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

GFOA Fall Conference – Discussion of Concerns (addition to scheduled agenda)

                 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

 

 

Click here to view the Agenda provided to Advisory Committee members at the meeting.

 

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