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Last updated: August 22. 2014 3:11PM - 281 Views
By Paul Hannah phannah@civitasmedia.com



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The new Government Accounting Standards Board or GASB, pronounced Gasby, standards set in place by GASB 68 will have minimal impact on Adams County, according to County Auditor David Gifford.


“This change to GASB does not apply to entities that function on a cash basis of accounting rather than the GAAP (Generally Accepted Accounting Principles) and GASB,” Gifford said.


With all the talk of the changes to GASB and whether or not it will cause problems, the fact that not all government entities use GASB has been overlooked. Adams County, the villages, and the townships operate on cash-basis accounting, which means the entities only report what money they take in and pay out. The value of assets and liabilities aren’t accounted for, as they are under GASB, including unfunded pensions.


The Ohio Public Employees Retirement System, one of the pensions involved in the new reporting, was asked for clarification and they responded, stating, “GASB Statement Number 68 does not apply to cash basis, regulatory or Other Comprehensive Basis of Accounting (OCBOA) entities. Therefore to comply with GASB’s rules, you will not change anything.”


Cash-basis accounting is a system that the average person would be familiar with, as it resembles a household budget. The government entity records what revenue is brought in for the year and what expenses are paid. GAAP is a thorough reporting standard containing the values of all assets, such as roads, buildings, and vehicles, and the value of any liabilities, such as outstanding loans. GAAP’s standards are set for government entities through the GASB.


“Back in the ’80s, when everyone was transitioning to GAAP - I was working here but I wasn’t the Auditor then - we were looking at it, and decided it would just cost too much money to use it,” Gifford said. “We’d have to pay to have everything appraised and new computer systems to handle all of the new information. We were one of the few counties that stuck with cash basis and we pay a yearly penalty for not switching to GAAP and GASB. In the late ’90s, though, a bunch of other small counties started realizing the same thing and decided it was just too expensive to continue using GAAP. Brown and Highland County were some of the ones that switched back to cash basis.”


Most of the local villages and townships also use cash-basis accounting as well, so are unlikely to be affected as well.


“We use the UAN (Uniform Accounting System) provided by the State, and we operate under a cash-basis,” said West Union Clerk Tanya Johnson.


A few government entities in Adams County do use GAAP, including the school districts and Franklin and Winchester townships.


Karen Ballengee, treasurer of the Manchester Local School District, wasn’t concerned about he changes.


“I’m working presently with the State Teachers Retirement and School Employees Retirements Systems to get the numbers we need to report. At this time I don’t know how much our portion of the liability will be,” Ballengee said. “It won’t have much effect on us though, since we’re not a ratable entity for Moody’s or any of the other bond rating agencies. We’re too small and the majority of our assessed valuation comes from one place - the power plants - which throws off the numbers.”


Another aspect that is overlooked by changes to GASB is the fact that individual villages and counties aren’t directly responsible for the pensions of government employees. Only the City of Cincinnati has its own pension fund. The rest of the government entities within the State of Ohio participate in the Ohio Public Employees Retirement System, the State Teachers Retirement System of Ohio , and the School Employees Retirement System of Ohio. All of these pension are beholden to the General Assembly, who regulates the contributions to the pensions from cities, villages, counties, townships, and school districts.


“Nothing in the law says we are responsible for the unfunded portion of the pensions,” Ballengee continued. “My liability is based on what the state legislators say my liability is.”


The Adams County/Ohio Valley School District continues using GAAP and GASB as well, because it helps when the district needs to issue bonds to pay for a project.


“We have a lot of bond issues outstanding, and it looks good when you try to refund or go out for additional bonds and things of that nature,” said Tina Hageman, treasurer of the AVOC School District. “They want to see all of your statements.”


When asked if she felt that reporting this new liability is appropriate, Hageman said, “I understand that the district has some liability. At the same time, we send that money to the STRS and SERS, so technically, as far as I am concerned, that should be reported on their books.”


Hageman noted that this change may have a greater impact on ACOV than Manchester Local because ACOV is a larger district and is rated by Moody’s and other rating agencies.


None of the those affected by the changes know what the retirement systems are going to tell them is their portion of the unfunded liability. Most suspect it won’t be until December or January that they will finally find out the full details of how GASB Section 68 will affect them.


“I am waiting to hear back from the State Examiners to see how it is going to change our reporting,” Diane Ward, Fiscal Officer of Franklin Township said.


“We have gotten a taste of it so far,” Gifford said, discussing a recent conference he attended on the subject. “The firm that converts our cash basis report to GAAP says they will include the amount OPERS reports as our liability as a footnote on the report. So it will show up, and for some of the villages and counties, it may look like they have a deficit. But lenders will know that it’s not something we are directly responsible for. I feel it is a bogus and meaningless liability for us to have to report.”


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