56%

We did not have any challenges/consultations

Restating prior year numbers in MD&A

The restatement footnote

General presentation in the statements

Identifying all deferred inflows and outflows at thefund level

Identifying all deferred inflows and outflows at theentity-wide level

0% 20% 40% 60% 80%

24

If your entity early implemented GASB 65, what challenges did you face or what consultations with your auditor did you have in early implementing: (check all that apply)

Virginia

Financial Reporting

73%

27%

78%

22%

76%

24%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Yes No

2014 2013 2012

25

Given the current uncertainty of state and federal funding, should information regarding intergovernmental dependency be included in the financial report?

Financial Reporting

73%

73%

68%

79%

94%

Use (education,infrastructure,

economic…

Purpose (operating vs.capital)

Length (annual vs.multiple year)

Type (grant vs.appropriation)

Source (federal vs.state vs. primary

government)

0% 20% 40% 60% 80% 100%

26

If yes, what type of information should be included? (Check all that apply)

80%

71%

57%

75%

96%

Use (education,infrastructure, economic

development)

Purpose (operating vs.capital)

Length (annual vs.multiple year)

Type (grant vs.appropriation)

Source (federal vs. statevs. primary government)

0% 20% 40% 60% 80% 100%

Virginia

Financial Reporting

27

11%

30%

23%

28%

5% 3%

The introduction section The MD&A The Auditor's Opinion

The financial statements The footnotes The statistical section

What do you consider to be the most read portion of your CAFR?

12%

36%

20%

22%

5% 5%

Virginia

Financial Reporting

28

1%

27%

5%

46%

17%

1% 3%

The introduction section The MD&AThe Auditor’s Opinion The financial statementsThe footnotes The required supplementary informationThe statistical section

What do you consider to be the most valuable portion of your CAFR?

32%

4% 32%

25%

4% 3%

Virginia

Financial Reporting

29

34%

9%

5%

1% 5%

18%

28%

The introduction section The MD&A

The Auditor’s Opinion The financial statements

The footnotes The required supplementary information

The statistical section

What do you consider to be the least valuable section of your CAFR?

37%

13%

2% 2%

19%

27%

Virginia

Financial Reporting

30


I don’t follow GASB’s current projects

Tax Abatement Disclosures

OPEB Accounting and Financial Reporting

Lease Accounting

Fair Value Measurement

Economic Condition Reporting

Conceptual Framework – Measurement and Recognition

0% 10% 20% 30% 40% 50% 60%

Authority/Commission School Municipality County

Which GASB current project(s) are you following? (check all that apply)

Virginia

29%

22%

15%

20%

63%

7%

20%

1%

Use of Technology

Use of Technology

17%

44%

22%

17% 14%

41%

23% 22%

26%

42%

22%

10%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

In the past year In the past 1 to 5years

In the past 6 to 10years

So long ago I cannotremember

2014 2013 2012

32

When was your last IT System overhaul (not including annual system updates)?

Use of Technology

11%

19%

31%

8%

32%

11%

19%

31%

8%

31% 34%

17%

38%

11%

0% 0%

5%

10%

15%

20%

25%

30%

35%

40%

Recentlyupgraded

In the upcomingyear

In the next 2-5years

In the next 6-10years

We do not havean IT System

overhaul plannedat this time

2014 2013 2012

33

When do you plan your next IT System overhaul (not including annual system updates)?

Use of Technology

84%

16%

84%

16%

91%

9%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Yes No

2014 2013 2012

34

Do you believe the increased use of technology will be necessary to keep cost under control?

Use of Technology

35

We do not use social media

YouTube

LinkedIn

Twitter

Facebook

0% 10% 20% 30% 40% 50% 60% 70%


On which of the following social media websites does your entity have an official presence (e.g. operated and overseen by the entity)? (Check all that apply.)

Virginia

66%

57%

28%

23%

27%

Use of Technology

36

79%

21%

Yes No

Do you currently post your CAFR to your website?

89%

11%

Virginia

Use of Technology

37

10%

8%

37% 30%

15%

Yes, regarding access via a smartphone, tablet or other similar deviceYes, regarding the use of unencrypted thumb drives to transfer dataYes, to bothNoWe do not allow this type of access

Are you concerned about confidential data being lost, stolen or misused given employees’ ability to access your network through smartphone, tablet, thumb drive or other similar devices?

14% 6%

39%

30%

11%

Virginia

Use of Technology

38

31%

25% 8%

36%

Yes, multiple services availableYes, 1 or 2 select services availableNo, but a plan is in place to implementNo, with no plans to implement

Is your locality wired such that web based access is available to all citizens locality wide?

34%

23% 5%

38%

Virginia

Use of Technology

39


We do not accept revenue collectionsthrough the internet

Utility payments

School fees

Real estate taxes

Traffic fines

Business and professional licenses

0% 10% 20% 30% 40% 50%

0 - 50 million 50.1 - 250 million 250.1 million – 1 billion > 1 billion

My locality currently accepts revenue collections through the internet for: (check all that apply)

Virginia

27%

18%

55%

18%

46%

20%

14%

Use of Technology

40

14%

49%

17%

3%

17%

Whenever there is a major change to our IT EnvironmentAnnuallyOnce every 3 yearsOnce every 5 yearsWe do not complete IT Risk Assessments

How often does your entity undergo an IT Risk Assessment?

12%

50%

20%

4%

14%

Virginia

Use of Technology

41

With regards to the above question, are these assessments performed:

25%

16%

43%

16%

Internally Externally Both We do not complete IT Risk Assessments

20%

12%

54%

14%

Virginia

Debt Structure

Debt Structure

43

45%

55%

Yes No

Should the Securities and Exchange Commission (SEC) have the authority to directly regulate issuers of municipal securities and set timelines, content requirements, and have enforcement capabilities over issuers?

40%

60%

Virginia

Debt Structure

44

35%

65%

Yes No

Should the SEC be allowed to establish the form and content of financial statements for entities that issue municipal securities?

29%

71%

Virginia

Debt Structure

45

Debt Structure

46

23%

15%

30%

32%

6 months 6 month to a year

1 to 3 years No time in the foreseeable future

Do you plan to incur debt in the next…?

23%

15%

30%

32%

Virginia

Debt Structure

47

57%

9%

1%

4%

5%

24%

Funding new construction/infrastructure Refinancing current debt

Financing pension/OPEB liabilities Helping with operations

Other We are not issuing debt

What will you use your next financing for?

65%

13%

2%

2%

2%

16%

Virginia

Debt Structure

48

21%

3%

53%

23%

Increase in bond rating Decrease in bond rating

Have no effect on bond rating Have not assessed

Based on your entity’s economic outlook, where do you see your bond rating in the next 5 years?

15%

6%

64%

16%

Virginia

Debt Structure

49

2%

32%

32%

34%

Increase in bond rating Decrease in bond rating

Have no effect on bond rating Have not assessed

What affect will recording the pension liability required by GASB Statement No. 68 have on governmental bond ratings as a whole?

34%

35%

31%

Virginia


51

It did not have any effect on our entity

The ARRA grant created more efficient operations to supportARRA grant functions even after the funding ended

We found other funding to replace ARRA grant funds

We issued debt

We had to cut full-time positions or other expenditures/programs

I only hired temporary employees specifically for the ARRA

0% 20% 40% 60% 80%


Virginia 15%

13%

0%

28%

2%

56%

If you received ARRA grant money, how have you been able to replace that funding? (check all that apply)


52

14%

20%

61%

5%

We will no longer be subject to a single audit under the new $750,000 thresholdConsolidating the cost principlesI have not read the final grant reform rulesOther

Which of the recently revised grant reform rules are most significant to your entity:

13%

33% 48%

6%

Virginia


53

40%

38%

14%

3%

5%

We do not have a separate financial accounting and grant management departmentYes, the departments collaborate fullyYes, the departments collaborate sometimesNo, the departments do not collaborateWe do not receive grant funds

Do the financial accounting and grant management departments collaborate to ensure grant funds are properly distributed and reported?

43%

33%

13%

11%

Virginia

Budget

Budget

39.0%

61.0%

50%

42%

66%

34%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

Yes No

2014 2013 2012

55

My entity experienced shortfalls in actual revenues compared with budgeted revenues.

Budget

56

To address budget shortfalls, is your entity contemplating increases in existing user or service fees?

41%

39%

20%

No Do not have a budget shortfall Yes, my entity is contemplating increasing fees

34%

47%

19%

Virginia

Budget

57

55% 37%

8%

No Do not have a budget shortfall Yes, my entity is considering new fees

To address budget shortfalls, is your entity contemplating new user or service fees?

51% 40%

9%

Virginia

Budget

58

8%

18%

5%

27%

19%

12%

11%

Increase in the upcoming yearIncrease in the next 3 yearsIncrease in the next 5 yearsDecrease in the upcoming yearDecrease in the next 3 yearsDecrease in the next 5 yearsWe have no reliance on the federal/state government

Do you believe reliance on federal/state government for funding will:

4%

19%

5%

24% 21%

19%

7%

Virginia

Budget

59

37%

7% 8%

41%

Have alreadyimplemented

Will implement in thenext 12 months

Will implement in thenext 1-3 years

We will not useoutsource companies

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Has your entity investigated any outsourcing opportunities that can reduce costs?

Budget

60

49%

4% 4%

34%

Have alreadyimplemented

Will implement in thenext 12 months

Will implement in thenext 1-3 years

We will not useoutsource companies

0%

10%

20%

30%

40%

50%

60%

Has your entity investigated any outsourcing opportunities that can reduce costs?

Virginia

Budget

8.3%

27.3%

61.0%

4.0%

11%

23%

61%

5% 3%

18%

59%

12%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

Raise taxes to balancethe budget

Reduce costs to bemore efficient with a

slight increase in taxes

Maintain tax rate andreduce cost of services

Reduce taxes at theexpense of programs

and services

2014 2013 2012

61

What is the Board or Commission position on property taxes?

Budget

62

14%

46% 4%

15%

8%

13%

EducationInfrastructureTourism (e.g., river walks, coliseums)Rehabilitating existing facilitiesNew facilitiesWe are not projecting any large capital expenditures in the next 5 years

Where are you projecting to spend the majority of your capital budget in the next 5 years?

Virginia

32%

40% 2%

13%

4% 9%

Budget

63

13%

20%

14%

9%

44%

As percentage of yearly actual expenditures

As percentage of yearly budgeted expenditures

As percentage of yearly actual revenues

As percentage of yearly budgeted revenues

We do not have an annual minimum unassigned fund balance policy

How is your annual minimum unassigned fund balance policy determined?

9%

15%

21%

15%

40%

Virginia

Budget

64

41%

59%

Yes No

Virginia

Does your entity have a "rainy day fund" policy?

53%

47%

Budget

65

31%

40%

12%

17%

<10% 10-15% 16-20% >20%

What percentage does your “rainy day fund” policy plan for?

44%

44%

4% 8%

Virginia

Budget

66

55%

21%

24%

Yes, currentlyNo, not currently, but plan toNo, and don’t plan to

Is your entity currently producing multi-year revenue forecasts and/or budgets?

62% 17%

21%

Virginia

Budget

67

Yes, currently

No, not currently, but plan to

No, and don't plan to

0% 10% 20% 30% 40% 50% 60% 70%

Authority/Commission/Other School Municipality County

Is your entity currently producing multi-year revenue forecasts and/or budgets? (by Entity Type)

Budget

68

Yes, currently

No, not currently, but plan to

No, and don't plan to

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

> 1 billion 250.1 million - 1 billion 50.1 - 250 million 0 - 50 million

Is your entity currently producing multi-year revenue forecasts and/or budgets? (by Revenue)

Budget

69

45%

16%

39%

Yes, we have had some programs pushed down to the local level

No, we haven’t had any programs pushed down, but expect to

No, we haven’t had any programs pushed down and don’t expect to

Are you seeing programs that were historically state- or federally-run pushed down to be run at your local government level?

56%

6%

38%

Virginia

Budget

70

42%

10%

48%

Yes, currently No, not currently, but plan to No, and don't plan to

Outside of federal grants, does your entity budget for security and terrorism preparedness?

42%

8%

50%

Virginia


72

7%

11%

14% 68%

Internal auditorsFraud hotlineAnother employeeNo fraud was perpetrated against our entity in the past year

If a fraudulent event occurred at your entity in the last year, how was it caught?

6%

21%

15%

58%

Virginia


73

31%

8% 61%

Yes No We do not have a fraud hotline

Our fraud hotline is an effective tool in preventing fraud and abuse?

44%

4%

52%

Virginia


74

Yes

No

We do not have a fraud hotline

0% 10% 20% 30% 40% 50% 60% 70% 80%


Our fraud hotline is an effective tool in preventing fraud and abuse? (by Entity Type)


75

Yes

No

We do not have a fraud hotline

0% 10% 20% 30% 40% 50% 60% 70% 80%


Our fraud hotline is an effective tool in preventing fraud and abuse? (by Revenue)


76

23%

2%

5%

3%

5%

62%

Internal Audit Accounting/FinanceHuman Resources Outsourced providerOther We don't have a hotline

Who oversees the Fraud Hotline?

36%

6%

2% 4%

52%

Virginia


77

28%

24%

3%

45%

Meet on a regular basis and provide good oversight for the audits

Only meet to review audit results

Audit Committee exists only for the auditor selection process

We don’t have an Audit Committee

How valuable and effective is your Audit Committee or similar governance committee?

44%

13% 4%

39%

Virginia


78

Meet on a regular basis and providegood oversight for the audits


Audit Committee exists only for theauditor selection process


0% 10% 20% 30% 40% 50% 60% 70%


How valuable and effective is your Audit Committee or similar governance committee? (by Entity Type)


79

Meet on a regular basis and providegood oversight for the audits


Audit Committee exists only for theauditor selection process


0% 10% 20% 30% 40% 50% 60% 70% 80%


How valuable and effective is your Audit Committee or similar governance committee? (by Revenue)


80

34%

16%

3%

47%

Less than 100 hours

Between 100 and 500 hours

Over 500 hours

Do not have Internal Audit function

Which of the following statements best describes the allotted time your Internal Audit department assists the external auditor?

41%

17% 2%

40%

Virginia


81

Less than 100 hours

Between 100 and 500 hours

Over 500 hours

Do not have Internal audit function

0% 10% 20% 30% 40% 50% 60% 70% 80%


Which of the following statements best describes the allotted time your Internal Audit department assists the external auditor? (by Revenue)


82

Providing assurance that management did not misstate thefinancial statements

Providing public confidence in the financial statements

Lending credibility to the financial statements

Compliance with grantors, which impacts future revenuestreams

Identification of areas where improvement(s) can be made

Accountability to the constituents

Validation of stewardship of resources

0% 20% 40% 60% 80%


The performance of an annual external financial statement and compliance audit provides clear value through: (check all that apply)


83

18%

20%

33%

29%

YesNo, but we plan to in the next yearNo, but we plan to in the future (beyond a year)We have no plans to

Has your entity re-assessed its internal control environment under the 2013 COSO framework?

13%

39% 29%

19%

Virginia


84

29%

56%

8% 6%

1%

We do not believe auditor rotation is necessaryWe believe auditor rotation should be assessed every 5 yearsWe believe auditor rotation should be assessed every 10 yearsWe believe auditor rotation should be mandatory every 5 yearsWe believe auditor rotation should be mandatory ever 10 years

What is your entity's opinion on the need for auditor rotation?

31%

61%

4% 4%

Virginia

Questions?

85

For more information or questions, contact:

Krista Edoff, Partner

[email protected]

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