State of Louisiana
DIVISION OF ADMINISTRATION
Office of Statewide Reporting and Accounting Policy
M. J. "Mike" Foster, Jr.
Mark C. Drennen
Commissioner of Administration
March 13, 2001
MEMORANDUM SA 01-24
All ISIS Agencies
F. Howard Karlton, CPA |
Implementation of GASB Statement 34|
On June 30, 1999, the Governmental Accounting Standards Board (GASB) released Statement 34-Basic Financial Statements- and Management’s Discussion and Analysis- for State and Local Governments-, which the government finance community considers to be the most significant change in financial reporting standards since the formation of the GASB in 1984. The state of Louisiana is required to report its Comprehensive Annual Financial Report (CAFR) in compliance with Statement 34 in fiscal year 2002. Implementing the new standard requires significant planning and resource commitment. In an effort to meet the challenge, a number of significant steps and initiatives have been taken including the formation of a task force represented by nine individuals from various state agencies within the financial statement reporting entity.
Additionally, the OSRAP has formed an implementation team responsible for planning and directing the implementation process by identifying the issues from the implementation process. As each major issue is identified and discussed with the members of the core implementation team, numerous interpretations are drawn. For each issue identified, a team member is assigned responsibility to research and document the issue. Once the research has been completed, a detailed position paper is drafted. The position paper defines the issue, details the professional references used in the research process, and, finally, states our.
To complete this significant project, we have decided to approach the task by converting the fiscal year 2000 CAFR into the GASB 34 format. OSRAP will do this again with the fiscal year 2001 CAFR so as to obtain the beginning balances for fiscal year 2002, as well as gain additional experience.
One of the statement requirements is the creation of new government-wide financial statements on a full accrual basis of accounting. We will be required to prepare two new statements: a Statement of Net Assets and a Statement of Activities on a government-wide basis. While governments have prepared numerous fund-based statements for years, they have not prepared a government wide financial statement on full accrual for all funds, as the GASB will now require. Second, OSRAP must now prepare a general discussion of our operating results and change in financial condition in a new management's discussion and analysis (MD&A), similar to the MD&A that publicly traded companies have prepared for years.
Because GASB 34 does not change the fund level statements significantly, we intend to implement GASB 34 at a high, centralized level but not without the involvement of you (agencies). For us to convert the fiscal year 2000 (already issued) CAFR into GASB 34 (test model), we will need your help in providing us, to the best of your knowledge and ability, the off system receivables and payables (accruals) that will convert the AFR reports you submitted for fiscal year 2000 to
full accrual. Currently, the only activity reflected is that received or paid during the 45 day close. We need you to provide us with all your revenues (receivables) and expenses (payables) as at June 30, 2000 regardless of when they are going to be collected or paid. Enclosed is a 4G03 report (goods delivered as of 6/30 paid with current year appropriations) as of February 28th. These amounts represent part of your 6/30 2000 payables, and should be in your accounts payable figure to be submitted on full accrual.
We also have the need for you to provide the following specific information to us for preparation of the government-wide financial statements: 1)Operating Grants and Contributions, 2) Capital grants and Contributions. 1) Operating Grants- represent total amount of grant revenues for the year that are restricted by the grantor for operating purposes or that may be used for either capital or operating purposes at the discretion of the grantee. 2) Capital Grants – represent total amount of revenues for the year from grants restricted by the grantor for the acquisition, construction or renovation to capital assets.
For these revenues, please indicate the amounts by program if the grants are associated with specific programs within your agency. If it is a multi-purpose grant (those that provide financing for more than one program), and the amounts restricted to each program are specifically identified in either the grant award or the grant application, please provide the breakdown of the grant revenues by these programs. If a multi-purpose grant does not provide specific identification of the programs and amounts, show the amount of the grant revenue by itself. These will be reported in the CAFR as general revenues instead of program revenues in accordance with GASB 34.
The timetable for the conversion this year is tight since we must start focusing on getting ready for fiscal year 2001 CAFR. In light of this, we are asking that you provide the information requested by March 26th 2001. Attached are copies of your statements A and B you submitted last year, and your lead schedules 3 and 4 (for entities with major state revenues). Please provide the full accrual information in the “Agency Adjustment” columns.
Your assistance and cooperation are greatly appreciated. Should you have questions or need additional information about GASB 34, please contact Mr. Afranie Adomako, the liaison of the implementation team at (225) 342-1091, any of the implementation team members, Ms. Rae Morrero at (225) 342-0710, Mr. Nelson Green (225) 342-0709, Ms. Renee Withers (225) 342-1089, or me (225) 342-6300.