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GASB Statement 34 - Closing Package Agencies |
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Afternoon Session A |
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April 30 and May 2, 2001 |
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GASB 33
Implementation Issues |
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Discussion of Interfund Transactions |
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STARS Changes |
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Internal versus External Activity/Balances |
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Program versus General Revenues |
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Account Code Additions |
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Discussion of Segment III Training |
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Open Forum |
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Effective for the current fiscal year – June 30,
2001 |
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Most significant expected changes are with
grants/entitlements (non-exchange) |
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Closing package revisions |
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Nonexchange transaction – transactions in which
the agency gives (or receives) value without directly receiving (or giving)
something of equal value in return |
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Exchange transactions – each party to the
transaction receives and gives up something of essentially the same value |
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Derived tax revenues |
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Imposed nonexchange transactions |
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Government mandated nonexchange transactions |
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*Voluntary nonexchange transactions |
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* Most
significant changes expected here. |
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Legislative or contractual agreements entered
into willingly by two or more parties |
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Examples |
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non-entitlement grant programs |
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private donations |
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* Changes
in receivable/deferred revenue calculations for the grants/entitlement
closing packages for 2001. |
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Required characteristics of recipients |
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Provider specifies certain characteristics which
recipient/subrecipient must possess |
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Example |
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The type
of entity eligible to receive the grant funds |
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Time requirements |
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Affect the timing of recognition of nonexchange
transactions |
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Grant provider or legislation specifies time
period during which funds may be spent or when use of funds is first
permitted |
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Example |
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Grant period October 1, 2001 through September
30, 2002 |
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Reimbursements |
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Provider requires a recipient/ subrecipient to
first incur allowable costs in order to qualify for funding |
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Contingencies |
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Provider may require the recipient/ subrecipient
to perform specific actions to qualify for funding |
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Example - matching funds |
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Revenues – recognized once all eligibility
requirements have been met |
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If governmental or expendable trust funds, funds
must also be available |
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Considered available if received on or before
June 30 or by July 31 |
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Changes only affect the closing package process
– no changes in STARS |
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Revenues - once all eligibility requirements
have been met, |
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report any revenues not received by June 30 as
receivable in the grants/ entitlements closing package |
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Grant award less funds received to date =
receivable |
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Received to date includes prior year funds |
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Expenses/expenditures – recognized once all
eligibility requirements have been met by the recipient/subrecipient |
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any payments not made by June 30, report as
accounts payable in the accounts payable closing package |
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Grant award less funds paid to date = accounts
payable |
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Paid to date includes prior year funds |
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Deferred revenue – record if grant funds are
received prior to meeting all of the eligibility requirements |
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For governmental or expendable trust funds, also
record deferred revenue if amounts are not considered available |
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Considered NOT available if not received by July
31 |
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PRT submits an application for a state park
facility grant (funds are available for the period October 1, 2000 through
September 30, 2005. PRT’s
application and spending plan are approved. |
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Grant award - $5,000,000 |
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At June 30, 2001 - $1,250,000 received |
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On July 20, 2001 – $500,000 is received |
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If this grant is recorded in subfund
5055-federal, which is a special revenue fund… |
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What amounts should be reported on the
grants/entitlements closing package as of June 30, 2001? |
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* Review
handout attachment |
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Discussion of Interfund Activity |
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New GASB 34 requirements |
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Eliminations of internal balances within
governmental activities |
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Eliminations of internal balances between
governmental activities and business-type activities (proprietary funds) |
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Interfund activity is defined as activity
between funds |
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Interfund loans – Fund A makes a loan to Fund B |
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Reimbursements – Fund A makes an expenditure on
behalf of Fund B, which is later reimbursed |
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Interfund services provided/used – Fund A
provides services to Fund B |
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Transfers – Fund A transfers funds to Fund B |
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At year end , the OCG must |
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Analyze all STARS JV’s, Appropriation/Cash
Transfers, IDTs for proper classification |
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Prepare and post entries to eliminate intrafund transactions |
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Prepare and post entries to eliminate certain
types of interfund activity, including corrections of errors (unless
original entry was NOT eliminated) |
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GASB 34 adds an additional level of elimination
to the current process |
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The OCG must rely on agencies to follow standard
procedures in preparing JV’s, Appropriation/Cash Transfers and IDTs |
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Several problems have been found by the OCG at
year end upon review of these transactions |
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Coding similar transactions differently |
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Using an incorrect input form (JV’s when
Transfer is more appropriate) |
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Providing insufficient supporting documentation |
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Reducing these types of errors will be CRITICAL |
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Move cash and revenue from one agency and/or
subfund to another agency and/or subfund |
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Ex. DPS collects revenue within its DMV function
and transfers the cash and revenue to DOT, which is legally authorized to
expend it |
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Use STARS Form 30 |
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Used to record: |
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the sale of goods or services by one agency
and/or subfund to another agency and/or subfund |
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Award of grant monies by one agency and/or
subfund to another agency and/or subfund |
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Transfers out of the General fund |
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Use STARS Form 40 |
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Used primarily to: |
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Correct errors in recording other STARS
transactions |
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Distribute revenue from zero-balance clearing
subfunds |
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Reimburse expenditures |
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Use STARS Form 01 |
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Code as I (internal) or E (external) if revenue
and/or expenditures is effected |
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Internal Versus External Activity |
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Government-wide financial statements |
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Requires
some internal activity and balances must be: |
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Reclassified |
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Consolidated |
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Eliminated |
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STARS transactions must segregate between
internal/external activity/balances |
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Internal activity and balances |
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result of resource flows between the funds of a
primary government |
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includes blended components, but not discrete
component units |
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Examples |
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Budget and Control Board |
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Department of Mental Health |
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SC Retirement Systems |
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Tobacco Revenue Management Authority |
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* Additional
examples in handout – Question # 2 |
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External activity and balances |
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result of resource flows between the primary
government and other external parties |
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i.e. vendors, contractors, legally separate
discretely presented component units, etc. |
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Examples |
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Private vendors |
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Public Service Authority |
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Connector 2000, Inc. |
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ETV Endowment of South Carolina |
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* Additional
examples in handout – Question # 3 |
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Change in Preparation of Journal Vouchers |
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Batch Type “0” only (no other batch entries affected) |
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Addition of an indicator in the document header |
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Will identify JVs as internal or external |
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Required, preferably at top right of document
header |
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“Zero-I” – all lines affect internal
revenue/expenditure objects |
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“Zero-E” – all lines affect external
revenue/expenditure objects |
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“Zero-Blank” – no lines affect
revenue/expenditure objects |
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My agency does not have the resources to program
its JV creation program to automatically print the I/E indicator in
position 164 of the document header.
May I handwrite or stamp the I or E on each document? |
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Yes, preferably in RED, in the document header
area |
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* Handout
Question # 5 |
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Why do we have to do all of this work? |
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GASB 34 requires we distinguish between internal
and external transactions and balances for the elimination/
reclassification of certain internal balances. This change will allow the OCG to obtain this information for
these batch transactions. |
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* Handout
Question # 15 |
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I have a question about whether to use an I or E
on a particular JV. Who can help
me? |
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Prior to July 1, 2001, Bryce Wilson or regular
contact in OCG’s office for each agency. |
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Beginning July 1, 2001, direct all questions to
the Central State Accounting Division |
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* Handout
Question # 16 |
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I need to correct a cash transfer or IDT (Batch
Type 3 or 4). Should the correcting
JV be coded as I or E? |
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This is an “I” transaction as STARS will
automatically code a transfer or IDT as internal. |
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* Handout
Question # 6 |
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During March, I deposited various checks from
non-State parties an various IDT receipts into my agency’s Revenue Clr’g
Subfund. When clearing these
balances out, which indicator should be used? |
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Both – 2 JVs must be prepared: one for the checks and one for the
IDT’s. |
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* Handout
Question # 7 |
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Is there any way to shortcut the work described
in the previous question? |
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May request the OCG to establish a 3555 subfund,
IDT receiving, for use beginning in FY 2002. |
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* Handout
Question # 8 |
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Suppose that in Question 7, I also had deposited
checks from various State agencies into the Revenue Clearing subfund. How should the balances for those
transactions be cleared? |
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* Handout
Question # 9 |
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My agency purchased office supplies from General
Services using the State credit card, and subsequently needed to change the
subfund where part of these supplies are charged. |
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I or E? |
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Handout Question # 10 |
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I need to correct the subfund and mini-code for
a disbursement voucher (Batch Type 6 document) where the payment (check)
was to another State agency. |
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I or E? |
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Handout Question # 11 |
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I need to move the entire balance in a
particular revenue/expenditure object code in my agency’s 3035 subfund from
mini-code 0057 to 0058. How can I
determine whether or how to split the balance between I and E? |
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* Handout
Question # 12 |
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STARS Account Code Changes |
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Identified as of April 2001 |
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Changes required in STARS Object Codes to date
relate primarily to: |
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Capital assets |
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Grant revenues (discussed in previous section) |
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Other changes identified include the deletion of
several revenue codes not used in recent years |
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Capital Assets |
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Changes in revenue codes |
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Changes in expenditure codes |
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Revenue codes |
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Changes relate primarily to sales of capitalized
and non-capitalized assets |
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Separate codes for items over and under the
capitalization limits |
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* See
handout attachment |
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Expenditure codes |
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Changes relate primarily to purchases of
capitalized and non-capitalized assets |
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Changes for moveable assets and works of art,
historical treasures (items between $1,000 and $5,000) |
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Changes for purchase or construction of other
depreciable capital assets classes |
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* See
handout attachment |
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GASB 34 requires grant revenues to be reported
in the following categories: |
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Program revenue – operating grants |
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Program revenue – capital grants |
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General revenue |
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Requires a change in current STARS object codes
used |
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Program revenue |
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restricted for use by a particular agency/
grouping of agencies |
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General revenue |
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all other revenue |
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Capital grants |
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resources are restricted for capital purposes |
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Operating grants |
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Resources are used for operations or capital
expenditures at the discretion of the Agency |
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Review handout materials |
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Current object code used |
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2801
Federal revenue |
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New object codes required to be used |
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2821
Federal Grants - Unrestricted |
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2822
Federal Operating Grants - Restricted |
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2823
Federal Capital Grants – Restricted |
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Agencies must review grants NOW to determine
proper classification at July 1 |
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Segment III State Agency Training |
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Tentative to hold in Spring 2002 |
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Will offer several sessions |
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Focus of training efforts on revised/new closing
packages |
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Critical to have staff responsible for
maintaining related financial data or completing closing packages attend |
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