Post on 01-Jan-2016
June 3 2003
2:00 – 3:30 pm EDT
Moderated by:
Jerry Farley
Washburn University
Welcome to Today’s NACUBO Webcast:
Statement 39—Overview
AGENDA
Introduction to Desktop Interface
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Audience Surveys
Question & Answers
Evaluation
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Today’s Featured Speakers
David BeanGASB Director of Research
Charles TegenClemson University Comptroller
and Former Chair of the APC
Larry Goldstein NACUBO Senior Fellow
and GASAC representative
Statement 14—The Genesis
Financial reporting entity Primary government Organizations for which the primary government is
financially accountable Other organizations for which the nature and
significance of their relationship with the primary government are such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete.
Financial Accountability
Appoint a voting majority of an organization's governing body
Either it is able to impose its will on that organization (five specific criteria) or
There is a potential for the organization to provide specific financial benefits to, or to impose specific financial burdens on, the primary government (three specific criteria).
A primary government may also be financially accountable for governmental organizations that are fiscally dependent on it.
Misleading to Exclude
Matter of professional judgment to determine whether the nature and the significance of relationship with the primary government warrants inclusion.
Organizations affiliated with governmental units, agencies, colleges, universities, hospitals, and other entities may warrant inclusion.
An example of an affiliated organization that may be evaluated for inclusion is a nonprofit corporation whose purpose is to benefit a governmental university by soliciting contributions and managing those funds.
The Potentially Misleading Sentence
The GASB is studying circumstances under which foundations, similarly affiliated organizations, and PERS might be included in the financial reporting entity. Result—Very few entities used professional
judgment
Statement 39 History
Added to the agenda in 1990—during the final deliberations on Statement 14
First exposure draft issued in 1994
Second exposure draft issued in 2001
Final statement released in 2002
Statement 39—Approach
Guidance applies to legally separate, tax-exempt entities
Criteria Solely (or almost solely) serves reporting entity or
its constitutes Entitled or has the ability to access a majority of resources Individual organization significant to primary government or its
component units
Display—discrete presentation
Institutional Issues
Review your institutional status Primary government Component unit Agency of the primary government
Review each potential component unit GASB 14 criteria GASB 39 criteria
Review display options
Institution and sole component unit in separate columns on same page
Component unit on succeeding page (when presentation requires)
Institution and multiple component units in separate columns on same page
Multiple component units in separate columns on succeeding page (when presentation requires)…
Review display options (cont.)
Combined totals for component units in a single column on same page as institution or succeeding page (when presentation requires)
Requires separate component unit statements in note
Compatibility Compatibility of terms Program expenses Natural expenses
Footnotes Management’s Discussion and Analysis
Audit Issues
Responsibility of auditor for financial reports
Assess impact on audit schedule Timing of audits Different fiscal year end
Assess impact on audit fees
Develop communication strategy
Next level of government
Board / Executive Management
Affiliated Organizations
Work with the institution
Compliance by institution is mandatory, if applicable
Better to cooperate than have decisions made without foundation’s input
Various options are available
Financial statement implications
GASB 39 does not affect foundation financial statements directly
FASB allows various options—some may be better than others
Various options for treatment of foundation in institution’s financial statements
Audit implications
Primary audit focus should be institution, not foundation
Absent state legal requirement or very unique situation, institution’s auditor should rely on audit opinion expressed by foundation auditor
Foundation’s audit schedule may be accelerated—especially if fiscal year-end is same as institution’s Could affect foundation’s audit fees
Consequences of Non-cooperation
Direct None—unless special state statutes apply
Indirect Strained relationship with institution Rescission of authority to use institution’s name
in fundraising
QUESTION & ANSWER
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