KEEPING STATE FISCAL OFFICIALS INFORMED VOLUME 34, NUMBER 5 | MAY 2014

NATIONAL STATE AUDITORS ASSOCIATION PROVIDES REAL VALUE FOR MEMBERS: INFORMATION SHARING, NETWORKING & MORE BY REBECCA OTTO, STATE AUDITOR OF MINNESOTA AND PRESIDENT OF NSAA

Looking back over the last year, I can honestly say that Subsequent to the Measurement Date and Measurement the time has fl own. It has been an honor to serve as your of Elements of Financial Statements) and one preliminary president. NSAA is one of the best organizations that I have views document (Fair Value Measurement and Application) ever been a part of: the members are highly professional, from the GASB. Additionally, the committee responded always willing to assist one another, and are very to two exposure draft s from the American Institute of productive. Combine that with top-notch professional staff Certifi ed Public Accountants: the proposed statement on from NASACT, and we have a winning formula! standards for attestation engagements titled Attestation Standards: Clarifi cation and Recodifi cation and the When I fi rst became the state auditor of Minnesota, NSAA proposed statement on auditing standards titled Using the reached out to me and convinced me to attend an annual Work of Internal Auditors. I want to thank all committee conference. Th ey off ered a scholarship to help defray my members who participated in responding to these due costs, which made it possible for me to attend. Attending process documents. the conference was one of the best things I did. Being an active member of NSAA has helped me grow professionally NSAA members were also involved in working on and to forge many valuable relationships. When the NASACT’s response to the Financial Accounting economic downturn hit and the Recovery Act arrived, it Foundation’s request for input on GASB’s Scope of was helpful to work with other NSAA members to make Authority: Consultation Process. Th is work helped shape the sure we could meet the increased demands of overseeing fi nal outcome for GASB’s process in considering projects. ARRA funds with reduced staffi ng levels. Member input was valued and had an overall positive outcome for the standard-setting system. Based on my positive experiences over the last eight years with NSAA, I would highly recommend that new members NSAA’s Human Resources Committee continued to hold become involved and consider serving on an NSAA information sharing calls with many states joining in on committee. Th ere are several to choose from, and meetings the conversation. Th ere has been a continuing interest in are normally held by conference call. Th e committees work recruitment, retention and developing our future leaders as on a range of issues important to our work. long-time employees retire and the economy picks up. Th is is not a surprise, considering that the ability of our offi ces NSAA members and our committees stayed busy this to provide strong, eff ective oversight hinges on having year. NSAA’s Audit Standards and Reporting Committee a highly professional, trained, productive and engaged created a work group to discuss audit issues related workforce. As the economy continues to improve, attracting to the implementation of Statement No. 68 from the and retaining the best and brightest to work in government Governmental Accounting Standards Board. Th e work auditing will most likely become more challenging. Th is group has held seven conference call meetings. I want will require all of us to stay on our toes, understand the to thank everyone who put time and energy into the needs of the next generation of auditors, and be creative work group, especially Gerry Boaz (TN) who chaired the to ensure that we are successful. HR information sharing meetings. calls work because of the willingness of member offi ces to Th e Audit Standards and Reporting Committee also, share their approaches to recruiting, improving retention, in conjunction with state comptroller’s Committee on boosting morale, onboarding new staff successfully, and Accounting and Financial Reporting, responded to two exposure draft s (Pension Transition for Contributions Made continued next page

REBECCA OTTO, NSAA PRESIDENT 2013-14 Minnesota State Auditor Otto was elected in 2006 and re-elected in 2010. She taught seventh grade science for five years. A successful businesswoman, she left a career as president of a 50-employee business she helped found to devote her time to public service and give back to the community. She holds a master’s degree in education from the University of Minnesota and a B.A. in biology from Macalester College.

NASACT News | May 2014 1 MESSAGE FROM NSAA’S PRESIDENT

handling promotions. I want to especially thank John July 1, 2013. He was a very active contributing member Geragosian (CT) for serving as the vice-chair of the including serving as president of the association. In his committee, and Glen Fowler (CA), Scott Frank (KS) and new position as the GASB chair, David hit the ground Roland Turner (VA) for always being willing to share what running. We look forward to a great working relationship they are doing around HR. Th e benefi t of working on this with him in the years to come. I also want to wish a warm committee is that you realize many of us face the same farewell to Tom McTavish (MI), as he will be retiring issues no matter what part of the country we serve in. soon aft er decades of public service in the governmental auditing fi eld. As a result of well-deserved retirements or NSAA’s Performance Audit Committee, chaired by Steve members moving on to other opportunities, I also want Eells (NJ), also continues to hold regular information to welcome these new NSAA members: Paul Joyce (IN), sharing calls. Most recently, the committee hosted a Marc Larkins (NJ) and Doug Ringler (MI). joint information sharing call with the E-Government Committee to discuss the types of audit provisions that As the president of NSAA, I have the honor and privilege should be included in cloud services contracts. of hosting the NSAA annual conference on June 10-13, 2014. Th e conference will be held in beautiful downtown A very popular service that NSAA off ers is the technical Saint Paul, Minnesota. Saint Paul is very easy to get to from inquiry program. When a member wants to fi nd out the Minneapolis/Saint Paul airport. Th e Mall of America, a how other states are handling issues such as purchasing must-see destination, is about a 15-minute drive from the new soft ware, addressing new auditing or transparency hotel. Located by the mighty Mississippi River, Saint Paul has requirements, or setting up a hotline, for example, NSAA much to see within walking distance of the conference site. staff will send out a technical inquiry on their behalf. My offi ce had NSAA send out a technical inquiry, and my staff We have a great agenda planned for the conference! We found the information we received from member offi ces will have a special focus on technology and making sure we very helpful. If you want to look back at past inquiries and have a strong workforce in the years to come. I hope that responses, you can fi nd them in the members only section Saint Paul’s Midwestern location will provide a great middle of NASACT’s website. ground for everyone to travel to. And I promise: the snow will be gone, the ice will be out on the lakes and rivers, and Finally, I would be remiss if I did not publicly thank some the grass will be green. See you all soon! of our departing members. David Vaudt, former Iowa auditor of state, took the helm as the chair of the GASB on

NSAA COMMITTEE MEETING SCHEDULE 10:30 a.m.  E-Government IT’S NOT TOO LATE TO REGISTER! The following NSAA committees will meet on Presiding: Chloe Haidet (GA), Chair Visit www.nasact.org to register and find Tuesday, June 10, in conjunction with the 2014 11:30 a.m.  Peer Review additional details! Questions may be directed to NSAA Annual Conference in Saint Paul, Minnesota. Sherri Rowland at [email protected] or (859) All NSAA members and staff are invited to attend. Presiding: Elaine Howle (CA), Chair 276-1147. Conference call-in capability will also be offered. 1:30 p.m.  Single Audit Those wishing to participate by conference call Presiding: Dianne Ray (CO), Chair may do so by dialing (512) 225-3050 (guest code 67981#). All meetings are listed in Central time. 2:30 p.m.  Audit Standards and Reporting PROGRAM Presiding: Randy Roberts (AZ), Chair

8:30 a.m.  Human Resources 3:30 p.m.  Performance Audit Presiding: Rebecca Otto (MN), Chair Presiding: Steve Eells (NJ), Chair 9:30 a.m.  Auditor Training 4:30 p.m.  Executive Committee Presiding: Courtney Carraway (NC), Chair Presiding: Rebecca Otto (MN), NSAA President

DON’T FORGET THE TRAVEL ASSISTANCE PROGRAM! State auditors in good standing are eligible to receive up to $750 in travel assistance to attend the conference. The assistance will be provided as a reimbursement following the conference. Download the travel assistance form at www.nasact.org/conferences_training/nsaa/conferences/ AnnualConferences/2014AnnualConference/2014AnnualConference.cfm.

NASACT News | May 2014 2 NEWS FROM WASHINGTON

SINGLE AUDIT ROUNDTABLE HOLDS FIRST MEETING OF 2014

Th e fi rst 2014 single audit roundtable was held recently be discussing future revisions to the CPE requirements to to update participants on issues related to the federal refl ect current trends. single audit process. Th e roundtable, which is held twice Th e American Institute of Certifi ed Public Accountants yearly, is a forum for discussion between the federal provided an update on practice quality initiatives and on government (including federal inspectors general) and the activities of the Government Audit Quality Center state auditors and CPA fi rms that conduct the single audit. (GAQC). Th e four GAQC initiatives include: Representatives from state audit offi ces included George Strudgeon from the Virginia Offi ce of the Auditor of Public • Examining the eff ectiveness of peer reviewers, including Accounts and Kelly Berger-Davis from the Ohio Offi ce of review criteria and educational requirements. the Auditor of State. • Focusing the peer review on risky industries and areas Th e U.S. Government Accountability Offi ce provided an of concern. update on Standards for Internal Control in the Federal • Making peer reviews more informative. Government (the Green Book) and Government Auditing Standards (the Yellow Book). Th e fi nal revised Green Book • Improving engagement tracking. is expected to be released this summer. It will address Th e GAQC is celebrating its tenth anniversary and now has the same 17 principals as COSO but will be modifi ed 24 state audit organizations as members. specifi cally to fi t the government environment. It was also clarifi ed that the reference to the Green Book in the Gil Tran from the U.S. Offi ce of Management and Budget recently released grant reform guidance from the U.S. reported that OMB continues outreach eff orts to educate Offi ce of Management and Budget is intended to be a those aff ected by the new uniform grant guidance. OMB best practice and not a requirement. Th e GAO has also is expecting federal agency implementation plans in established guidance for understanding the new peer June. Mr. Tran also noted that OMB is getting ready to review ratings. Th e guidance clarifi es that the reporting release the fi nal 2014 compliance supplement. Of note threshold between the ratings of “pass” and “pass with was the removal of the requirement to test 1512 reports defi ciencies,” in the 2011 Generally Accepted Government and the removal of the testing of “principals” in Section Auditing Standards, is essentially the same as that between 1. Additionally, Mr. Tran stated that as a result of the an unmodifi ed and a modifi ed opinion under previous Aff ordable Care Act, auditors will not have to test Medicaid GAGAS revisions. Th e guidance also includes defi nitions and Medicare eligibility if it is based on modifi ed adjusted of key terms including “defi ciency” and “signifi cant gross income. defi ciency” in the context of peer review. Further, at the Th e next roundtable will take place in Washington, DC, on Yellow Book Advisory Council meeting this fall, GAO will October 29.

NASACT RECEIVES NFMA’S EXCELLENCE IN DISCLOSURE AWARD

On May 6 the National Federation of Municipal Analysts Interim Financial Reporting: Best Practices for State presented the Excellence in Disclosure Award to NASACT. Governments, which was released by NASACT in August Th e award was presented at NFMA’s annual conference 2013. Th e best practices were developed by NASACT’s held in Orlando, Florida. Nominations were received from Continuing Disclosures Task Force, which was co-chaired the Board of Governors and Disclosure Committee and by Kim Wallin, Nevada’s state controller, and Colin subcommittee chairs, and the nominees were reviewed by MacNaught, assistant treasurer for debt management for NFMA’s Disclosure Committee. the commonwealth of Massachusetts. NFMA supported NASACT’s work by providing comments from the Th e Excellence in Disclosure Award recognizes NASACT’s Disclosure Committee and an endorsement by the Board of work in promoting interim disclosure reporting by the Governors. states and the development of the document Voluntary

BEST PRACTICES IN VOLUNTARY INTERIM FINANCIAL REPORTING In August 2013 NASACT released the document Voluntary Interim Financial Reporting: Best Practices for State Governments. The document outlines ten best practices to be implemented by states on a voluntary basis to augment existing disclosure programs. Subsequently, NASACT has formed an Interim Disclosures Implementation Group to implement the best practices and develop tips for other states to do the same. At left: Cornelia Chebinou, NASACT’s Washington director and staff liaison to the NASACT task force that developed the document, accepted the award from NFMA board member Jeffrey Burger.

NASACT News | May 2014 3 NEWS FROM WASHINGTON

GAO SAYS IMPROVEMENTS ARE NEEDED IN SEC’S INTERNAL CONTROLS AND ACCOUNTING PROCEDURES Th e U.S. Government Accountability Offi ce recently released adjustments of prior years’ undelivered orders in a management report on the U.S. Securities and Exchange accordance with the U.S. Standard General Ledger. Commission entitled Improvements Needed in SEC’s Internal • Develop and implement policies and procedures Controls and Accounting Procedures. Th e report follows detailing the steps and documentation required to others on the SEC’s FY 2013 and 2012 fi nancial statements, eff ectively control and monitor travel expenses paid which included signifi cant defi ciencies in internal control through the central billing account. over fi nancial reporting. Th is most recent report communicates some of the less signifi cant defi ciencies GAO identifi ed in In addition to internal control defi ciencies, the report SEC’s internal controls during the FY 2013 audit, along with related identifi es several previous recommendations that recommendations, and provides an overview of the status of prior GAO recommendations. warrant attention from the SEC. In this new report, GAO outlined defi ciencies related to: • Procedures for transferring disgorgement and penalty- • Develop and implement control procedures to related funds to the Department of the Treasury. include specifi c steps for the review, classifi cation, and disposition of collections in order to properly apply • Monitoring of disgorgement and penalty-related cases collections to an SEC accounts receivable or transfer fi led in courts. collections to either another entity or to Treasury. • Segregation of duties for recording disgorgement and • Revise control procedures for conducting the annual penalty-related fi nancial data. physical inventory count of property and equipment • Safeguarding of SEC cash receipts received at its service to include specifi c steps required to (a) reconcile provider. capitalized property and equipment to be counted with • Recording of property and equipment transactions. related general ledger balances, (b) reconcile division and offi ce responses to the items listed in the property • Management’s review of legal contingencies and and equipment report used for the physical count, signifi cant events. and (c) assess and appropriately refl ect any fi nancial Looking back at previous recommendations, GAO found statement impact of any issues identifi ed during the that several items were still open that the SEC should physical count. address: GAO’s full review of fi nancial management practices at • Correct the general ledger system confi gurations the SEC can be found at www.gao.gov/assets/670/663143. to properly account for upward and downward pdf.

OOURUR NNEWEW MMEXICOEXICO HOSTSHOSTS IINVITENVITE YOUYOU TOTO ATTENDATTEND NNASACTASACT 20142014 JAMES B. LEWIS HECTOR BALDERAS RICKY BEJARANO August 9-13, 2014 State Treasurer (NM) State Auditor (NM) State Comptroller (NM) President of NASACT Conference Co-Host Conference Co-Host Santa Fe, New Mexico Conference Host The Eldorado Hotel

NASACT News | May 2014 4 ASSOCIATION NOTES

LINDA COMBS IS NAMED STATE CONTROLLER IN NORTH CAROLINA North Carolina Gov. Pat McCrory government and was responsible for of Transportation she led that agency recently appointed Dr. Linda establishing fi nancial management to be the fi rst federal department to Morrison Combs as state controller. policies and requirements for the install a single core fi nancial system Executive branch of the federal department-wide. From 2005-2007 Dr. Combs was government, totalling $2.7 trillion in controller of the United States. As Dr. Combs has a doctoral degree from revenue. U.S. controller she worked on the Virginia Tech, undergraduate and widest possible range of issues at During her career she has worked for master’s degrees from Appalachian the highest levels of government. three U.S. Presidents and has earned State University, and is a graduate of She routinely briefed the President fi ve Senate confi rmations. Previously the Program for Senior Managers at of the United States on the status of Dr. Combs has been the chief Harvard University. fi nancial management in the federal fi nancial offi cer at the Environmental Numerous organizations have departments and frequently testifi ed Protection Agency where she led honored Combs for her excellence in before numerous Congressional that agency to obtain a clean audit leadership, exemplary performance oversight committees. She led opinion with no material weaknesses and outstanding service. Th ese awards Sarbanes-Oxley compliance for and received the highest honor include three from the President of the  the entire federal government. Dr. awarded the prestigious Crystal United States and nine awards from Combs headed the Chief Financial Eagle Award from the President. As various members of the President’s Offi cers Council for the entire federal assistant secretary of the Department Cabinet.

IN MEMORIAM: BOB GRAHAM, FORMER STATE AUDITOR OF WASHINGTON STATE On Wednesday, April 16, Robert V. lasting legacies from his time as performance audits, ultimately leaving “Bob” Graham, former state auditor of state auditor was his advocacy of Washington as the only state not Washington, died at the age of 93. performance audit. doing performance audits. It took 34 years before the offi ce fi nally won Mr. Graham was born April 12 in Performance audits were a new type performance audit authority and Pacifi c, Washington, and died at his of audit being conducted at the time. a stable funding source to support family home in Olympia. Several audits that were critical of the function in 2005, a change that state agencies caused the Washington Mr. Graham took offi ce as state happened under the tenure of Mr. legislature to pass a law preventing auditor of Washington in 1965 and Graham’s successor, Brian Sonntag. the state auditor from conducting served for 28 years. One of the

PPLANLAN TOTO AATTENDTTEND THETHE 20142014 NNASACTASACT ANNUALANNUAL CCONFERENCEONFERENCE Join NASACT President James B. Lewis, Hector DON’T FORGET THE TRAVEL Balderas and Ricky Bejarano for the 2014 ASSISTANCE PROGRAM! NASACT Annual Conference in Santa Fe, New NASACT principals in good standing (or their Mexico, this August 9-13. designees) are eligible to receive up to $2,000 CONFERENCE HOTEL: to attend the conference. These funds can THE ELDORADO HOTEL be used to cover travel or registration costs. MORE INFORMATION All funds will be provided in the form of The conference will be held at the El Dorado Watch for more details coming soon! reimbursements after the conference. Hotel located in heart of Santa Fe near the Questions about the conference may be historic Plaza and surrounded by rich culture, SPECIAL ACTIVITIES directed to Donna Maloy at [email protected] history and art. This year’s conference rate is Our hosts are planning a number of special or (859) 276-1147. $189/night plus applicable tax. To reserve your activities, including a reception at the historic room, call (800) 955-4455 and ask for La Fonda on the Plaza Hotel, a Santa Fe the NASACT Annual Conference rate. The cut- landmark, and an event at the Palace of thee off date is July 8, 2014. Governors. A guest program will also be offeredfered where guests will enjoy a walking tour of historic Santa Fe and a day trip to Chimayo.

NASACT News | May 2014 5 ASSOCIATION NOTES

NASACT HOSTS 33rd ANNUAL TENNESSEE TRAINING SEMINARS

Each year NASACT works with the Tennessee Comptroller of Certifi ed Public Accountants and the U.S. Government the Treasury to plan and conduct the Tennessee Government Accountability Offi ce. Auditor Training Seminars Program. Th is year marked the • A review of emerging issues from Congress, the U.S. thirty-third year for this successful training series, with 638 Offi ce of Management and Budget, and the U.S. attendees. Securities and Exchange Commission.  Th e seminars are conducted in four cities across Tennessee • Case studies of fraud, waste and abuse. Nashville, Jackson, Chattanooga and Morristownduring the months of April and May and cover topics as diverse as: Th e seminars are specifi cally designed to enhance the skills of auditors in CPA fi rms that conduct local government audits as • Updates on activities of the Governmental Accounting well as accountability professionals working in government. Standards Board and the American Institute of

QUESTIONS? If you are interested in starting a government auditor training program in your state, contact Kinney Poynter at [email protected].

NASC NAMES COMMITTEE CHAIRS

National Association of State Comptrollers President David Program Committee A. Von Moll, state comptroller of Virginia, has named chairs Chair: John Reidhead (UT) and co-chairs of NASC’s committees. Resolutions Committee Advisory Committee for State Comptrollers: Technical Activities and Functions (Comptrollers’ Book) Chair: Ed Ross (KY) Chair: Merideth Hackney (ID) Site Committee Committee on the Financial Plan Chair: Brandon Woolf (ID) Chair: Anna Maria Kiehl (PA) Committee on Accounting and Financial Reporting Committee on Outreach Chair: Alan Skelton (GA) Chair: Cynthia Cloud (WY) Vice-Chair: Stacy Neal (MO)

Constitution and Bylaws Committee State Government Payroll Information Sharing Group Chair: Calvin McKelvogue (IA) Co-Chair: Steve Nielson (WA) Co-Chair: Vicki Smith (TX) Middle Management Conference Committee Co-Chair: Lynne Bajema (OK) Travel and Purchase Card Information Sharing Group Co-Chair: TBD – host state Co-Chair: Patti Everill (ID) Co-Chair: Michelle Oliver (FL) Nominating Committee Chair: Kim Wallin (NV)

MORE INFORMATION Most committee work is accomplished via about NASC committee opportunities may also be conference call. directed to Kim. Full committee rosters and resources (such as minutes, other documents, etc.) can be found at To join a NASC committee, contact Kim O’Ryan at www.nasact.org/nasc/committees/index.cfm. [email protected] or (859) 276-1147. Questions

NASACT News | May 2014 6 ASSOCIATION NOTES

WHAT’S NEW AT www.nasact.org? Th e GASB also recently issued an exposure draft entitled Th e Hierarchy of Generally Accepted Accounting Th e following new items have been posted on NASACT’s Principles for State and Local Governments. website: Th e GASB is proposing reducing the GAAP hierarchy • NASC technical inquiry on the following topic at to two categories of authoritative GAAP. www.nasact.org/nasc/technical/index.cfm (members only content): Th e Board has asked for comments on all matters in this proposed statement, including reasoning - Fees for Garnishments behind expressed views and alternatives that could be • A link to the fi nal Digital Accountability and considered. Where possible, please provide a paragraph Transparency Act legislation at www.nasact.org. reference with comments. Th e ED can be downloaded from the GASB’s website at www.gasb.org. NASACT will be preparing an association NASACT SEEKS INPUT ON GASB EDS position on this ED. Th e GASB’s deadline for comments Th e Governmental Accounting Standards Board recently is December 31, 2014. issued an exposure draft entitled Fair Value Measurement Th e GASB also recently issued the ED Implementation and Application. Guide No. 20XX-1. Th e ED describes how fair value should be defi ned Th e Board has asked for comments on all matters in this and measured, what assets and liabilities should be proposal, including reasoning behind expressed views measured at fair value, and what information about fair and alternatives that could be considered. value should be disclosed in the notes to the fi nancial statements. Where possible, please provide a paragraph reference for comments. Th e ED can be downloaded from the GASB’s Th e GASB will hold a live, one-hour, CPE webinar on website at www.gasb.org. the exposure draft at 1 p.m. EDT on Tuesday, July 15 aimed at auditors and preparers. On Th ursday, July 17 NASACT will be preparing an association position on at 1 p.m. EDT, the GASB will host a one-hour, non-CPE this ED. Th e GASB’s deadline for comments is December webinar for fi nancial statement users. Registration for 31, 2014. both events will be announced on the GASB website in To include your comments in NASACT’s association the coming weeks. responses to either of these two exposure draft s, email them Th e ED can be downloaded from the GASB’s website at to Kim O’Ryan ([email protected]) or Sherri Rowland www.gasb.org. NASACT will be preparing an association ([email protected]) by Friday, October 17. position on this ED. Th e GASB’s deadline for comments Due to the size of the Implementation Guide ED, NASACT is August 15, 2014. would like to have at least two volunteers to review each of To include your comments in NASACT’s association the chapters. If you would like to volunteer, please contact response to this exposure draft , email them to Kim O’Ryan Sherri or Kim. ([email protected]) or Sherri Rowland (srowland@ nasact.org) by Friday, July 18.

UPCOMING INFORMATION SHARING CALLS

JUNE AUGUST NASACT Committee on Accounting, NASC Payroll Information Sharing - Reporting and Auditing - June 3 August 20 NASACT Pension Implementation Work NASC Travel and P-Card Information Group - June 4 Sharing – August 27 JULY NSAA HR Information Sharing - July 30

GET INVOLVED! For information on participating in any of these calls, contact NASACT’s headquarters office at (859) 276-1147.

NASACT News | May 2014 7 NEWS FROM GASB

Leases, Fiduciary Responsibilities, and Tax Abatement Disclosures. Th e Board also began a discussion of its technical plan for May–August 2014. Th is article addresses key decisions made by the Board during its deliberations on these topics. (For complete minutes of the Board meeting, visit the project pages devoted to each project on the GASB website.) GASB ISSUES EXPOSURE DRAFT ON FAIR VALUE MEASUREMENT AND APPLICATION Th e GASB recently issued for public comment a proposed SPOTLIGHT ON THE GASB PRACTICE FELLOW statement addressing accounting and fi nancial reporting PROGRAM issues related to fair value measurements. Th e GASB Practice Fellow Program is a unique opportunity Th e exposure draft Fair Value Measurement and Application for public accountants with at least eight years of experience describes how fair value should be defi ned and measured, to participate in the Board’s standard-setting process. what assets and liabilities should be measured at fair value, Practice Fellow candidates are nominated by their fi rms and what information about fair value should be disclosed and commit to spending two years working at the GASB in the notes to the fi nancial statements. headquarters in Norwalk, Connecticut, before returning to their sponsor fi rm. Additional information about the Fellow Program is GASB ISSUES CONCEPTS STATEMENT ON available by clicking here or by contacting Robert H. MEASUREMENT OF ASSETS AND LIABILITIES Kalina, vice president of human resources at the Financial Th e GASB recently issued Concepts Statement No. 6, Accounting Foundation, at [email protected]. Measurement of Elements of Financial Statements, which will guide the GASB in establishing accounting and fi nancial reporting standards for U.S. state and local governments GARS “MOBILE” VERSION NOW AVAILABLE FOR regarding the measurement of assets and liabilities. TABLET DEVICES Th e Financial Accounting Foundation recently announced the release of a version of the GASB Governmental BOARD MEETING HIGHLIGHTS Accounting Research System® that has been designed for use Th e GASB held public meetings April 8–10, 2014, to on tablet devices. GARS Online subscribers can access the discuss issues associated with its projects on Fair Value new tablet version through iOS (iPad) and Android-based Measurement and Application, Postemployment Benefi ts, devices at https://gars.gasb.org.

PREPARER SURVEY ON THE are effective or ineffective in providing Your input is vital to the GASB’s standards- EFFECTIVENESS OF STATEMENT 34 information that is essential for decision- setting process. making and that enhances the ability to NASACT Member Input is Requested If you have any questions, please feel free to assess a government’s accountability? contact Roberta Reese ([email protected]) or The Governmental Accounting Standards Board The GASB has developed an online survey to gather Lisa Parker ([email protected]). is currently conducting pre-agenda research to feedback from preparers of governmental financial inform its assessment of the effectiveness of statements. The GASB would greatly appreciate you Statement No. 34, Basic Financial Statements—and taking the time to complete the preparer survey, Management’s Discussion and Analysis—for State which can be accessed at www.gasb.org/GASB- and Local Governments, and related standards. The reexam-survey. objective of this research is to gather feedback on these broad questions: It is anticipated that the survey will take longer than a typical GASB survey, given the magnitude 1. What concerns exist regarding the application of the requirements in Statement 34. You can, of the standards? however, download a copy of the survey in its 2. How do the costs of applying the standards entirety to consider before entering your responses compare with the perceptions of the benefits into the online version. The deadline for of the resulting information? completing the survey is Friday, June 6, 2014. 3. What financial reporting model requirements

NASACT News | May 2014 8 GASAC UPDATE

GASAC MEETS IN CONJUNCTION WITH NASC IN MARCH, IDENTIFIES PRIORITY PROJECTS FOR CONSIDERATION BY GASB Th e Governmental Accounting Standards Advisory Council Mr. Ebersole reported that David Sundstrom, GASB met on March 11-12 in conjunction with the annual meeting member, has been reappointed to another fi ve-year of the National Association of State Comptrollers. Many term, and Jim Reardon, commissioner of fi nance and conference attendees were able to interact with members of the administration in Vermont and the National Governors GASAC and the Governmental Accounting Standards Board Association’s representative on the GASAC, has been on an individual level and attend portions of the meeting. appointed vice-chairman of the GASAC. Attending the meeting were two of the government trustees on Over the course of the day-and-a-half meeting GASAC the Financial Accounting Foundation board: Daniel Ebersole, members provided feedback to the GASB on issues secretary and treasurer of the FAF and former state treasurer of Georgia, and Nancy Kopp, treasurer of Maryland and the To join the NASACT sub-committee that provides newest governmental trustee. A sub-committee of NASACT’s input to the GASAC, contact Kim O’Ryan (koryan@ Committee on Accounting, Reporting and Auditing works nasact.org) or Sherri Rowland ([email protected]). with NASACT’s representative on the GASAC, Marty Benison, state comptroller of Massachusetts, to help formulate NASACT’s positions prior associated with several projects and issues, including the to each GASAC meeting. Th e subcommittee, consisting Financial Reporting Model reexamination pre-agenda of Staci Henshaw (VA), Calvin McKelvogue (IA), Craig research activities; Leases; Fiduciary Responsibilities; Fair Murray (MI), Bryan Naab (WI), Brandon Purcell (ID) and Value Measurement and Application; and technical agenda Alan Skelton (GA), as well as both Sherri Rowland and Kim priorities. O’Ryan from the NASACT staff , reviews GASB position With respect to the Financial Reporting Model papers in the weeks leading up to the GASAC meetings. reexamination, GASB staff provided members of the Th e March GASAC meeting included hundreds of pages of GASAC with an update on pre-agenda research activities. documents as the Council participates in an annual exercise Th e GASB staff is conducting research to help the Board to identify priority projects for GASB to consider. In this assess whether the blueprint for the annual fi nancial year’s review, three NASACT priorities made the highest list statements, notes and supporting information continues of priorities: to be appropriate for state and local governments and is providing fi nancial statement users with the information 1. Reexamination of the fi nancial reporting model. they need to make decisions and assess government 2. Electronic fi nancial reporting. accountability. 3. Note disclosures (Statement 38). Members of the GASAC described what they perceive Other priorities identifi ed by the GASAC include popular as the positive and negative aspects of key features of reporting, interim fi nancial reporting and reexamination of the fi nancial reporting model. Th ese features include: the standards for debt refundings. While these additional disaggregating fi nancial information by funds; presenting items were not at the top of NASACT’s list, NASACT governmental fund fi nancial statements using the current members still have substantial interest in these projects. fi nancial resources focus and modifi ed accrual basis of accounting; and the government-wide fi nancial statements. NASACT has continued to prioritize sub-reporting unit GASAC members also identifi ed (1) components of the presentation standards for subsets of the reporting entity fi nancial reporting model that they consider unnecessary, (e.g., funds or departments) because both comptrollers and if any, and (2) essential information that is missing, if any. auditors, particularly in large governments, continue to see GASAC members and their constituent organizations have an increase in the issuance of fi nancial statements without been asked to complete a detailed survey on this project. authoritative guidance. Th is agenda item is one of GASAC’s Th e survey was released last week. Mr. Benison emphasized top-ten priorities. Th e GASAC’s input fed directly into the the importance of members using this tool to GASB’s consideration of the technical plan at its April 2014 meeting. Th e full prioritization list is on page 10. continued next page

MARTIN J. BENISON, NASACT’S VOICE ON THE GASAC Martin J. Benison, state comptroller of Massachusetts, is NASACT’s representative on the GASAC. He also serves as current chairman of the Council. Mr. Benison is immediate past president of NASACT and is active in a number of association committees and projects. He has served as comptroller of Massachusetts since 1999.

NASACT News | May 2014 9 GASAC UPDATE cont.

communicate with GASB on this important issue (see Finally GASAC spent considerable time discussing the related article from the GASB on page 8). current implementation challenges for GASB 68 as the American Institute of Certifi ed Public Accountants releases Th e Leases project is reexamining the GASB’s existing lease audit guidance, particularly around multiple employer accounting standards, which have been in eff ect for almost plans, and the recommendation by some that GASB 30 years. Members of the GASAC provided feedback on consider delaying implementation until the audit issues the major tentative decisions made since the prior GASAC could be sorted out. While GASB ultimately decided not meeting in October 2013. Th e GASAC member discussion to delay implementation, the meeting proved helpful in included how the GASB’s tentative decisions compare with emphasizing the complexity of the issues preparers and the proposals made by the Financial Accounting Standards auditors face. Board and International Accounting Standards Board. Members of the GASAC provided input on topics including the methods a government lessee would use to measure the liability and asset associated with a lease, both initially and in subsequent years.

GASAC PRIORITIES FOR GASB’S 21. Exchange and Exchange-Like Financial 41. Bankruptcy Statement in light of Detroit, TECHNICAL AGENDA Guarantees Stockton 22. Nonexchange Transactions-Statements 33 42. Research and Development-Statement 62 1. Financial Reporting Model-Statements 34, 35, and 36 43. Right of Offset-Statement 62 37, 41, and 46 and Interpretation 6 23. Termination Benefits-Statement 47 44. Social Activity Bonds 2. Electronic Financial Reporting 24. Accounting for Equity Interests in Component 45. Costs and Initial Rental Operations of Real 3. Interim Financial Reporting Units Estate-Statement 62 4. Note Disclosures-Statement 38 25. Deferred Compensation Plans-Statement 32 46. Landfills-Statement 18 5. Popular Reporting 26. Exchange-Like Revenues 47. Sales & Pledges of Receivables & Future 6. Debt Refundings and Other Extinguishments 27. Impairments of Assets Other Than Capital Revenues-Statements 48 and 65 of Debt-Statements 7, 23, and 62 Assets 7. Financial Performance Measurements 28. Irrevocable Charitable Trusts The next GASAC meeting is scheduled to be 8. Financial Transactions with Characteristics of 29. Accounting for Prior-Period Adjustments, held July 10-11 in New York in a location Both Loans and Grants Accounting Changes...-Statement 62 convenient to LaGuardia Airport. Observers 9. Reporting Unit Presentations 30. Capitalization of Interest Costs-Statement 62 are always welcome. 10. Asset Retirement Obligations 31. In-Kind Contributions If you are considering attending please feel free to reach out to Marty Benison or check 11. Present Value 32. Preservation Method www.gasb.org for meeting details. 12. Troubled Debt Restructurings-Statement 62 33. Escheat Property-Statement 21 13. Asset Impairment: Capital Assets-Statement 34. Revenue Recognition: Exchange Transactions- 42 Statement 62 14. 2a7-Like External Investment Pools 35. Securities Lending & Reverse Repurchase 15. Blending Requirements for Certain Business- Agreements-Statement 28 & Interp. 3 Type Activities-Statements 14 and 61 36. Inventory-Statement 62 16. Conduit Debt-Interpretation 2 37. Nonmonetary Transactions-Statement 62 17. Emissions Trading (Carbon Credits) 38. Pollution Remediation Obligations-Statement 18. Statistical Section-Statement 44 49 19. Going Concern-Statement 56 39. Regulated Operations-Statements 62 and 65 20. Compensated Absences-Statement 16 40. Sales of Real Estate-Statement 62

NASACT News | May 2014 10 NEWS FROM AROUND THE NATION

BOSTON FED RESEARCH EXAMINES HOW STATES ASSESS THE AFFORDABILITY OF THEIR DEBT New research from the New England Public Policy Center aff ordability, including how to defi ne state debt and which at the Federal Reserve Bank of Boston explores the diff erent metrics and approaches can help assess state debt burdens. ways to assess the aff ordability of state debt and uses those It also off ers recommendations to help policymakers assess fi ndings to off er guidance to states in examining their own the aff ordability of potential debt. Th ese include improving debt burdens. transparency around various forms of state debt, examining alternative defi nitions of debt and multiple debt burden Th e report’s author, Senior Policy Analyst Jennifer Weiner, ratios, and timing aff ordability analyses to inform capital noted: planning. “…the Great Recession magnifi ed the tension states While the report focuses on New England, an face in balancing their capital investment needs with accompanying appendix (available online) provides their ability to meet debt service requirements given selected debt ratios for all 50 states. other priorities and obligations. Th is tension raises an important question: how can states gauge what is an Th is paper and an accompanying policy brief that aff ordable level of debt?” highlights common elements and best practices found in state debt aff ordability studies are both available at www. Th e report highlights some considerations faced by bostonfed.org/economic/neppc/index.htm. policymakers or analysts when gauging state debt

QUESTIONS? Questions may be directed to Jennifer Weiner at (617) 973-2891 or jennifer.weiner@bos. frb.org or Darcy Saas at (617) 973-3177 or [email protected].

APPLY FOR THE INNOVATIONS IN AMERICAN GOVERNMENT AWARDS Applications are now being accepted for the $100,000 in Government, a special Innovations Award that will Innovations in American Government Awards. recognize government-led innovations that demonstrate novel and eff ective approaches to increasing public Off ered by Harvard Kennedy School’s Ash Center for engagement and participation in the governance of towns, Democratic Governance and Innovation, the Innovations cities, states, and the nation. Award is the nation’s premier award for the public sector. It recognizes programs that demonstrate creative and eff ective Th e top winner of the Innovations in American government at its best. Government Award and the winner of the Roy and Lila Ash Award will each receive a $100,000 grant to support All units of government — federal, state, local, tribal, and replication and dissemination activities in 2015. Top territorial — from all policy areas are eligible to apply for fi nalists will also receive monetary grants. recognition. Applications and additional information are available at Th is year, the Ash Center is also off ering the Roy and www.innovationsaward.harvard.edu. Applications are due Lila Ash Innovations Award for Public Engagement on June 20, 2014.

PARTICIPATE IN THE NASCIO SURVEY ON STATE CYBERSECURITY In partnership with Deloitte, the National Association of Th e survey takes only 10-15 minutes to complete. If State Chief Information Offi cers is conducting a national necessary, the online survey can be started, saved, and survey on state government cybersecurity, including a resumed later to enable you to complete the survey in simultaneous, but separate survey targeting key state multiple sessions. Th e survey responses are confi dential and offi cials. Th is study, with recommendations, is considered secure. No individual survey participants or states will be the preeminent national report on states and cybersecurity. attributed in the fi nal survey report. Th e survey questions are focused on the perspectives of Th e deadline for completing the survey is close-of-business state offi cials regarding cybersecurity risks and readiness. on Friday, June 6, 2014 . Th ese are not technical, but policy questions about their NASACT members wishing to participate in this survey confi dence and experiences. should email Glenda Johnson at [email protected] for NASACT is collaborating with NASCIO to gather the survey link. background, perspectives and opinions of members on this critical issue to state offi cials.

NASACT News | May 2014 11 CALENDAR

2014

June 10-13 | NSAA Annual Conference, Saint Paul, MN

VOLUME 34, NUMBER 5 | MAY 2014 July 23 | Webinar: GASB Review - 2014

August 10 | NASACT Executive Committee Meeting, Santa Fe, NM R. Kinney Poynter August 9-13 | NASACT Annual Conference, Santa Fe, NM Executive Director Cornelia Chebinou September 30 - October 3 | NSAA IT Workshop & Conference, Grand Rapids, MI Washington Office Director Glenda Johnson 2015 Communications Manager March 10 | NASACT Executive Committee Meeting, Richmond, VA National Association of State March 11-13 | NASC Annual Conference, Richmond, VA Auditors, Comptrollers and Treasurers June 9-12 | NSAA Annual Conference, Little Rock, AR Headquarters Office 449 Lewis Hargett Circle, Suite 290 August 23 | NASACT Executive Committee Meeting, Chicago, IL Lexington, KY 40503-3590 August 22-26 | NASACT Annual Conference, Chicago, IL P (859) 276-1147, F (859) 278-0507 September 22-25 | NSAA IT Workshop & Conference, Hartford, CT Washington Office 444 N. Capitol Street, NW, Suite 234 Washington, DC 20001 P (202) 624-5451, F (202) 624-5473 MARK YOUR CALENDAR FOR THREE UPCOMING CONFERENCES! www.nasact.org BY DONNA MALOY, CONFERENCE MANAGER PROGRAM NASACT OFFICERS NSAA ANNUAL CONFERENCE James B. Lewis Th ere is still time to register for the NSAA Annual Conference. Th e President conference will be held at Th e Saint Paul Hotel, on June 11-13, 2014, with State Treasurer, New Mexico committees meeting on June 10. NASACT principals or their designees are eligible for up to $750 in travel assistance to attend this conference. William G. Holland First Vice President

Auditor General, Illinois PROGRAM NASACT ANNUAL CONFERENCE Calvin McKelvogue Join NASACT President James Lewis and our New Mexico hosts for the Second Vice President 2014 NASACT Annual Conference in Santa Fe, New Chief Operating Officer Mexico. Th is year’s annual conference will be held August 9-13 at the State Accounting Enterprise, Iowa Eldorado Hotel. Th e conference hosts have developed a slate of social activities that highlight New Mexico and the rich history of Santa Richard K. Ellis Fe. Th e conference technical program is being developed now and a Secretary draft will be posted to NASACT’s website soon. NASACT principals or their designees are eligible for up to $2,000 in travel assistance to State Treasurer, Utah be used for travel, accommodations or registration fees. Debra K. Davenport Treasurer PROGRAM Auditor General, Arizona NSAA IT WORKSHOP AND CONFERENCE Plan to attend the 2014 NSAA IT Workshop and Conference. NASACT News is published monthly. Th is year’s IT workshop and conference will be held September 30 – October 3 at the Amway Grand Plaza Hotel located in Grand To submit articles, photos or ideas, Rapids, Michigan. Additional details, including hotel information contact Glenda Johnson at can be found on NASACT’s website. A draft agenda will be posted [email protected] or (859) 276-1147. soon. Mark your calendars and plan to attend!

NASACT News | May 2014 12