Post on 23-Jan-2016
description
transcript
Governmental Governmental Accounting and Accounting and
Reporting Reporting UpdateUpdateGFOA Spring Conference
May 3, 2010
AgendaAgenda
Federal perspectiveFederal perspective EnvironmentEnvironment Implementation storiesImplementation stories What is happening now?What is happening now? What is waiting?What is waiting? Future considerationsFuture considerations
Remaining GASB Remaining GASB 34/35 Issues / 34/35 Issues /
InconsistenciesInconsistencies
GASB 34 / 35 IssuesGASB 34 / 35 Issues MD&A requirements for BTAs, MD&A requirements for BTAs,
clarification of clarification of exceptions to general requirementsexceptions to general requirements Grants and contracts, exchange and Grants and contracts, exchange and
exchange-likeexchange-like Federal financial aid, Pell grants, direct Federal financial aid, Pell grants, direct
lending lending Library booksLibrary books Split-interest agreementsSplit-interest agreements Perkins LoanPerkins Loan
Other IssuesOther Issues
Fund raising function used?Fund raising function used? Other functions / programs Other functions / programs Matrix presentation for functional Matrix presentation for functional
and natural expensesand natural expenses
Federal Federal PerspectivePerspective
Federal PerspectiveFederal Perspective IPEDS Technical Review Panel focused IPEDS Technical Review Panel focused
on - on - Consistency of reporting (GASB/FASB)Consistency of reporting (GASB/FASB) Need for more useful information Need for more useful information
IPEDS changes – Part C Expenses IPEDS changes – Part C Expenses Optional for FY June 30, 2009, allows for Optional for FY June 30, 2009, allows for
similar allocation of FASB institutions - similar allocation of FASB institutions - Operations and Maintenance of PlantOperations and Maintenance of Plant DepreciationDepreciation Interest ExpenseInterest Expense
Part C-Expenses and Other Deductions Part C-Expenses and Other Deductions (non Aligned)(non Aligned)
Part C- Expenses and Other Part C- Expenses and Other Deductions (Aligned)Deductions (Aligned)
($ in millions)
Before Allocation
After Allocation
Change
Instruction 173 197 24
Research 125 143 18
Public Service 68 78 10
Academic Support
35 40 5
Student Services 25 28 3
Institutional Support
27 31 4
Auxiliary Enterprises
81 91 10
Operations and Maintenance of Plant
35 0 -35
Depreciation 33 0 -33
Interest Expense 6 0 -6
Total 608 608 0
NACUBO AR 2010-1NACUBO AR 2010-1
Issued February, 2010Issued February, 2010 Offers guidance for public Offers guidance for public
institutionsinstitutions For IPEDS Reporting only For IPEDS Reporting only
NACUBO AR 2010-1NACUBO AR 2010-1
Select categories of costSelect categories of cost Review methodologies of costReview methodologies of cost Explore availability of dateExplore availability of date Consider mission, objectives and Consider mission, objectives and
practices of your institution practices of your institution
NACUBO AR 2010-1NACUBO AR 2010-1
The NACUBO APC and NACUBO survey The NACUBO APC and NACUBO survey support the use of the following common support the use of the following common allocation methodologies - allocation methodologies - Direct assignment based on functional Direct assignment based on functional
category of space category of space Assignable square footage Assignable square footage Salaries and wages, or salaries and wages plus Salaries and wages, or salaries and wages plus
benefits benefits Total expenses by function Total expenses by function Combination of the above Combination of the above
Governmental Reporting Governmental Reporting EnvironmentEnvironment
Codification of FASB, AICPA, Pre GASB Codification of FASB, AICPA, Pre GASB authoritative authoritative
GASB GASB Concepts Concepts Focus on AccountabilityFocus on Accountability
Service Efforts and AccomplishmentsService Efforts and Accomplishments FAF confirmed jurisdictional authority to include FAF confirmed jurisdictional authority to include
in financial accounting and reporting standardsin financial accounting and reporting standards International Financial Reporting International Financial Reporting
StandardsStandards
Watch Out !Watch Out !
New changes – OPEB, Pollution New changes – OPEB, Pollution Remediation DerivativesRemediation Derivatives Impact on legal restrictionsImpact on legal restrictions Bonds covenantsBonds covenants Labor / collective bargaining Labor / collective bargaining
negotiationsnegotiations
FY 2009 Implementation FY 2009 Implementation Stories Stories
Statement 45 – Accounting and Statement 45 – Accounting and Reporting by Employers for Other Reporting by Employers for Other Post Employment Benefits Post Employment Benefits
Statement 49 – Accounting and Statement 49 – Accounting and Financial Reporting for Pollution Financial Reporting for Pollution Remediation ObligationsRemediation Obligations
Statement 52 - Land and Other Real Statement 52 - Land and Other Real Estate Held as InvestmentsEstate Held as Investments
2009 GASB Implementation Guide – 2009 GASB Implementation Guide – Pell GrantsPell Grants
What is Happening Now?What is Happening Now?
Effective FY 2010 –Effective FY 2010 – Statement 51 – Accounting and Financial Statement 51 – Accounting and Financial
Reporting for Intangible AssetsReporting for Intangible Assets Statement 53 – Accounting and Financial Statement 53 – Accounting and Financial
Reporting for Derivative InstrumentsReporting for Derivative Instruments Statement 55 – Hierarchy of GAAP for Statement 55 – Hierarchy of GAAP for
State and Local GovernmentsState and Local Governments Statement 56 – Codification of Statement 56 – Codification of
Accounting and Financial Reporting Accounting and Financial Reporting Guidance Contained in the AICPA SASGuidance Contained in the AICPA SAS
What is Happening Now?What is Happening Now?
Statement 58 – Accounting and Statement 58 – Accounting and reporting for Chapter 9 reporting for Chapter 9 BankruptciesBankruptcies
Concepts Statement 4 – Elements of Concepts Statement 4 – Elements of Financial Financial StatementsStatements
Concepts Statement 5 – Service Concepts Statement 5 – Service Efforts and AccomplishmentsEfforts and Accomplishments
2009 GASB Implementation Guide2009 GASB Implementation Guide
Statement 51
Accounting for Intangible Accounting for Intangible AssetsAssets
Effective for periods Effective for periods beginning after June 15, 2009 beginning after June 15, 2009
(FY 2010)(FY 2010)
Intangible Assets
Easements Water rights Timber rights Patents Trademarks Computer software
Recognition
Must be identifiable Specified conditions approach for
internally generated assets (computer software)
Amortization
Required over useful life Limited by legal or contractual
provisions May have indefinite life if no limits
Implementation
Retroactively GASB 34 - Phase 1 or 2
Assets acquired after June 30, 1980 Except indefinite useful life Except internally generated assets
GASB 34 – Phase 3 Retroactive application encouraged not
required
Statement 53Statement 53
Accounting and Financial Accounting and Financial Reporting for DerivativesReporting for Derivatives
Effective for periods Effective for periods beginning after June 15, 2009 beginning after June 15, 2009
(FY 2010)(FY 2010)
Derivatives
Fair Value Derivative instruments are measured on the
statement of net assets at fair value Fair value changes are reported on the
“changes statement” as investment income Hedges are an exception -
Changes in fair value are reported on the statement of net assets as a deferral, charges or credits
Derivatives ? Interest rate swap
Variable rate to fixed rate Fixed rate to variable rate
Basis swap Exchange payments based on changes of two variable
rates Swaption
Gives the purchaser of the option the right but not the obligation to enter into interest rate swap
Commodity swap Reduce exposure to a commodity call risk
What is Not a Derivative
Normal purchase or sale contracts Loan commitments Financial Guarantees Contracts not exchanged – traded
(earthquake or weather derivatives) Investments (endowments) where
underlying asset is a derivative
Hedge and Hedge Accounting
Requirements Association – instrument is associated with a hedgeable
item Substantial offsets – instrument is effective in providing
changes in cash flows or fair values that substantially offset the cash flow or fair value of a hedgeable item
If the requirements are met, hedge accounting must be applied.
Accounting is not dependent on documentation
Hedge Accounting
Effectiveness must be evaluated Qualitative method Quantitative method
When a method becomes ineffective in a later period, another method may be used
Disclosure Requirements Significant terms Risks – credit, interest rate, basis, termination,
rollover, market access, foreign currency If another evaluation method is used , details
must be provided Investment derivative requires credit, interest
rate, foreign currency risks Contingencies Hedged debt Synthetic guaranteed investment contracts
Statement 55Statement 55
Hierarchy of Generally Hierarchy of Generally Accepted Accounting Accepted Accounting
Principles for State and Principles for State and Local GovernmentsLocal Governments
Effective immediatelyEffective immediately
Moves the definitions from AICPA Moves the definitions from AICPA Audit GuideAudit Guide
Statement 56Statement 56
Codification of Codification of Accounting and Accounting and
Reporting Guidance Reporting Guidance Contained in the AICPA Contained in the AICPA Statements of Auditing Statements of Auditing
StandardsStandardsEffective immediatelyEffective immediately
Moves the definitions from AICPA Moves the definitions from AICPA Statement of Auditing StandardsStatement of Auditing Standards
Statement 59Statement 59
Accounting and Accounting and Financial Reporting for Financial Reporting for Chapter 9 BankruptciesChapter 9 Bankruptcies
Effective immediatelyEffective immediately
Addresses bankrupt governmental Addresses bankrupt governmental units under chapter 9units under chapter 9
Concepts Statement 4
Elements of Financial Statements
Concepts Statement -Concepts Statement -Elements of Financial Elements of Financial
Statement Statement Resource – An item of present service capacityResource – An item of present service capacity Assets – Resources the entity presently Assets – Resources the entity presently
controlscontrols Liabilities – Present obligations to sacrifice Liabilities – Present obligations to sacrifice
resources or future resources that the entity resources or future resources that the entity has little or no discretion to avoidhas little or no discretion to avoid
Deferred outflow of resources – A consumption Deferred outflow of resources – A consumption of net resources by the entity that is applicable of net resources by the entity that is applicable to a future reporting period to a future reporting period
Concepts Statement -Concepts Statement -Elements of Financial Elements of Financial
Statement Statement
Deferred inflow of resources – An Deferred inflow of resources – An acquisition of net resources by the acquisition of net resources by the entity that is applicable to a future entity that is applicable to a future reporting period reporting period
Net Position – The residual of all Net Position – The residual of all other elements presented in the other elements presented in the statement of financial position statement of financial position
Concepts Statement -Concepts Statement -Elements of Financial Elements of Financial
Statement Statement Outflow of resources – A consumption of net Outflow of resources – A consumption of net
resources by the entity that is applicable to the resources by the entity that is applicable to the reporting periodreporting period
Inflow of resources – An acquisition of net Inflow of resources – An acquisition of net resources by the entity that is applicable to the resources by the entity that is applicable to the reporting periodreporting period
Before an item can be reported in a financial Before an item can be reported in a financial statement it must meet appropriate statement it must meet appropriate recognition and measurement criteria. A recognition and measurement criteria. A separate project will define these criteria. separate project will define these criteria.
Concepts Statement 5
Service Efforts and Accomplishments
Reporting
Concepts Statement -Concepts Statement -SEA Reporting SEA Reporting
Amended Concept Statement 2 Amended Concept Statement 2 Clarifies scope limitation “beyond the scope of the Clarifies scope limitation “beyond the scope of the
GASB” to exclude –GASB” to exclude – Goals and objectives of governmental servicesGoals and objectives of governmental services Specific nonfinancial measures or indicators of service Specific nonfinancial measures or indicators of service
performanceperformance Standards or benchmarks of service performance Standards or benchmarks of service performance
Focuses on types of SEA performance measures –Focuses on types of SEA performance measures – Measures of service effortsMeasures of service efforts Measures of service accomplishmentsMeasures of service accomplishments Measures that relate service efforts to service Measures that relate service efforts to service
accomplishments accomplishments
What is Waiting?What is Waiting? Effective FY12 -Effective FY12 - GASB 54 - Fund Balance Reporting and GASB 54 - Fund Balance Reporting and
Governmental Fund Type definitionsGovernmental Fund Type definitions GASB 57 – OPEB Measurements by Agent GASB 57 – OPEB Measurements by Agent
Employers and Agent Multiple –Employer Employers and Agent Multiple –Employer PlansPlans
Exposure Draft - Reexamination of GASB Exposure Draft - Reexamination of GASB 1414 Issued March, 2010Issued March, 2010 May be effective in FY 13May be effective in FY 13
International International Financial Financial Reporting Reporting StandardsStandardsIFRSIFRS
Future ConsiderationsFuture Considerations
Exchange – like revenues Exchange – like revenues Fiduciary responsibilitiesFiduciary responsibilities In-kind contributionsIn-kind contributions Irrevocable charitable trustsIrrevocable charitable trusts Reporting unit presentation and Reporting unit presentation and
GASB 14GASB 14 Financial performance measuresFinancial performance measures
Reexamination ProjectsReexamination Projects
Compensated absences Compensated absences Debt refundingsDebt refundings Deferred compensation plansDeferred compensation plans
FASB component units disclosures in FASB component units disclosures in a GASB based financial reporta GASB based financial report
GASB 14 Revisited GASB 14 Revisited
Alternative SRECNAAlternative SRECNA
Pell and Direct LendingPell and Direct Lending
NACUBO IssuesNACUBO Issues
Questions?Questions?
ctegen@clemson.eductegen@clemson.edu