The financial condition of each municipality rests upon the governing board or city council. The budget and other decisions guide staff in executing the policies of the city toward achieving the city’s goals. Monitoring the progress of the community can be done through a series of financial reports which should be provided to the council throughout the year.
At least two reports should be reviewed by the city council on a monthly basis. They are the Budget to Actual Activity Report and a Treasurer’s Report. They may have different names in each community; however, the information should be available for council, staff and the public to review. The “Budget to Actual Activity Report” shows the monthly revenues and expenditures that have occurred compared to the fiscal year to date activity and the budget. This report should be monitored to ensure that no program area will exceed the budgeted amount unless a budget amendment is adopted by the council. The Treasurer’s Report reflects the cash on hand, bank deposits and investments by fund type. This is a good report for the council to monitor fund balances and banking activity.
Each year many reports must also be filed at the end of the fiscal year. Three major reports which go to three different state offices are discussed below.
Outstanding Debt Report for the State Treasurer’s Office
This report is due August 15 of each year. Code of Iowa Section 12.1 requires all political subdivisions of the state to report outstanding obligations to the Treasurer of State. Obligations to be reported include bonds, notes, certificates of participation, leases and anticipatory warrants as defined by Code Section 74.1.
State Auditor’s Office Annual Financial Report (AFR)
The AFR is very similar to the documents used in preparing the annual budget in that the revenues and expenditures are classified into fund types and categories. Additional information is also required in the AFR concerning shared services, debt activity, classifications of cash balances and total employee payroll. The council does not have to approve the AFR for publication of the first page. However, it is recommended at a minimum that the council review the entire report. If the city population is more than 200, the first page must be published before the report is filed with the State Auditor’s Office. If the population is 200 or fewer, the report must be posted in at least three places as established by ordinance. If published in a newspaper of general circulation, include a proof of publication (affidavit or newspaper clipping which includes the publication date).
An electronic version of the AFR must be filed with the State Auditor’s office before December 1 of each year. Pursuant to Section 384.22 of the Code, cities that do not file the AFR on time will have five cents per capital of homestead tax credit (Chapter 425) funds withheld until the AFR is filed. Additionally, Section 384.16 of the Code requires the AFR to be used in the preparation of the following certified budget. Property taxes will not be levied for that year if a city fails to comply with statutory budgeting requirements and all state funds will be withheld until the city complies with these statutory requirements.
The Street Financial Report (SFR)
This report is required by the Iowa Department of Transportation and provides for the withholding of Road Use Tax monies by the December 1 deadline. This report requires cities to report on all street related expenditures including the usage of their Road Use Tax Fund dollars. The report also requires cities to list their equipment, describe completed street projects and payments of principal and interest for street related debt. Since this report requires council action, the timing for completion is critical.