gasb 68 from the employer’s perspective © elliott davis decosimo, llc laura self, manager...

GASB 68 From the Employer’s Perspective

© Elliott Davis Decosimo, LLC

Laura Self, ManagerColumbia, South Carolina

This material was used by Elliott Davis Decosimo during an oral presentation; it is not a complete record of the discussion. This presentation is for informational purposes and does not contain or convey specific advice. It should not be used or relied upon in regard to any particular situation or circumstances without first consulting the appropriate advisor. No part of the presentation may be circulated, quoted, or reproduced for distribution without prior written approval from Elliott Davis Decosimo.


•Objectives - Provide An Illustration of GASB 68 Implementation- Review Employer Implementation Considerations- Review Disclosure Requirements- Review Resources and Guidance Available


• Example of first year implementation steps- Using data for Clemson University (30300)- Most recent PEBA data (unaudited) is used• Can be found at

http://www.retirement.sc.gov/gasb/employers.htm - Assumption made for FY 2015 retirement

contributions- Applicable pages from PEBA follow – SCRS, PORS and

FY 2014 contributions


http://www.retirement.sc.gov/gasb/employers.htm

• Illustration (Using Clemson University Data)- Data obtained from PEBA:

- ***Note: Represents all actual ER contributions made in FY14 including service purchases (amount may vary slightly from amount presented in “Employer Contributions” schedule presented by PEBA in prior page attachment). PEBA will provide this amount on the final, audited NPL worksheet.

- Estimated FY 2015 contributions of $26,207,480


NPL NPL Change Def Out Def In Net Pension FY 14

6/30/2013 6/30/2014 FY13 to FY14 Liab Exp Invest Exp Def Out/In Expense Contributions Difference

SCRS 466,538,633 447,817,506 18,721,127 12,689,264 37,754,281 25,065,017 31,386,916

25,031,158 6,355,758

PORS 5,543,730 5,119,734 423,996 136,623 592,391 455,768 447,913

412,998 34,915

472,082,363 452,937,240 19,145,123 12,825,887 38,346,672 25,520,785 31,834,829 25,444,156 6,390,673

• Illustration (continued)- Journal Entries – Year 1


DR CR

A Unrestricted Net Position 472,082,363 Net Pension Liability 472,082,363

To record beginning pension liability at 6/30/14 (NOTE: measurement date of beginning pension liability is 6/30/13)

B Net Pension Liability*** 25,459,168

Unrestricted Net Position 25,459,168

To reclass contributions made during the measurement period(actual FY14 contributions which were recognized as an expense in FY14)

C Deferred Outflow 26,207,480 Pension Expense 26,207,480

To record/reclassify contributions made after the measurementdate of 6/30/14 (FY15 contributions) assuming they were recorded in FY15 to Pension Expense when made

• Illustration (continued)- Journal Entries – Year 1


DR CR

D Net Pension Liability 25,520,785

Deferred Outflows 12,825,887

Deferred Inflows 38,346,672

To record deferred outflows/inflows at the measurement date (6/30/14) to be recorded at 6/30/15

E Pension Expense 31,834,829

Net Pension Liability 31,834,829

To record proportionate share of pension expense for the measurement period (7/1/13-6/30/14) recorded in FY15

• Illustration (continued)- T Accounts – Year 1

Corresponding tojournal entries onprevious pages


Net Pension UnrestrictedLiability Net Position

114,950,612

A 472,082,363 A 472,082,363

B 25,459,168 B 25,459,168

D 25,520,785

E 31,834,829

452,937,239 331,672,583

DeferredOutflows Cash

C 26,207,480 C 26,207,480

D 12,825,887

39,033,367 26,207,480

DeferredInflows Pension Expense

D 38,346,672 E 31,834,829

38,346,672 31,834,829

• Employer Implementation Considerations- Census data will be examined more closely than in

the past by the retirement system, the plan auditors and the employer auditors• Review processes and controls over significant elements of

census data• Large (“individually important”) employers may be selected

by the plan auditor for additional testing of census data; the selection of large employers will likely rotate each year


• Employer Implementation Considerations, continued- Employer and their auditor can use the plan auditor’s

report on schedules to provide sufficient audit evidence• Review plan auditor’s report and any related opinion

modifications• Evaluate whether plan auditor has necessary competence

and independence- Employer auditor will gain understanding of controls

over census data and will also audit the census data (sample) provided to the plan


• Employer Implementation Considerations, continued- Employer and their auditor should verify and

recalculate amounts in schedules specific to employer• Verify/reconcile employer amounts used in allocation

percentage (numerator)• Recalculate allocation percentage of employer• Recalculate allocation of pension amounts based on

allocation percentage of employer- Once plan provided information is verified, employers

will have their financial reporting components


• Employer Implementation Considerations, continued- Employer will need to track the following components

- Differences between actual and expected experience (for example, terminations, mortality, etc.)

- Changes in assumptions- Differences between projected and actual earnings- Changes in employer’s proportionate share of contributions- Employer contributions subsequent to measurement date- Difference between actual contributions and proportionate

share

- Employer will need to maintain amortization schedules for their proportionate share


•Disclosure Requirements- Employers must disclose the following:• Description of the plan and benefits provided• Significant assumptions employed in the measure of net

pension liability, description of benefit changes and changes in assumptions, assumptions related to discount rate, employer’s share of pension had discount rate been 1% higher and lower

- Much of this information will be lifted from PEBA’s financial statements (Note 8 for their 6/30/2014 financial)


•Disclosure Requirements- Employers must disclose the following:• The balances of deferred outflows of resources and deferred

inflows of resources presented by source• The net amount of deferred outflows and inflows that will be

recognized as pension expense and the amount of deferred outflows that will reduce net pension liability – for each of the next 5 years and in aggregate thereafter• The employer’s percentage of net pension liability, how it

was determined, and any change in the percentage since the previous measurement date


•Disclosure Requirements- Required Supplementary Information:• Schedule of employer’s proportionate share of net pension

liability- Last 10 years required (or years available until 10 years are

available)• Schedule of employer’s contributions for last 10 years


•Disclosure Requirements- The Comptroller General’s office will be developing

a disclosure template in the next few months- In addition to information in the notes to PEBA’s

financial statements, PEBA will also provide basic information about the plan


•Guidance Available- GASB 67 Implementation Guide- GASB 68 Implementation Guide- Two White Papers• Government Employer Participation in Agent Multiple-

Employer Plans: Issues Related to Information for Employer Reporting• Agent Multiple-Employer Plans: Issues Associated with Testing

census Data in an Audit of Financial Statements- Four Audit Interpretations- GASB Implementation Toolkit


•Questions?


Laura Self: [email protected]

Website: www.elliottdavis.com

Elliott Davis Decosimo ranks among the top 30 CPA firms in the U.S. With seventeen offices across seven states, the firm provides clients across a wide range of industries with smart, customized solutions. Elliott Davis Decosimo is an independent firm associated with Moore Stephens International Limited, one of the world's largest CPA firm associations with resources in every major market around the globe. For more information, please visit our elliottdavis.com.


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gasb 68 from the employer’s perspective © elliott davis decosimo, llc laura self, manager...

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