Sworn into office as Ohio’s 31st Auditor of State in January of 2007, Mary Taylor is the first certified public accountant to serve as Ohio’s Auditor of State. She previously served two terms in the Ohio House of Representatives where she served on the House Finance, Ways and Means, and Education Committees.
With roots right here in Northeast Ohio, Auditor Taylor obtained a bachelor’s degree in accounting and a master’s degree in taxation from the University of Akron. She began her career in public service as a city councilwoman in Green, Ohio. She and her husband Don have lived in Green for the past 20 years. The Taylor’s have two sons, Joe and Michael, ages 17 and 14.
Taylor was recently honored as a 2008 recipient of the University of Akron’s Dr. Frank L. Simonetti Distinguished Business Alumni Award. The award was created by the University of Akron College of Business Administration Alumni Board in 1987 to honor distinguished alumni for their achievements in business and significant contributions to their communities. Taylor is one of three women appointed to represent the United States as a delegate to the 52nd session of the United Nations Commission on the Status of Women. The commission is a functional commission of the United Nations Economic and Social Council, dedicated exclusively to gender equality and the advancement of women.
Q: Under current economic conditions and the chaos in the banking/investment markets, what changes do you make in your auditing procedures for local or county governments to ensure that the local officials are in compliance with the current regulations to protect public funds? - Karen Fritschel - Mayor of Stow
Taylor: Audits conducted by my office help determine whether the government’s financial statements are fairly presented and whether management has complied with significant laws and regulations.
Regardless of the economy, Government Auditing Standards require that my office design each audit to reasonably assure detection of material misstatements. These misstatements may result from violations of laws and regulations that directly and materially affect the determination of financial statement amounts.
We provide the Ohio Compliance Supplement (OCS) to help auditors determine the laws and regulations that are generally material to an entity’s financial statements. The OCS contains certain laws and regulations which are of considerable public interest or are of the type auditors generally consider direct and material. The OCS was revised and updated in December 2008.
Ohio Revised Code Chapter 135, which governs deposit and investment regulations for political subdivisions, generally applies to all public offices with the exception of charter municipalities and community schools. For those that have exempted themselves by charter, the auditors design audit procedures based on the charter municipalities’ own investment and deposit provisions. For those in which Ohio Revised Code Chapter 135 applies, the OCS presents specific code sections and a summary of those sections. In addition, auditors inquire as to the entity’s control procedures that address laws and regulations over deposits and investments. Finally, suggested audited procedures are included for testing compliance with these laws. In addition, generally accepted accounting principles require entities to disclose their deposits and investments, and the risks associated with them. Our auditors test those disclosures.
Q: In response to a $640 million shortfall in Ohio’s budget, Governor Strickland ordered budget reductions of $30.4 million for the Ohio Department of Education. Some of these reductions are likely to ‘trickle down’ to the local school district level. Given these economic uncertainties, what do you suggest that an Ohio public school district do to improve the accuracy of its five-year forecast required by state law? - Dr. Joseph Giancola - Superintendent Kent City Schools
Taylor: State budget deficits impact all tax-funded agencies, including Ohio schools. During this time of economic uncertainty, an accurate five-year forecast is crucial for schools to assess their financial condition and make informed decisions about future district finances.
I recommend that you consider performing some of these procedures when completing your five-year forecast:
- Confirm revenues with your county auditor.
- If the district has an income tax, check with the Ohio Department of Taxation for trends that they are seeing regarding the tax.
- For foundation amounts, talk with your area coordinator to determine what might be forcing an increase or decrease in foundation funds.
- For payroll expenditures, cost out each person’s salary, step increases and benefits.
- Speak with insurance providers for trends in insurance costs.
- Plan ahead for capital expenditures. Prepare a capital forecast that will detail when certain capital expenditures will be made. For instance, if the district will require new buses, plan what years the buses will be purchased.
- Use Ohio Association of School Business Officials as a resource for updates on preparing the five-year forecast.
I also recommend that you diligently document your assumptions. As soon as new information becomes available, update the forecast with the new information. Dated facts and figures will significantly decrease the accuracy of your forecast.
Q: Government budgets of all political subdivisions are strained. In recent years the General Assembly has continued to “carve out” portions of counties’ general funds. These special revenue funds were created to allow officials who have no taxing responsibility to spend funds for unique purposes limiting a board of commissioners’ ability to meet more immediate needs. Now we face - some of the tightest budget situations ever seen in recent history. A county’s general fund budget is not only publicly scrutinized on a weekly basis it is also the budget that is most flexible to take on the mandated expenses of the county. These special “carved out” funds reduce our flexibility to meet public needs and state mandates. As Auditor of State and a former legislator would you be able to give recommendation or lend leadership in order to reduce the growth of special funds and to give greater flexibility in the spending of those funds for general fund purposes?” - Scott Wiggam - County Commissioner Wayne County
Taylor: Various types of legal provisions, including state constitutional provisions or statutes, require the establishment of special revenue funds. Special revenue funds help ensure that proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes are used for that purpose.
My office is currently completing a strategic plan. As one of the goals of that plan, I intend to exercise public policy leadership as the Auditor of State to help improve government accountability making Ohio a better place to live, work, invest and raise a family. An objective of that goal is to advocate for appropriate legislative proposals or policies that are not related to core functions of the AOS. Those would include engaging in important and relevant public policy discussions on issues facing and impacting Ohio, and special “carved out” funds from the counties’ general fund.
Q: Have you compared the benefits of preparing the Comprehensive Annual Financial Report (CAFR) versus the cost of its preparation? This exercise cost Lake County close to $75,000 last year. In this difficult budget time, those monies could be spent elsewhere. - Bob Aufuldish – Lake County Commissioner
Taylor: As with any decision, a county must weigh the benefits of preparing a CAFR with its cost. Although counties may chose to prepare basic financial statements rather than a CAFR, the Auditor of State’s office encourages the highest form of reporting for transparency and accountability purposes. While basic financial statements can be a useful management tool, CAFRs can be especially valuable. A CAFR presents more detailed information at a fund level and gives its users enough information to make informed decisions in a more comprehensive manner.
In addition, the process of gathering the documentation needed to complete the CAFR can uncover issues previously unknown to county officials. Also, the preparation of the CAFR provides invaluable institutional knowledge. CAFRs can also be used to promote your county by being distributed to other entities, such as libraries, and convention and tourists bureaus. NEO
