18469_Authority_June

municipalauthorities.org | 41 THE RIGHT MATERIAL. THE RIGHT PLACE. THE RIGHT TIME. Scan the Q R code to find a location near you. www.lbh2o.com 100% Employee Owned 24x7 Emergency Service and Support.    • Limiting the amount of outstanding debt to maintain fiscal responsibility • Stipulating debt service coverage ratios • Setting maturity limits for debt obligations • Ensuring the use of debt funds for specific capital improvements or necessary projects. Additional headings and details may be added to guide implementation of stated policies. For example, the Board may wish to identify the publication of general circulation where legal notices are to be posted. However, fiscal policies should remain relatively stable, avoiding frequent amendments or references to specific individuals or firms. Large authorities may require a more detailed financial handbook or policy manual. A formal statement of policies is important for a variety of reasons. It is helpful in identifying the Authority’s general policies should a question arise over a particular action. Rate payers, lenders, regulatory agencies, and even auditors may want a better understanding of decisions. For example, the policy to create and maintain a capital replacement fund can address questions about the need for a rate increase when there appears to be an adequate operating cash balance. Also consider the annual audit report. Most reports contain a section called the Management Discussion and Analysis (MD&A) that helps to introduce the financial statements and provides some statistical information on the Authority’s operations. The Notes to the Financial Statements section provides detailed information on the Authority’s financial affairs, auditors’ observations, risk evaluations, and other financial details. These notes are often scrutinized by lenders, bond rating agencies, insurance companies, the incorporating municipality(ies), and others evaluating the Authority’s financial health. S