Annual reports are a team sport

Originally Published in Statewise Fall 2008

by Barbara Neyens

Fall means many things to many people. For children and teachers, it’s back-to-school time. For baseball fans, it’s the run-up to the World Series. And for state agency financial professionals, it’s time to compile the annual financial report (AFR).

Admittedly, the AFR season may not be quite as much fun as, say, football season or Thanksgiving, but it doesn’t have to be a complete conundrum either. Whatever your question or problem, there is someone in Fiscal Management (FM) who can help. Between now and Nov. 20, people across the division will be standing by to help agencies unravel the mysteries of the AFR.

Putting it together

Before the books have even closed on the fiscal year, FM staff are on the job coming up with ways to make the AFR process a little simpler. In March, Financial Reporting staff begin updating the Reporting Requirements for Annual Financial Reports of State Agencies and Universities. They also start planning the curriculum for the AFR Update, the half-day training class offered to those who prepare AFRs and enter AFR data into the Uniform Statewide Accounting System (USAS). The class includes a teleconference option for those who can’t attend training in Austin.

Rather than trying to cover all of the reporting requirements page by page, the AFR Update class focuses on changes to reporting requirements and major components such as the federal schedule. Trainers also answer questions on areas that have given agencies difficulties in the past.

“The AFR Update is our opportunity to highlight important areas of the AFR process,” says Amanda Landry, financial reporting analyst with the Financial Reporting section. “Some topics are routinely presented, but the majority of the presentations focus on providing explanations of changes or clarifications to the AFR process.”

The class also focuses on new trends or requirements in accounting. This year’s class, which took place July 9–10, included a presentation by the State Auditor’s Office on the Statewide Audit process. This followed the fiscal 2007 implementation of Statement on Auditing Standards (SAS) 112, issued by the American Institute of Certified Public Accountants. Another important topic was an update on the status of the State Government Accounting Internet Reporting System (SIRS).

“Feedback on the AFR Update has been positive,” Landry says. “The teleconference option is good for people with limited travel budgets. Handouts are posted on FMX before the training, which gives participants a chance to have questions ready, and the handouts continue to be available after the class, which is helpful if you weren’t able to attend the training.”

Before joining the Comptroller’s office in August 2006, Landry worked for a consulting firm that did forensic accounting for litigation and fraud investigations. The job involved extensive traveling, and after earning her CPA, she decided to settle down in Austin and focus more on technical accounting. For her, helping agencies with the AFR process fits her goals perfectly.

More helping hands

Her fellow Financial Reporting analysts are there to back her up on this mission.

“We have several things we do for agencies,” says Kelley Glaeser, another financial reporting analyst in the Financial Reporting section. “If agencies have any technical questions about T-codes or the USAS system, we can help. We can also look at an agency’s USAS financial data and help them with pass-through funds, shared cash, general revenue reconciliations, the federal schedule and fixed assets.”

Because there are actually many deadlines involved in the AFR process, financial analysts check the agency’s USAS financial data throughout the process to make sure agencies are meeting each deadline. They also answer the many questions that come in by phone and email.

“General revenue (GR) reconciliations sometimes cause confusion,” Glaeser says. “Many agencies complete the reconciliation using the Web application and think they are finished. But if USAS figures don’t agree with the GR reconciliation numbers, then the agency needs to make additional entries to fix the discrepancy.”

With its many components, deadlines and instructions, the AFR is especially daunting to new state employees or to anyone who has never worked on one before. But even experienced AFR preparers can struggle to put all the pieces together.

“The reporting requirements manual is more than 500 pages long,” Glaeser says. “There’s no way anyone could memorize it. Using the table of contents can help you find what you need, but if you’re still lost, call us — we can help.”

Glaeser is well-qualified to answer AFR questions. She worked for six years in the auditing field before going to work for the Texas Commission on Environmental Quality, where she amassed 10 years of experience working on AFRs. She has been with the Comptroller’s office since September 2007.

In her career, she has seen how technology has streamlined the reporting process. For example, agencies used to have to call the Financial Reporting section to run fluctuation analysis reports on last year’s USAS numbers, but now each agency can run its own reports. In addition, Web applications have made some of the reporting processes easier and more uniform.

The USAS Fluctuation Analysis, now available on SIRS, enables agencies to perform a variance analysis/fluctuation analysis if balances in funds have changed dramatically from the previous year. This may occur for a variety of reasons, such as if a program was canceled and is no longer collecting revenue. This year, the dramatic increase in the cost of gas may cause variances in travel spending. Using the USAS Fluctuation Analysis, agency staff can account for these changes and be prepared to explain what happened and why.

“Executive managers will have questions if the balances have changed dramatically, and they don’t know why,” Glaeser says. “It’s a good idea to have the answers before the questions are asked, and the USAS Fluctuation Analysis makes this possible.”

In the future, both Glaeser and Landry expect there will be more Web-based systems available. “Web applications standardize the way information is collected and submitted,” Glaeser says. “Our goal is to make it a more automated process, because that makes it easier to analyze the information. This is part of a national trend toward improving efficiency.”

Web wizardry

Of course, coming up with the concept for an accounting Web application is one thing. Translating the concept into an operable system is another. That’s where David Heffington and Bruce Holmstrom step in.

“We’re familiar with the business side of fiscal management,” Holmstrom says. “Having that experience helps us understand what agencies need.”

With help from the Financial Reporting section and state agencies, Heffington and Holmstrom assisted in the development of the Web applications for GR reconciliation, investment notes, the federal schedule and the bond reporting system. For them, the AFR process provides feedback on how well the applications work, as well as how they can be improved.

“We’re constantly refining these systems according to what we learn during the AFR process,” Heffington says. “What we think is correct doesn’t work for everyone, so we’re constantly fine-tuning. We’re always looking for ways to make them faster and easier so agencies can get their data right the first time.”

For Holmstrom, the fine-tuning is one of the bright spots of his job. “I love to tinker with these applications,” he says. “It’s intrinsically fun — in a geeky sort of way. And if it makes people’s jobs easier, that just adds to the fun.”

Holmstrom brings a broad understanding of fiscal systems to his role. A graduate of the University of Texas at Austin, he earned a bachelor’s degree in economics and completed a year of graduate studies as well. He joined the Comptroller’s office 22 years ago as a research assistant in the Revenue Estimating Division and has worked in several different departments since then.

A native of Marble Falls, Heffington joined the Comptroller’s office in 2005 after spending several years in Richmond, Virginia. There he worked for a well-known electronics retailer, mainly working on the store’s website. He now has a much smaller audience for his work, but he enjoys it more.

“After a system is made available to the agencies, it’s nice to see how it works and see the benefit to the users,” he says. “Here, we’re not roped off from the business users and we receive immediate feedback for how our systems are performing in the field.”

Right now, each Web application has a separate logon, but both Heffington and Holmstrom think that may change soon.

“Eventually, we may be able to combine all the Web applications so users only have to sign in once,” Heffington says. “Our long-term goal is to have Web applications for all the notes so all the information can come in electronically — no hard copies will be needed. We can improve continuity by standardizing the notes and transmitting information directly into the database.”

Appropriation behavior

Although many AFR questions can be answered by Financial Reporting analysts, some issues are handled by the Appropriation Control section. As appropriation control officers (ACOs), Selena Meyers, Melissa Huerta and their colleagues can answer these questions and help agencies with appropriation-related problems.

Their role in the AFR process extends year-round. “We review appropriations all year long and let agencies know when we find something,” Meyers says. “If agencies have been making corrections throughout the year, they should be ready for the AFR process.”

ACOs can help agencies set up Detailed Accounting Financial Reports (DAFRs) to check their numbers. They can also help with USAS, GR reconciliation and payables, as well as with understanding the AFR instructions.

“Having the instruction manual is not the same as talking to someone who can help walk you through the process,” Meyers says.

One of the areas that ACOs often help with is clearing default funds. When money is sent to the state treasury but there’s no record in USAS, ACOs play detective to find out what went wrong. While DAFRs show what funds are in default, ACOs can help you understand how to fix the problem and avoid defaults in the future.

Both Meyers and Huerta have extensive accounting experience. Meyers has an accounting degree and worked for 15 years at Sul Ross State University. Her husband grew up in the Hill Country, and four years ago, the couple decided to move back to the Austin area. She joined the Comptroller’s office and has been an ACO since then.

Huerta began working for the state when she was 21. She started as a phone bank operator with the Texas Treasury Department’s Unclaimed Property Division before going into an accounting position. Eventually, she had amassed so much experience in accounting that she decided to go back to school to get her degree in the field. She worked for the Treasury, the State Library and the Texas Board of Architectural Examiners before returning to the Comptroller’s office as an ACO last July.

Huerta has some straightforward tips for agencies working on their AFRs. “Double-check your entries and pay attention to the inquiry screens — they will often tell you what you need to know,” she says. “Check out ‘What’s New’ on FMX to see what’s gone out and if there’s anything you’ve missed. And call us! We’re open to questions. If we can’t help, we’ll find out who can.”

To find ACOs and their contact information, consult the Appropriation Control Officer Directory.