Author: Gregory Allison

You Are Doing WHAT to the Governmental Funds?? – Part 2, The Short-Term Approach

In our last chapter, You Are Doing WHAT to the Governmental Funds?? – Part 1, The Near-Term Approach, we explored one of the three new measurement focus and basis of accounting (MFBA) options being considered for the governmental funds.  These approaches are presented in the Governmental Accounting Standards Board’s recent Invitation to Comment (ITC), Financial Reporting Model Improvements – Governmental Funds.  And you thought it was a scary chapter!?? The suspense continues with the second MFBA proposal – the short-term (or working capital) approach.  One spoiler alert (but it is for your own good) – each approach goes further away from the current resource measurement focus and modified accrual basis of accounting currently used by the governmental funds.  (Just wait until you read Part 3….)

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You Are Doing WHAT to the Governmental Funds?? – Part 1, The Near-Term Approach

In my previous post, Invitation to Comment – or Invitation to Disaster?? The Long Slog to a New Financial Reporting Model Begins!, I provided a fascinating overview of the Governmental Accounting Standards Board’s (GASB) new financial reporting model project.  As was noted, the actual Invitation to Comment (ITC), Financial Reporting Model Improvements – Governmental Funds is a first step in the long due process of developing a new GAAP standard.  As is the case here, an ITC usually provides an opportunity for the GASB to solicit feedback on various proposal considerations.  A significant aspect of the reporting model project is the reconsideration of the unique measurement focus used in the governmental funds (current financial resources).  The ITC details three new measurement focus approaches to consider – the near-term approach, the short-term approach, and the long-term approach.  This post, focusing on the near-term approach, is the first in a series that will provide (hopefully) a clearer insight into the plotting that is occurring in Norwalk.

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Invitation to Comment – Or Invitation to Disaster?? The Long Slog to a New Financial Reporting Model Begins!

Well, it was inevitable. While we all are still reeling from the fun that has been GASB Statement No. 34, Basic Financial Statements – and Management’s Discussion and Analysis – for State and Local Governments that was issued in June 1999, another chapter in the never-ending saga has begun. Yes, the Governmental Accounting Standards Board (GASB) recently added a new financial reporting model project to their official agenda. Now, the good news is that this type of project takes time – lots of time. The project that culminated in GASB Statement No. 34 was a 15-year process. The first implementers of GASB Statement No. 34 did so 15 years ago. So, one would hope that this is the beginning of another 15 year adventure and, at the end, most of us will be retired. Well, no such luck this time. While we do have time to possibly retire, the potential release of a new reporting model standard is currently slated for November 2021, with implementation certainly several years after that. However, we are not looking at a 15-year process.

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Whose Assets Are They Anyway?

The Governmental Accounting Standards Board (GASB) issued GASB Statement No. 84, Fiduciary Activities the last week in January 2017.  Obviously, this is breaking news – stop the presses!  The standard is the culmination of a long-term, wide-ranging project to address accounting and financial reporting for the following:

GASB Statement No. 68)

With GASB Statement No. 84, the GASB provides definitive guidance on how all fiduciary activities of a governmental entity should be reported. It is now definitive that assets that are associated with a fiduciary activity and are legally entrusted should be reported in one of three specific fiduciary fund types.  Those assets that are not legally entrusted but still meet the definition of a fiduciary activity are to be reported in a separate fiduciary fund type. This does clear some inconsistencies with fiduciary fund reporting currently where entrusted and non-entrusted assets may be reported in the same fund type (although many of us probably never lost much sleep over it).

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It is Going to Cost HOW Much to Retire It??

Everyone is well aware, or should be, that the cost of retiring is escalating almost by the minute.  There are financial advisors and estate planners who solely focus on enabling us to have a shot at a decent retirement, relatively free of financial concern.  Employers in both the public and private sectors are recognizing mammoth liabilities for the pension resources they are holding in trust for their employees.  But, are employees all that are going to retire from a state or local government?  Is that the only long-term cost that a governmental entity is going to be liable for (above and beyond normal indebtedness)?  The answer is obviously no or I would not be writing this post.

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Yay!! I’m Certified!!  Now What?

certified-stamp1 In my previous post, Are You Certifiable?, I reviewed the North Carolina Finance Officers’ Certification program, sponsored by the North Carolina Government Finance Officers Association (NCGFOA).  As was probably clear in the post, the process is challenging but certainly doable, and those that become certified finance officers in North Carolina should definitely be proud of their achievement.  But after the months (or years) of classes, studying, and testing, what happens after the success?  Is the certification permanent (just like an appointment on the United States Supreme Court)? Does it expire? DO I HAVE TO TAKE THE TESTS AGAIN?? This blogpost will summarize the “post-certification” years and how certified finance officers must continue maintaining the high standards that got you where you are in the first place.

Getting the Results

As a quick review, once one passes all four exams and has completed all educational and work experience requirements, they are eligible to apply for certification.  The certification itself is not “automatic”, though admittedly at this point, the application serves as a final “checks and balances” to ensure that all requirements have been met. Otherwise, the actual certification is relatively assured.  With the final successful results letter, the individual will receive an application for certification.  It is to be completed and remitted as instructed on the form.  The  form is then returned to the UNC School of Government for processing, along with a check for $50, made payable to the North Carolina Finance Officers Certification Program.

Once the application is approved, the individual will be considered certified as of the following January 1st.  Certification is for a five-year period which begins on the January 1st following the successful completion of the certification and approval process.  The certification expires on December 31st of the fifth year.

While the term for certification begins on January 1st, new certifications (as well as renewals, but that will be discussed later) are recognized publicly at the NCGFOA Spring Conference, typically held in early March.  Thus, the actual certificates themselves will be available a few months after the actual certification period begins.

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The Certification Period

As has been noted numerous times (and yet the question will still be raised!), a certification period lasts for five years.  Thus, individuals have to renew their certification at the end of each five-year period, assuming they have met and continue to meet all the necessary requirements.  Be assured, however, the renewal does NOT involve testing (there is still some humanity left in the world!).

To be eligible to successfully renew one’s certification, the following requirements must be met:

  • The individual must continue to be employed in an eligible position (see Are You Certifiable?).
  • The individual should be a member of the NCGFOA.
  • The individual must be have accumulated at least 100 hours of professional training during the five-year certification period just ended.

These requirements are relatively self-explanatory (or at least they should be).  However, the third requirement listed above, related to the professional training requirement, does raise questions, so let’s explore that a bit further.

Professional Training Requirements

During the certification period, one is expected to continue to remain up-to-date about the governmental finance profession by attending and/or taking relevant live and self-study courses, conferences, webinars, etc. that are available from many different venues, such as, but certainly not limited to:

Certainly, taking relevant courses during the certification period in community colleges, undergraduate, or graduate degree programs would count toward this requirement as well. In addition, professional service contributions, such as service on professional association boards or presenting at training events, courses, or conferences may count for up to 25% of the total hours required to be accumulated during the five-year period.

Often, the question is raised as to what is considered “relevant”.  Actually, the standard for this is quite flexible.  While training in governmental accounting and financial reporting is always recommended, at least to a certain degree, training related to management and leadership, information technology, and other similar topics are also considered relevant and often necessary in today’s financial management environment.

As for the 100-hour professional training requirement, the “industry” standard is 1 professional training hour per 50 minutes of instruction.  This is the same standard that is used for continuing professional education (CPE) standards for Certified Public Accountants.  Thus, when attending any courses or conferences that advertise the number of CPE hours being offered, that number would apply exactly the same way for the certified finance officer requirements.

Finally, individuals should maintain their own records supporting the number of hours of professional training that they have accumulated during each five-year certification period.  While the NCGFOA does not require that copies of “certificates of completion” be submitted when applying for certification renewal, the applicant is required to provide a listing with the renewal application that includes:

  • Nature of course, conference, webinar, etc. taken during the five-year period
  • Date(s) taken and location (if applicable)
  • Number of professional training hours for each event
  • Grand total of professional training hours for the five-year period

There may be circumstances where an individual has been unable to meet their professional training requirements during their certification period.  While the certification may not be renewed then, once the number of required hours have been met, they may apply for renewal at that time.  Assuming all other requirements have been met, the renewal will be approved and the new certification period will begin the following January 1st.

Currently, there are no provisions for professional training hours to “carryover” to the next five-year period.  Thus, if one accumulates more than 100 hours in one period, they may not apply the overage to the next period.

Lapses in Active Service

Occasionally, a certified finance officer ceases to work in a position eligible for certification, most commonly when they leave local government service altogether or move out-of-state (even if they still remain in local government).  At that time, their certification status is considered inactive (or suspended).  The certification is not revoked and can potentially be reactivated, depending on the following potential scenarios:

  1. If one re-enters eligible government employment in North Carolina during their inactive five-year certification period, they may reactivate their status, assuming they are able to meet the three requirements for renewal (referenced earlier in this post).
  2. If one re-enters eligible government employment during their inactive five-year certification period but is unable to meet the professional training requirements within that period, they have two years (from the date of eligible employment reinstatement) to complete the requirements. If they re-enter eligible employment after the original certification period has ended, they also have two years to meet the requirements to renew the certification.

It should be noted that qualifying professional training may have been accumulated even during the period of time that the certification was inactive.  While those training hours may be counted, at least 40 hours of the total must have been accumulated during the most recent two years leading up to the renewal/reactivation date.

Use of Professional Title

Currently, there are no committee guidelines on how the title of certified finance officer may be used.  I am often asked what letters one could put behind their names for business cards, bios, resumes, etc.  After I resist the urge to say things I should not, I advise that the most common combination that I see is CLGFO (Certified Local Government Finance Officer).  This is not required, nor is it discouraged.

Are You Certifiable?        

The above question has been posed to me time and again over the years, probably for obvious reasons!  (And the quick answer is…yes, I am! But I digress…)  However, it was not posed from the perspective of how I am using it in this context. One of the most common phone calls or e-mails that I receive on a regular basis relates to the North Carolina Finance Officers Certification Program.  As more and more baby boomers have their retirement lunches and collect their gold watches (click here for more on that topic!), the turnover in local government finance across the state and the infusion of newly minted local government finance employees has contributed to the exploding interest in this program.  This blog focuses on the specifics of the program, educational and testing requirements, and other frequently asked questions.  A future blog post will address post-certification life – continuing education, employment requirements, and the like.

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Are You Sure We Don’t Have Tax Abatements?

Tax Abatement, visual by Ruth Lerner

Tax Abatement, visual by Ruth Lerner

I’m here to help alleviate fears.  In August 2015, the Governmental Accounting Standards Board (GASB) issued GASB Statement No. 77, Tax Abatement Disclosures.  The guidance, which if it were applicable to North Carolina governments, would be effective for fiscal year end June 30, 2017.  The requirements are relatively simple – if a government has any tax abatement agreements, as defined in the standard, there are certain note disclosure requirements that must be made regarding the agreement(s). A tax abatement in is defined in the standard as follows: Continue reading

Welcome!

Benjamin Frankin, (1706-1790) , North American printer, publisher, writer, scientist, inventor and statesman. Source: Wkipedia

Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes.

Benjamin Franklin, in a letter to Jean-Baptiste Leroy, 1789

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