GASB STATEMENT 34 ADVISORY COMMITTEE
Minutes
October
3, 2000
LOCATION Conference Room 222
Wade Hampton State
Office Building
Columbia, South Carolina
TIME
10:00 AM
ATTENDEES Barbara
Hevener - South Carolina
Office of Comptroller General (OCG), Program
Sponsor
Kathy
Glass - KPMG, Program
Manager
John
Campbell - South
Carolina College & University Controller's Group
Phil
Campolo - South
Carolina Governor's Office - Executive Control of State
Becky
Carver - South Carolina
Department of Mental Health (Guest)
Mel
Commins – South Carolina
State Treasurer’s Office
Bruce
Dorman - South
Carolina Department of Public Safety
Rich
Gilbert - South Carolina
State Auditor's Office
Billy
Gossett – South Carolina
Department of Social Services
Lanna
Harris - State Budget
and Control Board, Internal Operations
Billy
Martin - South
Carolina Employment Security Commission
Renee
Moore - State Budget
and Control Board, Office of Information Resources
Pat
O’Cain - South Carolina Office
of Comptroller General, Data Processing
Lynda
Robinson - South Carolina
Department of Education
Harry
Snider - South
Carolina Public Service Authority – (Santee-Cooper- Guest)
Ed
Walton - University
of South Carolina (Guest)
Teri
Welsh - South Carolina
Department of Mental Health – (Guest)
Bonnie
Gunter - South
Carolina Office of Comptroller General (Administrative Coordination
and Minutes)
AGENDA
·
Welcome and Introduction
·
Status of OCG Efforts
·
Brainstorming
Ø
Agency Discussion of Key Issues
Ø
Additional Issues to Address at OCG October
Training
·
Other Questions
WELCOME AND INTRODUCTION
At 10:00 a.m. on October 3, 2000, Barbara Hevener called the meeting to order, welcomed everyone, and asked new attendees to introduce themselves.
MINUTES
Copies of the minutes from the August 1 meeting were distributed to each attendee. Barbara called for a motion to adopt the minutes as prepared. A motion was made by Kathy Glass and seconded by Pat O’Cain. The committee unanimously voted to approve the minutes without change.
Barbara asked Kathy to present the following agenda items.
STATUS OF OFFICE OF COMPTROLLER GENERAL’S (OCG) GASB 34 EFFORTS
Kathy reported on KPMG’s involvement with the OCG since the committee’s last meeting on August 1.
Central State
Financial Reporting (CSFR) Division
Kathy
informed the committee that the OCG’s Financial Reporting Division had
primarily been focusing on preparation of the Comprehensive Annual Financial
Report for FY 2000. Additionally, they
were preparing for the OCG’s upcoming training sessions for state agency
accountants, Understanding GASB Statements 34/35, to be held on October
17 and 25 at Midlands Technical College.
Data
Processing (DP) Division
Kathy
reported that Pat O’Cain and others in the Data Processing Division were busy
working on the following projects, all of which are needed to comply with
GASB 34: (a) changes to
STARS, (b) modifications to Series Z, the OCG’s financial reporting
system, and (c) selection of updated ad hoc report-writer software for use
by the OCG’s staff.
Pat
indicated that he or Scott Houston would attend applicable portions of the
OCG’s October training sessions to discuss changes to STARS.
BRAINSTORMING
Kathy
stated that she would like to deviate from the agenda to discuss some concerns
expressed by agency accountants at the GFOASC conference in September. Kathy explained that there seemed to be some
concern over the proposed method for complying with GASB 34’s requirement
to distinguish internal financial activity from external activity within STARS,
the State’s financial accounting system.
State agencies utilize several Batch type codes to record activity in
STARS, the majority of which distinguish between internal and external
transactions by the very nature of their “batch type.” However, batch type 0 entries, Journal
Vouchers, may represent internal or external activity, or a combination of
both. Therefore, the OCG has reviewed
several options for obtaining this information for Batch type 0 entries.
Kathy stated that the OCG had
concluded that the easiest of all solutions, and the one with the least impact
to STARS user agencies, would be to add a one-byte indicator (I
for internal; E for external) to the document header of each STARS
Journal Voucher document (JV) that affects revenue and/or expenditure
accounts. This would enable the OCG to
identify and eliminate material internal activity as required by
GASB 34.
Kathy, Barbara, and Pat O’Cain
emphasized that the accounting change--i.e., categorization of financial
activity as being internal or external--is a requirement of
GASB 34. They further expressed
their belief that the impact on accounting departments of having to categorize
certain JV transactions will likely be more significant than the IT
implications of adding a single byte to the document header area of JVs. Kathy asked Pat O’Cain to further
explain the proposal from an IT perspective.
Pat explained that the OCG’s
Data Processing Division had given considerable thought to several options for
meeting the GASB 34 reporting requirements with respect to
internal/external activity. Pat further
explained that after consideration and deliberation, the OCG had narrowed its
focus to three options and had concluded that Option 3, as listed below,
would cause the least impact on STARS user agencies. The options that the OCG considered for distinguishing between
internal and external activity are:
1. Use STARS transaction codes. This would require the addition of many new transaction codes because (a) any transaction code can appear on a JV and (b) many existing transaction codes currently are used to record both internal and external activity.
2. Use STARS object codes. This would require the addition of numerous new object codes because many object codes currently are used to record both internal and external revenues or expenditures/expenses.
3. Add a one-byte indicator in the document header area only on STARS JV documents affecting revenue and/or expenditure/expense accounts.
Pat explained that STARS
processes approximately 20,000 JVs per year—a small number relative to the
number of documents of other types that STARS processes. Further, only fourteen user agencies
currently submit automated input JV documents to the OCG for processing, so
only those agencies would actually need to make any data processing
changes as a result of Option 3 listed above. All agencies that do not submit automated input for JVs to the
OCG could simply hand-stamp or hand-write an I (for internal) or an E
(for external) in the header area of each applicable JV.
General discussion ensued, and
various committee members expressed their opinions and viewpoints regarding the
different potential methods of distinguishing internal from external
activity. Discussion points included
the following:
1. The possibility of using separate batch type codes (for example batch type 0 and 7) for internal and external transactions rather than Option 3 described above was raised. It was pointed out that this option would require no less programming work for agencies than Option 3 described above, but it would require much more programming work for the OCG because the batch type code is a key determinant of how STARS posts transactions.
2. Some members felt there would be advantages in using transaction codes to distinguish between internal and external activity rather than Option 3 described above; others said it would cause them more difficulty than Option 3. It was pointed out that using transaction codes for this purpose would require the addition of numerous new codes and might be conceptually more complex for agencies to administer than Option 3 described above.
3. It was suggested that some agencies may find the new procedures easier to handle if they set up an “IDT Clearing Account” subfund to account for deposits from internal parties and limit their existing revenue clearing account activity to deposits received from external parties. The OCG stated that several higher education institutions already use an IDT Clearing Account subfund so it would be easy to set up such a subfund for other agencies upon request.
4. One suggestion was to survey selected agencies to see how much of an impact Option 3 would have on them; another suggestion was to meet with representatives of the fourteen agencies that provide automated STARS input to the OCG to discuss the proposed methodology and any potential problems. [NOTE: Subsequent to the October 3 Advisory Committee meeting, employees of the OCG arranged to meet individually with several different interested parties. These representatives included Advisory Committee member Renee Moore, who is knowledgeable about the IT and accounting aspects of the GAAFRS system that several State agencies use; representatives of the State Treasurer’s Office, an agency that processes a large number of JVs; and Parker Boulware of the Department of Labor, Licensing, and Regulation, a SAAS system user. Further, Pat O’Cain discussed the Option 3 proposal with Raymond Reynolds of Palmetto Software who maintains the SABAR system used by several agencies. All participants in these meetings seemed confident that their respective systems could handle the additional one-byte field required by Option 3 described above.]
Agency
Discussion of Key Issues
Kathy requested comments from
the committee members regarding their agency’s significant issues and/or the
status of their GASB 34 progress to date.
Mel Commins of the State Treasurer’s Office (STO) stated that debt
reporting is his agency’s primary concern with GASB 34, but he believes
that the STO is “in pretty good shape” as far as this and other GASB 34
reporting requirements were concerned.
Mel stated that the STO was in the process of completing a detailed
analysis of its records to ensure accuracy of its estimates with respect to
debt reporting.
John Campbell and Harry Snider
both commented either during or immediately after the meeting that preparing
direct method cash flows statements is their number one GASB 34 issue.
Additional
Issues to Address at OCG October Training
It was suggested that the
upcoming training sessions address the following issues:
1.
Present the
required STARS changes discussed above.
2.
Inform participants
of the effective dates and implementation deadlines mandated by GASB 34.
3.
Urge
agencies/entities to immediately identify and quickly resolve any “key issues”
that they identify internally because of the approaching effective date of July
1, 2001.
4.
Urge
agencies/entities to begin capturing “detail” now for GASB 34 reporting
requirements.
5.
Identify
and point out to the participants some of the issues and new accounting
concepts that GASB 34 brings with it.
OTHER QUESTIONS
A question was presented and discussion ensued regarding any GASB 34 implications of purchases made via the State procurement card and the method to be used for recording these transactions. Barbara Hevener stated that this issue would be investigated and further discussion would be deferred to the next meeting.
CLOSING REMARKS
In closing, Barbara stated that the Comptroller General’s staff welcomes the committee’s input and wants to hear about all state agency/entity issues so that proper resolution can be accomplished via exchange of data and ideas in the areas involving GASB 34 accounting policies statewide. Barbara encouraged the committee to come forward with any key issues that need to be addressed so that early resolution could be made concerning the issues.
Kathy
affirmed that all of the issues discussed at today’s meeting were valid
concerns and significant issues, but asserted that they couldn’t be resolved in
today’s short meeting. Kathy stated,
however, that she would work with Barbara and Pat toward proposing responsive
and efficient suggestions for resolution of the key issues. Kathy proposes to present more detail at the
November meeting.
ADJOURNMENT
There
being no further business, Barbara adjourned the meeting just prior to noon.
NEXT MEETING
The
next meeting will be held on Tuesday, November 7, 2000. Members are requested to meet in Conference
Room 222 of the Wade Hampton State Office Building, Columbia, South Carolina,
at 10:00 AM.
Respectfully
submitted,
Barbara
C. Hevener
/bpg
Enclosures
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the Agenda provided to Advisory Committee members at the meeting.
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