Department of Legislative Audit Updates

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1 Department of Legislative Audit Updates Rod Fortin Director of Local Gov t Assistance Department of Legislative Audit 300 S. Sycamore Avenue, Suite 102 Sioux Falls, SD ph. (605) rod.fortin@state.sd.us DLA website: 1

2 2018 Session SB100 An Act to establish certain provisions related to grant monitoring and review and to revise certain record retention policies. Amends and requires that counties, cities and school districts make their audit reports available on their website. 2

3 2018 Session HB1172 An Act to revise certain provisions regarding meetings of public bodies. Amends to require the chair of a public body to reserve at every official meeting by the public body a period for public comment, limited at the chair's discretion, but not so limited as to provide for no public comment. 3

4 2018 Session HB1178 An Act to provide a penalty for the failure to complete timely audits by certain entities. This bill requires certain actions to be taken when audits are not submitted timely by schools, municipalities, hospital districts, waste management districts, water development districts, water user districts or consumer power districts. 4

5 2018 Session HB1178 (continued) Specifically, it requires the following: Amends Chapter 4-2 adding a section which requires Legislative Audit to cause to be published in the official newspaper of the entity and on Legislative Audit s website notice of the failure to submit a timely audit report. 5

6 2018 Session HB1178 (continued) Provides for a penalty of ten dollars per day for each day that an audit is delinquent. Requires Legislative Audit to notify the Attorney General of the appropriate penalty to be imposed. The Attorney General shall impose any penalty and proceeds are to be deposited in the State General Fund. The Attorney General may waive any penalty for good cause shown. 6

7 2018 Session HB1178 (continued) For the purposes of this Act, an audit is timely if the audit report is submitted to Legislative Audit not later than eighteen months following the end of the entity s fiscal year. If the entity is performing a two-year audit, the audit is timely if submitted to Legislative Audit not later than eighteen months following the end of the two-year period. This Act is effective for audits of periods ending on or after June 30,

8 2018 Session HB1100 An Act to require a name be printed on public contracts. Amends 5-18A-21 to require public contracts to include printed name of an any individual signing the contract. Failure to comply with the requirements for a printed name under this section does not void the terms or purpose of the contract. 8

9 2018 Session SB86 An Act to revise certain requirements when a local unit of government sells surplus property through a real estate broker. Amends to remove the requirement that an offer for purchase of real property through a real estate broker had to exceed 90% of the appraised value in order to be accepted. Requires the governing board to give notice of the sale of property and the appraised value of the real property from the appraisal report on file with the fiscal offices of the governing body. 9

10 2018 Session SB147 An Act to authorize local governing bodies to establish the per diem rate for housing and development commissions. Amends to remove the language of per diem not to exceed thirty five dollars and authorizes the governing body to establish the per diem rate for housing and development commissions. 10

11 2018 Session SB58 An Act to revise certain provisions regarding tax increment financing districts. 48 sections revising certain provisions regarding tax increment financing districts. Section 1 of the bill sunsets SDCL This is the current state-aid statute that governs how TIFs are treated in the state-aid to education formula. This section of law would remain in effect for any TIF created before July 1, Section 2 restates the general rule for local TIFs, whereby local property owners must pay an additional property tax 11 levy to make the impacted school district whole.

12 2018 Session SB58 Continued Section 3 provides the exception to the general rule for the current industrial and economic development classification AND adds a new exception for affordable housing TIFs. These three types of TIFs would continue to rely on the state-aid formula to make the impacted school districts whole. This would apply to any TIF created after June 30,

13 2018 Session SB58 Continued Section 4 defines industrial, economic development, and affordable housing for purposes of the state-aid statutes. Section 5 gives DOR the ability to publish an annual report of all TIFs in the state and require locals creating TIFs to provide any necessary information to compile the report. The remaining sections of the bill are form and style revisions to chapter 11-9 and other sections of the code that reference TIFs. 13

14 2018 Session SB98 An Act to revise certain provisions regarding the 911 emergency surcharge, the public safety 911 emergency fund, and revenue distribution and to repeal the 911 emergency surcharge sunset clause. 14

15 2018 Session SB62 An Act to provide for the notification related to a breach of certain data and to provide a penalty therefor. (SDCL Chapter 22-40) 15

16 2018 Session SB126 An Act to revise certain provisions regarding municipal annual reports. 16

17 Annual Financial Report Annual Financial Report (prior to 7/1/18) SDCL requires that an annual report be: a) Presented to the governing board at the first regular meeting in March. b) Filed with the Department of Legislative Audit immediately thereafter c) Published within 30 days or upon completion of an annual audit. 17

18 Annual Financial Report Annual Financial Report (after 7/1/18) SDCL requires that an annual report be: a) Presented to the governing board no later than the first regular meeting in May. b) Published in the official newspaper, or any other newspaper as the governing body may direct within 30 days after the report is made to the governing body or upon completion of an annual audit. c) Filed with the Department of Legislative Audit by the last day of May each year. 18

19 Annual Financial Report Annual Financial Report 67 Municipalities have not filed CY2017 Annual Report. (22%) 19

20 Audit Requirements--State Municipalities that have $600,000 or more in annual revenue are required to have that year audited (total revenues of all funds). $100,000 to $600,000 = Internal Control Review < $100,000 = no audit requirements 20

21 Audit Requirements--State Audits may be triggered in the following manner: Request of the governing board Special reasons exist Petition by 20% of the resident taxpayers Annual Audits vs. Biennial Audits (one covering two years) 21

22 Audit Requirements--Federal Uniform Guidance for Federal Awards: New Single Audit Rules. Audit Requirements effective for fiscal years beginning on or after 12/26/14 (CY2015) If a municipality spends more than $750,000 of federal financial assistance, then a Single Audit is required. All federal grants must be added together for comparing to the $750,000 and may include federal loan programs 22

23 GRANTS Uniform Guidance-Federal Awards Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards ( Uniform Guidance ) Title 2 Code of Federal Regulations Part 200 Organizations must establish and maintain effective internal controls over the federal award that provides reasonable assurance that the entity is managing the federal award in compliance with federal statutes, regulations, and terms and conditions of the federal award. ( ) 23

24 GRANTS Uniform Guidance-Federal Awards Subrecipient Monitoring and Management ( ) Requires Grantee to have written documentation for: 1. Determining the allowability of costs ( (7)) 2. Payment (i.e. cash management) ( ) 3. Procurement procedures ( (a)) 4. Standards of conduct covering conflict of interest ( (c)) 24

25 GRANTS Uniform Guidance-Federal Awards Procurement standards under the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards ( Uniform Guidance(UG) ). Codified at 2 C.F.R through Methods of procurement ( ) (see handout) Micro-purchases < $3,000 (currently) Small purchases < $150,000 Sealed bids or competitive proposals > $150,000 Noncompetitive proposal (single source, public emergency, previously authorized, and after solicitation, competition is inadequate) 25

26 GRANTS Uniform Guidance-Federal Awards Other Non-Federal Entities---Must follow its own documented procurement procedures which reflect applicable state, local, and tribal laws and regulations, provided that the procurements conform to applicable federal law and the standards identified in 2 C.F.R through 326 A non-federal entity s procurement may meet the requirements of applicable state, local, and tribal procurement laws and regulations, but not meet the Federal procurement standards set forth in 2 C.F.R through 326 such procurement would not be compliant with the Uniform Guidance. Follow the most restrictive. 26

27 GASB STATEMENTS Statement 84: Fiduciary Activities (CY19) 740 Private Purpose Trust Funds 750 Agency Funds 751 Special Assessments 753 Section 125 Escrow Fund 770 Pension Trust Funds 771 Firemen s Pension Fund Statement 87: Leases (CY20) Statement 88: Certain Disclosures Related to Debt, including Direct Borrowings and Direct 27 Placements. (CY19)

28 DLA Projects Annual Report Forms (Excel Workbook) Update Budget Forms Work with DOR on updating County Remittance Forms. Guidance on pass-through funds. 28

29 Updated Bid Booklet SD Local Government Guide for Acquisition, Disposals and Exchanges (Bid Booklet) Updated July 1, 2018 DLA Website 29

30 SURPLUS PROPERTY Auction Declare surplus Two notices, first notice 10 days prior auction An appraisal is not required Hold the auction Governing board members may buy at an auction 30

31 SURPLUS PROPERTY Sealed bid process Declare surplus Appraisal by three property tax payers $500 or less - Public or private sale without notice Over $500 Two notices May award to highest bidder 31

32 SURPLUS PROPERTY Proceeds of a sale may be placed into the General Fund, the CO Fund or if it is a food service item, into that fund Real estate may also be sold through a realtor Governing board has the right to accept or reject any sale 32

33 BID - LIMITS $25,000 for supplies (except equipment) or services Effective July 1, 2016, SB 118 of 2016 Session increased the threshold for equipment to $50,000 for all public subdivisions. The threshold for supplies and services other than equipment remains at $25,000 $50,000 for any public improvement 33

34 BID - DEFINITIONS Public Improvement the process of building, altering, repairing, improving or demolishing any public infrastructure facility, including any structure, building, or other improvements of any kind to real property Supplies any property, including equipment, materials, and printing; 34

35 BID - APPLICATIONS Multiple purchases Aggregate for FY Installment payments focus on contract Trade-in ---value of what you are acquiring Piecemeal breaking down a project 35

36 BID - EMERGENCY When there is a threat to public health, welfare or safety or for other urgent or compelling reason Bid notices are not required Consider rentals Declaration in minutes Procurement must be made with such competition as practicable 36

37 BID EXEMPTIONS ANY purchase of supplies or services, other than professional services, by purchasing agencies from ANY active contract that has been awarded by ANY government entity by competitive sealed bids or competitive sealed proposals or from ANY contract that was competitively solicited and awarded within the previous twelve months; 5-18A-22 (3) 37

38 BID EXEMPTIONS A purchase utilizing another entity s bid has to mirror a purchase from a contract that was awarded by the original bidding entity. It is not enough that such contract was bid by the original entity, it must have been awarded. 38

39 BID EXEMPTIONS Contracts may be utilized form any government entity, including those that are out-of-state, however, care must be taken to ensure that payment is made to the original vendor and that the contract was awarded by competitive sealed bids or competitive sealed proposals as defined in SDCL 5-18A-1 (27), 5-18A-5 and 5-18A-7. 39

40 BID EXEMPTIONS When buying off of another entity s bid, make sure it is not a trade-in bid, and you are encouraged to secure (from the original entity) the following items: Minutes approving contract Specs Affidavit of publication All the bid proposals submitted 40

41 BID - EXEMPTIONS Federal surplus property Purchases of surplus property from another SD Purchasing Agency. From the state price list Local vendor matching the state price list Real estate and auction services Legal, audit, architectural and engineering, insurance, real estate services and auction services. 41

42 BID - EXEMPTIONS Transportation of students (5 yr. limit) Computer software Communication technologies, computers, peripheral equipment and related connectivity Perishable or unprepared foodstuffs Raw materials used in construction or manufacture of products for resale May buy off of GSA contracts 42

43 BID - BONDING Bid bond 5% cashiers or certified check or 10% bid bond ---provided by each bidder Performance bond in the amount of the contract----provided by the winning bidder Bonding is only required for construction contracts 43

44 BID - BONDING SB6 of the 2016 Session-An Act to revise certain performance security requirements for public improvement contracts Repeals which conflicted with another statute. Adds a new section to chapter 5-21 allowing a public corporation to waive the requirement for a performance security bond for emergency procurements authorized by 5-18A-9. 44

45 BID - OPENING Two notices first notice at least 10 days prior to the opening Bids may not be faxed must be sealed Bids received late should not be considered 45

46 BID - OPENING HB1102 of the 2016 Session-- Amends 5-18A-5 to allow up to 45 days between the bid opening and the award of the contract for supplies bids and the invitation to bidders for supplies must include the number of days the government will use. For services and public improvement bids, the requirement remains unchanged and the contract must be awarded within 30 days of the bid opening. 46

47 BIDS FUEL (SDCL 5-18C-6) Not required to publish two notices Shall contact and attempt to obtain 3 quotes Record of the names of suppliers, quotes received, and the procurement procedures used in purchasing shall be documented, noted in the minutes, and retained on file by the governing body. May include a procedure for adjusting prices to meet changing market conditions not within the control of the vendor 47