December 19, 2007 Salmon Expects State’s 2007 Financial Audit to be Completed by December 31 deadline
Timely financial report helps maintain strong bond rating, Auditor notes
MONTPELIER – State Auditor Tom Salmon, CPA said his audit of State government’s 2007 financial statements will be completed by the time the bell rings on New Year’s Eve.
The State’s fiscal year ends on June 30 each year and Vermont law requires the Administration to issue an annual financial report by December 31. After the Administration closes the books it takes several months to prepare year-end financial statements for the independent examination conducted by the State Auditor’s Office. The audit report, issued by the State Auditor’s Office, is a key document used by bond rating agencies reviewing the State’s fiscal condition.
“Untimely financial reports raise questions in the financial community which could have an impact on the interest rate paid by the State for its bond issues,” said Salmon. “To date we have had excellent cooperation from all State departments subject to audit procedures, and this has helped to keep us on schedule to complete our audit by December 31. The Department of Finance and Management and financial staff at other departments should be commended for their hard work in this important effort,” said Salmon.
The primary purpose of a financial statement audit, Salmon said, is to provide legislators, taxpayers, and the financial community with independent assurance that the information presented in the State’s financial reports is reliable. “This is the most significant task of our staff each year,” Salmon said. “Financial statement audits are supposed to provide confidence and peace of mind; we also offer recommendations for improving internal controls and procedures,” Salmon added.
Much of the audit is focused on the State’s major governmental funds: the General Fund; the Transportation Fund; the Education Fund; the Special Fund; the Federal Revenue Fund; and the Global Commitment Fund. The State’s expenses for primary government functions totaled $4.02 billion in fiscal year 2006 and are expected to be higher for fiscal year 2007 when final numbers are confirmed by the audit.
Salmon said the audit is conducted according to Government Auditing Standards set by the Comptroller General of the United States and published by the U.S. Government Accountability Office (GAO). “The standards have risen over the past several years,” Salmon said. “There are an increasing number of tests, procedures and examinations that we have to perform to complete the audit according to today’s requirements.”
These standards require, in addition to providing reasonable assurance about the reliability of financial information, that auditors conduct more procedures to detect the risk of fraud or illegal acts, and also to report on potential deficiencies in internal control, such as a lack of adequate review and approvals of significant transactions; failure to safeguard assets from loss or damage; and weaknesses in key information technology systems, among others.
Salmon said that audit field work on Vermont’s Federal Single Audit, a review of the State’s compliance with federal regulations and laws applicable to the $1.5 billion in federal funds received by various state agencies, will be completed by December 31. “The final report, coming in early 2008, will be earlier than in previous years,” Salmon noted. The Federal Single Audit is being conducted by the independent accounting firm of KPMG, LLP under contract with the State Auditor’s Office, Salmon added.
Total primary government expenses include those for all state government activities such as human services, education, transportation, natural resource protection, general administration as well as business-type activities such as the Vermont Lottery Commission; Liquor Control, and Unemployment Compensation.
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