accounting & reporting updates

Accounting & Reporting Updates Denise Nguyen

February 16th, 2017

Agenda: • Financial Statements update

Templates for statements, MD&A, Notes, and the RSI, comments from audits New deadline for audited statements

• GASB update Financial Reporting Model Improvements

• Yearend Planning Monthly monitoring and cleanup effort Change in yearend deadlines Prepare for closing Disclosure forms

• Ideas for better practice/networking

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CHANGES IN THE FINANCIAL

STATEMENT TEMPLATE

Statement C criteria (Operating Statement) • 4xx 65xx is now with all other expenses.

Reduce profit (4xx 32xx) where expenses were incurred to generate the profit. Example: printing charges are based on supply costs: eliminate printing profit under object E.

• State appropriation: include fund 253 for FY16 only.

• GASB 68 entries are left blank for you to fill out. Balance your statements first before adding on these entries.

• We do not have adjustments due to change in accounting principle this year. Remove any information about change in principle in your template/MD&A/Notes.

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MANAGEMENT DISCUSSION &

ANALYSIS

Comment from some of SAO staff: The condensed statement of revenues, expenses, and changes in net position does not follow the required format. Accepted format for the condensed operating statement data is: • Operating revenues (by major source) • Nonoperating revenues (by major source) Source: GASB 34 This is for government wide financial statements with multiple major sources to report. We, as a BTA has one source. SBCTC disagrees and will continue with our current format. Other changes in the MD&A are related to GASB 68 (since this is our second year of implementing this standard.

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NOTES FOR THE FINANCIAL

STATEMENTS

• Accounting & Reporting Changes is now its own note, note #2.

• Revised definitions of Deferred outflows & Deferred in flows of Resources (note #7)

• All pension disclosure (include DO/DI tables) is now under the pension note (note #18)

• Risk management (note #11) has a new paragraph to follow standard for this type of disclosure.

• Note #16 should read: Schedule of Long Term Debt Liabilities

• OPEB is now its own note (note #19)

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REQUIRED SUPPLEMENTARY

INFORMATION (RSI):

• Originally used covered-employee payroll

• GASB 82: use covered payroll • Covered payroll: portion of

compensation paid to active employees on which contributions to a pension plan are based.

• Obtain DRS payroll reports to complete the RSI. Compared to your PPMS payroll data for reasonableness. Expect immaterial differences.

• Auditors use DRS data to review your disclosure.

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Helpful slides from SAO’s GASB 68 presentation

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Covered Payroll for

PERS 1, 2, 3

PER2/3 employer

contribution

PERS1 UAAL portion

Sort by P2 & P3


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Let’s review all the documents for GASB 68!

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http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwiq3dXZzobSAhVV6WMKHW-1BfQQjRwIBw&url=http://memegenerator.net/instance/16087076&bvm=bv.146496531,bs.1,d.cGc&psig=AFQjCNE-zGi20qBbdMwh2Gkoi3VyUfyuHg&ust=1486853330955780

AUDIT COMMENTS

Title 4 repayments: Deferring the recognition of certain revenues and expenses accrued in fund 840 result in understating of revenues as well as an understatement of expenses. The amount is typically immaterial but gets added to the aggregation of errors for the audit.

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AUDIT COMMENTS

Liability recognition for unemployment compensation: Options: • Unable to reasonably estimate the liability

and also immaterial. • You expect a significant amount of

unemployment compensation to be made so you reasonably estimate the liability based on the # of employees.

• You establish a reasonable estimate using the past three years’ claim expense.

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REMINDER One of the key internal controls: • Both preparer(s) and reviewer(s) are

“knowledgeable of GAAP’s reporting requirements to ensure accurate preparation and reporting of the College’s Financial Statements…” (per SAO’s finding)

• Take time to understand your financial records

• Keep up with changes in GASB pronouncements.

• SBCTC staff is external support and a part of your internal controls.

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NEW DEADLINE FROM NWCCU

Statements must be audited nine

months after the end of the fiscal

year.

• SBCTC will send out the financial statements template in September.

• Manual entries for GASB 68, 73, 75 will be available subsequently, depending on the timing of yearend closing, actuary reports, and DRS financial statements.

• Arrange audit fieldwork between October – February.

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GASB 68 CENSUS DATA AUDITS:

• DRS now contracts with Clifton, Laron, Allen, LLP to perform this audit work going forward.

• DRS & the CPA firm are preparing a list of auditees for the coming year.

• Expect audits from January to August.

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GASB UPDATE: Financial Reporting

Model Improvements Invitation to comment

deadline: March 31, 2017

Topics include: • Recognition approaches (measurement

focus and basis of accounting) • Separate Presentation of Operating and

Nonoperating Revenues and • Expenses— in Proprietary Fund and

Business-Type Activity (BTA) Financial Statements

• Extraordinary and Special Items—explore options for clarifying the guidance for more consistent reporting

• Management’s Discussion and Analysis (MD&A)

• Debt Service Funds—explore options for providing additional information, either individually or in aggregate in the financial statements or the notes

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YEAREND PLANNING

• SMART adjusting phase for the system is eliminated.

• All closing activity must be completed at FMS’s final close (including cleaning up SMART errors).

• SMART is open for two weeks in August only for interagency due to/due from entries and disclosure forms.

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YEAREND PLANNING

Goal: Reduce the amount of entries uploaded to AFRS. Reduce the amount of opening entries in the new year. No reversible entry except for interagency due to/due from and unearned revenue. Set aside time to close Spokane and Tacoma to meet OFM’s deadline.

SBCTC will work closely with colleges with the most adjusting entries last year to finish timely this year.

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YEAREND PLANNING

Documents available at

http://www.sbctc.edu/colleges-staff/programs-

services/accounting-business/accounting.aspx:

• Accrued Leave Instructions & Formulas

• Things to Do List (Simplified)

• Yearend closing process • Close/Open Job

Scheduling • Control Table • Use of Status Codes on

Control Table • Copy Over Process • Vendor Payment Advance

(and the simplified version) • Deposit in Transit • Accounts Receivable

Accruals biennium • Manual Accounts Payable

– biennium

• Depreciation and capital asset transcode summary

• In-Process Report – AFRS Transcodes

• Understand what your trans codes do in AFRS to avoid errors

• Interagency Receivable/Payable – biennium

• Interfund Transactions – biennium

• Negative Cash – Manual entries (no negative cash for biennium close)

• Pooled Cash

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http://www.sbctc.edu/colleges-staff/programs-services/accounting-business/accounting.aspx




YEAREND PLANNING

GLS 1110 1150 1205 1206 1209 1210 5155

SMART checklists p. 101 Cash and Investments • Section 1 GL1150 does not go to AFRS.

Only for your purpose to balance cash with the bank.

• Section 2: 1110 + 1205/06/09/10 = 5155

• We would expect to see activity in 840. if you have activity in other funds, we will inquire to make sure it really should be there.

• Section 3 (internal FMS only, not part of yearend review): this is to verify section 2’s total is $0 in fund 840 and any others you may have.

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SMART p.101example

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s/b in 840 only. Verify amounts in individual

funds

not part of our review.

Reconcile for your internal FMS purpose

SMART P.101 example

SMART P.103 INVESTMENTS

AND RESERVE - GL 1210/9557

• 9557 goes to AFRS as 9123 = nonspendable investments Nonspendable (GASB54) = due to external restriction

We typically do not see activity on this page. Review carefully if you end up with any (we will also inquire).

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SMART P.106

PREPAID EXPENSES –

GL 1510

• GL1510 (prepaid expense): ONLY allowed in proprietary funds

• Financial aid: we are working with OFM to allow 1510 a financial aid account (i.e. fund 846).

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SMART P.110 GL 52XX AND

GL 51XX SBCTC does not provide recommendation/guidance to book short term for these GLs.

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SMART P. 115 FOR GL 5192

Colleges are responsible for complete distribution entries. Please do not leave it for SB to do.

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SMART P.202 Interfund transfers must balance within fund and subobject code. SMART p.212 shows it by subobject

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Transferred benefits from

001 to 149 (TB) = ok

Problem: there is a TE out in 145

but no matching TE

in

SMART P.205 ENCUMBRANCES

AT FISCAL/ BIENNIUM END -

GL 6410

• Must clean up for biennium yearend.

(see Things to Do list for Tips about Encumbrances )

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SMART p.302 Operating Transfers - Source 0621/0622 • 0621 is transferring in = a credit to revenue • 0622 is transferring out = a debit to revenue.

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SMART p.302 Example: • Fund 147 3210 receives $167,579.83 from fund 145. • Fund 145 is transferring money to 147.

Both need to be equaled and in the right debit/credit position with a due t/f indicator (common problem)

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SMART P.306: FEDERAL

FINANCIAL ASSISTANCE -

SOURCES 03XX, 0546

• Review this page to ensure they truly belong to 03xx or 0546. Question to Ask: did I upload revenue/expenditure for this CFDA #? Or was it simply a reduction to expense?

• Disclosure form for Federal funding pulls from this page.

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SMART P.401: DUE TO/FROM

FUNDS – GL 1353/1653 AND

GL 5153/5253

• 060 has a receivable 1353 from fund 840 (debit position)

• Fund 840 has a payable to fund 060 (a credit position) Difference must be zero

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SMART P.401: DUE TO/FROM

FUNDS – GL 1353/1653 AND

GL 5153/5253

At yearend, summer quarter students may drop out and you’d have to provide refunds. This is where you may have these entries in the opposite positions (840 with a debit 5153, 060 with a credit 1353)

reclassify: 840: debit 5153 to 840 debit 1353 060: reclassify credit 1353 to credit 5153.

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SMART P.403: POOLED CASH -

GL 1355/5155

• Must be zero between due to/from and in the right debit/credit position with indicator.

• 1355/5155 is typically automatic (AP screen) in local accounts (including proprietary ones). Errors tend to occur when user enters manual entries.

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SMART P.404 VPA GENERAL

LEDGERS – GL 1350/5150

• Fund 840 has a receivable 1350 from fund 001 (debit position)

• Fund 001 owes fund 840 the same amount (5150 = credit position)

• Difference must be zero.

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SMART P.404 VPA GENERAL

LEDGERS – GL 1350/5150

• At yearend, it’s possible these get in the opposite position (overspent 001).

• Reclassify so AR/AP are in the right position.

• Start monitoring this in May to avoid overspending problems.

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SMART P. 405: VPA ADVANCE

• This page is for the beginning of the biennium only when we are allowed a one time draw of VPA in advance.

• At the end of the biennium colleges need to return this advance. Take the final reimbursement and reduce it by the initial advance. Prepare these JVs separately for tracking purposes.

• Warning: Correcting p.404 to the right dr/cr position will throw this page off. Let SBCTC know so we know to ignore the error as long as you have already reconciled and know what the final amounts should be)

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SMART P.502 AR/AP OPENING

BALANCES WITH NO CURRENT

ACTIVITY

MAJOR CLEANUP NEEDED: • In the drop down menu, there is a p.502b showing

all AR/AP with opening balances and any and all current activity. This is for your information so you can see all AR/AP and their payments.

• Review these accounts on p.502 with no activity. This could be a subledger issue (example, AP has been paid but was not applied to the original liability accrued, AR received payment but didn’t apply to the original receivable set up to accrue). This page needs major cleanup Some of the errors are from the last ice age.

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SMART P. 508: NEGATIVE CASH

• No negative cash at yearend • Plan ahead • Do all major transfers in May (to avoid

throwing local funds into a negative position.

• Transferring a large amount of expenditures (payroll) out of state funds and into local funds by crediting cash in the local fund may result in a negative balance on this page.

Start your payroll corrections in May.

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REMINDERS

• 840/841 is an agency fund. By yearend, the only

GLs that should be in this fund are assets, liabilities (1110 and 1205, 1206, 13xx, 5xxx).

• 32xx, 65xx and 9590 will roll up as 5199. There shouldn’t be any revenue/expenditure as all money belongs to somewhere else.

• 1210 can be its own investment in its own fund • Endowment (859) can also have its own

investment.

• In FMS, you may have all GLs for internal tracking.

• Note that anything that rolls up to 5199 would come up in Disclosure form B for Liabilities.

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Capital assets: • Communicate with capital management to anticipate

invoices/purchases for the year. • Track all capital asset items throughout the year • Reconcile Direct Line with FMS at least quarterly • Record capital asset entries immediately after 6/30. Estimate

or know what’s left to accrue (see cheat sheet available on SBCTC website

Don’t wait until yearend to do everything.

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Problems with Capital assets: These errors will surface when balancing your statements.

Issues with moving from CIP to asset & capitalizing interest

expense

forgot to record additions/change in asset

values

didn’t accrue invoices for items received by 6/30 but not invoiced

until later

coding errors in funds, GLs, and

object codes

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Problems with Capital assets: These errors will surface when balancing your statements.

should or should not have been recorded as a

capital asset

disposal/transfer was not recorded properly (remove

depreciation)

forgot to record depreciation

expense

If you disposed an asset in a governmental fund, use GL6597 (see SAAM 85.65.58). • This GL code is used to record the difference

between the cost of a capital asset and its accumulated depreciation when the asset is disposed of or written off.

• To be used in the General Capital Assets Subsidiary Account only with Subobject WF “Capital Asset Adjustment (General Capital Assets Subsidiary Account Only).”

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SB will be reviewing SMART pages from March – May to ensure all old errors are cleaned up (This also helps with preparing to go live). A week before FMS’s final close: • provide State Board with a plan for cleaning

up any remaining errors. • Provide State Board a reason for leaving the

error as is.

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SMART pages we are considering deactivating: • p.202 and 212 have the same information but sorted in

different ways. Which is of most useful to you?

• p.404 and 901: this information is also available on p.902

• p.505 Fund Balance Ledgers should be credits • It’s for your information as we have no control over your

fund balance.

• P. 506 not sure what it does for you.

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SMART Disclosure Forms Cash and Investment General Disclosure • Don’t duplicate banks in different categories Example: checking account contains a CD: don’t list these twice • We are not authorized to have bonds.

Questions related to bonds should always be “no”.

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Lease forms (form B): • There are multiple pages in this section.

Click “Save” to get through to all of them. • All cells in each GL Code where you have

activity have to be filled in (debit/credit: do not net them).

• Beginning balance is pulled from previous year’s

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Capital Assets (form E) • All cells in each GL Code where you have activity have to

be filled in (debit/credit: do not net them). • Provide support for these entries (it is the most difficult

form for SBCTC to balance for the system in AFRS) • Fund 997 = governmental = GL9850 • 4xx & 5xx = 2xxx

DO NOT PUT PROPRIETARY ACTIVITY IN GOVERNMENTAL ACCOUNTS and vice versa

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Federal Disclosure Forms: • Review the last presentation on how to record

federal money based on where it comes from.

• If you do not have a CFDA number, it’s a sign that it may not be a 03xx source code.

• Provide the support for all of your federal disclosures. This was the #1 time consuming form to balance this last fiscal year.

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DISCLOSURE FORMS TIPS

• Compare your disclosure forms to the previous years

• Analyze any major differences This helps identify what you missed • Don’t go on vacation while we’re

still closing the system! • Or at least let us know how to find

you.

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Ideas for better practice/networking: • Share questions/answers as I see them with the

rest of the system. What do you think?

• All topics will be anonymous. • Do we want a workgroup/retreat for May BAR? • Do we need regional training? • Mentoring/partnering up with others.