Transcript Title

What's New From
Norwalk?
Presented by
Corey Arvizu, CPA, Partner
Heinfeld, Meech & Co.
2014 GFOAz Winter Conference
Prescott Resort & Conference Center
Prescott, AZ
February 21, 2014
Agenda
New Pension Reporting
GASB Update
Single Audit Update
AICPA Code of Conduct
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New Pension Reporting
3
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
4
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
statements
Many governments will report liabilities in
the tens of millions of dollars
Measurement is accounting-based rather
than funding-based
Effective for fiscal year end 2015 for the
government employers
5
GASB 68 –
Accounting and Financial Reporting for Pensions
ASRS/PSPRS to assist with required
disclosure and schedules
GASB issued implementation guidance for
pension plans in June 2013
Guidance for employers to be issued early
2014
Additional note disclosures and supplemental
schedules will be required
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7
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GASB 68 –
Accounting and Financial Reporting for Pensions
The numbers…
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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.
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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
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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
11
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
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GASB Update
13
Pronouncement Timeline
Fiscal Year
2013
2013
2013
2013
2014
2014
2014
2014
2015
2015
2015
Pronouncement
GASB No. 60, Accounting and Financial Reporting for Service Concession Arrangements
GASB No. 61, The Financial Reporting Entity: Omnibus an Amendment of GASB
Statements No. 14 and No. 34
GASB No. 62, Codification of Accounting and Financial Reporting Guidance Contained
in Pre-November 30, 1989 FASB and AICPA Pronouncements
GASB No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows
of Resources, and Net Position
GASB No. 65, Items Previously Reported as Assets and Liabilities
GASB No. 66, Technical Corrections – 2012 – an Amendment of GASB Statements No. 10
and No. 62
GASB No. 67, Financial Reporting for Pension Plans – an Amendment of GASB
Statement No. 25
GASB No. 70, Accounting and Financial Reporting for Nonexchange Financial
Guarantees
GASB No. 68, Accounting and Financial Reporting for Pensions – an Amendment of
GASB Statement No. 27
GASB No. 69, Government Combinations and Disposals of Government Operations
GASB No. 71, Pension Transition for Contributions Made Subsequent to the
Measurement Date
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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.
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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
16
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.
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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
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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
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CITY OF GIACONDA
STATEMENT OF NET POSITION
JUNE 30, 2014
Governmental
Activates
ASSETS
Current assets:
Cash and cash equivalents
Taxes receivable
Accounts receivable
Intergovernmental receivable
Total current assets
$
Noncurrent assets:
Capital assets, non-depreciable
Capital assets, depreciable (net)
Total noncurrent assets
Total assets
DEFERRED OUTFLOWS OF RESOURCES
Deferred item on refunded debt
LIABILITIES
Current liabilities:
Accounts payable
Accrued wages and benefits
Unearned revenue
Compensated absences
Loans payable
Revenue bonds
Total current liabilities
Noncurrent liabilities:
Compensated absences
Loans payable
Revenue bonds
Total noncurrent liabilities
Total liabilities
23,065,362
718,368
362,153
969,057
25,114,940
$
2,190,093
458,909
22,181,101
20,656,679
124,882,390
145,539,069
170,654,009
15,342,777
79,939,857
95,282,634
117,463,735
35,999,456
204,822,247
240,821,703
288,117,744
392,398
2,472,096
2,864,494
2,781,875
782,563
128,180
1,234,551
2,513,133
304,820
7,745,122
697,374
95,129
114,293
307,670
2,370,180
3,584,646
3,479,249
877,692
128,180
1,348,844
2,820,803
2,675,000
11,329,768
6,914,283
7,262,489
15,007,611
58,878
5,165,426
48,367,660
53,591,964
57,176,610
407,084
5,165,426
55,281,943
60,854,453
72,184,221
-
1,990,112
1,990,112
1,990,112
1,990,112
132,956,156
40,005,568
172,961,724
20,464,865
60,470,433
626,098
3,654,948
4,426,071
34,212,350
215,881,191
$
626,098
3,654,948
4,426,071
13,747,485
155,410,758
$
19,532,099
Total
42,597,461
718,368
2,552,246
1,427,966
47,296,041
348,206
DEFERRED INFLOWS OF RESOURCES
Deferred pension plan items
Total deferred inflows of resources
NET POSITION
Net investment in capital assets
Restricted for:
Classroom size reduction
Capital projects
Debt service
Unrestricted
Total net position
Business-type
Activates
$
$
20
CITY OF GIACONDA
BALANCE SHEET - GOVERNMENTAL FUNDS
JUNE 30, 2014
General Fund
Receipt of grant
revenues in advance
of meeting eligibility
requirements
ASSETS
Cash and cash equivalents
Taxes receivable
Accounts receivable
Intergovernmental receivable
Special assessments
Prepaid items
Total assets
LIABILITIES, DEFERRED INFLOWS
OF RESOURCES AND FUND BALANCES
Liabilities:
Accounts payable
Accrued wages and benefits
Intergovernmental payable
Unearned revenue
Deposits payable
Total liabilities
$
$
$
Deferred inflows of resources:
Unavailable revenues – property taxes
Total deferred inflows of resources
Revenues received
after the period of
availability
11,180
14,224,638
1,944,997
687,168
361,283
128,180
95,872
3,217,500
$
14,224,638
$
$
4,138,674
14,993
$
4,143,104
$
4,153,667
$
$
414,236
73,920
$
324,735
16,204
$
$
20,588,837
718,368
362,153
840,871
11,180
22,521,409
488,156
571,195
2,683,968
777,292
361,283
358,436
95,872
4,276,851
15,777
15,777
55,889
55,889
146,881
146,881
3,639,171
2,685,879
840,704
3,639,171
3,526,583
6,325,050
840,704
1,769,333
9,162,590
18,097,677
230,256
1,769,333
9,162,590
10,931,923
$
3,887,479
Total
Governmental
Funds
7,551
248,074
75,215
75,215
Fund balances:
Restricted
Committed
Assigned
Unassigned
Total fund balances
Total liabilities, deferred inflows and fund balances
12,562,684
718,368
354,602
577,804
HURF
Non-Major
Governmental
Funds
4,143,104
$
4,153,667
$
27,989,306
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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
22
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.
23
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
24
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.
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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
26
Economic Condition Reporting: Financial Projections
Components of fiscal sustainability information
1) 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
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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
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GASB Technical Plan
• Monitoring –
• Research –
• Electronic financial reporting
• Emerging accounting issues
• Pension implementation
•
•
•
•
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
31
Single Audit Update
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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
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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
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AICPA Code of Conduct
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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
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Thank you
Corey Arvizu, CPA
Heinfeld, Meech & Co.
520-742-2611, Ext. 101
[email protected]
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