GASB
STATEMENT 34 ADVISORY COMMITTEE
Kick-off
Meeting Presentation
Minutes
June
6, 2000
LOCATION
Conference
Room 222
Wade Hampton
State Office Building
Columbia,
South Carolina
TIME
10:00 AM
ATTENDEES
Jim
Lander - South Carolina
Comptroller General
Barbara
Hevener - South Carolina
Office of Comptroller General - Program Sponsor
Kathy Glass-
KPMG - Program Manager
Debbie
Brumbaugh - South
Carolina Department of Public Safety
Jenny Butler
- South Carolina
Department of Health & Human Services
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
(Representing
Boyd Rhoten)
Mel Commins
- South Carolina State
Treasurer's Office
Angela
Feaster - South Carolina
Department of Transportation
(Representing
Debra White)
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
Scott
Houston - South Carolina
Office of Comptroller General - Data Processing
(Representing
Pat O'Cain)
Billy Martin
- South Carolina
Employment Security Commission
Renee
Moore - State Budget
and Control Board - Office of Information Resources
Donna
Parker - South Carolina
Department of Health & Human Services (Guest)
Elaine
Peterson - South
Carolina Public Service Authority (Santee-Cooper)
Lynda
Robinson - South Carolina
Department of Education
Ed Walton
- University of South
Carolina (Guest)
Teresa Welsh
- South Carolina Department
of Mental Health (Guest)
Bonnie
Gunter - South
Carolina Office of Comptroller General
(Administrative Coordination and
Minutes)
AGENDA
·
Welcome
·
Introduction of Advisory Committee Members
·
GASB Statement 34 Overview
·
Overview of Office of the Comptroller
General (OCG)
GASB Statement 34 Implementation Project - Phase I
-Phase I Schedule
-Phase I Deliverables
·
Advisory Committee's Role in GASB Statement
34 Implementation Process
·
Other Discussion/Next Steps
FIRST MEETING -
CALLED TO ORDER
On June 6, 2000, Barbara
Hevener, serving as program sponsor for the GASB Statement 34 implementation
project, called to order the first meeting of the newly established GASB
Statement 34 Advisory Committee. As
program sponsor, Barbara will serve as team leader for South Carolina's GASB 34
implementation.
Barbara introduced to the
committee the Honorable James Lander, Comptroller General for the State of
South Carolina.
WELCOME
General Lander welcomed
committee members to the Kick-off Meeting Presentation. His welcome also addressed the guests and
individuals representing regular committee members who were unable to attend
for various reasons. Guests included
Becky Carver, Angela Feaster, Scott Houston, Donna Parker, Ed Walton, and
Teresa Welsh. General Lander expressed
his appreciation to everyone for serving on the advisory committee.
Acknowledging significant
work to be accomplished within a short timeframe, General Lander was
enthusiastic about the committee's capability to provide meaningful support to
the GASB Statement 34 implementation project.
He expressed admiration for the detailed knowledge and expertise that
the committee members hold in public sector financial reporting and accounting
at the agency level. General Lander
said he looked forward to receiving valuable input from the committee on key
issues that might impact the successful implementation of GASB 34 for the State
of South Carolina. General Lander
further stated his confidence that through the cooperative effort and
dedication of this carefully appointed advisory committee, GASB 34
implementation would be effectively facilitated in a timely manner.
INTRODUCTORY
REMARKS
Barbara Hevener introduced the
committee members and guests. She
presented introductory remarks about the advisory committee's role. Barbara explained that the primary
responsibility of the committee would be to provide a central forum for
discussion of significant GASB Statement 34 issues.
OVERVIEW OF GASB
34 IMPLEMENTATION
Barbara then called upon Kathy
Glass, program manager for the implementation project and senior manager
with KPMG, to present an overview of GASB Statement 34.
Kathy stressed to the committee
that implementation of GASB Statement 34 will affect numerous aspects of
financial reporting and accounting for the State of South Carolina. Moreover, the implementation of GASB 34 will
require considerable work by the Comptroller General's Office as well as
significant efforts of all the state agencies, including those considered to be
STARS agencies, audited financial statement entities, and component units.
Kathy discussed several issues
that significantly impact the GASB 34 implementation process. She talked about key concerns such as: (1)
policy considerations; (2) accounting issues; (3) education; (4) reporting; and
(5) system capabilities. (Link Slide 6)
Kathy informed the committee
that KPMG is currently engaged in contractual agreements with several other
states and is working closely with them to bring satisfactory resolutions to
challenges arising from the impact of GASB Statement 34 implementation. She indicated that the sharing of knowledge
that KPMG gains while working with other states should prove beneficial to the
State of South Carolina.
Barbara Hevener stated the “good news” for agencies
is that only limited changes are proposed for the Statewide Accounting and
Reporting System (STARS). The State’s
implementation of GASB 34 will affect all agencies in some manner,
however. Some provisions of
GASB 34 that will especially affect the State of South Carolina are as
follows: (1) Governmental funds
(including the General Fund) must report on both the modified accrual and full
accrual bases of accounting rather than exclusively on the modified accrual
basis; (2) Governmental funds must
begin recording depreciation for most of their capital assets; (3) There are new accounting and
reporting rules for recording and reporting infrastructure assets, works of
art, and historical treasures;
(4) Certain changes in the State’s fund structure will be
required; (5) Governmental funds
must begin to segregate the portion of long-term liabilities (e.g., compensated
absences, capital leases, and legal settlements) expected to be paid during the
very next fiscal year from amounts expected to be paid beyond that point; (6) There are new, more stringent
segment reporting rules for enterprise funds.
Barbara said that State of South Carolina agencies
that currently produce audited financial statements must conduct their own
internal GASB 34 implementation projects.
The financial statements that these agencies produce for the fiscal year
ended June 30, 2002 (or December 31, 2001) must comply with all of
GASB 34’s accounting and reporting requirements. These agencies must determine how to modify their systems to meet
these requirements.
Certain Required Supplementary Information (RSI)
must accompany all financial statements prepared in accordance with
GASB 34. The most important new
RSI is “management’s discussion and analysis” (MD&A), a narrative with
tables somewhat similar in appearance to the letter of transmittal now accompanying
some (but not all) audited financial statements. Auditors will have a larger role in reviewing MD&A than they
currently have in reviewing letters of transmittal, however. In addition, the requirements for MD&A
are more exacting than present guidelines for letters of transmittal. All agencies that produce audited financial
statements must prepare MD&A.
Barbara identified several State of South Carolina
financial statement agencies that will be particularly affected by
GASB 34. Specifically: (a) The Department of Transportation
(DOT) must begin reporting roads and bridges as capital assets because these
meet the definition of infrastructure assets;
(b) State colleges, universities, and technical schools must begin
reporting as enterprise funds (business-type activities) rather than using the
separate higher education reporting model they used in the past; (c) The Employment Security
Commission’s benefits fund must begin reporting as an enterprise fund (business-type
activity) rather than as an expendable trust fund.
Barbara emphasized that
agencies producing audited financial statements should begin their planning for
GASB 34 implementation now so that timely solutions will be
developed for any significant issues.
These agencies also should carefully evaluate whether they can make the
required changes in time with existing staff or will need to engage
consultants/contract workers to help with systems, capital asset valuation,
and/or other GASB 34 related projects.
The most significant changes for agencies that do
not produce audited financial statements will relate to the closing packages
they complete at year-end. Major
changes are expected in those closing packages that relate to capital assets
(currently called fixed assets), receivables and payables, and possibly
compensated absences.
Although the specifics of these changes have not yet
been determined, Barbara stated that closing package agencies can, and should,
take certain steps now to help ensure their GASB 34 readiness. Agencies that historically have not
maintained separate fixed assets records for non-depreciable general fixed
assets (i.e., land and land improvements) vs. depreciable general fixed assets
(i.e., buildings and improvements, equipment, easements, and infrastructure
assets) should make this distinction now so that they will know which assets to
depreciate when depreciation guidelines become available. Further, agencies should resolve any other
outstanding fixed asset valuation issues or asset ownership ambiguities. Also, agencies that collect significant
amounts of revenue should review their systems to be sure that they record
receivables when they arise rather than waiting until bills are produced.
OVERVIEW
OF THE OFFICE OF COMPTROLLER GENERAL (OCG) GASB STATEMENT 34 IMPLEMENTATION
PROJECT - PHASE I
Kathy Glass referred members to
the presentation handout, which was distributed at the start of the
meeting. Using the presentation handout
as a reference tool for the committee, Kathy discussed key issues impacting the
implementation project.
Kathy reported on KPMG's
coordination with the Office of Comptroller General during the crucial Phase
I of the project. She continued by
explaining the detailed steps used in Phase I through the development of
the "draft" Phase II Implementation Work Plan. The key Phase I deliverables are outlined
below:
KPMG
Phase I Deliverables:
·
Preliminary Readiness/Criticality Report
·
Evaluation of Series Z Modifications
·
Evaluation of STARS Modifications
·
Closing Package Modifications/Additions
·
Analysis of the Scope of Training for State
Agency Accountants
·
Phase II Implementation Work Plan
Kathy then apprised the
committee of the Phase I schedule, which commenced in early March 2000 and ran
through early June 2000. Tasks
accomplished during this Phase 1 timeframe are indicated below: (Link Slide 8)
Phase
I Schedule:
·
Preliminary interviews - Criticality Matrix (March 10 - April 14)
·
Evaluation of Series Z Modifications (March
17 - April 28)
·
Evaluation of STARS Modifications (March 31 - April 28)
·
Identification of Closing Package Changes (April 7 - May 12)
·
Analysis of Scope of Training Program (April 21 - May 19)
·
Implementation Work Plan (May 12 -
June 2)
Barbara explained that the OCG
staff is currently reviewing/revising the "draft" Phase II
Implementation Work Plan and timetables for "real life
workability" of the project.
Timing is an important consideration in light of limited personnel
resources, and the approaching CAFR season.
The work plan should be finalized within the next two weeks.
A primary focus of Phase II, as
Barbara explained, will be the development of training to instruct the State's
financial reporting and accounting personnel regarding GASB 34
requirements. Currently, three separate
training segments are proposed.
Subjects of these segments are:
(1) Overall GASB 34 awareness;
(2) Changes affecting systems and/or daily operations; and (3) Detailed
completion of new and amended closing packages.
ADVISORY COMMITTEE'S
ROLE IN THE GASB STATEMENT 34 IMPLEMENTATION PROCESS
Barbara Hevener expressed the
importance of the committee's role in the overall scope of the implementation
project. Kathy Glass advised that without
significant effort from every player, the State could be at risk of
not implementing GASB 34 successfully.
Barbara restated the role of
the appointed committee members. The
essential objectives of this committee will be to:
·
Provide a central forum for discussing
significant GASB Statement 34 issues
·
Review the State's progress toward GASB
Statement 34 Implementation
·
Provide an open forum for discussion of
roadblocks
·
Provide a channel to manage GASB Statement
34 issues external to the OCG
A GASB Statement 34 Advisory
Committee Organization Chart was distributed to each committee member along
with a Members Information Sheet.
OTHER DISCUSSION
AND CLOSING COMMENTS
Barbara Hevener opened the
floor for questions and other discussion.
There being no further questions or discussion, Barbara thanked each
participant for their support of the implementation project and expressed
appreciation for their attendance.
Barbara offered her assistance to anyone needing to discuss a unique
implementation issue or challenge.
Barbara Hevener informed the
group that minutes of today's meeting, as well as future meetings, will be
posted for those interested parties at the OCG's website, http://www.cg.state.sc.us under
"State Agency Information," sub-topic-"GASB Statement
34." To expedite delivery of
minutes for future meetings, each member was requested to furnish his or her
e-mail address if one was available. A
list of those addresses will be maintained.
Hard copies of the minutes will also be mailed to committee members if
e-mail is unavailable to them.
Kathy Glass closed by
commenting that she, too, would be available to discuss the GASB 34
implementation process with anyone wanting to address concerns unique to their
own entity. She requested they give her
a call or e-mail her to schedule an appointment.
There being no further
business, Barbara Hevener adjourned the meeting at 11:45 AM.
NEXT
MEETING
Tuesday, August 1, 2000
is the next regularly scheduled meeting of the committee. Members are requested to meet in Conference
Room 222 of the Wade Hampton State Office Building at 10:00 AM.
Respectfully
submitted,
Barbara
C. Hevener
Program
Sponsor
/bpg
Enclosures