GASB and Asset Management Presentation


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  • Financial Accounting Foundation Association of Government Accountants Government Financial Officers Association Securities and Exchange Commission
  • GASB and Asset Management Presentation

    1. 1. GASB and ASSET MANAGEMENT at the Oregon Department of Transportation How They Relate By Laura Wipper and Jesse Moore June 2008
    2. 2. Topics We’ll Cover <ul><li>Financial issues – who cares? </li></ul><ul><li>GASB – compliance & accountability </li></ul><ul><li>Early implementation of GASB at ODOT </li></ul><ul><li>Assets – definition & categories </li></ul><ul><li>Asset Management & GASB </li></ul><ul><ul><li>How they relate </li></ul></ul><ul><ul><li>Things we’re working on </li></ul></ul><ul><ul><li>Benefits </li></ul></ul><ul><ul><li>Suggestions for the future </li></ul></ul>
    3. 3. Financial Issues – Who Cares? <ul><li>When it comes to accounting, reporting, measuring, it’s </li></ul><ul><ul><li>GASB </li></ul></ul><ul><ul><ul><li>One of two boards under umbrella of FAF </li></ul></ul></ul><ul><ul><ul><ul><li>FASB is the other </li></ul></ul></ul></ul><ul><ul><ul><li>Major input provided by AGA & GFOA </li></ul></ul></ul><ul><li>When it comes to financing and bonding, it’s </li></ul><ul><ul><li>SEC </li></ul></ul><ul><ul><li>IRS </li></ul></ul>
    4. 4. What is GASB? <ul><li>Government Accounting Standards Board </li></ul><ul><ul><ul><li>Charged with establishing and improving financial accounting and reporting by state, county, city and other local governments </li></ul></ul></ul>
    5. 5. Do We Have to Comply? <ul><li>Federally mandated </li></ul><ul><ul><li>Federal Circular A-133 (Audits of States, Local Governments and Non Profit Organizations) issued pursuant to the Federal Single Audit Act of 1984 </li></ul></ul><ul><li>Required by ORS 291.040: </li></ul><ul><ul><li>State financial report. (1) Within 180 days of the close of each fiscal year, the Oregon Department of Administrative Services shall prepare a financial report for the State of Oregon. The report shall contain financial statements which fairly present the financial condition and results of operation of the State of Oregon in accordance with current, generally accepted accounting principles and such other financial and statistical information as may be necessary to completely and accurately disclose the financial condition and financial operations of the state and its various agencies. </li></ul></ul><ul><ul><li>(2) As used in subsection (1) of this section, “generally accepted accounting principles” means those accounting principles sanctioned by recognized authoritative bodies such as the Governmental Accounting Standards Board , the American Institute of Certified Public Accountants or their successors. [1977 c.897 §1; 1989 c.152 §1; 1991 c.220 §6] </li></ul></ul>
    6. 6. How is This Accomplished? <ul><li>ODOT: </li></ul><ul><ul><li>Follows </li></ul></ul><ul><ul><ul><li>Generally Accepted Accounting Principles (GAAP) </li></ul></ul></ul><ul><ul><ul><li>GASB pronouncements </li></ul></ul></ul><ul><ul><ul><ul><li>Statements that become standards </li></ul></ul></ul></ul><ul><ul><ul><li>Federal and state requirements </li></ul></ul></ul><ul><ul><li>Assists DAS with preparation of the Comprehensive Annual Financial Report (CAFR) </li></ul></ul><ul><ul><ul><li>DAS issues state government CAFR annually </li></ul></ul></ul><ul><ul><ul><ul><li>Fed by ODOT’s own AFR </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Issued for bonding purposes </li></ul></ul></ul></ul></ul>
    7. 7. How are Gov’ts Held Accountable? <ul><li>Audits </li></ul><ul><ul><li>Federal </li></ul></ul><ul><ul><li>Secretary of State, Audits Division </li></ul></ul><ul><ul><li>Internal </li></ul></ul><ul><ul><li>External </li></ul></ul><ul><ul><ul><li>Holding others accountable </li></ul></ul></ul><ul><li>Requirements met equals “clean opinions” </li></ul><ul><ul><li>ODOT’s report reviewed annually </li></ul></ul>
    8. 8. GASB 34 <ul><li>Statement that became standard in 1999 </li></ul><ul><ul><li>Sweeping changes in financial reporting requirements for state and local governments </li></ul></ul><ul><ul><ul><li>Significant restructuring </li></ul></ul></ul><ul><ul><ul><li>Most dramatic change since 1930’s </li></ul></ul></ul><ul><ul><li>Staged implementation </li></ul></ul><ul><ul><ul><li>Beginning in 2001 </li></ul></ul></ul>
    9. 9. Goals of GASB 34 <ul><li>Expand government financial reporting requirements </li></ul><ul><ul><li>Continue Fund Reporting - short-term perspective </li></ul></ul><ul><ul><li>Add Financial Statements - long-term perspective </li></ul></ul><ul><ul><ul><li>Includes all assets, liabilities, revenues, expenses, gains and losses </li></ul></ul></ul><ul><ul><ul><li>Comprehensive demonstration of stewardship </li></ul></ul></ul>
    10. 10. Definitions <ul><li>What is an Asset? </li></ul><ul><ul><li>Anything with </li></ul></ul><ul><ul><ul><li>Expected useful life of one year or more </li></ul></ul></ul><ul><ul><ul><li>Original cost of $5000 or greater (OAM 15.60.10 PO section .103) </li></ul></ul></ul><ul><ul><ul><ul><li>Costs for components as a system </li></ul></ul></ul></ul>
    11. 11. Two Approved Approaches to Report Infrastructure Assets: <ul><li>Modified </li></ul><ul><ul><li>Challenging method used by many DOT’s requires: </li></ul></ul><ul><ul><ul><li>Full catalogue of inventory </li></ul></ul></ul><ul><ul><ul><li>Condition levels </li></ul></ul></ul><ul><ul><ul><li>Defined inspection schedules </li></ul></ul></ul><ul><ul><ul><li>Maintenance costs tracked to individual assets </li></ul></ul></ul><ul><ul><ul><li>Comparisons between actual and estimated costs for past 5 years </li></ul></ul></ul><ul><li>Depreciation </li></ul><ul><ul><li>ODOT’s present method requires: </li></ul></ul><ul><ul><ul><li>Asset values </li></ul></ul></ul><ul><ul><ul><li>Asset age </li></ul></ul></ul><ul><ul><ul><li>Depreciation methodology </li></ul></ul></ul>
    12. 12. Issues for ODOT & GASB 34 at Implementation <ul><li>Data “hurdle” to meet requirement to report on value of infrastructure assets </li></ul><ul><ul><li>Inventory, values and depreciation methodology </li></ul></ul><ul><li>Absence of procedures and methods for asset management system </li></ul>
    13. 13. Solutions to Meet Implementation Timeline <ul><li>Financial Services staff created version of asset management systems </li></ul><ul><ul><li>Procedures and processes to account for assets </li></ul></ul><ul><ul><ul><li>Definitions </li></ul></ul></ul><ul><ul><ul><li>Values </li></ul></ul></ul><ul><ul><ul><li>Depreciation methodologies </li></ul></ul></ul><ul><ul><ul><li>Processes to account for new assets and works in progress </li></ul></ul></ul><ul><ul><ul><ul><li>Must be “capitalized” when complete </li></ul></ul></ul></ul>
    14. 14. Financial Categories of Assets <ul><li>Fixed Assets (AKA non-linear) such as: </li></ul><ul><ul><li>Right of way </li></ul></ul><ul><ul><li>Equipment </li></ul></ul><ul><ul><li>Information technology </li></ul></ul><ul><ul><li>Facilities </li></ul></ul><ul><li>Infrastructure Assets (AKA linear) </li></ul><ul><ul><li>Bridges and Tunnels </li></ul></ul><ul><ul><li>Highway </li></ul></ul><ul><li>Intangibles - pending requirement </li></ul>
    15. 15. Current and Emerging Issues <ul><li>Driven by compliance requirements: </li></ul><ul><ul><li>Narrowing tolerance has resulted in findings </li></ul></ul><ul><ul><ul><li>Current efforts to correct issues have managed to keep these at a reduced level of significance </li></ul></ul></ul><ul><ul><ul><ul><li>Increasing expectations and decreasing tolerances - more challenging in the future, i.e., </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>472 structures – values or else </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Works in process </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Things built with maintenance dollars </li></ul></ul></ul></ul></ul><ul><li>Others driven by business needs and accountability </li></ul>
    16. 16. Some Reasons for Audit Findings <ul><li>Definitions not consistent </li></ul><ul><ul><li>Asset categories </li></ul></ul><ul><ul><li>Work type </li></ul></ul><ul><ul><ul><li>I.e., Construction, preservation, maintenance </li></ul></ul></ul><ul><li>Depreciating too fast </li></ul><ul><ul><li>Not getting all or accurate costs </li></ul></ul><ul><ul><ul><li>Works in progress is only part of the issue </li></ul></ul></ul><ul><ul><li>Rate not matching useful life </li></ul></ul>
    17. 17. What’s the Hammer? <ul><li>Repeat significant audit findings mean </li></ul><ul><ul><li>Increasing oversight by </li></ul></ul><ul><ul><ul><li>Audits Division </li></ul></ul></ul><ul><ul><ul><li>Feds </li></ul></ul></ul><ul><ul><ul><li>FHWA </li></ul></ul></ul><ul><ul><li>Potential impacts to bond rating </li></ul></ul><ul><ul><ul><li>Mortgage crisis makes this more and more of a reality </li></ul></ul></ul>
    18. 18. Asset Management & GASB <ul><li>Asset Management efforts can provide means to comply with requirements </li></ul><ul><li>GASB standards can provide structure for asset data </li></ul><ul><li>Effectively blended – sets the stage for much improved financial information </li></ul><ul><ul><li>Enabled by ERP/integrated system </li></ul></ul>
    19. 19. Working on the Issues <ul><li>Improving communication </li></ul><ul><ul><li>ODOT Financial Reporting staff, Asset Mgmt staff, asset owners, etc. </li></ul></ul><ul><ul><ul><li>Understanding and solving issues </li></ul></ul></ul><ul><li>Improving asset data </li></ul><ul><ul><li>Inventory </li></ul></ul><ul><ul><li>Updates </li></ul></ul>
    20. 20. Asset List: (Draft To Date)
    21. 21. Features Attributes & Conditions Survey (FACS): (Draft To Date)
    22. 22. Other Things to be Aware of <ul><li>Asset Management efforts also positions the agency to revisit financial reporting approach (Depreciation or Modified) </li></ul><ul><ul><li>Changing to the Modified approach requires well established and integrated sources of data across assets (still years away) </li></ul></ul><ul><ul><ul><li>Accountabilities in Modified approach may be difficult to sustain </li></ul></ul></ul><ul><ul><ul><ul><li>Requires condition levels, targets and investments to keep them there </li></ul></ul></ul></ul>
    23. 23. Suggestions for the Future <ul><li>Continued communication! </li></ul><ul><li>Work together on definitions </li></ul><ul><ul><li>Assets first, activities later </li></ul></ul><ul><li>Continue to work on shared solutions </li></ul><ul><ul><li>Data that can be integrated (now or later) </li></ul></ul><ul><li>Revise asset list for shared purpose </li></ul><ul><li>“Right size” asset data and management programs </li></ul><ul><li>Position to support and relate </li></ul><ul><ul><li>Ease of efforts later </li></ul></ul>
    24. 24. Questions?