WHAT DO THEY MEAN TO YOU? HEIDI E. WHITE, CPA PARTNER VAVRINEK, TRINE, DAY & CO., LLP OCTOBER 2, 2014 GASB Statements

Overview of Governmental Accounting Standards Board Recent Proposals and Pronouncements Impact to the District Report Do These Pronouncements Really Matter to the District? How Can You Stay Informed? Assisting the Board and Management with Understanding Standards

GASB Statements Overview of the Governmental Accounting Standards Board  Formed to provide greater accountability and well informed decision making through excellence in public sector financial reporting  Mission is to establish and improved standards of state and local governmental accounting and financial reporting that will:  Result in useful information for users  Guide and Educate the public, including issuers, auditors and users of the financial statements

GASB Statements Overview of the Governmental Accounting Standards Board  GASB is an independent organization that establishes and improves standard of accounting and reporting for US State and Local Governmental Agencies.  Pronouncements and Standards are not federal laws and regulations, however compliance is enforced through requirements of individual agencies and the audit process when opinions are rendered on the fairness of presentation in conformity with GAAP.

GASB Standards Recent Proposals and Pronouncements How Many GASB Pronouncements are there? 71 What was the first one and when was it issued? Statement 1 Gave Authority to GASB and AICPA Industry Audit Guide Issued July 1984

GASB Standards What is the most recent Pronouncement? GASB Statement 71: Pension Transition for Contributions Made Subsequent to the Measurement Date – an amendment of GASB Statement 68. To be applied simultaneously with the provisions of GASB Statement 68

GASB Statements Statement that will be applicable to the June Annual Audited Financial Statements: GASB Statement 65: Items Previously Reported as Assets and Liabilities Reclassifies as “Deferred Outflows of Resources” or “Deferred Inflows of Resources” certain items that were preciously reported as Assets and Liabilities. Also limits the use of the term Deferred in financial statement presentations. Impact is there will be restatements of the Beginning Net Asset Balances for the audited financial statements

GASB Statements Statement that will be applicable to the June Annual Audited Financial Statements: GASB Statement 65: Items Previously Reported as Assets and Liabilities Examples of Deferred Outflows: Deferred loss on refunding of debt Examples of Deferred Inflows: Grants received in advance of time or spending requirements Deferred gain on refunding of debt Other Impacts: Deferred issuance costs from debt issuances Previously – Capitalized and amortized over the life of the debt. With GASB 65 implementation, debt issuance costs no longer meet the definition of an “asset”. GASB 65 requires these to now be recognized as an expense in the period incurred.

GASB Standards Statements to be Implemented in GASB Statement 68: Accounting and Financial Reporting for Pensions—an amendment of GASB Statement No. 27 GASB Statement 71: Pension Transition for Contributions Made Subsequent to the Measurement Date – an amendment of GASB Statement 68.

GASB Standards Do these Pronouncements Really Matter to the District? YES Federal and State Agencies review the annual audited financial statements for compliance with GAAP Bond rating agencies are reviewing for consistency across types of governmental agencies Every new pronouncement is noted to “…improve the decision-usefulness of information in financial reporting and enhance the value of external reporting”

Do these Pronouncements Really Matter to the District?  The Financial Statements, including Notes, presented in the Annual Financial Statements are the responsibility of the District.  Management signs a Representation Letter  Standards require the Auditor to assess the “Knowledge, Skills and Ability” of those taking responsibility for the financial statements.

GASB Standards How does the District Stay Informed? Online – GASB.org provides access to Standards, Implementation Guides, Reference Materials, and Future Projects. Also provides a Forum for discussions on potential topics. Technical Conferences – both the AICPA and California Society of CPA’s offer conferences and training, as does the CCIA, ACBO and other industry organizations Your District CPA – Information on required accounting standards and disclosures should be part of your routine discussions.

GASB Standards Assisting the Board and Management with Understanding Standards Consider a Study Session with members of the Board to inform and clarify new accounting standards and the implications to the District’s Report Entrance and Exit meetings during the course of the audit become essential to understanding the required disclosures and potential restatements.

GASB Standards What is Coming Next????? Fair Value Measurements and Applications---- Exposure Draft has been issued with comment deadline of 8/15/2014 Asset Retirement Obligations ---- Currently being Deliberated Blending Requirements for Certain Business Type Activities --- Currently being Deliberated