Old Law Causes Timely Concerns For Ohio Municipalities

ORC 3709.36 Calls For Immediate Action From Cities To Comply

In Ohio, cities have traditionally reported information related to their health districts in their annual financial statements and financial audits. But, thanks to a newly discovered rule, the practice of grouping the information together is no longer acceptable.

According to Ohio Revised Code (ORC) 3709.36, which actually went into effect in 1974, city health districts are considered separate entities, regardless of whether they were established by a city’s charter and/or they are controlled by a city’s council. As a separate entity, the board of health or health district is defined as a “body politic and corporate.” In other words, it’s considered its own legal entity under a single governmental authority. As legal entities, health districts in Ohio are “capable of suing and being sued, contracting and being contracted with, acquiring, holding, possessing, and disposing of real and personal property, and taking and holding in trust for the use and benefit of such district or authority any grant or devise of land and any domain or bequest of money or other personal property.”


Read Also: Six Policies & Procedures All Government Entities Should Implement, Update


What Does ORC 3709.36 Mean To Cities In Ohio?

Obviously, the discovery of ORC 3709.36 means that there are some changes in store for Ohio municipalities. Below is an overview of what you should be aware of.

  • The financial activity of your city’s health department is required to be eliminated from the primary government’s annual financial statements.
  • The health district is required to file its own financial statements in the Hinkle System.
  • The city is required to analyze the health department for a potential component unit under GASB 61, The Financial Reporting Entity: Omnibus, which will impact how certain funds are reported.
  • A separate audit of the health department may be required if the city’s health department’s audit cannot be satisfied by the audit of the primary government.

How Much Time Do Cities Have To Comply?

Not much.

These changes will be in full effect for your 2019 reporting period. You’ve likely already heard that the Auditor of State’s office has put out the call for a separate RFP for city health department’s audits. Furthermore, you may have heard that the city’s 2019 financial statements will need to reflect the changes outlined above, including the completion of a GASB 61 analysis. This is a lot to do in not a lot of time. For assistance, additional insight and more, be sure contact a member of the Rea & Associates government services team immediately.

By Anita Martin, CPA (Medina office)

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