The median time it takes for states, local governments and other entities to release their annual audited financial reports in fiscal year 2019 was 151 days, slightly higher than the ten-year median of 148 days.
But it’s not all bad news. Merritt Research Services took a new approach to its annual
“Instead of a negative slap on the hand all the time, we want them to realize that this is a best practice,” said Richard Ciccarone, Merritt’s president. “They should be proud of their accomplishments from the market standpoint, from their taxpayers and their watchdogs.”
“These are recognitions that are very valuable for our industry,” Ciccarone added.
Among states and their equivalents, the District of Columbia, New York and South Carolina were quickest at 114 days, 119 days and 137 days respectively.
Among cities, Sioux Falls, South Dakota completed its audit in 80 days, followed by Columbus, Ohio and Kettering, Ohio both at 87 days.
Columbus, Ohio, City Auditor Megan Kilgore said her city has a long history of releasing audited financials in about 90 days from the close of the fiscal year.
“We are a well-oiled financial reporting machine,” she said.
Kilgore doesn’t expect the pandemic to affect the city’s audit times.
“No doubt many issuers around the U.S. are experiencing delays due to remote work or factors outside of an issuer’s control,” Kilgore said. “We did our best to anticipate likely speedbumps this year (FY 2020) and I’m pleased to say that we stayed on track with our 90-day goal. We’re releasing our audited financials this week.”
Kilgore advised fellow issuers to prepare a detailed project plan for staff and external auditors to schedule all of their financial statement preparation and audit activities with reasonable time frames.
“It is important to work with the external auditors to set expectations and request their flexibility through the audit and financial statement review process,” Kilgore said.
Also winning praise in Ohio's capital is the Columbus Regional Airport Authority, which along with the Port Authority of New York and New Jersey and the Chesapeake Regional Airport in Virginia led airports by completing audits in 64 days.
The speedster of the hospital sector was the Mercy Health Corp. in Rockford, Illinois, which completed its audit in 44 days.
Government Finance Officers Association guidelines call for issuers to complete their financial reports within 120 days.
Most issuers still take about 120 to 175 days after the end of their fiscal year to complete their audits, the Merritt report said.
“It basically hasn’t changed much over the last ten years," Ciccarone said. "That’s the frustrating part.”
Audit firms were also included in the survey. Other than governments that relied on state auditors, there was no dominant private audit firm or auditor type by size that stood out among the fastest reporters, Ciccarone said.
"This is not to say that some audit firms didn’t fare better or worse than the medians,” Ciccarone said. “It would seem to me that the results of the study suggest this it more it is more about the issuer than the accountant. Still, an auditing firm can help speed it up or slow it down, so it matters.”
The fastest municipal bond sectors to complete their FY 2019 audits were also the fastest to do so in the previous year, Merritt said. The median for the wholesale electric power was 94 days, for hospitals 114, and private higher education 117 days. The slowest sectors were counties at 180 days, cities at 175 days and states and territories at 173 days.
All winners in the FY2019 report, except for states and territories, finished their audit in 90 days or sooner.
Ciccarone doesn’t expect the pandemic to change audit times dramatically.
“People have learned how to do remote work and getting the papers to them," he said. "The hardest part is getting the papers to the auditor that they need because they may not be on site.”
So far, fiscal 2020 audits which are commonly associated with fiscal years that end June 30 are not deviating from fiscal 2019 numbers, Ciccarone said.
“This is particularly true for hospitals and private higher education which were hard hit by the pandemic in the first half of last year,” Ciccarone said. “Approximately 50% of our coverage base of those two sectors have already checked in for the 2020 fiscal year.”
