The URL can be used to link to this page

Home My WebLink AboutIR 10059 INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 10059 To the Mayor and Members of the City Council October 17, 2017 h�T�i7 Page 1 of 4 �i {i7 Y *a SUBJECT: IMPLEMENTATION OF GOVERNMENTAL ACCOUNTING rrn f STANDARDS BOARD STATEMENTS EFFECTIVE FISCAL YEAR 2017 The purpose of this Informal Report is to summarize the Governmental Accounting Standards Board Statements that are applicable to the City in fiscal year 2017. Overview information on these statements is provided below and all applicable requirements will be included in the City's upcoming Comprehensive Annual Financial Report (CAFR) and external audit. GASB Statement No. 73 — Accounting and Financial Reporting for Pensions and Related Assets that are not Within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statement 67 and 68 Background On June 29, 2015, the Governmental Accounting Standards Board (GASB) issued Statement No. 73, "Accounting and Financial Reporting for Pensions and Related Assets That Are Not Within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statements 67 and 68". This Statement establishes or amends requirements for pensions that are not within the scope of the GASB's earlier Statements. Overall Effect on Financial Reporting The objective of this Statement is to improve the usefulness of information reported on pensions in the general purpose external financial reports of state and local governments by enhancing comparability. The Statement extends the approach to accounting and financial reporting established by GASB Statement 68 to all pensions. GASBS 73 applies to both defined benefit and defined contribution pension plans that either do not have any dedicated assets associated with them or have assets that are not in a trust. Impact on the City Statement No. 73 does not apply to the City as the City's pension plan falls within the scope of GASB Statement No. 68. GASB Statement No. 78 — Pensions Provided Through Certain Multi-Employer Defined Benefit Pension Plans Background On December 11, 2015, GASB issued Statement No. 78, "Pensions Provided through Certain Multiple-Employer Defined Benefit Pension Plans". This Statement establishes requirements for ISSUED BY FINANCIAL MANAGEMENT SERVICES FORT WORTH, TEXAS INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 10059 To the Mayor and Members of the City Council October 17, 2017 h�T�i7 Page 2 of 4 �i {i7 Y *a SUBJECT: IMPLEMENTATION OF GOVERNMENTAL ACCOUNTING rrn f STANDARDS BOARD STATEMENTS EFFECTIVE FISCAL YEAR 2017 recognition and measurement of pension expense, expenditures, liabilities, note disclosures, and required supplementary information for multiple-employer pension plans. Overall Effect on Financial Reporting Previously, cost-sharing multiple-employer pension plans reported details associated with the financial position of the pension under Statement No. 68. This statement amends the scope and applicability of Statement No. 68 by excluding cost-sharing multiple-employer pensions from the reporting requirements of Statement No. 68 and establishes new reporting requirements for which these plans must comply. The Texas Municipal Retirement System is an example of this hybrid, which would be affected by Statement 78. Impact on the City Statement No. 78 does not affect the Fort Worth Employees' Retirement Fund data presented in the City's Comprehensive Annual Financial Report, because the City's pension plan does not meet the criteria of a multi-employer defined benefit pension plan. GASB Statement No. 80 — Blending Requirements for Certain Component Units Background On February 11 , 2016, GASB issued Statement No. 80, "Blending Requirements for Certain Component Units". This Statement provides additional criterion applicable to component units organized as not-for-profits such as public hospitals and/or governmental healthcare organizations. Overall Effect on Financial Reporting Under Statement No. 80, state and local governments are required to blend the financial information of component units incorporated as not-for-profit corporations in the primary government's financial statements when the primary government is the sole member of the not- for-profit corporation. Component units that are included in the reporting entity's financial statement pursuant to Statement No. 39, Determining Whether Certain Organizations Are Component Units, are not affected. ISSUED BY FINANCIAL MANAGEMENT SERVICES FORT WORTH, TEXAS INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 10059 To the Mayor and Members of the City Council October 17, 2017 h�T�i7 Page 3 of 4 �i {i7 Y *a SUBJECT: IMPLEMENTATION OF GOVERNMENTAL ACCOUNTING rrn f STANDARDS BOARD STATEMENTS EFFECTIVE FISCAL YEAR 2017 Impact on the City The Financial Management Services Department will continue to monitor all potential component units as required by Statement No. 39. To date, no component units are required to be evaluated under the criteria of Statement No. 80. GASB Statement No. 82 — Pension Issues — An amendment of GASB Statements Nos. 67, 68, and 73 Background On April 11, 2016, the Governmental Accounting Standards Board (GASB) issued Statement Number 82. This Statement addresses the following issues: 1) Presentation of Payroll-Related Measures in the Required Supplementary Information (RSI) of the Comprehensive Annual Financial Report (CAFR) 2) Selection of Assumptions, and 3) Classification of Employer-Paid Member Contributions Overall Effect on Financial Reporting The three primary objectives of this Statement are to improve the consistency in the application of pension accounting and financial reporting requirements as more fully described below: 1. The Statement changes the payroll amount that is disclosed in the Required Supplementary Information for pensions from covered-employee payroll (the payroll of employees that are provided pensions through the pension plan) to covered payroll (the payroll on which contributions to the pension plans are based). The difference between these figures is the amounts earned by employees on which contributions are not made. 2. The Statement clarifies that a deviation (as the term is used in Actuarial Standards of Practice) from the guidance in an Actuarial Standards Practice does not comply with the GASB Statements requirements on pensions for the selection of assumptions used in determining the total pension liability. 3. The Statement clarifies that payments made by an employer to satisfy the contribution requirements that are identified by the pension plan terms as plan member contributions should be classified as employee, not employer contributions. ISSUED BY FINANCIAL MANAGEMENT SERVICES FORT WORTH, TEXAS INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 10059 To the Mayor and Members of the City Council October 17, 2017 h�T�i7 Page 4 of 4 �i {i7 Y *a SUBJECT: IMPLEMENTATION OF GOVERNMENTAL ACCOUNTING rrn f STANDARDS BOARD STATEMENTS EFFECTIVE FISCAL YEAR 2017 Impact on the City The Financial Management Services Department has reviewed the requirements of this Statement and any financial impact is anticipated to be insignificant. As required, payroll-related disclosures will be updated, but will have no financial impact. The City does not deviate from required Actuarial Standards of Practice when completing our annual valuation, thus no impact is anticipated from this requirement. Finally, the contribution clarification between employer and member contributions only occurs when we have employees on workers' compensation. These amounts are minimal and are not ordinary or customary. If you have any questions, please call Aaron Bovos, Chief Financial Officer, at 817-392-8517 David Cooke City Manager ISSUED BY FINANCIAL MANAGEMENT SERVICES FORT WORTH, TEXAS