Mineola, NY- Nassau County Comptroller George Maragos sent a memo to the Nassau County Interim Financial Authority (NIFA), the Administration and Legislative leaders to inform them that the County would be restating the 2012 Comprehensive Annual Financial Report (CAFR) due to pension plan reporting errors dating back to 2005 under the prior Comptroller. The errors resulted in a cumulative $84.4 million over seven year (2006 - 2012) understatement of the pension expense as reported in the major governmental funds in accordance with Generally Accepted Accounting Principles (GAAP). The County’s results as reported on a budgetary basis have NOT been affected and do not require restatement.
From the $84.4 million incorrectly reported, $71.6 million was for the period 2006 to 2009, and $12.8 million was for the period 2010 to 2012. Consequently, the County GAAP fund balance will be reduced from $111.4 million to $27.1 million. Additionally the long term pension liability to the State has been understated by approximately $87.3 million. The errors were discovered by the Comptroller’s new director of accounting during the 2013 year-end closing process. The County’s outside auditors have agreed with correcting entries and are in the process of auditing the balances.
“These errors are unfortunate and should not have occurred,” Comptroller George Maragos said. “I complement the new director of accounting and the current accounting staff for their diligent work in uncovering, reporting and correcting the errors in a totally transparent manner. Their professionalism together with the restatements of the County’s 2012 Annual Financial Report will help retain the County’s credibility in the financial Markets and with our taxpayers.”
However, the reduction in the County GAAP fund balance by $84.3 million to $27.1 million at year-end 2012 leaves the County vulnerable to unforeseen costs increases or revenue shortfalls. The Administration, NIFA and the Legislature will need to address these issues and take steps to restore the fund balance. On a positive note, unaudited 2013 results are estimated to show a GAAP surplus of $48.9 million, which will increase the GAAP fund balance to over $70 million.