The New York State Office for People with Developmental Disabilities (OPWDD) has established internal goals to perform a Limited Fiscal Review (LFR) of each of its funded agencies on an annual basis. The objectives of an LFR are generally to (1) assess an organization’s financial soundness in terms of annual operating performance; (2) review an organization’s financial stability at a point in time and over the course of time; and (3) evaluate integrity and corporate governance.
For an LFR, OPWDD would reference a provider’s audited financial statements, tax returns, Consolidated Fiscal Reports (CFR), website, past OPWDD audit findings, and federal audit results. Some of the figures, calculations, and metrics reviewed by OPWDD include the following:
- Annual change in net assets/profit (in total and from operating activities);
- Net asset balances (negative balances will be red flags) as a percent of total operations;
- Fluctuations between years;
- Cash balances (individually and in relation to accounts receivable);
- Current ratio (current assets divided by current liabilities), which should be at least 1:1;
- Debt covenant compliance and line of credit usage;
- Investments and endowments in dollar terms and as a percent of total net assets;
- Board composition and related party issues;
- Executive compensation; and
- Compliance with filing and reporting requirements.
The OPWDD website has additional resources that can help prepare you for an LFR. See below for some helpful links, and as always, if we can be of service to your organization in any way, please reach out to us.