what's new from norwalk? 2014 gfoaz winter conference prescott resort & conference center...
TRANSCRIPT
What's New From Norwalk?
2014 GFOAz Winter ConferencePrescott Resort & Conference Center
Prescott, AZFebruary 21, 2014
Presented byCorey Arvizu, CPA, Partner
Heinfeld, Meech & Co.
2
Agenda
New Pension ReportingGASB UpdateSingle Audit UpdateAICPA Code of Conduct
3
New Pension Reporting
4
GASB 68 – Accounting and Financial Reporting for Pensions
These proposed pension expense reporting changes will have the biggest effect on governments of any GASB pronouncement issued since the inception of the GASB.
David R. Bean, GASB Director of Research and Technical Activities
5
GASB 68 – Accounting and Financial Reporting for Pensions
Governments will be required to report its pro-rata share of the pension plan’s unfunded obligations on the financial statementsMany governments will report liabilities in the tens of millions of dollarsMeasurement is accounting-based rather than funding-basedEffective for fiscal year end 2015 for the government employers
6
GASB 68 – Accounting and Financial Reporting for Pensions
ASRS/PSPRS to assist with required disclosure and schedulesGASB issued implementation guidance for pension plans in June 2013 Guidance for employers to be issued early 2014Additional note disclosures and supplemental schedules will be required
7
8
9
GASB 68 – Accounting and Financial Reporting for Pensions
The numbers… ASRS had $9.5 billion unfunded liability at June 30, 2013 Approximately 75% funded status at June 30, 2013 Approximately 200,000 active employee participants Rough calculation of over $47,500 liability per employee Crunch the numbers for your government…
Disclaimer: The above is provided for entertainment purposes only. Actual employer liability amounts to be provided by ASRS actuaries and auditors.
10
GASB 68 – Accounting and Financial Reporting for Pensions
Determining the employer numbers… ASRS and PSPRS will provide the participating
government employers with the following:• Proportionate percentage and the basis used,
such as covered payroll or actual contributions• Net pension liability (or net pension assets)• Deferred inflows and outflows of resources
components• Pension expense components• Note and RSI disclosures, for example: NPL share
with discount rate +/- 1 point
11
GASB 68 – Accounting and Financial Reporting for Pensions
Auditing the numbers… Potential alternatives
• Participating government employer auditor contracts with an actuary to help audit the numbers provided by ASRS/PSPRS
• Participating government employer auditor gains an understating of pension elements and independently audits the information provided by ASRS/PSPRS
• ASRS/PSPRS contract a special audit of amounts then provide to all participating government employers and their auditors
Final determination to be made in spring 2014
12
GASB 68 – Accounting and Financial Reporting for Pensions
Managing the implementation… Obligation reported on the government-wide and
proprietary fund statements Prepare to report deferred outflow/inflows Plans will need to provide required information to ensure
timely financial reporting No requirement to accumulate resources to fund
obligations Be prepared to discuss the financial health of the pension
plans Unfunded obligations only one element of financial health
Initiate discussions with the governing body
13
GASB Update
14
Pronouncement Timeline
Fiscal Year
Pronouncement 2013
GASB No. 60, Accounting and Financial Reporting for Service Concession Arrangements
2013
GASB No. 61, The Financial Reporting Entity: Omnibus an Amendment of GASB Statements No. 14 and No. 34
2013
GASB No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements
2013
GASB No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position
2014 GASB No. 65, Items Previously Reported as Assets and Liabilities 2014
GASB No. 66, Technical Corrections – 2012 – an Amendment of GASB Statements No. 10
and No. 62 2014
GASB No. 67, Financial Reporting for Pension Plans – an Amendment of GASB
Statement No. 25 2014
GASB No. 70, Accounting and Financial Reporting for Nonexchange Financial Guarantees
2015
GASB No. 68, Accounting and Financial Reporting for Pensions – an Amendment of GASB Statement No. 27
2015 GASB No. 69, Government Combinations and Disposals of Government Operations 2015
GASB No. 71, Pension Transition for Contributions Made Subsequent to the
Measurement Date
15
GASB 60 – Service Concession Arrangements
Examples –1) State transportation department enters into arrangement with a
transportation authority for the operation of a tollway. Authority to receive and retain revenues for a period of 75 years.
2) A City enters into arrangement with a private company for the operation of City owned golf courses. The private company agrees to pay the City 10% of revenues for 10 years.
3) County entering into an arrangement for a City to design, build, and operate a new jail facility. The County will collect and retain all fees for a period of 40 years.
16
GASB 60 – Service Concession Arrangements
Not within the scope of an SCA
1) Third party designs and builds a capital asset
2) Concessions or other ancillary services operated in conjunction with a government facility
3) Service and management arrangement services the government would otherwise perform
17
GASB 62 – Codification of FASB Standards
The following disclosure may be deleted:
Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both the government-wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. Governments also have the option of following subsequent private-sector guidance for their business-type activities and enterprise funds, subject to this same limitation. The Town has elected not to follow subsequent private-sector guidance.
18
GASB 65 – Items Previously Reported as Assets and Liabilities
Expands the use of deferred inflows and outflows of resources to other items
Certain elements apply to governmental fund statements
Use of term “deferred” limited to deferred outflows/inflows of resources
Note disclosure required if deferred items are aggregated on the face of the financial statements
Does not impact fund balance reporting
Effective for fiscal year end 2014
19
GASB 65 – Items Previously Reported as Assets and Liabilities
Application items common to local governments• Deferred outflow – difference between carrying value
of debt and the amount to refunded debt (if debit)• Deferred inflow – “unavailable” related to the
application of modified accrual accounting• Neither an asset or deferred outflow – debt issuance
costs to be reported as an expense• Certain items related to pension reporting upon future
implementation
20
ASSETSCurrent assets:
Cash and cash equivalents $ 23,065,362 $ 19,532,099 $ 42,597,461Taxes receivableAccounts receivableIntergovernmental receivable
Total current assets
Noncurrent assets:Capital assets, non-depreciableCapital assets, depreciable (net)
Total noncurrent assetsTotal assets
DEFERRED OUTFLOWS OF RESOURCESDeferred item on refunded debt
LIABILITIESCurrent liabilities:
Accounts payableAccrued wages and benefitsUnearned revenueCompensated absencesLoans payableRevenue bonds
Total current liabilities
Noncurrent liabilities:Compensated absencesLoans payableRevenue bonds
Total noncurrent liabilitiesTotal liabilities
DEFERRED INFLOWS OF RESOURCESDeferred pension plan items 1,990,112 1,990,112
Total deferred inflows of resources - 1,990,112 1,990,112
NET POSITIONNet investment in capital assetsRestricted for:
Classroom size reductionCapital projectsDebt service
UnrestrictedTotal net position $ 155,410,758 $ 60,470,433 $ 215,881,191
3,654,9484,426,071
34,212,350
55,281,94360,854,45372,184,221
172,961,724
626,098
2,675,00011,329,768
407,0845,165,426
128,1801,348,8442,820,803
3,479,249877,692
2,864,494
35,999,456204,822,247240,821,703288,117,744
Total
718,3682,552,2461,427,966
47,296,041
20,464,865
5,165,42648,367,66053,591,96457,176,610
40,005,568
307,6702,370,1803,584,646
58,878
114,293
95,282,634117,463,735
697,37495,129
22,181,101
2,472,096
15,342,77779,939,857
4,426,071
626,0983,654,948
13,747,485
Business-type Activates
2,190,093
458,909
15,007,611
132,956,156
348,206
6,914,2837,262,489
1,234,5512,513,133
304,8207,745,122
2,781,875782,563128,180
20,656,679124,882,390145,539,069170,654,009
969,05725,114,940
392,398
CITY OF GIACONDASTATEMENT OF NET POSITION
JUNE 30, 2014
Governmental Activates
718,368362,153
21
Receipt of grant revenues in advance of meeting eligibility requirements
Revenues received after the period of availability
ASSETS
Cash and cash equivalents $ 12,562,684 $ 3,887,479 $ 4,138,674 $ 20,588,837
Taxes receivable
Accounts receivable
Intergovernmental receivable
Special assessments
Prepaid items
Total assets $ 14,224,638 $ 4,143,104 $ 4,153,667 $ 22,521,409
OF RESOURCES AND FUND BALANCES
Liabilities:
Accounts payable $ 1,944,997 $ 414,236 $ 324,735 $ 2,683,968
Accrued wages and benefits
Intergovernmental payable
Unearned revenue
Deposits payable
Total liabilities
Deferred inflows of resources:
Unavailable revenues – property taxes 75,215 15,777 55,889 146,881
Total deferred inflows of resources 75,215 15,777 55,889 146,881
Fund balances:
Restricted
Committed
Assigned
Unassigned
Total fund balances
Total liabilities, deferred inflows and fund balances $ 14,224,638 $ 4,143,104 $ 4,153,667 $ 27,989,306
General Fund
718,368
354,602
577,804
CITY OF GIACONDA BALANCE SHEET - GOVERNMENTAL FUNDS
JUNE 30, 2014
11,180
687,168
LIABILITIES, DEFERRED INFLOWS
361,283
128,180
95,872
3,217,500
1,769,333
9,162,590
10,931,923
HURF
7,551
248,074
73,920
488,156
3,639,171
3,639,171
Non-Major Governmental
Funds
14,993
16,204
230,256
571,195
2,685,879
840,704
3,526,583
Total Governmental
Funds
718,368
362,153
840,871
-
11,180
777,292
361,283
1,769,333
9,162,590
18,097,677
358,436
95,872
4,276,851
6,325,050
840,704
22
GASB 70 – Accounting and Financial Reporting for Nonexchange Financial Guarantees
Guidance for when a government guarantees the obligations of another entity
Government does not receive equal value in exchange
Disclosure required when such a guarantee extended
Guidance for recognizing a liability when certain factors and data indicate the government will be required to satisfy the guarantee
Effective for fiscal year end June 30, 2014
23
GASB 70 – Accounting and Financial Reporting for Nonexchange Financial Guarantees
Note 12 – Financial Guarantee
In November 2010, Dale County guaranteed the 10-year, $10 million December 2010 general obligation bond issuance of the Rio Civic Center, a legally separate district located within Dale County, in accordance with the State Civic Center Act. The bonds mature annually through December 1, 2020, with semiannual interest payments. In the event that the Rio Civic Center is unable to make a payment, Dale County will be required to make that payment.
24
GASB 69 – Government Combinations and Disposals of Operations
Guidance for government combinations that are accomplished through mergers, acquisitions, and transfers of operations
Governments previously used guidance intended for the private sector
Operations is an integrated set of activities conducted and managed for the purpose of providing identifiable services with associated assets
Effective for fiscal year end June 30, 2015
25
GASB 69 – Government Combinations and Disposals of Operations
Note 15: Disposal of Operations
On March 15, 2015, the City transferred the assets and liabilities comprising its fire service operations to the Mountain Region Fire Authority (MRFA) for the purpose of enhancing emergency fire services. As a result of the transfer, the City recognized a loss of $2.9 million on the disposal of its fire service operations as a special item. The City's 2015 expense related to its fire service operations totaled approximately $11.2 million. 2015 revenues associated with the City's fire service operations, consisting of both program and general revenues, totaled approximately $9.6 million. Expenditures and revenues of the fire services operations reported in the general fund were $10.9 million and $9.7 million, respectively.
26
Economic Condition Reporting: Financial Projections
Propose presentation of certain economic condition information as required supplementary information
Format of information presented similar to statistical schedules of a CAFR
Appropriateness as RSI, impact on timeliness of reporting, and cost-benefits among factors considered
Project currently on hold pending resolution of GASB scope
27
Economic Condition Reporting: Financial Projections
Components of fiscal sustainability information1) Projections of cash inflows
2) Projections of cash outflows
3) Projections of financial obligations (bonds, pensions, long-term contracts, etc.)
4) Projections of annual debt service payments (principal and interest)
5) Narrative discussion of major intergovernmental service interdependencies
28
29
30
GASB Projects in Deliberation
Fair Value Measurement and Application
Fiduciary Responsibilities
GAAP Hierarchy
Lease Accounting
Other Postemployment Benefit Accounting and Financial Reporting
Tax Abatement Issues
31
GASB Technical Plan
• Monitoring – • Electronic financial reporting• Emerging accounting issues• Pension implementation
• Research – • Asset retirement obligations• Financial reporting model• Irrevocable charitable trusts• Blending requirements for
BTAs
• Potential projects – • Interim reporting• Popular reporting• Reporting unit presentations• Emissions trading (carbon credits)• In-kind contributions
32
Single Audit Update
Single Audit Update
Changes based on recent guidance - • Consolidation of several OMB Circulars, including
A-87 and A-133• Focus on outcomes rather than prescribed practices
- Time and effort• No proposed changes to compliance supplement or
number of compliance requirements tested• GAQC likely to provide webinars open to the public• Effective for fiscal year end June 30, 2016
33
Single Audit Update
Changes based on recent guidance - • Change in single audit threshold to $750,000• Change in type A program threshold from $300,000
to $750,000• Change in type B program threshold from $100,000
to $187,500• Threshold for findings raised from $10,000 to
$25,000• Minimum amount of awards tested revised from
25% to 20%
34
Single Audit Update
New Process for Data Collection Form • New Federal Audit Clearinghouse system recently launched• Final data collection form released for use on January 7th • Revised form includes a new federal awards finding page
with more detail findings information- the finding reference number- type(s) of compliance requirement(s) to which the finding
relates- types of deficiencies (e.g., opinion modification, material
weakness, etc.)- a "yes" or "no" response as to whether questioned costs
are being reported
35
36
AICPA Code of Conduct
37
AICPA Code of Conduct
Code applicable to members of the AICPA and used by the State Board on licensing matters
Code reformatted to enhance navigation
Separate section added for members in business
Conceptual framework added for when a specific guidance is not in place
Expected effective date of December 14, 2014
See Professional Ethics page of the AICPA website for additional information
