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R.S. Abrams & Co., LLP

Issue: # 5
April 2, 2012
R.S. Abrams Islandia Office

Proposed Changes to Single Audits

by Chuck Scheid, CPA

  

On February 24, 2012, the Office of Management and Budget (OMB) issued, for comment, an "Advance Notice of Proposed Guidance" that would have an effect on state and local governments and nonprofit organizations expending federal funds.

 

One of the significant proposed changes is increasing the threshold and changing the framework for having a Single Audit. The following summarizes the proposed changes:

  • Entities that expend less than $1,000,000 in federal awards during a fiscal year would not be required to have a Single Audit. Currently the threshold is $500,000.
  • Entities that expend between $1,000,000 and $3,000,000 would have a scaled down audit that would cover only two compliance requirements, as compared to currently having to audit up to fourteen compliance requirements. Allowable costs would always be one of the required compliance requirements and the program agency would select the second compliance requirement based on their judgment as to which area would have the highest risk of waste, fraud and abuse. OMB would provide the agency direction for making this decision.
  • Entities that expend $3,000,000 or more would be required to have a full Single Audit.

Some of the other proposed changes are as follows:

  • Streamlining the fourteen compliance requirements as per Circular A-133 Compliance Supplement. By reducing non-material requirements, agencies will be able to refocus their resources to more essential areas.
  • Improving audit follow-ups by having entities maintain more of a proactive role in audit findings.
  • Ensuring across-agency coordination to reduce redundancy and burden on pass-through entities and subrecipients.
  • Developing alternate time and effort reporting requirements that could reduce administrative burden.

The objective of this reform is to make the oversight of federal funds more effective and efficient to ensure that the public receives the most value from the Single Audits. To find out more on the "Advance Notice of Proposed Guidance", see the link below.

http://www.whitehouse.gov/sites/default/files/omb/fedreg/2012/2012-4521.pdf

State Pension Plan Changes

by Chuck Scheid, CPA

   

On March 15, 2012, the State Legislature passed a bill that creates a Tier VI pension plan. The plan applies to employees hired after April 1, 2012, however this plan does not apply to New York City police officers and firefighters. Some of the highlights of the new tier are as follows: Raises the minimum retirement age from 62 to 63 and allows for an early retirement with penalties.

  • Employees are required to contribute based on a salary sliding scale
    • Up to $45,000                contribute 3% of salary
    • $45,000.01 to $55,000    contribute 3.5% of salary
    • $55,000.01 to $75,000    contribute 4.5% of salary
    • $75,000.01 to $100,000  contribute 5.75% of salary
    • $100,000.01 and up        contribute 6% of salary *

* Amounts earned above the Governor's salary (currently $179,000) will not be eligible for the pension benefit calculation under Tier VI.

  • Lowers future pension benefits. The pension multiplier will be 1.75% for the first 20 years of service and 2% thereafter (previously the rate was 2%).
  • Offers a 401(k) style "defined contribution" option only to non-union employees with salaries above $75,000. The employer would make an 8% contribution.
  • Tier VI only allows up to two salaries to be included in calculating benefits (there is no limit for Tiers I to V).
  • 100 sick days can be applied toward retirement service credit (a decrease from 200 sick days).
  • The final average salary will be based on the final five years of service (an increase from three years). The lump sum termination payments of unused sick and vacation time are not included in the calculation. There is a 10% cap on the average salary covering the previous four years that will be used to determine pension allowances.
  • Future pension enhancements will be required to be funded by the State. 

Metropolitan Commuter Transportation Mobility Tax (MCTMT) Update

by Chuck Scheid, CPA

 

Effective April 1, 2012

 

(1)  Public schools and BOCES are now exempt from the Metropolitan Commuter Transportation Mobility Tax (MCTMT) per Chapter 56 of the Laws of 2011.

 

(2)  All other local governments will have their payroll threshold and payroll tax rates adjusted as follows:

            Payroll Expense                                  MCTMT Rate

           Over $312,500 to $375,000                         .11%

           Over $375,000 to $437,500                         .23%

           Over $437,500                                           .34%

 

The Office of the State Comptroller has issued a March 2012 Accounting Bulletin addressing this change.
http://www.osc.state.ny.us/agencies/abulls/a631.htm
 

Lawmakers Announce Agreement on State Budget

by Chuck Scheid, CPA

 

On Tuesday, March 27, 2012, the Governor and legislative leaders settled on a $132.6 billion dollar budget for the 2012-13 fiscal year. This budget is a decrease of $135 million from last year, resulting in the second straight year the budget has decreased. Some key points in the proposed budget are as follows:

  • Increase in Community College Aid by $31.3 million.
  • Increase in School Aid to approximately $20.4 billion which includes performance grants to reward academic improvement and school district efficiencies.
  • State agencies will be allowed to purchase from centralized contracts, thereby reducing their costs.
  • Provides savings for all counties and New York City through mandate relief in Medicaid.

A copy of the budget agreement can be downloaded from the Governor's office at

http://www.governor.ny.gov/press/03272012budgetagreement.

 
FIRM NEWS

Employee of the Month - February 2012

 

R.S. Abrams & Co., LLP formally congratulates Katherine Klein,CPA for being named Employee of the Month!!!

 

Katherine is recognized for her excellent leadership skills with regards to the firm's single audit and tax clients.  She has been with the firm for over five years and continues to play a vital role in the firm's tax practice as the Tax Manager.
Employee of the Month - March 2012

 

R.S. Abrams & Co., LLP formally congratulates Chelsea Kaufman for being named Employee of the Month!!!

 

Chelsea is recognized for all of her hard work and dedication during tax season.  She has been with the firm for three and a half years and continues to play a vital role in the firm's tax practice.
In This Issue
Proposed Changes to Single Audits
State Pension Plan Changes
Metropolitan Commuter Transportation Mobility Tax (MCTMT) Update
Lawmakers Announce Agreement on State Budget
Employee of the Month - February 2012
Employee of the Month - March 2012
R.S. Abrams & Co. is an accounting firm with extensive experience auditing school districts, boards of cooperative educational services, not-for-profits, and state & local governments.  We also provide tax and accounting services to individuals, partnerships and corporations across the country.  Our firm has been in business for over 75 years and provides auditing services in Nassau, Suffolk, Westchester, and Rockland counties.
 

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The information contained in this newsletter is provided for informational purposes only, and should not be construed as accounting, audit, or tax advice on any subject matter. The Firm provides accounting, audit, and tax advice only to persons or entities with which it has established a client relationship. No recipients of information from this newsletter, clients or otherwise, should act or refrain from acting on the basis of any information included in this newsletter without seeking appropriate accounting, audit, tax or other professional advice on the particular facts and circumstances at issue from a public accounting firm licensed in the recipient's state. The content of this newsletter contains general information and may not reflect current accounting, audit, or tax developments. The Firm disclaims all liability in respect to actions taken or not taken based on any or all of the contents of this newsletter.

 
Our firm has two locations in Islandia and White Plains, New York and the single most important factor in our firm's success over the past 75 years has been our uncompromising commitment to the highest standards of quality and professionalism.  Should you have any questions for us, please don't hesitate to contact us at (631) 234-4444.

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R.S. Abrams & Co., LLP