GASB Update Presented by: Debbie Harper Ryan Domino Housekeeping - - PowerPoint PPT Presentation

GASB Update

Presented by: Debbie Harper Ryan Domino

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Housekeeping items

• GASB series
• We are offering registration for both CPE or no CPE
• You will get a pop ups that will need your response for

CPE credit. (70%)

• You can send us questions at anytime and we will either

respond directly or set-up a Q&A series that will be available

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Debbie Harper, Partner

• 19+ years with LSL
• Technical Partner
• Specialize in Government
• Deborah.harper@lslcpas.com

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Ryan Domino, Manager

• 7+ years with LSL
• GFOA Technical Reviewer
• AICPA Advanced Single Audit Certified
• Ryan.domino@lslcpas.com

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• June 30, 2020 Fiscal Year

– COVID-19 - POSTPONED

• June 30, 2021 Fiscal Year

– GASB 84 – Fiduciary Activities – GASB 90 – Majority Equity Interest

• June 30, 2022 Fiscal Year

– GASB 87 - Leases – GASB 89 - Accounting for interest cost incurred before the end of a construction period – GASB 92 – Omnibus 2020 – GASB 93 – Replacement of Interbank Offered Rates

ITEMS TO HAVE IN PLACE BY JULY 1, 2020 FOR JUNE 30, 2021 IMPLEMENTATION

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GASB 84 FIDUCIARY ACTIVITIES

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Fiduciary Activities

• Income Statement Activity
• Break out Revenues (Additions)
• Break out Expenses (Deductions)
• This activity needs to be for the entire year

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New Fiduciary Activity Categories:

• Pension (and Other Employee Benefits) Trust Funds
• Investment Trust Funds
• Private-Purpose Trust Funds
• Custodial Funds

– Break out – Investment Funds not in Trust

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All Fiduciary Funds - Statements

• Statement of Net Position

– Balance Sheet

• Statement of Changes in Fiduciary Net Position

– Income Statement

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Identifying Fiduciary Activities

• Fiduciary Component Units

– Meets Statement 14 as amended as a component unit AND is

• ne of the following arrangements:
• An irrevocable trust of a pension plan
• An irrevocable trust of an OPEB plan
• Non employer assets accumulated for a pension plan
• Non employer assets accumulated for an OPEB plan

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Component Unit

• Generally, pension and OPEB trusts are legally separate

entities

• Financially Accountable – appoint voting majority and

able to impose will/receive a financial benefit

• Financial Burden – legally obligated or assumed the
• bligation to make contributions to pension or OPEB

plans

• Fiscal Dependency – PG approves budget, rates, bond

issuance, etc.

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Does your component unit fall under Fiduciary Activities? (3 options)

• Fiduciary Component Units

– Assets are:

• Administered through a trust agreement or equivalent arrangement

in which the government itself is not a beneficiary,

• Dedicated to providing benefits to recipients in accordance with the

benefit terms, and

• Legally protected from the creditors of the government

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Does your component unit fall under Fiduciary Activities? (3 options)

• Fiduciary Component Units

– Assets are

• for the benefit of individuals, and
• the government does not have administrative involvement with

the assets or direct financial involvement with the assets.

• In addition, the assets are not derived from the government’s

provision of goods or services to those individuals

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So what is considered Administrative Involvement or Direct Financial Involvement?

• Administrative involvement

– If government monitors compliance with the requirements of the activity that are established by the government or by a resource provider that does not receive the direct benefits of the activity. – If government determines eligible expenditures that are established by the government or by a resource provider that does not receive the direct benefits of the activity – If government has the ability to exercise discretion in how assets are allocated.

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So what is considered Administrative Involvement or Direct Financial Involvement?

• Direct Financial Involvement

– If government provides matching resources for the activities

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Does your component unit fall under Fiduciary Activities? (3 options)

• Fiduciary Component Units

– Assets are

• for the benefit of organizations or other governments that are not

part of the financial reporting entity.

• In addition, the assets are not derived from the government’s

provision of goods or services to those organizations or other governments.

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Identifying Fiduciary Activities

• Pension and OPEB Arrangements that are NOT

component units and government controls assets

– A pension plan that is administered through an irrevocable trust (see paragraph 3 of Statement 67) – An OPEB plan that is administered through an irrevocable trust (see paragraph 3 of Statement 74) – A circumstance in which assets from entities that are NOT part of the reporting entity are accumulated for pensions (see paragraph 116 of Statement 73) – A circumstance in which assets from entities that are NOT part of the reporting entity are accumulated for OPEB (see paragraph 59 of Statement 74

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Control of Assets not considered in determining component unit is a fiduciary component unit

• Control of Assets

– If the government holds the assets or – Has the ability to direct the use, exchange, or employment of the assets in a manner that provides benefits to the specified or intended recipients. – Restrictions from legal or other external restraints that stipulate the assets can be used only for a specific purpose do not negate a government’s control of the assets.

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Identifying Fiduciary Activities

• Other Fiduciary Activities if all three of the following:

1) The government has control over the assets 2) Those assets are NOT derived either:

• Solely from the government’s own-source revenues
• From the government mandated/voluntary nonexchange transactions

(exception of pass-through grants)

3) Assets associated with activity are at lease one of the following: I. In a trust legally protected, dedicated for recipients within the terms

• II. Assets benefit individuals with no government involvement

III.Assets benefit an organization or other outside government

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How to Report identified Fiduciary Activities

• Pension (and other employee benefit) trust funds

– Pension plans and OPEB plans that are administered through irrevocable trusts (see par. 3 of Statement 67 and/or 74) – Other employee benefit plans for which (1) resources are held in a trust fund AND (2) contributions to the trust and earnings on those contributions are irrevocable.

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Look for additional breakdown of investments Combine here, break‐out in back Break‐out here

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Common California Plans for Pension and OPEB

• Pension – Multiple Agent Plans and Cost Sharing Plans

– CalPERS, PARS or County Plans (OCERS, SBCERA, SDCERA, etc.) – Assets investment are shared for investment purposes only and benefits are separate for each employer – Asset investments are shared for investment purposes AND benefits are shared among employers

• Excluded from Fiduciary Fund Statements

– Lack of Voting Majority – Lack of imposition of will – Lack of Control of assets

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Common California Plans for Pension and OPEB

• Pension – Single Employer Plan

– Your Own Pension Plan – Assets investment are NOT shared for investment purposes AND benefits are not shared

• Pension Trust Fund Fiduciary Fund Statements

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Common California Plans for Pension and OPEB

• OPEB – Multiple Agent Plans

– CalPERS - CERBT, PARS – Assets investment are shared for investment purposes only and benefits are separate for each employer

• Excluded from Fiduciary Fund Statements

– Lack of imposition of will – Lack of Control of assets

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Common California Plans for Pension and OPEB

• OPEB – Single Employer Plan (Stand-Alone Plan)

– Your Own OPEB Plan – Assets investment are NOT shared for investment purposes AND benefits are not shared

• OPEB Trust Fund Fiduciary Fund Statements

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How to Report identified Fiduciary Activities

• Investment trust funds

– Used to report fiduciary activities from the external portion of investment pools and individual investment accounts that are held in a trust when government is not a beneficiary and assets are dedicated to providing benefits to recipients in accordance with benefit terms where assets are legally protected from government creditors

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How to Report identified Fiduciary Activities

• Private-purpose trust funds

– Used to report all fiduciary activities that are NOT

• pension (and other employee benefit) trust funds or
• investment trust funds AND

– Held in a trust – Government is not a beneficiary – Assets provide benefits to recipients in accordance with benefit terms where assets are legally protected from government creditors.

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How to Report identified Fiduciary Activities

• Custodial funds

– Used to report fiduciary activities that are NOT held in trust agreements or equivalent arrangements. – The external portion of investments pools that are not held in a trust when government is not a beneficiary – Assets provide benefits to recipients in accordance with benefit terms where assets are legally protected from government creditors – Should be reported in a separate external investment pool fund column, under the custodial fund classification.

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Custodial with a non-trust external investment pool

Other Custodial Funds External Investment Pools ASSETS Cash and cash equivalents $ 58,196 $ 586,887 Receivables: Taxes for CFD #1 - Civic Center 58,695

• Taxes for other governments

148,242

• Total receivables

206,937 Investments at fair value: Common stock

• 500,000

Mutual funds

• 456,805

Pooled Investement funds

• 4,568,000

Total investments

• 5,524,805

Total Assets 265,133 6,111,692 LIABILITIES Accounts payable 1,451 568 Due to local governments 164,201

• Total Liabilities

165,652 568 NET POSITION Restricted for: Other governments 99,481 Pool participants 6,111,124 Unrestricted

• Total Net Position

$ 99,481 $ 6,111,124 Custodial Funds

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How to Report identified Fiduciary Activities

• Business-type Stand Alone Statements

– Resources expected to be held 3 months or less can be reported in the statement of net position, with inflows and outflows reported as operating cashflows in the statement of cashflows.