Presenters:Sarasota County Schools

Valerie MaggiPalm Beach County Schools

Annette Pinnock

What are conversion entries All adjusting journal entries necessary to produce the

Government-Wide financial statements that are not part of the basic modified accrual Fund financial statements.

Types of Conversion EntriesCapital Assets

Capital expenditures-current period transactions Capital leases-current period transactions Gains/losses related to capital asset dispositions Trade-ins, donations, etc. Depreciation

Types of Conversion Entries Long term Debt and Related

Transactions Issuance of long term debt-current period transactions Advance refunding of bonds Early extinguishments of debt (non refunding) Debt service payments-current period transactions Amortize premiums State Board of Education Bonds

(SBE)/Certificates of Participation (COPS)

Types of Conversion Entries Long term Debt and Related

Transactions Compensated Absences Other Post Employment Benefits (OPEB) Early retirement plan liability FRS & HIS (Health Insurance Subsidy)

Types of Conversion Entries Reclassification/Elimination Elimination entries – transfers, etc. Merging internal service funds

Two Approaches

Two ways to track all the conversion journal entries to get the same the same end resultsStatement of Net PositionStatement of ActivitiesReconciliations from Fund Statements

to Statement of Net Position and Statement of Activities

Two Approaches

Separate LedgerSeparate fund(s) within the existing

financial system

USING SEPARATE LEDGER“FACCRUAL LEDGER”

AFR CONVERSION ENTRIES AND RECONCILIATIONS

Government –wide Financial Reporting

“One Picture – Two Views”

Modified accrual Fiscal accountability Report major funds

separately and combine all non-major funds

Integrated reporting unit Consolidate all operations

on a full accrual basis Operational accountability

Fund Financial Reporting

AFR CONVERSION ENTRIES AND RECONCILIATIONS

And… the challenges of meeting GASB Statement No.

34 Basic Financial Statements—and Management's Discussion and Analysis—for State and Local Governments begins

AFR CONVERSION ENTRIES AND RECONCILIATIONS ACTUAL LEDGER

Maintain fund accounting records on either cash or modified accrual basis

Monthly closing

FACCRUAL LEDGER Used to post all

conversion entries which are mainly prepared using Excel spreadsheets

Is maintained as they are subject to independent audit

Visit at year-end for general accounting

AFR CONVERSION ENTRIES AND RECONCILIATIONS

“FACCURAL” Ledger Track all transactions associated with government-wide

financial statements District uses the Asset Management Module in

PeopleSoft to track all asset transactions (additions & disposals). Additional ledger allows us to have all the details associated with all the asset transactions which makes it easier to reconcile at the fund level

All capital asset transactions get recorded monthly by the system as designed. The biggest advantage is having all the detail at hand any time

AFR CONVERSION ENTRIESWorksheet

Where do we begin? Roll forward prior year balances must be completed

Conversion worksheet used to calculate, and create the support for all conversion entries Consist Gov’t-wide Asset & Liability tabs Other tabs for support All entries for journal upload to “FACCRUAL” ledger

Change between beginning and ending balances represent the amount of the conversion entries

Ensure ending balances agrees with disclosure notes

Capital Assets Fixed Assets – Current Year

Addition Activity Debit Asset

Credit Expense Fixed Assets – Current Year

Disposal Activity Credit Asset

Debit Expense Debit Accum Depreciation

Fixed Asset Depreciation –Current Year Activity Debit Depreciation Expense

Credit Accum Depreciation

• Fixed Assets – Prior Year CAFR Balance Sheet• Debit Asset

• Credit Accum. Deprec.

• Credit Net Position

Prepaid Expenses Prepaid Expense – PY

CAFR Debit Prepaid Expenses

Credit Net Position Incr. Prepaid Exp. – CY

Activity Debit Prepaid Expenses

Credit ExpenseOR

Decr. Prepaid Exp. – CY Activity Debit Expense

Credit Prepaid Expenses

Types of prepaid expenses in Palm Beach:

Insurance that crosses fiscal years

Multi year Software expenditures

AFR CONVERSION ENTRIESRECONCILIATION

“FACCURAL” Ledger – made it much easier to produce Reconciliation of the Governmental Funds Balance

Sheet Total Fund Balances to the Statement of Net Position identifies how governmental fund balances are converted to

report Governmental Activities net position Reconciliation of the Statement of Revenues,

Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities

Identifies how the activities of governmental funds are converted to report the change in net position of Governmental Activities

USING SEPARATE FUNDS

Conversion Funds

Two types of conversion funds

Conversion Fund GASB 34 Includes all the assets/liabilities not reported in the individual

fund statements. This is where the majority of the conversion entries are posted. Conversion entries are posted in a separate accounting period

and are defined by a specific journal entry task identifier (i.e. Year End Adj accounting period using the conversion AJE task.)

Conversion Fund GASB 34Capital AssetsConversion entries recording additions, deletions and

depreciation are system generated and post to the Conversion Fund using a separate journal entry task (i.e. Fixed Asset JE.)

Manual entries are posted for CIP additions/deletions, gain/loss on disposal and recording any new capital leases.

Since the addition entries are system generated, a separate adjusting journal entry is needed to reduce expenditures for current year capital outlay reported in the Governmental Funds.

Conversion Fund GASB 34Debt and Other Long-Term LiabilitiesAll entries to record changes related to outstanding

debt.For example: amortizing premiums,

recording/refunding debt, short term/long term portions of debt, reducing debt for the principal payments reported in the Debt Service Funds.

Change in OPEB, compensated absences, FRS etc.

Elimination Fund Elimination conversion entries Interfund receivables, payables and transfers. Internal Service Funds-allocate operating income (loss),

record nonoperating revenues(expenses), transfers, assets, liabilities and previous year net position.

Conversion Funds Closing Entries Post closing entries in both conversion funds.Net effect in Elimination Fund will be the net position

of the The Internal Service Fund.

Balance ForwardThe general ledger balances roll forward in the

Conversion Fund GASB 34 only.

Conversion Funds Benefits of using conversion funds Ability to run combining reports across all funds for

Government-Wide financial statements.Eliminate need for separate set of books to create the

Government-Wide financial statements.Within our system we have the ability to scan and attach all

backup information to the conversion journal entries.Useful for the auditors.Can run a report specific to conversion journal entries.

Becomes a useful tool each year.

Reconciliations When using conversion funds, the reconciliation

process is much easier. By running a trial balance and conversion journal

entry report for both conversion funds you know all the things necessary to complete the Reconciliation from Governmental funds to the Government-Wide statements; Statement of Net Position and Statement of Activities.

Conversion Fund GASB 34 Trial Balance

Elimination Fund Trial Balance

End ResultStatement of Net PositionStatement of ActivitiesReconciliation of the Balance Sheet of

Governmental Funds to the Statement of Net Position

Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balance of Governmental Funds to the Statement of Activities