©2013 CliftonLarsonAllen LLP cliftonlarsonallen.com See CLA PowerPoint User Guide for instructions to insert an image or change the icon on the business card. Find it at the bottom of the myCLA / Firm Resources / Materials / Templates page. See CLA PowerPoint User Guide for instructions to insert an image or change the icon on the business card. Find it at the bottom of the myCLA / Firm Resources / Materials / Templates page. Effect of New GASB Standards on Local Governments Jack Reagan, Audit Partner CliftonLarsonAllen LLP

©2013 CliftonLarsonAllen LLP Effective Dates—FYE June –Statement 60—Service Concession Arrangements –Statement 61—Financial Reporting Entity –Statement 62—Codification of AICPA and FASB –Statement 63—Deferrals Presentation 2014 –Statement 65—Assets and Liabilities—Reclassification and Recognition –Statement 66—Technical Corrections –Statement 67—Pension Plans 2015 –Statement 68—Pension Accounting for Employer and Nonemployer Contributing Entities –Statement 69—Government Combinations and Disposals of Government Operations 2

©2013 CliftonLarsonAllen LLP Effective for Periods Beginning After December 15, 2011 Statement 63 Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position Statement 63 Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position

©2013 CliftonLarsonAllen LLP Definitions Deferred outflows of resources –A consumption of net assets by the government that is applicable to a future reporting period –Has a positive effect on net position, similar to assets Deferred inflows of resources –An acquisition of net assets by the government that is applicable to a future reporting period –Has a negative effect on net position, similar to liabilities Net position –The residual of all elements presented in a statement of financial position –= assets + deferred outflows – liabilities – deferred inflows 4

©2013 CliftonLarsonAllen LLP Display Requirements Deferred outflows should be reported in a separate section following assets Similarly, deferred inflows should be reported in a separate section following liabilities Net Position components resemble net asset components under Statement 34, but include the effects of deferred outflows and deferred inflows –Net investment in capital assets –Restricted –Unrestricted Governmental funds continue to report fund balance 5

©2013 CliftonLarsonAllen LLP Effective for Periods Beginning After December 15, 2012 Statement 65 Items Previously Reported as Assets and Liabilities

©2013 CliftonLarsonAllen LLP Deferred Inflows of Resources Grants received in advance of meeting timing requirement Deferred amounts from refunding of debt (credits) Proceeds from sales of future revenues Deferred gain from sale-leaseback “Regulatory” credits 7

©2013 CliftonLarsonAllen LLP Deferred Outflows of Resources Grant paid in advance of meeting timing requirement Deferred amounts from refunding of debt (debits) Cost to acquire rights to future revenues (intra- entity) Deferred loss from sale-leaseback Debt issuance costs (other than insurance) Initial costs incurred by lessor in an operating lease Acquisition costs for risk pools Loan origination costs 8

©2013 CliftonLarsonAllen LLP Inflows of Resources Loan origination fees Commitment fees (after exercise or expiration) 9

©2013 CliftonLarsonAllen LLP Statement 68 Accounting and Financial Reporting for Pensions Effective for Fiscal Years Beginning After June 15, 2014

©2013 CliftonLarsonAllen LLP Defined Benefit Pensions Liabilities to the pension plan (payables) Liabilities to employees for pensions –“Net pension liability” (NPL) ◊ Total pension liability (TPL), net of pension plan’s fiduciary net position TPL = actuarial present value of projected benefit payments attributed to past periods Fiduciary net position as measured by pension plan –Single/agent employers recognize 100 percent of NPL –Cost-sharing employers recognize proportionate shares of collective NPL 11

©2013 CliftonLarsonAllen LLP Discount Rate Should be a single rate that reflects: –The long-term expected rate of return on plan investments that are expected to be used to finance the payment of benefits to the extent that ◊ Plan net position is projected to be sufficient to make projected benefit payments, and ◊ Assets are expected to be invested using a strategy to achieve that return –A yield or index rate for 20-year, tax exempt general obligation bonds with an average rating of AA/Aa or higher to the extent that the conditions for the use of the long- term expected rate of return are not met 12

©2013 CliftonLarsonAllen LLP Cost-Sharing Employers A government participating in a cost-sharing plan would report a liability in its own financial statements that is equivalent to its proportionate share of the net pension liability of all the employers in the cost-sharing plan. Approach uses a basis for allocation of proportionate share based on the employer’s contribution effort relative to that of all contributors 13

©2013 CliftonLarsonAllen LLP One to Keep an Eye On Tax Abatement Research Project –May require disclosure of tax abatements or incentives ◊ Property tax relief for the elderly ◊ Property tax relief incentives ◊ Utilities rate relief incentives ◊ Other discounts form regularly assessed taxes and fees –Will show what tax would be gross and then the discounts from tax granted by tax class 14

©2013 CliftonLarsonAllen LLP Impact of Deferrals Presentation Potentially new statement titles New categories on statement of net position May need to modify bond covenants Historical trend data may need to be modified 15

©2013 CliftonLarsonAllen LLP Impact of Items Previously Reported as Assets and Liabilities Major items will be reclassified –Especially debt issuance costs Previously reported net assets will change Again, may need to modify bond covenants 16

©2013 CliftonLarsonAllen LLP Impact of Pension Standards Significant change in discount rate –Decrease in rate –Increase in liabilities (significant increase) Recording of share of VRS liabilities –Currently reported in notes –Will be reported in statement of net position –Everyone will be recording Additional analysis of the Moody’s way –Even higher liabilities to be reported 17

©2013 CliftonLarsonAllen LLP 18 ©2013 CliftonLarsonAllen LLP cliftonlarsonallen.com twitter.com/ CLA_CPAs facebook.com/ cliftonlarsonallen linkedin.com/company/ cliftonlarsonallen Jack Reagan Audit Partner CliftonLarsonAllen LLP 4250 N Fairfax Drive Arlington, VA Contact Information 18