GASB 68's Impact on NJ Audits

The Governmental Accounting Standards Board released Statment No. 68 "Accounting and Financial Reporting for Pensions" to improve accounting and financial reporting by state and local governments for pensions.  While the goal is to enhance the value of the the overall financial reports for assessing accountability and interperiod equity through disclosure of net pension liability, the move presents an immedite concern for all New Jersey School Districts in the form of timing and impact on the statutory deadline for submission.

GASB 68 - Wake up call!

Audit Submission N.J.S.A. 18A:23-1 provides that the annual audit must be completed no later than five months after the end of the fiscal year (December 1). N.J.S.A. 18A:23-3 requires “…such accountant shall within five days thereafter file two duplicate copies thereof certified under his signature in the office of the commissioner” (Monday, December 7, 2015). No provision is made for the issuance of extensions beyond the statutory due date. 

The concern centers on the State's ability to deliver the required information to districts by the November 1, 2015 target date based on the field work of KPMG working on behalf of the state to gather this data.  Keep in mind, KPMG is still completing field work and even once the state provides this data to districts, the information (reported information) will have a material impact on audits, reflected in changes to footnotes, schedules A1, A2, statistical J sections and other areas of the budget thus requiring significant modifications and entry on the part of district auditors state wide.  The concern then becomes the auditors ability to wrap up and present such audits in accordance with the statutory deadline of December 1, 2015.

Why this matters... If a district elects to or agrees to a Modified (Qualified) Opionion in order to meet the deadline of December 1 while awaiting the final revisions and inclusion of the GASB 68 Pension Liability reporting, that district faces a host of negative actions including but not limited to:

1.  Impact on QSAC (Quality Single Accountability Continuum) 
2.  Flags the district for potential State Monitoring
3.  Lowers the district's "Bond Rating" which equals potential higher interest rates
4.  Effects ability to apply for National awards such as ASBO's Certificate of Excellence in Financial Reporting [CEFR] and GOA recognition

Most important is the delay on reporting of Surplus status and or deficit position in the face of budgetary planning for the subsequent budget year 2016-2017.

We need a waiver!  Short of a waiver, we need to work through NJASBO to provide a clear understanding of the impact and seek relief.