The Journey to Budgetary Compliance

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The Journey to Budgetary Compliance
Governors Office of Planning and Budget

• March 5, 2008
• Web Casts
• Morning Session 10 a.m. 12 noon
• Afternoon Session 2 4 p.m.

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The Journey to Budgetary Compliance
Governors Office of Planning and Budget

• March 5, 2008

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• Housekeeping
• Please put cell phones on vibrate or turn them
  off
• No food or drink in the auditorium
• Restrooms are located off the lobby
• Website address for additional support
  information http//sao.georgia.gov
• Under the At Your Service heading
• FM Reconciliation Training Presentation
• Accounting Procedures Manual
• Check back often for additional courses and
  registration
• Please hold questions for the QA segment

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Agenda

• Introductions
• Budgetary Compliance Overview
• 2007 Budgetary Compliance
• 2008 Budgetary Compliance
• Training and Support
• Next Steps
• Questions

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Presenters

• Sonja Allen
• Office of Planning
• and Budget
• Don Barzyk
• State Accounting Office

Governors Office of Planning and Budget
I. Intro
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• Lynn Vellinga
• State Accounting Officer
• Need for budgetary compliance
• Need for clean report from DOAA
• SAO is committed to helping agencies comply by
• Maintaining and improving PeopleSoft Financials
• Issuing specific Policies and Procedures as
  needed
• Revising State Accounting Procedures Manual
• Developing training strategy to deliver ongoing
  training
• Monitor budgetary and trial balance reports for
  compliance
• Identify opportunities to assist agencies

I. Intro
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• 2008 will be better
• Reports have been fixed
• Conversion Issues/Data Cleanup has been addressed
• 2007 first full year with Program Chartfield

I. Intro
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• Trey Childress
• Director, Office of Planning and Budget
• OPB has statutory responsibility to monitor
  budgets
• Compliance with letter and intent of
  Appropriations Act
• Budgets maintained at authorized levels
• Allotments of State Funds within authorization
• OPB is committed to helping agencies comply by
• Maintaining statewide BudgetNet applications
• Providing annual training on systems and
  Appropriations Act
• Issuing specific Policies Procedures as needed
• Monitoring expenditures quarterly

Governors Office of Planning and Budget
I. Intro
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The Journey to Compliance

• Budgetary Compliance is the Destination
• OPB and SAO are the Tour Guides
• BudgetNet and PeopleSoft are the Vehicles
• Business Processes, Policies and Procedures, and
  the Appropriations Act are the Maps

Lets begin our journey!
II. Overview
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Understanding Budgetary Compliance
Destination

• What is Program Based Budgeting (PBB)?
• What is Budgetary Compliance?
• Who are the participants and what are their roles
  in the process?
• What tools are used?
• What Processes and Policies Need to be Followed?

Tour Guides
Vehicles
Maps
II. Overview
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The Journey to Budgetary Compliance
Destination
II. Overview
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Program Budgeting Definitions

• Program a discrete set of activities undertaken
  to carry out an agencys core business
• Budget complete financial plan for the fiscal
  year as proposed in the budget report and
  modified and adopted by appropriation and revenue
  Acts
• Budget Allotment process of authorizing the
  withdrawal of state funds from the treasury based
  on a determination that the budget allotment
  request is consistent with an approved work plan
• (O.C.G.A. 45-12-71)

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What is Budgetary Compliance?
Legal Level of Control The level of detail
identified in the appropriations act at which
agencies are required to record and report
revenue and expenditures. This level is
currently Program, Purpose and Fund Sources
within a program.
Budgetary Compliance The agencys capability to
demonstrate adherence to the Appropriations Act.
Destination
II. Overview
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What is Budgetary Compliance?

• Begins with the Appropriations Act (AOB)
• Legal Level of Budgetary Control
• Requires continuous monitoring of budgets, fund
  sources, and expenditures
• Agencies are responsible for assuring compliance
  with the Appropriations Act

Destination
II. Overview
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The Journey to Budgetary Compliance
Tour Guides
II. Overview
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Who is Involved?
State Level

• Office of Planning and Budget (OPB)
• State Accounting Office (SAO)

Department of Audits
Agencies
ACCOUNTING FUNCTION BUDGET FUNCTION
II. Overview
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Office of Planning and Budget

• Coordinates the fiscal affairs and procedures of
  the state to assure the carrying out of the
  financial plans and policies approved by the
  General Assembly, including administration of a
  system of annual operating budgets and amendments
  thereto and of expenditure control. (O.C.G.A.
  45-12-73. (4))
• OPB is statutorily required to monitor budgetary
  compliance for every appropriated agency.

II. Overview
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Office of Planning and Budget

• OPB reviews and approves the AOB
• OPB may request schedules and other supplementary
  information the AOB is the financial plan for
  the agency
• OPB reviews and approves Amendments
• OPB may need authorized position/motor vehicle
  counts, implementation plans, object classes, and
  subprogram information to ensure conformity to
  both the letter and the intent of approved
  appropriations acts
• OPB
• Ensures allotments conform to the appropriations
• Monitors fund expenditures by making sure they
  are within appropriated/budgeted amounts by
  program and fund source

II. Overview
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State Accounting Office

• Provides statewide policies and procedures for
  financial accounting
• Provides the tools for reporting, tracking and
  monitoring through the PeopleSoft systems
• Prepares and publishes annual financial reports
• Comprehensive Annual Financial Report (CAFR)
  (GAAP)
• Statewide Single Audit Report (Federal)
• Budgetary Compliance Report (BCR) (Statutory)

II. Overview
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State Accounting Office

• Budgetary Compliance Report
• Demonstrates compliance with the Appropriations
  Act for both revenue and expenditures
• Shows budget to actual variance for all state
  organizations in the Appropriations Act

II. Overview
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Department of Audits and Accounts

• Performs agreed-upon procedures to determine
  agencies compliance with the Appropriations Act
• Reviews agency operations and SAO reports to
  determine if agencies are compliant with the
  Appropriations Act, following statewide policies,
  and maintaining adequate accounting records
• Conducts performance audits to
• Determine if programs are meeting business
  objectives
• Measure programs results and effectiveness
• Evaluate the efficiency of resource allocations
• Assess compliance with laws and regulations

II. Overview
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How Compliance is Evaluated
Tour Guides
II. Overview
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The Journey to Budgetary Compliance
Vehicles
II. Overview
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BudgetNet

• All state agencies work in BudgetNet
• AOB/Amendments/Allotments
• Agencies not using SAO PeopleSoft Financials need
  to
• Develop a reconciliation process to ensure
  budgetary controls in the financial application
  are consistent and in sync with BudgetNet

II. Overview
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BudgetNet

• Application of record for approved budgets
• Initial load of AOB matches exactly the
  appropriation by Program and fund source
• Used to submit and approve amendments to initial
  AOB
• Used to submit and approve allotment requests for
  state funds

II. Overview
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Peoplesoft

• Two trees are critical to program budgeting
• Program Tree
• Funding Source Tree

Ensures that financial data is presented correctly

• Two Ledgers are critical to program budgeting
• Program Ledger
• Allotment Ledger

Allows for PeopleSoft BudgetNet to interface
II. Overview
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Governors Office of Planning and Budget
BudgetNet/PeopleSoft - The Vehicles
Intersections
OPB Approves Allotments Comptroller
Issues Warrant
Intersections
II. Overview
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Program Budget Comparison Report

• Referred to as the PBCR or Budgetary Comparison
  Report (Report No. GLS4008X)
• Only report showing official Budget next to
  expenditures and revenues by program at the legal
  level of control
• Should be monitored/reviewed at least quarterly
• Should be submitted to OPB with quarterly
  allotment requests
• Expenditures should be within budgets and revenues

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The Journey to Budgetary Compliance
Course Corrections - Reconciliations

• Reconcile BudgetNet to PeopleSoft (or your
  financial application)
• Reconcile Subsidiaries to General Ledger
• AR, AP, AM, PO, and Budgets
• Run budgetary compliance report quarterly
• By program and fund source look for
• Expenditures in excess of budget
• Revenue booked by program and fund source

On the road to Budgetary Compliance
III. BC 2007
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The Journey to Budgetary Compliance
The Maps
The Road to Budgetary Compliance
III. BC 2007
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2007 Budgetary Compliance Preliminary
Observations
III. BC2007
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Program Based BudgetingFY2007 HB94

• Preliminary Observations
• Purpose Statement
• Legal Level of Budgetary Control
• Revenue Recognition
• Cost Allocations
• Journal Entry Documentation
• Carry-Over State Fund Reserves
• PeopleSoft Issues

III. BC2007
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Purpose Statement HB94

• Indicates how funds should be spent
• Expenditures not in agreement with the purpose
  statement audit finding

HB94
Purpose
III. BC2007
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Legal Level of Budgetary Control - HB94

• Fund Source within Program
• State Funds are at the lowest level of detail in
  the Appropriations Act within the program

HB94
Program
Purpose Statements
Legal Level of Budgetary Control
Information Only
Information Only
Lowest Level of Detail
Information Only
III. BC2007
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Revenue Recognition HB94

• Revenue must be recognized at the legal level
  of budgetary control
• By Program and Fund source within each program
• The burden this creates for the agencies is
  acknowledged

III. BC2007
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Cost Allocations FY2007

• Cost allocations to programs
• No consistency among agencies
• Little consistency in methodologies within
  agencies
• Little consistency from year to year
• What is needed
• Within agencies a consistent, documented
  methodology that is uniformly applied to
  programs and consistent from year to year
• Statewide guidelines for agencies

III. BC2007
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Journal Entries FY2007

• Agencies need to maintain adequate
  documentation for all entries
• If revenues or expenditures need to be moved
  to other programs or funding sources
• Provide a detailed explanation and
  justification
• Include hard copy substantiation from the
  original transaction (source documentation) as
  support

III. BC2007
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Carry-Over State Fund Reserves FY2007

• Budgeted as Other Funds
• Spent as State Funds
• Must follow budget
• New Policy being developed
• SAO is developing new policy to address
• Will have Prior Year fund source for each
  state fund source
• Budget will be set up with these fund sources

III. BC2007
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PeopleSoft Issues FY2007

• Data Integrity remain encumbrances issues
  from the conversion that caused trial balances
  to be off
• SAO has worked for the past 6 months to fix
• Reports key reports did not perform correctly
• Program Budget Comparison Report (PBCR)
• Trial Balance Report
• SAO has fixed and tested reports (PBCR Now has
  a check box to differentiate budget years)

III. BC2007
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2008 Budgetary ComplianceHB95(To be amended
by HB989)
IV. BC2008
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Budget Management Cycle - FY2008

• CAFR Published
• BCR Published

• Provide any information needed for BCR CAFR

• July 2008
• Submit final cleanup amendments
• Closeout Prior Year
• Complete Reconciliations

Quarterly Reconciliations
You are here!
Quarterly Reconciliations
Quarterly Reconciliations
IV. BC2008
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2008 Budgetary Compliance - HB95

• Appropriations Act
• Authorizes maximum expenditures by program and
  state fund source for specified purpose
• Federal and other funds are estimated amounts
• Federal funds are continually appropriated -
  agencies can amend in or out as required based on
  receipt or non-receipt of funds should not be
  used to circumvent the Governors and Legislative
  intent.
• Federal fund transfers are currently limited by
  budgetary control language in the back of the
  bill.

HB 95
IV. BC2008
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2008 Budgetary Compliance HB95

• Section 55 Budgetary Control and Interpretation
• The appropriations in this Act consist of the
  amount stated for each line at the lowest level
  of detail for Total State Funds and Total Federal
  Funds in each case as associated with the
  statement of Program Name and Program Purpose.
• The summary and lowest level of detail for Total
  Agency Funds and Total Intra-State Governmental
  Transfers are for informational purposes only.
• When an agency receives appropriations from the
  group of Total Federal Funds category for more
  than one program, the program shall also be
  authorized an additional fifty percent (50) of
  the stated amountsuch that the stated total in
  appropriations from that fund source within the
  section is not exceeded.

IV. BC2008
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2008 Budgetary Compliance - Fund Sources State
Funds

• Legal Level of Budgetary Control
• Lowest Level of Detail

HB 95
For each Program Legal Level of Control
IV. BC2008
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2008 Budgetary Compliance - Fund Sources Federal
Funds

• Legal Level of Budgetary Control
• Lowest Level of Detail

HB 95
For each Program Legal Level of Control
IV. BC2008
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2008 Budgetary Compliance - Fund SourcesOther
funds

• Legal Level of Budgetary Control
• Summary Level

HB 95
Summary Amount
IV. BC2008
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2008 Budgetary Compliance
Responsibilities

• Agencies are responsible for assuring compliance
  with the Appropriations Act
• OPB processes amendments to AOB, and allotments
  and, monitors quarterly budgetary compliance
  reports
• SAO assists agencies with compliance

IV. BC2008
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2008 Agency Responsibility

• Any organization with appropriated funds is
  subject to Budgetary Compliance
• Agencies are responsible for assuring compliance
  with the Appropriations Act
• Record revenues by program and fund source
• Expenditures by program and fund source
• Continually monitor fund sources and expenditures
  
• Review budget comparison reports
• Quarterly budget reviews and adjust as needed

IV. BC2008
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Training and SupportTour Guide Support and More
Maps
V. Training
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Support

• Policies and Procedures are being developed
• Process for approval
• Draft
• Agency comment period - 30 days
• Revise
• Approve
• Distribution
• Training as needed
• Drafts of four specific policies will be
  distributed shortly for 30-day agency comment
  period
• PeopleSoft Data Validation
• PeopleSoft Report/Query functionality is being
  tested
• SAO to review agencies reports
• OPB Quarterly Reviews of Expenditures
• Development of a long-term Training Strategy that
  includes SAO, OPB, and CVIOG

• Policies for Review
• Carry Forward State Funds
• Year - End Close
• Budgeting Federal Other Funds
• De-amending Federal Funds
• Adjustments to Budget Programs

V. Training
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Training
Short Term

• Ledger Reconciliations
• Separate training sessions for subsidiary ledger
  reconciliations to General Ledger
• AP, AM, AR, PO and Budget
• BudgetNet to PeopleSoft Reconciliation
• Pre-requisite Pivot Tables (Excel)
• Training will be delivered by

Carl Vinson Institute of Government April/May
2008 Link on SAO/OPB Website
V. Training
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Training
Current activities

• Assessment of PeopleSoft functionality with the
  intent of reducing number of financial
  applications in use
• Revise Accounting Procedures Manual
• Issue specific Policies and Procedures as needed
• In conjunction with CVIOG develop and deliver
  continuing training on policies and procedures as
  well as the use of financial applications

V. Training
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V. Next Steps - Agency

• If corrective actions are needed
• Perform reconciliations
• Make adjusting entries with backup documentation
• Document cost allocation methodologies
• Confirm revenue is recognized by program
• Sign up for training when offered

VI. Next Steps
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Next Steps FY2008 Closing

• Review revenues and budgets for budgetary
  compliance
• Submit 4th Quarter allotment
• Provide Program Expenditure Reports
• Feedback on Policies and Procedures

March 2008

• Begin/Continue reconciliations
• Attend training sessions

April 2008

• Enter Amended FY amendment (HB989)

May 2008

• Begin Year-end cleanup amendments
• Attach source documentation

June 2008

• Year-end Program Expenditure Reports
• BudgetNet Final Amendments
• BudgetNet Final Allotment (if needed)
• Close books in PeopleSoft

July 2008
VI. Next Steps
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2009 Budgetary ComplianceHB990
COMING SOON!
IV. BC2008
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Questions

• The Web cast will be available at the SAO website
  http//sao.georgia.gov (OPB has a link to the SAO
  website on the BudgetNet home page)
• Stay up to date on training offerings by
  frequently visiting the SAO web site

VII. QA
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The Journey to Budgetary Compliance
Governors Office of Planning and Budget

• E V A L U A T I O N S U R V E Y
• sao.georgia.gov
• Please complete and submit to
• Craig.Southern_at_opb.state.ga.us
• Your Feedback is appreciated!

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The Journey to Budgetary Compliance
Governors Office of Planning and Budget

• I N T E R M I S S I O N
• Next Web Cast
• Afternoon Session 2 4 p.m.

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Program Budget Comparison Report
Budget
Expenditures
Revenues