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What’s New for the 2015 Annual Financial Report?


March 30, 2016 by Toni Nelson
Category: Financial Reporting

What’s New for the 2015 Annual Financial Report?

Financial report time for local governments is now. The deadline this year is one day earlier because it is a leap year. Mark your calendars, the date is May 29; if you file your report online, it is important that you file by the deadline. RCW 43.09.230 states, “Such reports shall be prepared, certified, and filed with the state auditor within one hundred fifty days after the close of each fiscal year.”

The financial report each year typically brings with it new reporting requirements, and this year is no exception. The State Auditor’s Office (SAO) provides a summary of the significant changes within the online BARS manual for GAAP and Cash Basis manual users. The most significant change this year is the new pension liability reporting requirement (GASB 68). It requires local government employers participating in cost-sharing plans to recognize their proportionate share of the collective pension amounts for all benefits provided through the plan.

The SAO has made significant outreach efforts to provide local government with the training needed to meet this new reporting requirement. There was a two-hour GASB 68 implementation webinar presented in January that is available on the WFOA non-conference training website, YouTube videos for both GAAP and Cash Basis reporting entities are available on the SAO-BARS Manual webpage and the SAO is offering one-on-one assistance in Olympia and Tacoma to GAAP reporting local governments. If you have not watched the YouTube videos made by the SAO you will definitely want to take a look; they are informative and very well done. For Cash Basis entities the tutorial will walk you through each of the steps to complete the worksheet and provide you with the information needed to accurately report your pension liability on Schedule 09. Here is the link to the Department of Retirement Systems (DRS) Participating Employer Financial Information (PEFI) for report year 2015. The PEFI is the source material for calculating your share of the pension liability and completing this new financial reporting requirement.

As a separate reconciliation consideration the PEFI provides the employer contributions made for each of the retirement plans. It is important to reconcile the PEFI contributions shown on the report to your financial system. There are just two adjustments that you will need to keep in mind: 1) that the PEFI reflects the state fiscal period of 7/1-6/30 (while local governments use a calendar year) and 2) that the contributions reflected on the PEFI do not include the DRS Administrative fee of .0018.

Each year there are changes to the notes to financials for both GAAP and Cash Basis reporting entities. Of significance this year is the note disclosure for the pension liabilities. The language has been modified to reflect this new reporting requirement. There is also a change to the debt service note. This note disclosure eliminates the separation of debt types and now requires separation of principal and interest. It also requires disclosure of “Debt Refunding” and “Debt Guarantees” if applicable. The notes to financials are an integral part of the annual financial report, so it’s important to review the new templates provided by the SAO each year to assure accuracy.

Another significant change for those entities who file online using the SAO online filing tool is the requirement to submit reconciled schedule 01 data. For Cash Basis reporting entities this schedule is the basis from which the financial statements are created. When local governments upload the financial data on the Schedule 01, the online filling system will automatically calculate the ending fund balances. If the SAO system calculates ending balances/net position in a variance from your Schedule 01 submission that is great than $1,000 the system will not allow final submission until the difference is resolved or falls below the $1,000 variance threshold. As time draws nearer to the filing deadline you will want to make sure that all variances have been resolved in order to timely file your annual financial report.

The accurate and timely filling of your annual financial report is a requirement by statute (RCW 43.09.230). There are resources available to assist you with this important financial document. We encourage you to ask questions!

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About Toni Nelson

Toni has over 24 years of experience with Local Government finance and budgeting. Toni's area of expertise include "Cash Basis" accounting and reporting, budgeting, audit prep and the financial issues impacting small local government.

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