MSBO Business Manager/CPA Workshop

Transcription

1 MSBO Business Manager/CPA Workshop Standards Update 2018 Eric Formberg, CPA, CGFM Partner Plante & Moran, PLLC

2 Session Objectives Provide information to help plan your 2018 audits Provide a high level briefing on the activities of standardsetting bodies and regulators Discuss common quality issues and tips for avoiding them Increase awareness of audit quality resources Focus on MI Schools Issues 2

3 Standards Update Effect of Current Environment on Governmental Audits 3

4 MF5 Current Environment Setting the stage F/S Audits Effect of tax reform - likely little for K12 Uncertainty at federal level (e.g., delegation of federal activities to state and local governments, funding cuts, etc.) Implementation of new accounting standards for 2018 Continued OPEB implementation concerns for SLGs Technology advances (e.g., Blockchain) Cybersecurity risks and challenges 4

5 Slide 4 MF5 Speakers: Do we have them all? Mary Foelster, 4/19/2018

6 MF14 Current Environment Setting the stage Single Audits Year 3 of Uniform Guidance Continuing to focus on lessons learned Fewer federal resources and pressure to reduce regulation 2018 Compliance Supplement format change UG Procurement adoption Public access to data on FAC Federal quality control reviews ongoing and continued potential for future quality study AICPA EAQ initiative continues; increased peer review scrutiny MDE and Grants 5

7 Slide 5 MF14 Speakers: Do we have them all? Mary Foelster, 4/27/2018

8 Standards Update Technical Update 6

9 Overview AICPA GAO Single audits Governmental F/S audit developments GASB Focus Items 7

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11 AICPA ASB SAS 132, The Auditor s Consideration of the Entity s Ability to Continue as a Going Concern Going concern basis of accounting Ability to continue as a going concern Adequacy of disclosures Report accordingly Issued February 2017 and effective for periods ending on or after December 15,

12 AICPA ASB SAS 132, The Auditor s Consideration of the Entity s Ability to Continue as a Going Concern (AU C 570) Auditor s objectives and related conclusions Use of going concern basis of accounting Substantial doubt about ability to continue as going concern Required to ask about period beyond management s assessment Financial statements prepared in accordance with a specialpurpose framework Going concern basis may not be relevant Need to consider if substantial doubt exists Use of emphasis paragraphs when substantial doubt alleviated ( close calls ) 10

13 AICPA ASB SAS 133, Auditor Involvement with Exempt Offering Documents (AU C 945) Requirements when auditor is involved with exempt offering document Subsequent events Other information Involvement determined by two benchmarks Inclusion of auditor report in exempt offering document Auditor meets one or more trigger activities Issued July 2017 Effective for exempt offering documents that are initially distributed, circulated, or submitted on or after June 15,

14 AICPA ASB SAS 133, Auditor Involvement with Exempt Offering Documents (AU C 945) Trigger activities are: Assisting the entity in preparing information included in the offering document Reading a draft of the offering document at the entity s request Issuing a comfort letter Participating in due diligence discussions Issuing an attestation report on information relating to the exempt offering Providing written agreement for the use of the auditor s report in the offering document Updating the auditor s report for inclusion in the offering document 12

15 Not the way to approach Peer Review!

16 AICPA Peer Review Enhanced Oversight Program Objectives Focus on mustselect engagements. Identify material departures from professional standards. Evaluate the performance of peer reviewers. Provide education and feedback to peer reviewers and firms. 14

17 AICPA Peer review Study of single audits About the study Population of audits 1,100 single audits subject to peer review Year-ends of 11/30/15 or prior Sample 87 randomly selected single audits (performed under Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments and Nonprofit Organizations) Methodology Firm completed questionnaire addressing 37 quality factors Subject matter experts reviewed engagement AICPA assessed correlation between factors and conformity 15

18 AICPA Peer Review Factors driving quality size of single audit practice and GAQC membership 16

19 AICPA Peer Review Factors driving quality Engagement partner competency Number of single audits performed annually Non-conformity % 1 68% 2 to 10 44% 11 or more 25% Years of experience History of non-conformity Hours of single audit CPE in previous 3 years 17 18

20 AICPA Peer Review Factors driving quality Recommended actions If you perform under 10 single audits, ensure that You are only accepting engagements that the firm is competent to perform Your practice aids and A&A guides are up to date Your engagement team is your A team (and A doesn t stand for available ) This assessment should include consideration of experience and single audit specific education Where appropriate, engage a knowledgeable third party Engagement team should be performing appropriate consultations throughout the engagement Ensure your EQCR criteria are appropriate in light of the risks of operating in this area Access AICPA infographic on this topic 18

21 AICPA Peer Review 2018 areas of focus Peer Review Documentation Risk assessment Single audits Specialization Auditing in the Future 19

22 Peer Review Checklists

23 AICPA Ethics New interpretation, Hosting Services (AICPA Code of Professional Conduct, Independence Rule (ET ) under Nonattest Services ) Hosting services can impair independence when a CPA takes responsibility for maintaining internal control over an attest client s data or records The interpretation becomes effective on September 1, 2018 Exposure Draft, Information System Services (formerly Information Systems Design, Implementation, or Integration) comments due June 15, 2018 Exposure Draft, Entities included in State and Local Government Financial Statements comment period closed Frequently Asked Questions (General ethics questions) issued March 20, 2018 December 2017 Official Releases interpretations and guidance effective on December 31,

24 GAO Government Auditing Standards (Yellow Book) Expected release date by June 30, Effective date is expected to be for financial audits for periods ending on or after June 30, 2019; for performance audits beginning on or after July 1, What to Expect New format to differentiate requirements from application guidance More guidance on internal/external specialists than was in the Exposure Draft CAUTION! THIS SLIDE BASED ON DISCUSSIONS AT GAO ADVISORY COUNCIL MEETING. REVIEW THE FINAL YELLOW BOOK AND LOOK FOR A FUTURE GAQC ALERT FOR ACTUAL FINAL REQUIREMENTS 22

25 GAO Government Auditing Standards (Yellow Book) What to Expect Independence Likely that financial statement preparation nonaudit services will be required to be considered a significant threat in most cases; this will require documentation of client SKE and identification of safeguards. With regard to independence impairments, adding application guidance on indicators for when not to accept an engagement, as well as indicators for when to terminate an engagement in process. Removal of 4 hour Yellow Book CPE requirement that had been proposed GAO will instead include this as a recommendation in the application guidance. Removal of requirements to report abuse and waste SEE CAUTION ON PRIOR SLIDE! Alternatively, emphasis will be placed on the the likely control deficiencies that lead to abuse and waste. 23

26 Best Practice Tips: Focus on Evaluation and Documentation of Nonaudit Services Identify nonaudit services Meet preconditions Evaluate and document Skills, Knowledge, and Experience (SKE) of management Assess threats Consider individually and in the aggregate Document consideration of significant threats Document your understanding of nonaudit services with the auditee Apply effective safeguards when significant threats exist 24

27 GAO Resources Yellow Book Web Page 2017 Yellow Book Exposure Draft GAO Guidance on Requirements for GAGAS CPE ( GAO hotline; or (202) Green Book Web Page 25

28 Single Audits key areas needing attention in planning and performing 2018 audits 2018 Compliance Supplement Format change skinny supplement Procurement updates Issued Mid May 2018 Awards thru MDE are post UG SFA cluster developments Getting it right! Learning from peer reviews and other reviews of single audits Update on federal FAQs on the Uniform Guidance Federal Audit Clearinghouse (FAC) developments 26

29 Single Audits Key Areas Needing Attention in Planning and Performing of 2018 Audits Agency differences Schedule of Expenditures of Federal Awards MDE requirements Major program determination Internal control testing Compliance testing Reporting Auditor reporting Findings Reporting package DCF completion/accuracy Making sure all the pieces tie together 27

30 Single Audit 2018 Compliance Supplement Skinny format for 2018 Will need to use 2018 and 2017 Supplements together Part 1 and Table of Contents will explain how to use Effective for audits of fiscal years beginning after June 30, 2017 Changes include program deletions, program additions, programmatic changes (only those having substantive changes) Includes clarifying guidance on procurement 28

31 Single Audit Procurement Effect of 2018 NDAA and who, what, and when NDAA 2018 (enacted December 12, 2017).. Sections 805 (41 USC 134) and 806 (41 USC (a) (1)), increased the simplified acquisition threshold to $250,000 and the micro purchase threshold to $10,000, respectively. These changes effectively redefine the level for the simplified acquisition threshold (section of the Uniform Guidance) and the micro purchase threshold (section of the Uniform Guidance). These changes will become effective when they are formally codified in the Federal Acquisition Regulations. Once codified, the higher thresholds will be available to all auditees. The non Federal entity must document this decision in its internal procurement policies. Information on this slide is subject to change as NDAA is not yet codified! 29

32 Single Audit Getting it right! Learning from peer review and other reviews of single audits Main Problem Areas Identifying Direct and Material Compliance Requirements Internal Control Testing Compliance Testing Documentation 30

33 Identifying direct and material compliance Avoiding the N/A problem N/A is not enough to support why you did not audit a type of compliance requirement. If your teams believe a requirement that is identified as being applicable to a program in the Part 2 matrix of the Compliance Supplement is not direct and material to a client, documentation should always be provided. Documentation is key if overriding a Y in the Part 2 matrix! 31

34 Example N/A documentation Example 1. Detail testing of the subrecipient monitoring compliance requirement is not performed for CFDA XX.XXX even though the requirement is noted as applicable in the Part 2 matrix. This is because XYZ entity s expenditure of program funds has not included passing funds down to subrecipients. Example 2. While the Part 2 Matrix identifies procurement as being applicable to CFDA No. XX.XXX, Client ABC made only one small purchase during the year that is immaterial overall to the program expenditures. Therefore, the procurement type of compliance requirement for CFDA No, XX.XXX is not direct and material to Client ABC. Example 3. Detail testing of the eligibility type of compliance requirement not performed. While the requirement is noted as applicable int the Part 2 matrix, the Compliance Supplement section for CFDA No. XX.XXX notes that testing eligibility is the responsibility of the pass-through entity's subrecipients. Thus, it is to be tested by the auditors of Client ABC s subrecipients. 32

35 Other things you can do Ensure teams have appropriate understanding of each major program to apply appropriate judgment Train staff on appropriately using the Supplement s Part 2 Matrix Partner and manager reviewers should be aware of the importance of this area 33

36 Internal Control Testing Are audit teams focused on controls? Auditors must: Perform procedures to obtain an understanding of internal control over federal programs sufficient to plan the audit to support a low assessed level of control risk of noncompliance for major programs. Plan testing of internal control over the relevant compliance requirements for each major program. Perform testing of internal control as planned. Report on internal control over compliance. 34

37 Tackling Internal Control Look at key compliance processes What could go wrong risk Identifying key controls Testing Prepare clear supporting documentation Q were Key controls operating effectively? Difficulty No Part 6 in Compliance Supplement to reference for each compliance requirement 35

38 Best Practice Tips: Internal Control Over Compliance Be sure to come full circle on risk of material noncompliance Identify, Assess, Respond, Evaluate Preliminary assessment of control risk may be facilitated through a checklist or narrative Internal controls should be continually re evaluated throughout the audit process Understand the difference between testing controls and testing compliance Controls: What did entity do to ensure compliance? Compliance: Did entity comply? 36

39 Best Practice Tips: Internal Control over Compliance Testing compliance gives indirect evidence on controls, but cannot serve as the basis for assessing controls as operating effectively 2 step testing process Controls are designed effectively and placed into operation Key controls are operating effectively (low control risk) Important to identify and document the key controls to be tested Remember to consider Information Technology (IT) controls when evaluating design and when testing for operating effectiveness 37

40 Compliance Testing Focus on the importance of the following: Use appropriate sample sizes (see GAS-SA Guide!) and prepare documentation to support Ensure that compliance sample sizes are appropriately adjusted for results of internal control testing Make sure audit documentation is clear about criteria used to perform tests (i.e., the old rules versus the new UG rules) Train staff about the nuances of some of the more difficult compliance areas (e.g., procurement) Ensure staff have an appropriate understanding of when to use of Part 3.1 and Part 3.2 of the Compliance Supplement 38

41 A final word on documentation If it was not documented it was not done! Key areas of documentation include: Materiality levels and basis for how determined Major program determination including individual program risk assessments Understanding and testing of I/C over compliance Compliance testing and support for sampling used Overall Conclusions Need to meet overall documentation requirements of AU C section 230, Audit Documentation and Government Auditing Standards the experienced auditor concept 39

42 AICPA Audit Guide, Government Auditing Standards and Single Audits Key resource for auditors; you should be using this Guide! Available in ebook and paperback Key changes made: Updates to areas needing additional emphasis or explanation to help clarify the Uniform Guidance audit requirements Updates for July 2017 federal UG FAQs Slight changes to certain auditor reports for consistency 40

43 Update on federal FAQs on the UG Previously issued by COFAR; now that COFAR disbanded, FAQs are posted to CFO.gov Web site Compliance Supplement states that FAQs are meant to provide additional context, background, and clarification of the policies described in the Uniform Guidance and should be considered in the single audit work plan and reviews Latest update made in July UniformGuidanceFrequentlyAskedQuestions.pdf 41

44 Single Audit FAC developments Nothing new for 2018 audits However, remember reporting packages, including your reports and findings are posted publicly! Proposed new DCF for use in 2019, 2020, and 2021 audits is out for comment Draft DCF and instructions Federal register notice Comments due June 4, 2018 Next DCF likely to require text of audit findings, corrective action plan, and SEFA notes 42

45 Best Practice Tips: Use the FAC to Improve Single Audit Quality Review your firm s DCF submissions (the actual forms) in the FAC for deficiencies Remediate deficiencies through reissuance of the data collection form and/or reports on a timely basis before identification in federal quality control reviews, desk reviews and peer reviews Also consider reviewing a post issuance sampling of your single audit reporting packages posted to the FAC (now generally available publicly) for any quality problems Federal agencies and others now have the opportunity to do the same Districts certify the DCF did you review it? 43

46 FAC/DCF Resources FAC Web site: FAC Instructions and Documents page which includes: DCF and related instructions IDES instructions Single audit worksheets (Excel) Federal awards Federal awards findings Older versions of the Form and IDES instructions PDF quick reference guide provides guidance on how to create a compliant PDF document PDF Validator available on FAC home page Questions for the FAC? Call: (301) or (800) ; or send an e mail via FAC home page 44

47 President s Management Agenda Management Agenda released on OMB Web site in March 2018 Includes a cross agency priority goal on grants along with a related strategy document which includes: Component 1 on the standardization of grant reporting data and digitized data collection. Component 2 on to the development of digital tools to manage federal risk. Component 3 on the identification of practices and data tools to enable agencies to incorporate performance into their grant award operations 45

48 SLG F/S Audit Developments 2018 Areas of Focus OPEB implementation for governmental employers Importance of actuaries/specialists (e.g., pension and OPEB) Irrevocable Split Interest Agreements Preparing for big changes in the future Fiduciary activities Leases 46

49 Attention Please its OPEB Time!

50 OPEB Implementation Major impacts of GASB 75 MI Schools cost sharing multiemployer plan, similar to Pension ORS web site OAG report/data likely available late July Net OPEB liability is now recorded in Statement of Net Position (approx. 1/3 the size of the pension liability) Strictly prescribed actuarial methodology and discounting guidance will produce a different (often higher) OPEB liability than GASB 45 Much more robust notes and RSI is required Identification of statutory required contribution Prior period adjustment for: Net OPEB liability Deferred outflows for contributions subsequent to Deferred inflows for 147c1 revenues received related to OPEB 48

51 OPEB Implementation Considerations for OPEB (similar to pension) Statutory Required Contribution Proportionate share of net OPEB liability Deferred Inflows Deferred Outflows Contributions after the measurement date Governmentwide pension expense and allocation Reconciliation between funds and governmentwide Impact on Enterprise Funds Impact on Net Position Allocation of contributions between (for and ) Pension OPEB Defined contribution retirement Defined contribution health care 49

52 OPEB go to Resources SLG Guide Chapter 14 Addresses accounting and auditing considerations for employers that provide OPEB administered through a qualifying trust (including cost sharing multiemployer plans) and OPEB not administered through a qualifying trust GASB IG , Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans Considered category b GAAP Provides guidance that clarifies, explains, or elaborates on GASB 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans 50

53 Actuaries as Specialists Work of the actuary (assuming management specialist) AU-C section 500, Audit Evidence Evaluate the competence, capabilities, and objectivities of the specialist Obtain an understanding of the work of that specialist Evaluate the appropriateness of the work of that specialist for audit evidence for the related assertions Additional considerations related to the actuarial communications Is your client an intended user? Do they contain the right assurances? Any negatives? Consider obtaining OAG assessment of OPEB/Pension actuary 51

54 Auditing Total Pension/OPEB Liability Variety of Audit Procedures and Evidence Design Audit Procedures to Address the Risk of Material Misstatement Understand the Plan (plan amendments, changes in benefit terms) Review and Assess Actuarial Valuation and Certification Letter Test Census Data (Reliability and completeness) Review Roll forward, if applicable Determine Appropriateness of Valuation Methods and Assumptions Evaluate the Professional Qualifications of the Actuary & Objectivity Evaluate Discount Rate Key Question How will the auditor of the reporting unit (K12) document consideration/testing of above? 52

55 GASB 81, Irrevocable Split Interest Agreements Governments that receive resources pursuant to an irrevocable split interest agreement Provides guidance for recording irrevocable split interest agreements Donor transfers resources to an intermediary to hold and administer for the unconditional benefit of a government and at least one other beneficiary Usually in the form of a trust or other legally enforceable agreement Types include charitable lead trusts, charitable remainder trusts and real estate life interests Rare in K12 53

56 GASB FOCUS ISSUES GASB 72 and GASB 77 54

57 GASB 72, Fair Value Measurement and Application, Fair Value Measurement and Application 55

58 GASB 72 Fair Value Measurement and Application Generally requires investments to be measured at fair value. Investment is defined as a security or other asset that: A government holds primarily for the purpose of income or profit, and Service capacity based on ability to generate cash or sold to generate cash. Investments not measured at fair value continue to include, for example: Money market investments, 2a7-like external investment pools, investments in life insurance contracts, equity method common stock, unallocated insurance contracts, synthetic guaranteed investment contracts ISSUE will K12 2a7 like investments be allowed to continue to report at net asset value (and apply GASB 79)? Use of Acquisition Value (an entry price): donated capital assets, donated works of art, historical treasures, similar assets and capital assets received in service concession arrangement. Previously measured at fair value. 56

59 GASB 72 Fair Value Measurement and Application Fair Value price received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Guidance applying fair value to certain investments and disclosures related to all fair value measurements. Unit of Account: Investments held in a brokerage account is each individual security. Investment in a mutual fund is each share in the mutual fund held by a government (NAV Net Asset Value). 2a7 like plans may need to be reported at NAV, depending on application of SEC rules. 57

60 GASB 72 Fair Value Measurement and Application Valuation Techniques The market approach, the cost approach, or the income approach Hierarchy of inputs to valuation techniques: Level I - quoted prices (unadjusted) in active markets Level II - observable for the asset or liability, either directly or indirectly observable for the asset or liability, either directly or indirectly other than quoted prices Level III - unobservable inputs, such as management s assumption of the default rate among underlying mortgages of a mortgage-backed security Other fair value investments not classified but reported at NAV 58

61 GASB 72 Fair Value Measurement and Application Disclosures (similar to FASB): Fair value measurements, The level of fair value hierarchy, Valuation techniques Disclosure does not eliminate cash and investment disclosures Requires District to determine which balance sheet items require fair value measurement and which are excluded Note, most operating investments likely at cost If 2a7 like pools reported at cost, unique withdrawal terms must be disclosed under 79 Key take away What is the treatment of 2a7 like pools similar to MiLAF? 59

62 GASB 77, Tax Abatements, Fair Value Measurement and Application 60

63 Overview of GASB 77 GASB 77 footnote disclosures for tax abatements that are: Initiated by a local unit of government; and Initiated by other governments but will impact a local unit Public Schools in Michigan fit here Focus disclosures on the amount of tax revenue NOT COLLECTED as a result of tax abatement programs EFFECTIVE last year! 72

64 What is a Tax Abatement? Based on the aforementioned considerations, the Board defined a tax abatement (for financial reporting purposes) as resulting from an agreement between one or more governments and an individual or entity in which (a) one or more governments promise to forgo tax revenues to which they are otherwise entitled and (b) the individual or entity promises to take a specific action after the agreement has been entered into that contributes to economic development or otherwise benefits the governments or the citizens of those governments. The scope of this Statement is limited to transactions that meet this definition. ( B15) 73

65 Potential Issues If a governmental unit receives a reduction in revenue due to an abatement, but is made whole by another entity directly related to this reduction, does GASB 77 still apply since there is no net revenue impact? Short answer, YES. (Per recent GASB Q&A) The Q&A states that the fact that the government can recover tax revenue is not relevant to determining whether the agreement meets the definition of an abatement or not. The fact the State makes up for the revenue loss has NO IMPACT on the need to disclose Should disclose the revenue replaced 76

66 Potential Issues Determining whether the agreements meet the definition of a tax abatement outlined in GASB 77 Gathering information from other taxing units (HUGE for K12) Valuing the actual abatement Ensuring completeness of footnote disclosure District should not wait for year end to do this! 77

67 Possible GASB 77 Abatements IFT Likely, but will need to pay close attention to whether the agreement was entered into before or after the taxpayer fulfilled their promise Brownfield Redevelopment Likely, as long as the developer is the one being reimbursed for remediation efforts TIFA or DDA No, generally there are no specific agreements here and overall taxes are not reduced New Personal Property Tax Act Likely, however obtaining information from the municipality is not likely given lack of information filed by taxpayer 78

68 Disclose For abatements entered into by the other governments (K12): Brief description, including names of governments entering into the abatements, and the specific taxes being abated Total amount of taxes reduced in current year If reimbursed for lost revenue, from another entity, also disclose the amount received or receivable, from who, and under what authority. NOTE: Tax abatements can be disclosed individually or aggregated by type Aggregate - Still must disclose the governmental unit that started the abatement and the tax being abated Individual- - must disclose threshold used for determining which ones to present individually 79

69 Key Reminders & Other Thoughts Once the applicable tax abatement programs are identified, client must then gather data for footnote disclosure Remember revenue loss can be more than just non-homestead property tax SD - Consider Debt, Sinking, Recreation mills ISD - Special Ed, Voc Ed, Enhancement The taxing units will provide the District with values District will need to calculate the tax Possible some counties could provide taxable value data Keep materiality in mind! What if the client is unsuccessful at obtaining data they need? Standardized communication Client send request letter (note this is not an audit confirmation) Financial Statement Impact New GASB 77 footnote & adoption of new accounting pronouncement footnote 80

70 GASB 83 Certain Asset Retirement Obligations Effective for 6/30/19 School District financial reports Enhance comparability of financial statements by establishing uniform criteria for governments to recognize and measure certain AROs Statement has been issued because many governments have not been reporting these liabilities or may have been applying other guidance (FASB). 81

71 GASB 83 Certain Asset Retirement Obligations Reminder of what an ARO is. Legally enforceable liability associated with the retirement of a tangible capital asset Retirement of capital asset Disposal of a replaced part that is a component of a capital asset Environmental remediation associated with the retirement of a capital asset 869

72 GASB 83 Certain Asset Retirement Obligations Requires measurement of an ARO based on the best estimate of the current value of outlays to be incurred Current value is an important difference from FASB To be recognized when the liability is reasonably estimable A deferred outflow of resources should be recorded at the amount of the corresponding liability upon initial measurement Unless abandonment an expense should be used at initial recognition This may result in recording of a liability that previously did not exist 83

73 GASB 83 Certain Asset Retirement Obligations When could this apply to K12? Law requiring certain actions to retire assets at the end of the useful life Abandoning an asset How is this different than Impairment? Incurrence of contamination requiring clean up Does NOT apply to temporary idling of an asset Does NOT apply to pollution remediation obligations prior to their retirement 84

74 GASB 84 Fiduciary Activities Effective for 6/30/20 School District financial reports Key implications Student activities, scholarship funds, booster clubs Reminder of current treatment (generally) Student activities fiduciary, agency fund Scholarships fiduciary, private purpose trust fund Boosters excluded from SD financial statements 86

75 GASB 84 Fiduciary Activities Q What will new treatment be? A it depends! The standard provides principles vs rules and GASB did not make a specific statement re impact on K12 Need to follow the flowchart and apply the definitions (see next slide) Note, some of the definitions may not be easy to interpret Potential outcome Student activities becomes a governmental fund Scholarships reported as a fiduciary activity, custodial fund Boosters stays out of statements, unless the SD is involved in resource management MDE 1022 committee will begin taking the issue up to provide statewide guidance in the Fall of Note the question of resource management will be key. 87

76 GASB 84 GASB 84 Decision Flowchart Key q Key q 88

77 GASB 87 Leases Effective 6/30/2021 for School District financial statements Reminder on how Districts currently report leases Most are operating Governmental fund and government wide statements expense as paid No balance sheet amounts 89

78 GASB 87 Leases What will change. All leases (> 12 mos.) go on the government wide statement of net position and enterprise fund balance sheet Similar to how fixed assets are recorded on governmental fund financial statements currently Lessees will report a Lease payable and a Right to use Lease asset (unless effectively a purchase, with transfer of ownership); 90

79 GASB s are Coming!!!!

80 GASB Standards Tracker MF13 12/31/2017 GASB 81: Irrevocable Split-Interest 6/30/2018 6/30/2019 GASB 75: OPEB Employer GASB 85: Omnibus GASB 83: Certain Asset Retirement Obligations (AROs) GASB 88, Debt Disclosures 12/31/2019 GASB 84: Fiduciary Activities 12/31/2020 GASB 87: Leases Watch for Implementation Guide Updates 78

81 Slide 78 MF13 LH needs to check me on this. Mary Foelster, 4/23/2018

82 AICPA Audit and Accounting Guide, State and Local Governments Key resource for auditors of SLGs; you should be using this Guide! Next update available in ebook and paperback in June 2018 Key changes made: The addition of illustrative note disclosures for the GASB 68 cost sharing schedules of employer allocations and pension amounts A new illustrative schedule of pension amounts for a single employer plan and a related illustrative auditor s report Newly effective GASB standards AU C 570 on going concern and AU C 945 on municipal security involvement Order now at: 79

83 What is really important?

84 K12 Topics Financial Statements 147 a1, a2, c1, c2, e Return of 3% contributions GASB 75 and ORS/OAG Timing, information provided, district data, census COE and UAAL ORS contribution rate table updated for PA92 MDE School Accounting Manual Updates Bond/Sinking Fund Guide updated in 2017 Due Date

85 K12 Topics Single Audit Model Procedures Manual MSBO web site Procurement adoption MDE School Audit Manual and Risk Alert UG guidance on MDE site Program updates title I (ESSA), Food Service, Special Ed MDE restructuring Findings resolution SSPAF/CAP client letterhead

86 Questions and Comments