BARS and GASB Overview Washington Association of Area Agencies on Aging June 6, 2018

Transcription

1 BARS and GASB Overview Washington Association of Area Agencies on Aging June 6, 2018 O f f i c e o f t h e W a s h i n g t o n S t a t e A u d i t o r

2 BARS manual overview GASB update Review of GASB 68 OPEB Implementation Considerations Plan types Measurement date/discount rate Alternative valuation method Blended premium rate Census data F/S, notes and RSI OPEB Implementation resources Today s presentation O f f i c e o f t h e W a s h i n g t o n S t a t e A u d i t o r 2

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4 Why Does the BARS Manual Exist? O f f i c e o f t h e W a s h i n g t o n S t a t e A u d i t o r 4

5 BARS Manual Content Chart of Accounts Budgeting BARS (now in electronic form) Accounting Reporting Appendices O f f i c e o f t h e W a s h i n g t o n S t a t e A u d i t o r 5

6 Who Uses the Data? O f f i c e o f t h e W a s h i n g t o n S t a t e A u d i t o r 6

7 Exploring the BARS Manual Search HelpDesk Overview of Significant Changes BARS Account Export BARS Alert O f f i c e o f t h e W a s h i n g t o n S t a t e A u d i t o r 7

8 Chart of Accounts Always seven digits long; however, the number of prescribed digits (indicated by letter P) varies Required only for reporting revenues (and other increases and financing sources) and expenditures/expenses (and other deceases and financing uses) O f f i c e o f t h e W a s h i n g t o n S t a t e A u d i t o r 8

9 GASB Update O f f i c e o f t h e W a s h i n g t o n S t a t e A u d i t o r 9

10 Effective for the Reporting Year 2016 Statement 72, Fair Value Measurement and Application Statement 73, Accounting and Financial Reporting for Pensions and Related Assets That Are Not within the Scope of GASB Statement 68 and Amendments to Certain provisions of GASB Statements 67 and 68 Statement 76, The Hierarchy of GAAP for State and Local Governments Statement 77, Tax Abatement Disclosures Statement 78, Pensions Provided through Certain Multiple- Employer Defined Benefit Pension Plans Statement 79, Certain External Investment Pools and Pool Participants O f f i c e o f t h e W a s h i n g t o n S t a t e A u d i t o r 10

11 Effective for the Reporting Year 2017 Statement 74, Financial Reporting for Postemployment Benefits Other than Pension Plans Statement 80, Blending Requirements for Certain Component Units an amendment of GASB Statement No. 14 Statement 81, Irrevocable Split-Interest Agreements Statement 82, Pension Issues an amendment of GASB Statements No. 67, No. 68, and No. 73 O f f i c e o f t h e W a s h i n g t o n S t a t e A u d i t o r 11

12 Effective for the Reporting Year 2018 Statement 75, Accounting and Financial Reporting for Postemployment Benefits Other than Pensions Statement 85, Omnibus 2017 Statement 86, Certain Debt Extinguishment Issues O f f i c e o f t h e W a s h i n g t o n S t a t e A u d i t o r 12

13 Effective for the Reporting Year 2019 Statement 83, Certain Asset Retirement Obligations Statement 84, Fiduciary Activities Statement 88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements O f f i c e o f t h e W a s h i n g t o n S t a t e A u d i t o r 13

14 Effective for the Reporting Year 2020 Statement 87, Leases O f f i c e o f t h e W a s h i n g t o n S t a t e A u d i t o r 14

15 Future Pronouncements GASB Invitation to Comments, Preliminary Views, Exposure Drafts Revenue and Expense Recognition (Invitation to Comment) Financial Reporting Model Improvements Governmental Funds (Invitation to Comment) Accounting and Financial Reporting for Majority Interests an amendment of GASB Statement No. 14 (Exposure Draft) Accounting for Interest Cost during the Period of Construction (Exposure Draft) Implementation Guide No. 201Y-X, Implementation Guidance Update 201Y (Exposure Draft) O f f i c e o f t h e W a s h i n g t o n S t a t e A u d i t o r 15

16 O f f i c e o f t h e W a s h i n g t o n S t a t e A u d i t o r GASB 68 Year 3

17 Contributions For the PEFI, DRS calculates contributions based on the process date; not the reporting date. Process date is generally the day after the transmittal date. Transmittal date can be up to 15 days after the reporting date. O f f i c e o f t h e W a s h i n g t o n S t a t e A u d i t o r 17

18 Contributions A significant portion of PERS 2/3, SERS 2/3, and PSERS 2 employer contributions actually go to PERS 1. RCW Affects deferred outflows for employer s contributions subsequent to the measurement date. Affects pension expense for each plan. Affects amounts reported in RSI. O f f i c e o f t h e W a s h i n g t o n S t a t e A u d i t o r 18

19 Use monthly transmittal summary reports O f f i c e o f t h e W a s h i n g t o n S t a t e A u d i t o r 19

20 LESSON That s not pension expense; that s an adjustment to pension expense: Net this adjustment with your actual contributions for the year to calculate pension expense. O f f i c e o f t h e W a s h i n g t o n S t a t e A u d i t o r 20

21 Compare to expected pension expense O f f i c e o f t h e W a s h i n g t o n S t a t e A u d i t o r 21

22 Required Supplementary Information ( RSI) O f f i c e o f t h e W a s h i n g t o n S t a t e A u d i t o r 22

23 LESSON RSI has two different measures of covered payroll: Schedule of Proportionate Share of the Net Pension Liability dated as of the measurement date (example state plans = 6/30) Schedule of Employer Contributions dated as of employer s year end (example 12/31) It s unlikely that the amount for Covered Payroll would be the same on both schedules. O f f i c e o f t h e W a s h i n g t o n S t a t e A u d i t o r 23

24 O f f i c e o f t h e W a s h i n g t o n S t a t e A u d i t o r 24

25 RSI GASB 68, paragraph 81.b - The RSI schedule of employer contributions should report the amount of contributions recognized by the pension plan. Previous slide example: PERS 2/3 = $61,136 PERS 1 = 46,858 GASB 82, paragraph 5 - Covered payroll is the payroll on which contributions to a pension plan are based. Previous slide example: PERS 2/3 = $987,666 PERS 1 = $987,666 O f f i c e o f t h e W a s h i n g t o n S t a t e A u d i t o r 25

26 OPEB OPEB = Other Post Employment Benefits Postemployment healthcare benefits (medical, dental, vision, hearing, etc.) whether provided through a pension plan or separately Other (death benefits, disability, life and LTC insurance, etc.) when provided separately from a pension plan O f f i c e o f t h e W a s h i n g t o n S t a t e A u d i t o r 26

27 New OPEB standards issued June 2015 Financial Reporting for Postemployment Benefit Plans Other than Pension Plans Accounting and Financial Reporting for Postemployment Benefits Other than Pensions FYE and after FYE and after Replaces GASB 43 Replaces GASB 45 Applicable if there is a qualifying trust Applicable whether or not there is a qualifying trust O f f i c e o f t h e W a s h i n g t o n S t a t e A u d i t o r 27

28 Qualifying Trust What is a qualifying trust (or equivalent arrangement)? Contributions are irrevocable Plan assets are dedicated to providing benefits to plan members Plan assets are legally protected from creditors O f f i c e o f t h e W a s h i n g t o n S t a t e A u d i t o r 28

29 What if I don t have a qualifying trust? Can t report a trust fund assets are assets of the employer If you hold any OPEB assets in a fiduciary capacity use an agency fund O f f i c e o f t h e W a s h i n g t o n S t a t e A u d i t o r 29

30 OPEB: new standards The new OPEB standards mirror the new pension standards: Liability (or asset) on the statement of net position Deferred outflows/inflows Discount rate The alternative valuation method is still allowed for plans with less than 100 employees (active + inactive). The implicit rate subsidy still applies. O f f i c e o f t h e W a s h i n g t o n S t a t e A u d i t o r 30

31 Types of OPEB Plans Single employer Defined Contribution Defined Benefit Trust Agent multipleemployer Cost-sharing multipleemployer No trust Single employer O f f i c e o f t h e W a s h i n g t o n S t a t e A u d i t o r 31

32 Insured Benefits What are insured benefits? An arrangement whereby premiums or other payments are made to an insurance company while employees are in active service, in return for which the insurance company unconditionally undertakes an obligation to pay the OPEB of those employees No OPEB liability for the employer O f f i c e o f t h e W a s h i n g t o n S t a t e A u d i t o r 32

33 Measuring the OPEB Liability (How do I get my numbers?) O f f i c e o f t h e W a s h i n g t o n S t a t e A u d i t o r 33

34 Measurement of the Liability OPEB liability = Actuarial present value of projected benefit payments attributed to past employee service Determined through an actuarial valuation conducted in accordance with actuarial standards of practice performed at least biennially As of the measurement date or rolled forward from a valuation date no more than 30 months and 1 day earlier than the employer s reporting date O f f i c e o f t h e W a s h i n g t o n S t a t e A u d i t o r 34

35 Measurement Date Valuation date The date of the actuarial valuation of the plan. It can be rolled forward to the measurement date. Measurement date The date the OPEB liability and deferred outflows/inflows are measured. It is the reporting date of the plan. Reporting date Employer s year end. No need to roll forward from the measurement date. O f f i c e o f t h e W a s h i n g t o n S t a t e A u d i t o r 35

36 Measurement Date Selection of the measurement date and valuation date should be consistent from period to period. Valuation must be conducted in accordance with GASB 75. O f f i c e o f t h e W a s h i n g t o n S t a t e A u d i t o r 36

37 Discount Rate A single rate that reflects: Expected rate of return on OPEB plan investments only to the extent that the plan s fiduciary net position is sufficient to make projected benefit payments After that yield/index rate for 20-year, tax-exempt GO bonds with AA/Aa rating or higher If you are pay-as-you-go/no qualifying trust, this is your discount rate O f f i c e o f t h e W a s h i n g t o n S t a t e A u d i t o r 37

38 Alternative Valuation Method Specified alternative valuation method (see paragraphs 225 & 226 of GASB 75) Can be used to measure total OPEB liability if you have fewer than 100 employees (active and inactive) in the plan as of the beginning of the year O f f i c e o f t h e W a s h i n g t o n S t a t e A u d i t o r 38

39 X = <100 Single employee = 1 Employee + spouse = 1 Employee + spouse + 17 kids = 1 Retiree = 1 Retiree + survivor = 1 Survivor = 1 O f f i c e o f t h e W a s h i n g t o n S t a t e A u d i t o r 39

40 Implicit Rate Subsidy a.k.a. Blended Premium Rate Caused by inclusion of retirees in the same cost pool as active employees retirees have the same premium rates as active employees. The rates for active employees implicitly subsidize the rates for retirees this implicit subsidy is OPEB. The implicit subsidy must be included in OPEB liability even if retirees pay 100% of their premiums. If retirees are rated separately from active employees and pay 100%, then there is no subsidy. O f f i c e o f t h e W a s h i n g t o n S t a t e A u d i t o r 40

41 O f f i c e o f t h e W a s h i n g t o n S t a t e A u d i t o r 41

42 Census Data Testing Census data is the member information used in the actuarial valuation that determines the OPEB liability. Examples birthdate, gender, plan options, etc. Employers should have adequate internal controls to ensure that census data is accurate and complete. Auditors will test. O f f i c e o f t h e W a s h i n g t o n S t a t e A u d i t o r 42

43 Financial Statements, Notes and RSI Different requirements for single vs. multi-employer and trusted vs. nontrusted plans O f f i c e o f t h e W a s h i n g t o n S t a t e A u d i t o r 43

44 Financial Statements O f f i c e o f t h e W a s h i n g t o n S t a t e A u d i t o r 44

45 General Note Disclosures O f f i c e o f t h e W a s h i n g t o n S t a t e A u d i t o r 45

46 Note Disclosures (cont.) O f f i c e o f t h e W a s h i n g t o n S t a t e A u d i t o r 46

47 Required Supplementary Information (RSI) O f f i c e o f t h e W a s h i n g t o n S t a t e A u d i t o r 47

48 Implementation Checklist > Determine types of OPEB you offer > Identify type of OPEB plan(s) > Determine if there is a qualifying trust > Get a valuation Select your measurement date Select frequency and timing of actuarial valuations Select qualified actuary or use alternative method Select actuarial assumptions discount rate Census data > Allocate to funds and activities > Notes & RSI O f f i c e o f t h e W a s h i n g t o n S t a t e A u d i t o r 48

49 Resources online Governmental Accounting Standards Board (GASB) Download any GASB statement Draft GASB 75 implementation guide Technical inquiries SAO BARS Manual OPEB page O f f i c e o f t h e W a s h i n g t o n S t a t e A u d i t o r 49

50 O f f i c e o f t h e W a s h i n g t o n S t a t e A u d i t o r 50

51 O f f i c e o f t h e W a s h i n g t o n S t a t e A u d i t o r 51

52 References Contact the Washington State Auditor s Office Debra Burleson, CPA, Assistant Audit Manager Debra.Burleson@sao.wa.gov Amy Bunger, Assistant State Auditor Debra.Burleson@sao.wa.gov Lisa Carrell, CPA, Assistant Audit Manager Lisa.Carrell@sao.wa.gov O f f i c e o f t h e W a s h i n g t o n S t a t e A u d i t o r 52

53 Questions? O f f i c e o f t h e W a s h i n g t o n S t a t e A u d i t o r 53