INFORMATION SESSION Cd, 5/15/E

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1 INFORMATION SESSION Cd, 5/15/E

2 Background What is GASB 68? Governmental Accounting Standards Board (GASB) approved new rules that will affect employers Employers must include the following in their financial statements: Their share of pension liabilities Their share of annual expenses Extensive disclosures in the notes 2

3 Background Employer impact Additional work for employers and external auditors Required to include proportionate share of net pension liability (NPL) and annual expense in financial statements Significant impact on financial statements 3

4 Terminology Definitions Net pension liability (NPL) The difference between plan assets and the total obligations to plan participants as of the measurement date. Unfunded accrued actuarial liability (UAAL) is now replaced by NPL Total pension liability (TPL) Actuarially calculated liability of present value of benefits earned as of the measurement date Plan net position (PNP) Total market value of pension assets as of the measurement date 4

5 Terminology Definitions Measurement date Plan valuation date selected by the employer to report its share of NPL in its financial statements (must be June 30 of current or prior plan fiscal year) Proportionate share Allocation of pension liability and expense based on an employer s contributions as a percentage of total employer contributions to the plan Deferred inflows and deferred outflows Elements of the change in NPL that will be amortized in future years 5

6 Accounting How is NPL calculated? Total pension liability (TPL) Plan net position (PNP) Net pension liability (NPL) 6

7 Accounting Deferred inflows and outflows Actuarial gains and losses (difference between actual and expected economic and member demographic factors) Changes in actuarial assumptions Difference between projected and actual investment earnings 7

8 Accounting Deferred inflows and outflows The effect of a change in employer proportion from one measurement date to the next Amortization period of deferred inflows and outflows Employer contributions subsequent to the measurement date used by the employer 8

9 Accounting Pension expense Liability approach based on the change in NPL for the fiscal year Adjustments for current year deferred inflows and outflows Amortization of prior year deferred inflows and outflows 9

10 Proportionate Share Basis of proportionate share Change in proportionate share from year to year Measurement date options 10

11 Employer Schedules Schedule of Employer Proportionate Share Schedule of Pension Amounts by Employer 11

12 Footnotes and Required Supplemental Information 12 Footnotes Pension plan description (paragraph 76) The name of the pension plan A brief description of the benefit terms A brief description of the contribution requirements Access to the pension plan s stand-alone financial report Assumptions and other inputs (paragraph 77) Discount rate (paragraph 78) Pension plan s fiduciary net position (paragraph 79) Other information (paragraph 80)

13 Footnotes and Required Supplemental Information Required Supplemental Information (RSI) Presented as of the measurement date of the collective NPL (paragraph 81) A 10-year schedule presenting employer s proportionate share information and covered-employee payroll each year (paragraph 81a.(1)) Presented as of employer s fiscal year end A 10-year contributions schedule (paragraph 81b.) Notes to the RSI (paragraph 82) Information about factors that significantly affect trends in the amounts reported in the RSI schedules should be presented in the notes to the schedules 13

14 Information Provided by STRS Ohio What information can I expect from STRS Ohio? Schedule of Employer Contributions by Payroll Schedule of Employer Contributions by Member Contributions in the STRS Ohio fiduciary plan net position by fiscal year on a payroll paid basis Purpose Provides employers with a tool to reconcile their contributions to payroll records Provides a tool for auditors to make selections for census data testing Provides detail to determine deferred outflow of resources for contributions paid subsequent to the measurement period 14

15 Information Provided by STRS Ohio What information can I expect from STRS Ohio? STRS Ohio will provide two audited schedules to employers (see samples) Schedule of Employer Proportionate Share Schedule of Pension Amounts by Employer Individual information from two schedules in separate unaudited report Five things you need to know about GASB reporting standards 15

16 Information Provided by STRS Ohio What information can I expect from STRS Ohio? Amortization tracking tool Provides the collective values of elements subject to amortization and the annual amortization amounts for each valuation date Categorized as deferred inflows or outflows in the table Employers can use the template format to track their proportionate shares of the collective values Additional columns provided for employer tracking of any change in proportionate share Sample journal entries 16

17 Audit Process & Implications Audit Audit steps Audit reports Employer CAFR 17

18 Audit Process & Implications 18 Auditor s opinion sample Report on schedules We have audited the accompanying schedule of proportionate share of STRS Ohio as of and for the year ended June 30, 2014, and the related notes. We have also audited the columns titled net pension liability, total deferred outflows of resources excluding employer specific amounts, total deferred inflows of resources excluding employer specific amounts, and pension expense as of and for the year ended June 30, 2014, and the NPL as of and for the year ended June 30, 2013, (specified column totals) included in the accompanying schedule of collective pension amounts of STRS Ohio, and the related notes. Opinion In our opinion, the schedules referred to above present fairly, in all material respects, the employer allocations and NPL, total deferred outflows of resources excluding employer specific amounts, total deferred inflows of resources excluding employer specific amounts, and pension expense as of and for the year ended June 30, 2014, and the NPL as of and for the year ended June 30, 2013, for STRS Ohio, in accordance with accounting principles generally accepted in the United States of America.

19 Resources Employer website GASB Resource Section Member website Ongoing News & Information Employer GASB eupdates Specific questions Leo Wilhelm

20 20 QUESTIONS AND ANSWERS

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Overview of GASB 67 and 68

Overview of GASB 67 and 68 Community College Internal Auditors May 7, 2015 Crowe Horwath LLP Jeff Jensen, Partner Audit Tax Advisory Risk Performance 2014 Crowe Horwath LLP Implementation Dates When will