This document summarizes a webcast for not-for-profits and governments on accounting, auditing and regulatory updates. It provides information on welcoming participants, continuing professional education credits, presenters and objectives. The session will cover recent regulatory issues, impacts of new auditing standards, likely audit emphasis areas, and implementation of new accounting standards to assist with preparation for 2012 audits. It includes polling questions to gauge participants' organizations and areas of focus.

1. Not-for-Profit &
Government
Webcast Series
Government
Accounting, Auditing, and Regulatory
Update
May 10, 2012
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2. WELCOME
Please make sure you’ll be able to hear us when we start!
Computer audio
• Automatically connected when you logged in
• Computer speakers or headphones required
• You do not need to join the conference call
Conference Call
• If you do not have computer speakers or headphones, join the
conference call for the audio
• Number: 866-244-8528, participant code: 929600
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3. MODERATOR
Carol Summers
Marketing Manager
Not-for-Profit & Government Group
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4. THE VIRTUAL CLASSROOM
Q&A
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5. THE VIRTUAL CLASSROOM
Polling slides
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6. THE VIRTUAL CLASSROOM
Handouts
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7. CPE CREDIT
To be eligible for CPE credit, you must:
o Log-in to the meeting with your full name
o Respond to the polling questions
o Attend for the duration
If attending as a group:
o Complete a CPE attendance sheet (“sign-in”)
o Designate a Location Group Leader
o Send completed attendance sheets to
carol.summers@mossadams.com
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8. DISCLAIMERS
The material appearing in this presentation is for
informational purposes only and is not legal, accounting or
investment advice. Communication of this information is not
intended to create, and receipt does not constitute, a legal
relationship, including, but not limited to, an accountant-client
relationship or advisor-client relationship. Although these
materials may have been prepared by professionals, they
should not be used as a substitute for professional services. If
legal, accounting, investment or other professional advice is
required, the services of a professional should be sought.
Assurance, tax and consulting services offered through Moss
Adams LLP.
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9. PRESENTERS
Jim Lanzarotta, CPA
Business Assurance Partner
Moss Adams LLP
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10. Government
Accounting, Auditing,
and Regulatory Update
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11. SESSION OBJECTIVES
• Review recent regulatory issues facing governments
• Share impact of recent auditing standards changes
• Discuss likely audit emphasis this year
• Discuss implementation of new accounting standards
• All the above to assist with your preparation for your
2012 audit
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12. POLLING QUESTION #1
• What type of organization are you representing?
o Higher education institution
o State & local government
o Tribal government
o Power, water, and/or sewer utility
o GASB reporting not-for-profit
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13. REGULATORY
o HR 674, Three Percent
Withholding Repeal and Job
Creation Act
o Signed by President Obama
11/21/11
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14. REGULATORY
• SEC studies the Municipal
Securities Markets
• Dodd-Frank Wall Street
Reform Act – directed GAO
to study role of GASB in the
municipal securities
market
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15. REGULATORY
• Among other changes, significant
change to independence requirements
• * Audit adjustments
• * Preparation of financial statements
• * New conceptual framework
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16. REGULATORY
• Proposed changes to Single Audit
requirements
• Less than $1M in federal
expenditures – no audit
• Between $1M - $3M – a more
‘focused’ audit
• Testing of allowable costs, and
one other compliance
requirement
• Greater than $3M – a full single audit
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17. POLLING QUESTION #2
Historically, my federal expenditures have been
• Between $500K and $1M, so I would no longer require
a single audit
• Between $1M and $3M, so I would be eligible for the
smaller scope ‘focused’ audit
• Over $3M so I would still require a full scope audit
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18. REGULATORY
• Proposed changes to Single Audit requirements
• If the changes are approved, it is estimated that
• 11,000 audits will no longer be required affecting 3,300
CPA firms
• 700 CPA firms will lose their only single audit
• 3,700 CPA firms will be providing limited scope audits
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19. AUDITING STANDARDS CHANGES
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20. AUDITING STANDARDS CHANGES
• SAS 118 – what should management know?
• Includes unaudited information including
letter of transmittal, statistical section, other
• Auditor focused on consistency with audited
financial information
• Auditor required communications with
governing Boards
• Guidance when material inconsistencies exist
• Provides guidance on report modifications
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21. AUDITING STANDARDS CHANGES
• SAS 119 – what should management know?
• Audited financial data including combining, individual
fund, budgetary schedules
• Procedures required to test consistency with
underlying accounting records, applicable criteria
• Additional management requirements – provide
report on SI with separately issued SI, overall audit
report provided or readily available
• Specific reporting requirements/modifications
• Additional management representations required
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22. AUDITING STANDARDS CHANGES
• SAS 120 – what should management know?
• Information required by a recognized
standard setter
• Procedures required to test consistency with
prior knowledge, applicable criteria
• Required representations from management
• Stronger language required in auditor
opinions – if omitted or incomplete, contains
material departures, or auditor unable to
complete audit procedures
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23. LIKELY AUDIT EMPHASIS
• Auditing management
estimates
• Claims and judgments
• Pension/OPEB liabilities
and disclosures
• Self-insurance programs
• Pollution remediation
liabilities
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24. LIKELY AUDIT EMPHASIS
• Auditing going concern
assertion, disclosures, dis
cussion in MD&A
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25. POLLING QUESTION #3
My government, or a governmental entity I know, is
experiencing significant fiscal stress calling into
question its ability to
• Continue over the next 18 months
• Continue after 18 months but questionable beyond 36
months
• I don’t know any entities encountering significant fiscal
stress sufficient to question it as a going concern
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26. FUTURE AUDIT STANDARDS CHANGES –
ASB CLARITY PROJECT – GROUP AUDITS
• Clarity standards in general - many impacts to auditors
• Group audits – impacts management as well
o Communication required with component auditors
o Evaluation of component auditors
o Management controls over consolidation process
o Subsequent events for components
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27. ACCOUNTING ISSUES
• Examples
• Entities created/acquired by governmental hospitals,
universities, utilities, Indian tribes
• University foundations and auxiliaries
• Pension plans sponsored/administered by a government
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28. ACCOUNTING ISSUES
• Guidance provided by AICPA in SLG, NFP, EBP Audit Guides
• Popular election, or appointment of majority of the Board
by a governmental entity
• Ability to dissolve an entity and access its assets
• The power to enact a tax levy
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29. POLLING QUESTION #4
For those with component units…
• I routinely scrutinize the organizational documents
sufficient to confirm the correct reporting standards
being followed
• I only review the organizational documents the first
time a component unit comes into my reporting unit
• I rely on management of the component unit for
determination of its correct reporting framework
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30. ACCOUNTING ISSUES
• GASB 54 implementation
• Pressure to ‘legitimize’ special
revenue funds
• Inability to automatically track
constrained resources
• Spending prioritization led to
unwanted results
• Boiler plate footnote disclosures
did not get revised
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31. ACCOUNTING ISSUES
• New standards implementation dates
o FYE June 30, 2012
• GASB 57 – OPEB measurement dates
o FYE June 30, 2013
• GASB 60 – Service concession arrangements
• GASB 61 – Reporting entity
• GASB 62 – Codification of pre-1989 FASB’s
• GASB 63 – Deferred inflows/outflows
o FYE June 30, 2014
• GASB 65 – Items previously reported as
assets/liabilities
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32. ACCOUNTING ISSUES
• A suggestion…
o Implement a standard early…either
• GASB 60 – Service concession
arrangements
• GASB 61 – Reporting entity
• Waiting may make FYE 6/30/13 a real
bear of a year…
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33. ACCOUNTING ISSUES
• GASB 60 – Service Concession
Arrangements
o Conveyance of right/obligation to use
capital assets to provide public services
for $$
• Operator receives fees from third
parties
• Transferor retains certain control
• Transferor retains residual interest
in the assets
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34. ACCOUNTING ISSUES
• GASB 61 – Reporting Entity
• Additional element – existence of
‘financial benefit/burden’
• Clarification on when to blend
• Flowchart in Appendix C
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35. POLLING QUESTION #5
What should I be doing now in preparation for GASB 60 and 61
implementation…
• Reviewing contracts and agreements
• Reviewing organizational documents of related
organizations
• Internal discussions with our legal department
• Inquiries of department managers
• Documenting analysis and conclusions, perhaps use of GASB
flowchart tools
• All of the above
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36. QUESTIONS?
Jim Lanzarotta
Jim.lanzarotta@mossadams.com
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