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.

Effects of GASB 34 on South Carolina’s State Agencies

                 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.

Effects on Agencies Producing Audited Financial Statements

                 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.

Effects on Agencies Preparing Closing Packages

                 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


Click here to view the slides presented during the meeting

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