Improving Your CAFR. Presented by: Tracie McCreary and Frank Gambosi

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1 Improving Your CAFR Presented by: Tracie McCreary and Frank Gambosi

2 Improving Your CAFR Comments Received from the GFOA Adopting GASB 72 Addressing GASB 77 in your Letter of Transmittal (Frank Gambosi) 2

3 Common GFOA Comments In Management s Discussion and Analysis, the discussion of overall operations should explain the reasons for the changes in net position rather than focusing solely on the size of the changes. 3

4 Common GFOA Comments XXX Fund should have been reported as a major fund. 4

5 Common GFOA Comments Budget Stabilization/Minimum Fund Balance Under GASB 54, these items require note disclosure. If they are referenced in the transmittal letter or MD&A, make sure you have the appropriate disclosure. 5

6 Common GFOA Comments Other Purposes In restricted net position and in the GASB 54 fund balance chart, try to keep other amounts to a minimum. 6

7 Common GFOA Comments Purposes In the GASB 54 chart, try not to use fund names or financial statement programs as purposes. 7

8 Common GFOA Comments Restrictions in the GASB 54 chart vs. Restrictions in the Statement of Net Position GFOA might compare restricted amounts in the GASB 54 chart to restricted amounts presented in the Statement of Net Position, specifically debt service restrictions and capital outlay restrictions 8

9 Common GFOA Comments Only the principal and interest components of debt service expenditures should be included in the calculation of the ratio of total debt service expenditures to noncapital expenditures. Bond Issuance costs should be excluded from the calculation Payment to refunding bond escrow agent are considered part of debt service principal and interest 9

10 Common GFOA Comments Property Tax Rates Direct and Overlapping Governments This stat table should include the total direct rate (weighted average) and should tie to a similarly captioned item on Assessed Valuation and Estimated True Value of Taxable Property. 10

11 Common CAFR Comments The outstanding debt schedule should only include long-term debt instruments, not all longterm liabilities Don t include fund liabilities, police and fire pension liability or NPL. Do include capital leases 11

12 Common CAFR Comments Pledged Revenues Include note disclosure Include Stat Table 12

13 Adopting GASB 72 Fair Value Measurement and Application Effective for financial statement periods beginning after June 15,

14 GASB 72 Prior to GASB 72 we used Fair Value Under GASB 72 we have: Fair Value Acquisition Value 14

15 GASB 72 GASB 72 generally requires investments to be measured at fair value. 15

16 GASB 72 Investment An investment is a security or other asset that (a) a government holds primarily for the purpose of income or profit and (b) has a present service capacity based solely on its ability to generate cash or to be sold to generate cash 16

17 GASB 72 Fair Value Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. 17

18 GASB 72 There are other GASB pronouncements that govern which investments are measured at fair value. GASB 72 does not impact which investments are measured at fair value. 18

19 GASB 72 Investments not measured at fair value continue to include, for example, money market investments, 2a7-like external investment pools, investments in life insurance contracts, common stock meeting the criteria for applying the equity method, unallocated insurance contracts, and synthetic guaranteed investment contracts. 19

20 GASB 72 Acquisition value Acquisition value is the price that would be paid to acquire an asset with equivalent service potential in an orderly market transaction at the acquisition date, or the amount at which a liability could be liquidated with the counterparty at the acquisition date. 20

21 GASB 72 Acquisition value GASB 72 requires measurement at acquisition value (an entry price) for donated capital assets, donated works of art, historical treasures, and similar assets and capital assets received in a service concession arrangement. These assets were previously required to be measured at fair value. 21

22 GASB 72 For investments measured at fair value, we will have to identify the level of the fair value hierarchy within which the fair value measurements are categorized, as follows: 22

23 GASB 72 Level 1 inputs Quoted prices in active markets for identical assets or liabilities that a government can access at the measurement date. 23

24 GASB 72 Level 2 inputs Inputs other than quoted prices included within level 1 that are observable for an asset or liability, either directly or indirectly. 24

25 GASB 72 Level 3 inputs Unobservable inputs for an asset or liability 25

26 GASB 72 For recurring and nonrecurring fair value measurements: The fair value measurement at the end of the reporting period 26

27 GASB 72 For recurring and nonrecurring fair value measurements: Except for investments within the scope of paragraphs that are measured at the NAV per share (or its equivalent), the level of the fair value hierarchy within which the fair value measurements are categorized in their entirety (Level 1, Level 2, or Level 3) 27

28 GASB 72 A description of the valuation techniques used in the fair value measurement 28

29 GASB 72 If there has been a change in valuation technique that has a significant impact on the result (for example, changing from an expected cash flow technique to a relief from royalty technique or the use of an additional valuation technique), that change and the reason(s) for making it. 29

30 Questions? 30

LGS 88 East Broad Street Columbus, Ohio 43215 LGS Phone: (800)

31 LGS 88 East Broad Street Columbus, Ohio LGS Phone: (800) Tracie McCreary: (330)

32 88 E. Broad St. Columbus, Ohio Phone: (800) Fax: (614)

Insights into GASB Investments Guidance

14 th Annual GIOA Conference March 23, 2018 Insights into GASB Investments Guidance Statements 31, 40, 72, and 79 Wesley A. Galloway, Senior Project Manager The views expressed in this presentation are