1. GASB 68 From the Employer’s Perspective © Elliott Davis Decosimo, LLC Laura Self, Manager Columbia, South Carolina

2. This material was used by Elliott Davis Decosimo during an oral presentation; it is not a complete record of the discussion. This presentation is for informational purposes and does not contain or convey specific advice. It should not be used or relied upon in regard to any particular situation or circumstances without first consulting the appropriate advisor. No part of the presentation may be circulated, quoted, or reproduced for distribution without prior written approval from Elliott Davis Decosimo. © Elliott Davis Decosimo, LLC

3. Objectives -Provide An Illustration of GASB 68 Implementation -Review Employer Implementation Considerations -Review Disclosure Requirements -Review Resources and Guidance Available © Elliott Davis Decosimo, LLC

4. Example of first year implementation steps -Using data for Clemson University (30300) -Most recent PEBA data (unaudited) is used Can be found at http://www.retirement.sc.gov/gasb/employers.htm http://www.retirement.sc.gov/gasb/employers.htm -Assumption made for FY 2015 retirement contributions -Applicable pages from PEBA follow – SCRS, PORS and FY 2014 contributions © Elliott Davis Decosimo, LLC

8. Illustration (Using Clemson University Data) -Data obtained from PEBA: -***Note: Represents all actual ER contributions made in FY14 including service purchases (amount may vary slightly from amount presented in “Employer Contributions” schedule presented by PEBA in prior page attachment). PEBA will provide this amount on the final, audited NPL worksheet. -Estimated FY 2015 contributions of $26,207,480 © Elliott Davis Decosimo, LLC NPL ChangeDef OutDef InNetPensionFY 14 6/30/20136/30/2014FY13 to FY14 Liab ExpInvest ExpDef Out/In ExpenseContributionsDifference SCRS 466,538,633 447,817,506 18,721,127 12,689,264 37,754,281 25,065,017 31,386,916 25,031,158 6,355,758 PORS 5,543,730 5,119,734 423,996 136,623 592,391 455,768 447,913 412,998 34,915 472,082,363 452,937,240 19,145,123 12,825,887 38,346,672 25,520,785 31,834,829 25,444,156 6,390,673

9. Illustration (continued) -Journal Entries – Year 1 © Elliott Davis Decosimo, LLC DRCR AUnrestricted Net Position 472,082,363 Net Pension Liability 472,082,363 To record beginning pension liability at 6/30/14 (NOTE: measurement date of beginning pension liability is 6/30/13) BNet Pension Liability*** 25,459,168 Unrestricted Net Position 25,459,168 To reclass contributions made during the measurement period (actual FY14 contributions which were recognized as an expense in FY14) CDeferred Outflow 26,207,480 Pension Expense 26,207,480 To record/reclassify contributions made after the measurement date of 6/30/14 (FY15 contributions) assuming they were recorded in FY15 to Pension Expense when made

10. Illustration (continued) -Journal Entries – Year 1 © Elliott Davis Decosimo, LLC DRCR DNet Pension Liability 25,520,785 Deferred Outflows 12,825,887 Deferred Inflows 38,346,672 To record deferred outflows/inflows at the measurement date (6/30/14) to be recorded at 6/30/15 EPension Expense 31,834,829 Net Pension Liability 31,834,829 To record proportionate share of pension expense for the measurement period (7/1/13-6/30/14) recorded in FY15

11. Illustration (continued) -T Accounts – Year 1 Corresponding to journal entries on previous pages © Elliott Davis Decosimo, LLC Net PensionUnrestricted LiabilityNet Position 114,950,612 A 472,082,363 A B 25,459,168 B D 25,520,785 E 31,834,829 452,937,239 331,672,583 Deferred OutflowsCash C 26,207,480 C D 12,825,887 39,033,367 26,207,480 Deferred InflowsPension Expense D 38,346,672 E 31,834,829 38,346,672 31,834,829

12. Employer Implementation Considerations -Census data will be examined more closely than in the past by the retirement system, the plan auditors and the employer auditors Review processes and controls over significant elements of census data Large (“individually important”) employers may be selected by the plan auditor for additional testing of census data; the selection of large employers will likely rotate each year © Elliott Davis Decosimo, LLC

13. Employer Implementation Considerations, continued -Employer and their auditor can use the plan auditor’s report on schedules to provide sufficient audit evidence Review plan auditor’s report and any related opinion modifications Evaluate whether plan auditor has necessary competence and independence -Employer auditor will gain understanding of controls over census data and will also audit the census data (sample) provided to the plan © Elliott Davis Decosimo, LLC

14. Employer Implementation Considerations, continued -Employer and their auditor should verify and recalculate amounts in schedules specific to employer Verify/reconcile employer amounts used in allocation percentage (numerator) Recalculate allocation percentage of employer Recalculate allocation of pension amounts based on allocation percentage of employer -Once plan provided information is verified, employers will have their financial reporting components © Elliott Davis Decosimo, LLC

15. Employer Implementation Considerations, continued -Employer will need to track the following components -Differences between actual and expected experience (for example, terminations, mortality, etc.) -Changes in assumptions -Differences between projected and actual earnings -Changes in employer’s proportionate share of contributions -Employer contributions subsequent to measurement date -Difference between actual contributions and proportionate share -Employer will need to maintain amortization schedules for their proportionate share © Elliott Davis Decosimo, LLC

16. Disclosure Requirements -Employers must disclose the following: Description of the plan and benefits provided Significant assumptions employed in the measure of net pension liability, description of benefit changes and changes in assumptions, assumptions related to discount rate, employer’s share of pension had discount rate been 1% higher and lower -Much of this information will be lifted from PEBA’s financial statements (Note 8 for their 6/30/2014 financial) © Elliott Davis Decosimo, LLC

17. Disclosure Requirements -Employers must disclose the following: The balances of deferred outflows of resources and deferred inflows of resources presented by source The net amount of deferred outflows and inflows that will be recognized as pension expense and the amount of deferred outflows that will reduce net pension liability – for each of the next 5 years and in aggregate thereafter The employer’s percentage of net pension liability, how it was determined, and any change in the percentage since the previous measurement date © Elliott Davis Decosimo, LLC

18. Disclosure Requirements -Required Supplementary Information: Schedule of employer’s proportionate share of net pension liability -Last 10 years required (or years available until 10 years are available) Schedule of employer’s contributions for last 10 years © Elliott Davis Decosimo, LLC

19. Disclosure Requirements -The Comptroller General’s office will be developing a disclosure template in the next few months -In addition to information in the notes to PEBA’s financial statements, PEBA will also provide basic information about the plan © Elliott Davis Decosimo, LLC

26. Guidance Available -GASB 67 Implementation Guide -GASB 68 Implementation Guide -Two White Papers Government Employer Participation in Agent Multiple- Employer Plans: Issues Related to Information for Employer Reporting Agent Multiple-Employer Plans: Issues Associated with Testing census Data in an Audit of Financial Statements -Four Audit Interpretations -GASB Implementation Toolkit © Elliott Davis Decosimo, LLC

27. Questions? © Elliott Davis Decosimo, LLC

28. Laura Self: laura.self@elliottdavis.com Website: www.elliottdavis.comwww.elliottdavis.com Elliott Davis Decosimo ranks among the top 30 CPA firms in the U.S. With seventeen offices across seven states, the firm provides clients across a wide range of industries with smart, customized solutions. Elliott Davis Decosimo is an independent firm associated with Moore Stephens International Limited, one of the world's largest CPA firm associations with resources in every major market around the globe. For more information, please visit our elliottdavis.com. © Elliott Davis Decosimo, LLC