Will Your Next Audit Be Looking For Your Public Entity’s “Comprehensive Investment Program”?

If your professional responsibilities include some aspect of managing the finances of a municipal government or public school district, then there is something you need to be aware of.

Oversight agencies such as some State Comptroller’s Offices and regulatory auditors have added a new component to their list of items to be reviewed when they come in to inspect your accounts and examine your financial records.

We are seeing examples of auditors looking for public entities to have a “Comprehensive Investment Program” in place that measures and meticulously evaluates the municipality’s or school district’s interest income earned over a given time period. This kind of examination and comparison of actual earnings to potential earnings using market benchmarks is far beyond the kind of typical written investment policy that most public entities have on file that, for example, routinely list the types of investments allowed by law.

There are audit reports now available online that document the failure of some public officials to develop and manage a comprehensive investment program. These publications, now entered into the official record, also criticize officials for missing an opportunity to realize higher revenues which would have potentially reduced the financial burden on taxpayers.

This new level of scrutiny may have come about because, in many well-managed municipalities and schools, interest earnings on their liquidity have now become a very substantial part of their non-tax revenue stream. In fact, in the case of many of our three+one clients, we are seeing earnings on investments being used to offset a major portion of their real property tax levies. Typically for our clients, interest earnings can offset 10% to 15% of the total property tax levy. One of our clients actually earned enough in interest over the past 12 months to offset a staggering 26.4% of their property tax levy!

We have the tools, the technology, and the team to help you maximize interest revenues and to eliminate any chance that you might be on the receiving end of a critical investment audit. Why not give us a call or drop us an email? We’d be pleased to hear from you!