questions or comments?
DESCRIPTION
QUESTIONS OR COMMENTS?. Send us your questions regarding GASB 68 throughout the presentation. Follow these steps to submit your question electronically:. Text ‘GASB68’ to 66746 Wait for confirmation message Reply with your question. STAYING OUT OF THE RED:. THE REAL BOTTOM LINE. - PowerPoint PPT PresentationTRANSCRIPT
QUESTIONS OR COMMENTS?Send us your questions regarding GASB 68
throughout the presentation. Follow these steps to submit your question electronically:
1. Text ‘GASB68’ to 667462. Wait for confirmation
message3. Reply with your question
THE REAL BOTTOM LINE
Questions? Text ‘GASB68’ to 66746
STAYING OUT OF THE RED:GASB 68 Impact on Ohio
Questions? Text ‘GASB68’ to 66746
Public Employees sell their labor to a public employer in exchange for wages and a benefits package, which includes the promise of a future pension.Particularly because the wages were historically often lower than the private sector, the pension promise is part of the “basis of the bargain.”
“The Employment Exchange”Rationale:
Questions? Text ‘GASB68’ to 66746
The Employment Exchange
GASB 68 will require public employers to include the proportionate share of the unfunded part of this promise on the Statement of Net Position.
Query:Is this unfunded liability enforceable as an obligation of the public employer?
Questions? Text ‘GASB68’ to 66746
The Ohio Environment
In Ohio, the amount a public employer must contribute to its pension obligation is capped by law – an act of the Ohio General Assembly.
Questions? Text ‘GASB68’ to 66746
The Ohio Environment
If pension liabilities of the five systems continue to be unfunded, the impact could be shouldered in various ways, or a combination:• The local government• Individual employees• Further reforms from current contributors• Capital shifts from non-mandated benefits
(health)
Questions? Text ‘GASB68’ to 66746
The Ohio Environment
The Challenge:• Depending on the manner in which the
liability is apportioned, GASB 68 could require reporting of a liability by a local government that it is not responsible for, and never becomes responsible for – dramatically distorting the financial report of that local government.
Questions? Text ‘GASB68’ to 66746
The Ohio Environment
Failing to follow GASB 68:• will result in modified audit opinions • will mean that Ohio governments fail to follow
accounting standardsWe wanted to find a way to accurately report Ohio governments’ financial positions while following accounting standards.
Questions? Text ‘GASB68’ to 66746
AOS Proposed Guidance
Report the unfunded pension liability as a separate line item on the Statement of Net Position (for multiple pension systems, see footnotes for detail)Include language in the MD&A that explains Ohio’s legal environment and the limitations on enforcement of unfunded pension liability as against the local government.
Questions? Text ‘GASB68’ to 66746
AOS Proposed Guidance
Include in MD&A a statement that:Because of the discussion below, many end users of this financial statement will gain a clearer understanding of the Government’s actual financial condition by adding deferred inflows¹ related to pension and the net pension liability to the reported net position.¹ deferred outflows would be subtracted: if applicable
Questions? Text ‘GASB68’ to 66746
AOS Proposed GuidanceMD&A Net Position Summary
Refer to page 3 in your handout
Questions? Text ‘GASB68’ to 66746
AOS Proposed GuidanceStatement of Net Position
Refer to page 7 in your handout
Long-Term Liabilities:
Deferred Outflows of Resources
Questions? Text ‘GASB68’ to 66746
AOS Proposed GuidanceStatement of Activities
Refer to pages 8 and 9 in your handout
Questions? Text ‘GASB68’ to 66746
AOS Proposed Guidance
Note that the liability is proportioned between governmental activities and individual enterprise funds.
Questions? Text ‘GASB68’ to 66746
AOS Proposed Guidance
Note XX on Pension Liability• Net Pension Liability represents a liability to
employees for pensions• Represents the government’s proportionate
share• Pension Liability is reported on the accrual basis
QUESTIONS OR COMMENTS?Send us your questions regarding GASB 68
throughout the presentation. Follow these steps to submit your question electronically:
1. Text ‘GASB68’ to 66746
2. Wait for confirmation message
3. Reply with your question