September 30, 2015
Below are the clarifications to questions raised by our previous TAA letter on GASB 68 (September 14, 2015), revisions to Schedule L-1 with the changes from the Financial Integrity Rating System of Texas (FIRST) and GASB 68, and changes to the data feed.
GASB 68 Additional Information
Does GASB 68 have an effect on the governmental fund financial statements?
The Governmental Accounting Standards Board (GASB) required governmental entities to recognize the unfunded or overfunded status of its pension plan (GASB 68). The journal entries to report the information are made only on the government-wide financial statements.
Do charter schools have to report net pension liability under GASB 68?
Charter schools are not subject to GASB 68 and are not required to record a net pension liability. However, there are additional note disclosures required under FASB SFAS 158 (Subtopic 715-80) additional information coming soon.
Why is the TEA creating new accounting codes if the information is not reported in PEIMS?
The object codes that the TEA reserved are for reporting purposes only and will not be used to report information in the Public Education Information Management System (PEIMS). These codes were defined in order to allow districts the ability to create a contra fund to record the journal entries in an orderly manner. The codes are also used in reporting information back to the TEA on the L-1. We are requesting that this information be presented on the L-1 so that the TEA may reverse this information when calculating FIRST indicators affected by this recent change.
Is it an acceptable practice to allocate pension expense to other funds or functions if the expense is immaterial?
When allocating the pension expense related to GASB 68 for proprietary (enterprise) funds and for functions with very limited amounts allocated to them, it is acceptable to move the pension expense to functions with a greater amount of the allocated expense so long as the financial statements remain materially correct. Please use a materiality level acceptable for you and your auditor to complete the audit. For example, a proprietary fund (7XX) has $100,000 in contributions (object code 6146) compared to total contributions (object 6146) of $20,000,000 for the district. The pension expense allocation amount would be .5%. It would be an acceptable method to allocate this pension expense to other larger functions (like function 11) for reporting purposes so long as the district maintains an adopted policy that the general fund will pay for the long-term pension liability.
Changes to Schedule L-1 (Required Responses to Selected School FIRST Indicators)
Please note that the wording of the Schedule L-1 questions has been revised to more closely match the related FIRST indicators. Questions SF7, SF8, SF11, SF12, and SF13 have been added and question SF9 has been moved to SF6. Questions SF 11–13 were added in order for districts to report Net Pension Assets, Net Pension Liabilities, and Pension Expense related to the GASB 68 journal entries. The revised Schedule L-1 is attached.
Changes to the AUDIT System data feed
Additionally there are changes to the AUDIT System data feed upload.
Exhibit J-2 (old Indirect Cost Rates Schedule)
• should be eliminated from both the annual financial report and electronic data feed submission
• the Audit application will not accept J-2 data
Exhibit J-3 (Fund Balance and Cash Flow Calculation Worksheet)
• still optional and can be included in the annual financial report
• however, it will be deleted from the electronic data feed submission
• the Audit application will not accept J-3 data
Should you have questions please contact the Division of Financial Compliance at
(512) 463-9095 or firstname.lastname@example.org or email@example.com.