1 PresentersJoe Evans, Partner McGladrey LLP Bill Sarb, Manager Jessica Kline, Manager Tammy White, Deputy State Examiner State Board of Accounts (SBOA)
2 New GASB Pension Standards GASB Statement No. 67Accounting and Financial Reporting For Pension Plans (Plan Reporting)Effective for fiscal yearsEnding June 30,2014GASB Statement No. 68Accounting and Financial Reporting For Pension Plans (Employer Reporting)Effective for fiscal yearsEnding June 30,2015GASB Statement No. 67Accounting and Financial Reporting For Pension Plans (Plan Reporting)-The effective implementation of these standards requires your help and participation.-Cooperation is essential so that established State deadlines can be met.
3 Testing Underlying Census Data of Active Employees Plan auditor (McGladrey) engaged to perform testing on relevant census data reported to the Plan during periodPeriod to be tested is the fiscal year ended June 30, 2013Several employers were selected for testing this year. Other employers in future periodsRetirees and inactive employees will generally be tested at the Plan level and not require any additional information from employersThe objective of the testing is to verify the Plan has the correct data on which to base the pension calculations, especially the total pension liability
4 Testing Census Data – Sample of employees Hire dateYears of serviceAgeEligibilityGenderBirth dateEmployee Status – Active / Inactive / Retired-We will provide you the sample items in a spreadsheet format so that you can see the details for each person-Need to have access to original personnel files-Will be using employee ID numbers provided by INPRS
5 Testing Payroll Data – INPRS Eligible Annual earnings 7/1/12 – 6/30/13Actual amounts reported to INPRSAnnual salary vs. actual amount paid – need to tie out actual amount paidCopy of annual salary approvalSummary of sampled employee annual earningsPay Period Detail – by sampled employeeHours and pay ratesCreditable vs. non-creditable earnings- Need payroll registers, employee payroll details by pay period, approved salary, backup for reconciling items, pay stubs and/or banking information
6 Reconciliation of Payroll Records to the General Ledger and/or Financial Statements Total earnings by employee reported to INPRS for fiscal year 2013Non INPRS earnings by employeeOther adjustmentsTotal salaries per general ledger and also corresponding financial statementsReconciliation requested to be completed before detail testing of individuals beginsFor calendar year employers we will work with you to try alternative approaches such as reconciling select monthly data
7 Sample Reconciliation to be Prepared Section 1 - Reconcile the General Ledger to the Payroll RegisterTotal Payroll Expense for Fiscal Year 2013 per General Ledger$20,000,000ADJUSTMENTS (Modify as Necessary):Employer FICA expense(120,000)Employee benefit expense recorded in general ledger(2,200,000)Adjusted General Ledger17,680,000Detailed Payroll Registers (all months for annual period)(17,680,000)*Difference-Section 2 - Reconcile the Detailed Payroll Register to Earnings as Reported to INPRSDetailed Payroll RegistersNon-Plan Payroll Earnings (Ineligible Employees)(1,200,000)INPRS Earnings per the Payroll Registers16,480,000Earnings Per INPRS DataPERF(7,400,000)TRF Pre-1996(3,500,000)TRF 1996(5,580,000)Total earnings reported to INPRS(16,480,000)* The complete listing of employees and gross wages provided must agree to this line on the payroll reconciliation
8 Potential General Ledger Reconciling Items Any expense recorded in the GL, but not on the payroll reportFY12 Optional Twelve-Month Deferred Payments (applicable to the TRF employers)FY13 Optional Twelve-Month Deferrals (applicable to the TRF employers)Individuals terminated during the yearPayroll that exceeds creditable maximumAny non-eligible earnings
9 Testing Payroll Data – Non INPRS Annual earnings 7/1/2012 – 6/30/13Eligibility (testing they are properly excluded) by reviewing their job descriptionNot necessary to trace census data back to personnel files for properly excluded employees.
10 Auditor ExpectationsAuditors will provide sample of employees to be tested in advance of the visitWe will provide you total annual payroll reported to INPRSNeed all support documentation for payroll by employee to be made availableNeed access to personnel files to trace census data to underlying recordsDocumentation and back-up for reconciliation to the general ledgerNeed management cooperation to provide explanations for exceptions found if any
11 Employer Responsibilities With your help we believe this can be a relatively simple exercise that can be completed in a few hoursWithin the next few weeks, we will be sending you an with the list of employees to be tested and the total 2013 payroll amounts reported to INPRSPlease begin immediately to obtain required dataYou need to obtain the back-up documentation i.e. personnel files and payroll support for the employees selected for testingYou need to prepare a reconciliation of the payroll totals reported to INPRS to your total payroll to ensure we have everyone
12 Employer Responsibilities (continued) Within the next few days, you will be contacted by Jessica Kline to schedule the auditors visit. Our hope is to schedule these visits starting July 14, 2014 and be completed no later than August 22, 2014Please have all information ready for the auditors when they arrivePlease designate an audit liaison to be present with the auditors during their testing and answer questionsAdditional employees may need to be tested during the visit especially if you have numerous Non-INPRS employees
13 ContactsJessica Kline at McGladrey will be your key contact for this process.Phone: (317)Joe Evans and Bill Sarb are reachable via if you have questionsQuestions for INPRS, please contact Teresa Snedigar, Director of Internal AuditPhone: (317)
14 Conclusion We will attempt to answer questions sent in the queue. On your phone you can unmute using #6 if you would like to ask a question
15 INPRS – GASB 67 & 68 TestingThank you for your cooperation
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