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GASB 34 Implementation and Other Financial Reporting Issues August 23, 2002 Ren E. Wiles Preeta Nayak.

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Presentation on theme: "GASB 34 Implementation and Other Financial Reporting Issues August 23, 2002 Ren E. Wiles Preeta Nayak."— Presentation transcript:

1 GASB 34 Implementation and Other Financial Reporting Issues August 23, 2002 Ren E. Wiles Preeta Nayak

2 GASB 34 FYE 6/30/2002, 28 BOEs will be using the new financial reporting model. 88 BOEs to implement GASB 34 in the 2002-2003 fiscal year.

3 BOEs implementing this year

4 What is GASB 34 and what does it mean to me? Measuring what it costs to run the entire school operation, rather than What resources do I have for the next fiscal year?

5 To those of you in Phase 1… What have you learned that you wish someone had told you before you got into this?

6 Overview of Changes Financial statements under GASB 34 will apply full accrual accounting to governmental funds. Infrastructure will be recognized. GFAAG & GLTDAG will be gone. Depreciation will be taken as an expense on all depreciable assets.

7 Continued The cost of services/programs will be disclosed. Program expenses will be shown on the Statement of Activities. Revenues directly related to the program will be matched. Unmatched revenues will be reported as General Revenues.

8 What to expect this first year. We expect that… This has not had/will not have a tremendous impact on your day-to-day accounting. PREPARING to present on GASB 34 basis has been/will be a time consuming processes. Phase 2 Boards, make friends with the Phase 1 BOE most like your own.

9 How will this affect NC Boards of Education? What level of expenses will you show? GASB Statement 34, paragraphs 39 & 40 Detail should match what is shown on statement of revenues, expenditures & changes in fund balance. Should at least be by Function. Show more detail is it improves usefulness.

10 The A word. Stands for Allocation Certain expenses should be matched to the function they support. Employee Benefits Depreciation Capital Outlay

11 Employee Benefits Allocate the expenses in the 5900 and 6900 purpose codes. 5910 & 5920 sub-purpose codes should be allocated to the appropriate function. Look to your information technology staff. Can they extract the information you need? Same applies to 6910 & 6920.

12 continued, 5930 & 6930 for staff development may be reported as Other Instructional (Support) Programs. Accumulated annual leave should be allocated also.

13 Phase 1 Boards Phase 1 boards, talk early with your auditor about the materiality level of the government-wide statements. Because local, federal & state $$ will be together in the government-wide statements, the materiality level should be higher than what we are used to.

14 Phase 2 Board Make friends with a Phase 1 board that is similar to your own.

15 Question 108, Implementation Guide Should depreciation be charged to specific functions or programs in the government-wide statements? ADepreciation expense for the following types of capital assets is required to be included in the direct expenses of functions or programs: ·Capital assets that can be specifically identified with a function or program ·Shared capital assets (for example, a facility that houses the police department, the building inspection office, and the water utility office). Depreciation expense for capital assets that essentially serve all functions, such as a city hall or a state administrative office building, may be: ·Included in an indirect expense allocation (optional) to the various functions or programs (Appendix 3, Exhibit 2) ·Reported as a separate line in the statement of activities; however, the account title should make the reader aware that it does not include all depreciation (for example, unallocated depreciation) (Appendix 2, Exhibits 21 and 33) ·Reported as part of the general government (or its counterpart) function (Appendix 2, Exhibit 2). Depreciation expense for infrastructure assets associated with governmental activities should be reported as either: ·A direct expense of the function (for example, public works or transportation) that is normally used for capital outlays for and maintenance of infrastructure assets (Appendix 2, Exhibit 2) ·A separate line in the statement of activities (again noting the extent of the depreciation expense presented) (Appendix 2, Exhibits 21 and 33).

16 Expected Allocation School bus depreciation should be accounted for in purpose code 6500, Business Support Services. Computers used only in classrooms should be accounted for in purpose code 5100, Regular Instruction Program

17 Unallocated Depreciation* Because some assets may serve multiple functions, the depreciation may be presented as a separate line item. * Disclose on the face of the statement of activities that this amount does not include direct depreciation.

18 Depreciation continued. Note disclosure should contain full depreciation information. I.E., what was allocated as a direct expense and what was not.

19 Capital Outlay Not a program on the government-wide statements. Majority of the expenditures will be capitalized & depreciated. Items not capitalized should be matched with the specific purpose/function.

20 Category 1, not capitalized Likely these assets are for maintenance & repair work. These should be allocated to the 6500 purpose code, Business Support Services, because physical plant maintenance would go to the 6580 purpose code.

21 Category 2, not capitalized Remember, as much as possible should be allocated to the specific function/purpose that it serves. For those expenditures which cant be allocated, purpose code 6500 again appears to be the best allocation.

22 Category 3, not capitalized Items here are related to transportation, purpose code 6550. Therefore, items not capitalized nor allocated to a specific program/function, should be allocated to purpose code 6500, Business Support Services.

23 Indirect Costs. Because the government-wide statements will combine several funds, indirect cost allocations should be eliminated. Revenue Code 4880, indirect cost revenue in Local Current Exp. and expenditure in purpose code 8000 should be eliminated. See Memo #973 for further details.

24 But what about Revenues? Revenues must be classified as: Charges for service, Operating Grants and Contributions, Capital Grants and Contributions, or General Revenues Appendix B to Memo #973 will classify the majority of school revenues.

25 Single Audit issues By change in State law, the staff of the LGC now assembles, approves and distributes the Compliance Supplements. Formerly the State Auditors responsibility.

26 Single Audit issues, 2 State Public School Building Bond Fund and State Public School Building Capital Fund are grants to the counties. Schools report revenues & expenditures, if they are performing the transactions. Should appear on the schools Schedule of Expenditures of State & Federal Awards

27 Single Audit issues, 3 GAGAS findings and Single Audit findings should all have corrective action plans. A contact person and anticipated completion date should be included.

28 Single Audit issues, 4 Cluster of Programs should be treated as one program. Summer School Lunch program (10.559) is part of the Child Nutrition Cluster. This program should be included in the cluster audit.

29 Single Audit issues, 5 Medicaid Reimbursement NC Information Highway Appeared on several Schedule of Expenditure of Fed. & St. Awards last year. Our understanding is that these are not financial assistance. They should not be on the Schedule.

30 Questions on the Preceding? Contact Mr. Jim Burke, 919-807-2383. Or, Ms. Jean Slaughter, 919-807-2391.

31 Major changes to the audit manual Technical adjustments to: Valuation of investments Risk management note Show contribution of school buses Adjust forfeited vehicle note. Include contingent liability note for pending litigation.

32 Charter Schools All NC charter schools should be Phase 3 implementation, 2003-04 fy. Area of concern, related party transactions. Make sure that conflict of interest policy is adopted. Make sure that policy is followed. Disclose related party transactions.

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