Auditor of State Issues Changes To Budgeting Requirements That May Impact Your Government Entity
When it comes to the Governmental Accounting Standards Board’s (GASB) Statement No. 84, Fiduciary Activities, government entities across the state continue to find themselves in various stages of the implementation process. Some entities have successfully applied the necessary changes, while others, as determined by their budgetary year-ends, have been able to hold off on putting the new accounting standards into action. Regardless of where you are in the process, it’s time to become aware of another important date in the GASB 84 process – and that’s the date your entity’s new budgeting requirements is scheduled to take effect.
The Next Step
GASB Statement No. 84 was designed to provide government entities with the guidance necessary to identify fiduciary activities for accounting and financial reporting purposes. Moreover, it provides direction into how these fiduciary activities should be reported. It’s important to note that implementation of this GASB will likely have an impact on most Ohio governmental financial statements, and their budgeting requirements, regardless of whether they report on the Regulatory Basis, OCBOA basis, or GAAP basis.
Read Also: Are You Ready For This? GASB 84
Due to the scope of GASB 84, as well as the various year-end reporting periods realized by various entities, the majority of the conversation on this matter centered around the various dates of implementation. However, now that government entities are well aware of their required implementation dates and are likely taking the necessary steps to adopt GASB 84 provisions, the conversation has shifted to new budgeting requirement deadlines.
To help entities along the way, the Ohio Auditor of State (AOS) recently issued several documents to help with the implementation of GASB 84:
- Back in February 2020, the Ohio Auditor of State (AOS) issued Bulletin No. 2020-003. This Bulletin is designed to help with the implementation process and includes a new budgeting requirement for government entities to be aware of and implement when required.
- AOS also issued the GASB 84: Analysis Chart to help with the analysis and classification of common funds used in various governments (such as school student activities, muni courts, and county undivided tax accounts).
- Finally, AOS also issued GASB 84: Frequently Asked Questions, a document that continues to be updated as additional questions come in to the AOS office.
Many governments receive outside assistance to help them implement GASB 84. However, government officials need to be aware of the budgeting impact GASB 84 can have on their organizations when preparing their budgets (particularly as it relates to appropriations and certificates of estimated recourses).
One key term to consider as you move forward with the implementation of GASB 84 is the name change of “Agency” funds to “Custodial” funds.
According to guidance, custodial funds are still not “required” to be budgeted. However, the AOS Bulletin states that budgeting must now follow the fund classification from the results of implementing GASB 84. As an example, if Fund X was previously an agency fund and not budgeted, it will now be required to be budgeted if Fund X is changed to a special revenue (for example) fund with the implementation of GASB 84.
These new budgeting requirements are scheduled to take effect based on the following GASB 84 Implementation Year:
|Year GASB 84 |
|Year Budgets |
|Dec. 31 Year Ends||2019||2021|
|Dec. 31 Year Ends||2020||2021|
|June 30 Year Ends||2020||2022|
|June 30 Year Ends||2021||2022|
COVID Crisis Impacts Deadlines
COVID-19 has impacted nearly every aspect of our daily lives – and the GASB is not immune. As a result of the upheaval resulting from COVID-19 (coronavirus), the GASB issued Statement No. 95, Postponement of the Effective Dates of Certain Authoritative Guidance. This pronouncement effectively delays the implementation of GASB 84 for 12 months, citing COVID-19. However, please note that each government entity may be impacted on a different timeline based on when GASB 84 is implemented when preparing their annual financial statements. Therefore, we recommend that you gain a complete understanding of your fund classification as a result (or potential result) of the implementation of GASB 84.
As you can see from the chart above, budgeting implementation may take effect prior to preparing your annual financial statements. AOS Bulletin 2020-003 recommends contacting AOS-Local Government Services regarding any questions related to the information provided within the Bulletin.
To learn more about these changes, email the government services team at Rea & Associates.
By Chad Welty, CPA (Medina office)