2016 Financial Reporting Workshop - Chief Financial Officer of Florida · PDF file2016 Financial Reporting Workshop Presented By: Florida Department of Financial Services ... Year

2016 Financial Reporting Workshop

Presented By: Florida Department of Financial ServicesDivision of Accounting & AuditingBureau of Financial Reporting

1

Agenda for Today

Introduction CAFR Overview Statistics Inter and Intrafund Compliance Checklist Items Depreciation Governmental Accounting Standard Boards (GASB) Updates Conclusion

2

Statewide Financial Reporting Section (SFRS) Team

Danta White, CPAFinancial Administrator

Pam BarksdaleProfessional Accountant Specialist

Nicole DavisProfessional Accountant Specialist

David JamesSenior Management Analyst II

Chunping Lin, CPAGovernment Analyst II

Sherif NessimGovernment Analyst II

Leonor SkoglundGovernment Analyst II

3

CAFR Overview

4

Authorization and Reference

Required by Section 216.102 (3), F.S.

Due by February 28 annually

Prepared in accordance with generally accepted accounting principles (GAAP)

Governmental Accounting Standards Board (GASB)

Audited by the Florida Auditor General

5

CAFR Contents

Reporting entity includes state agencies and component units

Basic Financial Statements

Notes to the Financial Statements

Other Required Supplementary Information (RSI)

Statistical Section

6

Information Sources

7

Financial StatementsNotes to the Financial Statements

Departmental FLAIR records at closing

Forms

Certain audits or agency reports (Ex: Lottery and Florida Turnpike)

Certain audits or agency reports (Ex: Lottery and Florida Turnpike)

Adjustments – agency, CFO, audit

2016 CAFR Preparation Process

May June NovMarch

PLANNINGREVIEW & COMPILATION

AUDIT

AGENCY ADJUSTMENTS

FebAug Sept Oct Dec JanJan

CFO & AUDIT ADJUSTMENTS

AGENCY CLOSING PUBLISH CAFR

April July

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Forms/Databases

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Multiple Forms used to prepare information that makes up the CAFR

Key Formso Form 3 Inter/Intrafundo Form 30 Cash Flowso Changes In Assets/Liabilitieso Agency Fund Change Statemento Compensated Absenceso P Formso Many More

Forms are available on our website or will be provided.

Forms/Databases

Working Trial Balance Databaseo Tool to use as guidance before and after closingo Available July 1st, 2016

Form 3 Completeness Databaseo Tool to validate your Form 3 data is in balance with your Trial Balanceo Available mid-July 2016

Form 30 Databaseo Used to complete your Cash Flows Formso Available mid-July 2016

Instructions available for all three databases

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Forms/Databases

Working Trial Balance (WTB) Databaseo The WTB is a tool that provides trial balance information to the agencies

and Compliance Checklist status reports for specific Checklist items.o Tool to use before and after closingo Most GL-related Compliance Checklist Items have at least one report in

WTB.o “Forms Due” Report is an analytical tool to help assess forms that are

due to SFRS.o Available July 1st, 2016o Feedback on the tests in WTB or any suggestions for new tests are

always welcome!

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Working Trial Balance (WTB)

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Forms/Databases

Form 3 Completeness Databaseo Tool used to validate that your Form 3 data is in balance

with your Trial Balanceo Form 3 captures all Interfund and Intrafund transactionso All transfers, advances and due to/from transactions must

always be in balance with your Trial Balanceo Available mid-July 2016o Instructions provided with database

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Form 3 Completeness

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Forms/Databases

Form 30 Databaseso Used to complete your Cash Flows Formso Required for each enterprise fund (GF 50) and Internal

Service Fund (GF 60)o Available mid-July 2016o Instructions provided with database

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Form 30 (Cash Flows)

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STATISTICS

Adjustments Processed

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A=Auditor GeneralB=AgencyC=Statewide Financial Reporting

Inter & Intrafund

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INTERfund is journal transfer transactions between agencies(Due to/from, Transfers in/out and Advances to/from).

INTRAfund is journal transfer transactions within agencies(Due to/from, Transfers in/out and Advances to/from)

Debits must always equal credits

Interfund

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2014 Total

number of rows

Total rows of data not balanced

% of Balanced Data

1st Submission 4512 622 86%2nd Submission 4490 239 95%3rd Submission 4433 37 99%

2015 Total

number of rows

Total rows of data not balanced

% of Balanced Data

1st Submission 4195 1047 75%2nd Submission 4343 417 90%3rd Submission 4494 154 97%4th Submission 4385 89 98%

Interfund

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Intrafund

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2014 Total number

of rows Total rows of data not balanced

% of Balanced Data

1st Submission 1599 116 93%2nd Submission 1604 32 98%

2015 Total number

of rows Total rows of data not balanced

% of Balanced Data

1st Submission 1666 121 93%2nd Submission 1603 64 96%

Intrafund

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Inter & Intrafund

Agency/AST True-up

o There was some confusion regarding the recording of certified forwards (CF) for amounts due to other agencies.

o Agencies will receive an invoice from AST for the sole purpose of providing a recommended amount to record as certified forwards.

o Also, agencies will be instructed to create a “Due To” (GL 353).

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STATE OF FLORIDAAST - Agency for State Technology Data Center Invoice

2585 Shumard Oak BlvdTALLAHASSEE, FLORIDA 32399

Invoice Number ‐ CFJune2016

Invoice Date ‐ June 6, 2016

Data Center Services InvoiceInvoice displays AST's recommendation for AHCA's Certified Forward in the 210001 - State Data Center Agency for State Technology Data ProcessingServices Budget Category

Agency Name: Agency for Health Care Administration

Certified Forward Estimate for FY 16 $253,021.00

For the purpose of setting up your Agencies GL Code 35300 Payable to the AST

$253,021.00

Payment:Journal Transfer Payment should be made to:

72‐60‐2‐792018‐72980500‐00‐004801‐00Benefitting Object Code 048000

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Compliance Checklist

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An instrument used to validate the accuracy of information reported within the CAFR

A tool to provide feedback to the agencies on how they are doing in regards to specific items.

Also used as a guideline for agencies as they prepare their information throughout the process

Twenty five (25) checklist items ranging from verifying proper data is being used to submitting items by a certain due date

2015 Compliance Checklist Evaluations will be available at the end of the workshop

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Checklist # Checklist Item Compliance 2015 Compliance 2014Year to Year Change

1 Funds in Balance 100% 94% 6%2 Intrafund Activity (within Agency) 79% 71% 8%3 Interfund Activity (with Other Agencies) 64% 58% 6%4 Cash Balances 97% 100% ‐3%5 Treasury Investment Balances 96% 96% 0%6 Beg Fund Balance/Net Assets 97% 97% 0%7 General Revenue 100% 100% 0%8 Capital Assets Depreciation 100% 100% 0%9 Fund Balance Classification 94% 100% ‐6%10 Net Investments in Capital Assets 96% 95% 1%11 Compensated Absences 83% 100% ‐17%12 Capital Asset Accounts 91% 94% ‐3%13 Long‐term Debt Accounts 100% 90% 10%14 Analytical Procedures 94% 92% 3%15 Other Guidance 100% 100% 0%16 Fund Questionnaires for New Funds 100% 100% 0%17 SWFS Forms 94% 94% 0%18 Component Unit Financial Statements 100% 100% 0%19 SEFA 97% 97% 0%20 Fraud Certification 100% 97% 3%21 Final Budgeted Revenues 100% 100% 0%22 GASB Implementation Schedule Notification 100% 100% 0%23 Elimination of Revolving Funds 100% 100% 0%24 Interfund Loans 100% 100% 0%25 Compliance with Chapter 280, FL Statutes (QPD) 100% 89% 11%


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Checklist Item No. 11 – Compensated Absences

Compensated absences are absences for which employees will be paid, such as vacation and sick leave.

Validate that you’re utilizing the data from People First as assistance in calculating your compensated absences. This data is usually made available in July.

Ensure that the amounts reported within GLs 386 (Compensated Absences – Current) and 486 (Compensated Absences – Non-Current) on your forms (Form 49) agree to the amounts in your trial balances before submission to our office.

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Checklist Item No. 9 – Fund Balance Reporting

Validates that your fund balance classifications are reported properly.

Refer to CFO Memorandum No. 3 (2013-2014) Fund Balance Reporting

New Report within WTB regarding Nonspendables – LT Receivables and Advances

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Fund Balance Reporting – Nonspendables (Long Term Receivables and Advances)

o This new report is being created in reference to CFO Memo No. 03 (2013-2014) – Fund Balance Reporting

o This report displays any funds that have an amount reported within GL 562 – Nonspendables – LT Receivables and Advances.

o If any funds are a SWGF 20 (Special Revenue Fund), you are required to reclassify the amount to committed (GL 549) or restricted (GL 571-575).

o Instances where you have a GL 562 reported within a fund that does not contain a SWGF 20, we recommend that you consider reclassifying the GL 562 to Committed or Restricted.

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Statewide Financial StatementsCompliance Checklist # 9 ‐ Fund Balance ReportingNonspendables ‐ Long Term Receivables and Advances

OLO 990000Department of Sporting Events

Fund: SWGF: Fund Title:

990000‐10‐1‐123456 10 General Revenue Fund

Long Term Receivables and Advances

In this fund, consider reclassifying GL 562 ‐ Nonspendable ‐ LT Receivables and Advances to Committed or Restricted. If the SWGF is a 20, you must reclassify your GL 562 amount to Committed (GL 549) or Restricted (GL 571‐575)

GL 562:‐12,013,651.15

Fund:

990000‐20‐2‐987654

SWGF: Fund Title:

20 Baseball Trust Fund


No amount is recorded within your GL 562 for this fund, no adjustments are necessary.

GL 562:0.00

Fund:

990000‐20‐2‐234567

SWGF: Fund Title:

20 Football Trust Fund


In this fund, consider reclassifying GL 562 ‐ Nonspendable ‐ LT Receivables and Advances to Committed or Restricted. If the SWGF is a 20, you must reclassify your GL 562 amount to Committed (GL 549) or Restricted (GL 571‐575)

GL 562:‐12,328,500.63

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DEPRECIATION

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Checklist Item No. 8 – Depreciation

Update to language on SWFS Guidance documento Validate that your Property Custodian has run depreciation for

ALL depreciable capital assets before closing.o Refer to the Florida Department of Financial Services FLAIR

Procedures Manual, Chapters 517-519 on the website

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Depreciation

Scenario A building construction project was not completely

added to the Property Master (PM) Fileo $10,000,000 was recorded to PM fileo $20,000,000 was not moved from GL 72200o $30,000,000 should be recorded to PM file

Assumptions: o Construction of the building completed and

amortization began as of 7/1/2010o Straight-line depreciation o Useful life of 50 years (600 months)

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Steps to Correct

1. Add $20,000,000 to the PM file to reflect correct asset cost – Entries will affect PM file and Fund

2. Reclassify expenditure to a prior period adjustment – Entries will only affect Fund

.

TR GL Debit Credit

16 27200 20,000,000

16 72200 20,000,000

TR GL Debit Credit

10 72200 20,000,000

10 54200 20,000,000

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Steps to Correct

3. Manually calculate accumulated depreciation for the period 7/1/2010 to 6/30/2015 and record adjustment to correct accumulated depreciation amount as of 6/30/2015 – Entries will affect PM file and Fund

4. Reclassify depreciation expenditure to a prior period adjustment – Entries will only affect Fund

TR GL Debit Credit

10 72500 2,000,000

10 54200 2,000,000

TR GL Debit Credit

16 27300 2,000,000

16 72500 2,000,000

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Steps to Correct 5. Results of Steps 1 through 4 in the PM file and the

Fund (as of 6/30/2015)o Building Costs = $30,000,000o Accumulated Depreciation = $3,000,000o Depreciable Building Value = $27,000,000

6. Run a simulated depreciation as of 6/30/2016 (current year) in FLAIR (no effect on PM File or Fund)

7. Run the depreciation as of 6/30/2016 in FLAIR –Entries will affect PM file and the Fund

TR GL Debit Credit

03 72500 600,000

03 27300 600,000

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Governmental Accounting Standards Board (GASB) Statements

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GASB Statements Effective Dates

Fiscal Year 2015-16 Fiscal Year 2016-17 Fiscal Year 2017-18

Statement No. 72 – Fair Value

Statement No. 73 –Pensions

Statement No. 75 – OPEB Employers

Statement No. 73 –Amendments to Pension

Statement No. 74 – OPEB Plans

Statement No. 81 –Irrevocable Split-InterestAgreements

Statement No. 76 – GAAP Hierarchy

Statement No. 77 – Tax Abatement Disclosure

Statement No. 82 –Amendments to Pension

Statement No. 79 –External Investment Pools

Statement No. 78 -Pensions

Statement No. 79 –External Investment Pools

Statement No. 80 –Component Units

Statement No. 82 –Amendments to Pension 41

GASB StatementsFiscal Year 2015-16 Implementation

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GASB Statement No. 72

Defines fair value Defines an investment and generally requires investments to

be measured at fair value Provides guidance for determining a fair value measurement

and applying fair value to certain investments Changes the measurement guidance for donated capital

assets, donated works of art, historical treasures and similar assets, and capital assets received in a service concession agreement

Requires disclosures to be made about fair value measurements, the level of fair value hierarchy, and valuation techniques

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Definition of fair value – the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement dateo An exit priceo Not adjusted for transaction costs

Other characteristics of fair valueo Market-basedo Based on a government’s principal or most

advantageous marketo Considers unit of account

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Definition of investment – a security or other asset that:o A government holds primarily for the purpose of

income or profit, ANDo Has a present service capacity based solely on its

ability to generate cash or to be sold to generate cash

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Assets that meet the definition of an investment generally should be measured at fair value. Examples:o Alternative investmentso Equity securitieso Commingled investment pools that are not government

sponsoredo Invested securities lending collateralo Intangible assetso Land and land rightso Real estateo Natural resource assets

If they meet the definition of an

investment

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The determination of whether an asset is an investment or another type of asset is made at acquisitiono Once determined, the classification should be retained

for financial reporting purposes, even if the government’s usage of the asset changes over time.

o Initial Implementation Exception: The classification should be based on the facts and circumstances at initial implementation of Statement 72, rather than on those in existence at the time the asset was initially acquired.

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Scenario

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A housing finance agency holds mortgage loan receivables made as part of a governmental program to encourage home ownership. The present service capacity of the loans is to provide a service that allows residents to purchase a home

Investments or Not Investments

Not Investment - The present service capacity is not based solely on the loans’ ability to generate cash.

A state owns land and timber resources in an undeveloped part of the state. The state acquires the resources in order to preserve the land; however, the state occasionally enters into contracts for a company to cut and sell the timber, for which the state receives a fee.

Not Investment - The land and timber resources were not acquired primarily for the purpose of income and profit.

GASB Statement No. 72Scenario

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A state owns royalty interests in certain oil and gas properties. It holds these interests in order to generate income for providing funding to schools within the state. It does not own the tangible land associated with the oil and gas rights. There is no governmental program or service associated with the ownership of the interests.

Investments or Not Investments

Investment - Because the primary purpose of holding the royalty interests is for the purpose of income, and the present service capacity is based solely on the ability to generate cash, these assets would meet the definition of an investment.

The state owns a five-story office building. Three floors are occupied by state agencies, and two floors are leased to a retail merchant for the sole purpose of rental income.

Not Investment - The present service capacity of the building is not based solely on its ability to generate cash.


Definition of acquisition value – The price that would be paid to acquire an asset with equivalent service potential in an orderly market transaction at the acquisition date, or the amount at which a liability could be liquidated with the counterparty at the acquisition dateo Market-based entry priceo Replacement cost or the settlement amount

measurement attribute

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Acquisition value (entry price) replaces fair value for the following:o Donated capital assetso Donated works of art, historical treasures, and

similar assetso Capital assets received in a service concession

arrangement

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SFRS Implementationo Survey will be sent to agencies to determine if there

are capital assets or other assets that may meet the new GASB 72 definition of an investment

o A CFO Memorandum will be released in regards to Statewide Financial Statements Capital Asset Guidance and Rules For Tangible Personal Property

o Creating new forms for Investments Measured at Fair Value

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GASB Statement No. 73, 76, and 79 Statement 73: Pensions

o FYE 6/30/16: Amendments to Statement 67 and 68o FYE 6/30/16: Assets accumulated for purposes of providing pensions

through defined benefit plans that are not administered through trust (pensions not within the scope of GASB 68)

o FYE 6/30/17: Accounting and financial reporting for pensions that are not within the scope of Statement 68

Statement 76: The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments

o Simplifies the hierarchy and explains how to identify the relevant literature within the hierarchy

Statement 79: Certain External Investment Pools and Pool Participants

o Revises the accounting and financial reporting standards for 2a7-like investment pools as a result of amendments by the Securities and Exchange Commission (SEC) to the Investment Company Act of 1940, Rule 2a7

o Two year implementation (FYE 6/30/16 and 6/30/17) We will be working with applicable agencies (DMS, Treasury, and

SBA) to ensure proper implementation. 53

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GASB StatementsFiscal Years 2016-17 and 2017-18

Implementation

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GASB Statement No. 74 and 75Effective 2016-17 and 2017-18

GASB Statement 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans (OPEB Plans)

o Establishes financial reporting standards for state and local governmental OPEB plans.

o Effective FYE 6/30/17 GASB Statement 75, Accounting and Financial Reporting for

Postemployment Benefits Other Than Pensions (OPEB)o Establishes standards of accounting and financial reporting for

OPEB provided to employees of state and local governmental employers through OPEB plans administered through trust

o Effective FYE 6/30/18 Statement 74 (plans) and 75 (employers) makes OPEB

accounting and financial reporting consistent with the pension standards in Statements 67 (plans) and 68 (employers).

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GASB Statement No. 74 and 75Effective 2016-17 and 2017-18

SFRS will be working with DMS to ensure the state meets GASB requirements

There will continue to be an OPEB liability allocation to agencies as employers recorded in State Fund 7 (SF7).

We will provide agencies with updates, as necessary, in regards to implementation

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GASB Statement No. 77 Effective 2016-17

Tax Abatement Disclosureso Establishes financial reporting disclosure standards

for tax abatement agreements entered into by state and local governments

o Disclosures required by this statement include tax abatements resulting from both: Agreements that are entered into by the reporting

government, AND Agreements entered into by other governments and that

reduce the reporting government’s tax revenues.

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Definition of tax abatement: A reduction in tax revenues that results from an agreementbetween one or more governments and an individual or entity in which:o One or more governments promise to forgo tax

revenues to which they are otherwise entitled; ANDo The individual or entity promises to take a specific

action after the agreement has been entered into that contributes to economic development or otherwise benefits the governments or the citizens of those governments

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GASB Statement No. 77Effective 2016-17

Required DisclosuresBrief Descriptive Information Government’s Own

AbatementsOther Government’s Abatements

Name of program √

Purpose of program √

Name of government √

Tax being abated √ √

Authority to abate taxes √

Eligibility criteria √

Abatement mechanism √

Recapture provisions √

Types of recipient commitments √60


Required Disclosures

Other Disclosures Government’s OwnAbatements

Other Government’s Abatements

Dollar amount of taxes abated √ √

Amounts received or receivable from other governments associated with abated taxes

√ √

Other commitments by the government

√

Quantitative threshold for individual disclosure

√ √

Information omitted due to legal prohibitions

√ √

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SFRS Planned Steps for Implementation:o Work with DEO and other applicable agencies, if

any, to ensure the state meets GASB requirements

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Blending Requirements for Certain Component Units – an amendment of GASB Statement No. 14o Establishes an additional blending requirement for the

financial statement presentation of component unitso Applies to component units that are organized as not-

for-profit corporations in which the primary government is the sole corporate member as identified in the CU’s articles of incorporation or bylaws.

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SFRS Planned Steps for Implementation:o Survey agencies to determine discretely presented

component units that may need to be blended.o Update SFRS Component Unit Determination Form

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Conclusion

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KEYS To Successful Pre/Post Closing

Close in balance (Checklist Item #1) Start confirming INTER fund balances with other agencies

early. Ensure you record depreciation in FLAIR prior to agency

closing Review agency post-closing adjustments prior to submission

to SFRSo Adjustments in balance (debits = credits)o Adjustment does not create atypical balanceso Adjustment based on current trial balance amounts

Utilize WTB Database daily Contact SFRS if you have any questions or concerns

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Agency Closing Reports and Year-end Reports

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Available in RDSo Year-end Report available in

March 2017o Closing Report available in

August 2017

FLAIR Report Distribution System (RDS) End User Training

http://www.myfloridacfo.com/Division/AA/Training/default.htm

References

Working Trial Balance Database & SWFS Guidance -http://www.myfloridacfo.com/Division/AA/StateAgencies/default.htm

Forms - http://www.myfloridacfo.com/Division/AA/Forms/default.htm

Florida Department of Financial Services FLAIR Procedures Manual, Chapters 517-519 (Depreciation) located at: http://www.myfloridacfo.com/Division/AA/Manuals/default.htm

Memorandums - http://www.myfloridacfo.com/Division/AA/Memos/default.htm

FLAIR Report Distribution System (RDS) -End User Training http://www.myfloridacfo.com/Division/AA/Training/default.htm

GASB Standards -http://www.gasb.org/jsp/GASB/Page/GASBLandingPage&cid=1176160042327

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How to Contact UsDanta White, CPAFinancial Administrator(850) 413-5687

Pam BarksdaleProfessional Accountant Specialist(850) 413-5803

Nicole DavisProfessional Accountant Specialist(850) 413-5459

David JamesSenior Management Analyst II(850) 413-5666

Chunping Lin, CPAGovernment Analyst II(850) 413-5385

Sherif NessimGovernment Analyst II(850) 413-5565

Leonor SkoglundGovernment Analyst II(850) 413-5603

Group E-mails:[email protected]

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Questions

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Documents

2016 Financial Reporting Workshop - Chief Financial Officer of Florida · PDF file2016 Financial Reporting Workshop Presented By: Florida Department of Financial Services ... Year