Joint Presentation of the
Auditor of Public Accounts and
the Virginia Retirement System
GASB 68
Implementation
Virginia Association of
School Business Officials
Fall Conference
October 16, 2015
Zachary L. Borgerding, CPA
APA Audit Director, Reporting and Standards
Barry C. Faison, CPA
VRS Chief Financial Officer
Agenda
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Overview of New Pension Standards
Overview of the Cost Sharing vs Agent Plans
VRS Approach to GASB 68 Implementation
GASB 68 Reports, Guidance and Other
Resources
APA Approach to GASB 68 Audit and
Resulting Opinions
Questions
Overview of
New Pension
Standards
Overview of New Standards
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GASB 67
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GASB 68
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Impacted the Pension Plans
Effective for VRS for FY 2014
Impacted Employers in Pension Plans
Effective for VRS Employers in FY 2015
Significant liability moved to the face of the
financial statements for employers
Market value is used to measure plan assets
Overview of New Standards
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GASB 68 Impact
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Moved Actuarial Valuation data from Notes to
Financial Statements
Increased complexity in presentations
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Additional data elements
Amortization of deferred outflows/inflows of resources
Increased note disclosures
Information being subjected to additional audit work
More emphasis placed on census data
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Foundation for liability calculations
Responsibility for data accuracy shifted to employers
Increased audit work at employers
Characteristics
of Cost-Sharing
and Agent
Plans
Cost-Sharing Plans
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Multiple employers participating in an
unallocated collective pool
All assets are legally available to pay benefits
for any employer’s members
An employer’s cost is not related to the
employer’s impact on the plan’s liability
Assets are comingled for investment purposes,
and income is earned by the collective pool
All employers share a common employer
contribution rate
Example - VRS Teacher Retirement Plan
Agent Multiple Employer Plans
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Separate employers participating in a collective
pool, allocated by employer
Contributions from each employer and assets
are allocated and available for benefits of only
that employer’s members
Assets are comingled for investment purposes,
but income is allocated to each employer
Each employer has a unique employer
contribution rate
Example - VRS Political Subdivision
Retirement Plans
VRS Approach
to GASB 68
Implementation
GASB 68 Implementation
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Centralize GASB 68 data process
Engage VRS actuary to create plan-wide data
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Prepare comprehensive report including GASB 68
data for all covered employers
Compute allocation percentages for cost-sharing
plans
Prepare separate GASB 68 reports for each political
subdivision
Expand VRS webpage for information
Prepare implementation guidance, sample
journal entries, and sample note disclosures
with RSI
GASB 68 Implementation
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Expand availability of data in VNAV system
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Developed report for employer to extract VNAV data
changes (hires, terminations, job changes, status
changes, salary changes, etc.)
Supplements monthly Snapshot reports
Prepare supplemental information for Actuary
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Analysis of annual employer contribution revenue to
identify variances from current contributions due
Detailed report identifying components of change in
plan assets between periods
Report of employer contributions using current year
creditable compensation for employer allocations
GASB 68
Reports,
Guidance, and
Resources
GASB Resources
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GASB 67 and GASB 68 standards
GASB 67 and GASB 68 Implementation guides
Complete GASB 67 report from VRS Actuary
for the VRS plans
Complete GASB 68 report from VRS Actuary
for all covered employer groups
Selected presentations on GASB 67 and
GASB 68
GASB Resources
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Sample journal entries for each employer
group
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Set-up opening balance
Record first-year activity
Sample note disclosures for each employer
group
GASB 68 Reports from VRS with Audit Opinion
from the Auditor of Public Accounts
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Selected state agencies (6/30/2013 & 6/30/2014)
Teacher cost-sharing pool (6/30/2013 & 6/30/2014)
Political subdivision plans (FY 2014)
APA Approach
to GASB 68
Audit and
Opinions
Agent Multiple Audit Assurances
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Proper
accumulation
of census
data by the
Plan
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Fair
presentation
of changes
in FNP by
employer
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NPL is the
difference
between TPL
and FNP
Agent Multiple Audit Opinion
In our opinion, the Schedule referred to
above presents fairly, in all material
respects, the total fiduciary net position of
the Virginia Retirement System Political
Subdivision Retirement Plans as of June
30, 2014, and the changes in fiduciary net
position for the year then ended…
Agent Multiple Audit Opinion
Also, in our opinion, the Schedule referred
to above presents fairly, in all material
respects, the fiduciary net position of each
individual employer as of June 30, 2014,
and the changes in fiduciary net position
for each individual employer for the year
then ended…
Agent Multiple Examination Opinion
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Provides assurance that VRS has:
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Provided complete and accurate census
data reported by participating employers to
the actuary
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Provided census data which properly reflects
current benefit provisions
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Properly excluded deceased members
Agent Multiple Examination Opinion
In our opinion, management’s assertion
that the Virginia Retirement System
complied with the aforementioned
requirements based on the criteria set forth
in the accompanying letter from
management during the year ended June
30, 2014, is fairly stated, in all material
respects.
Defining Roles for Agent Multiple
Plan
Auditors
• Provide an audit opinion on the Schedule of Changes in FNP by
employer and related notes
• Provide an examination opinion on the plan’s accumulation of
census data
Employers
• Submit accurate census data in VNAV
• Evaluate assumptions in actuarial valuation
• Compare FNP in valuation to audited schedule
Employer
Auditors
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Test census data for active employees
Review audited Schedule of Changes in FNP and census opinion
Evaluate competence and independence of plan auditor
Evaluate competence and independence of actuary
Cost Sharing Audit Assurances
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Provide opinion on
pension amounts at
the plan level
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Provide opinion on
employer allocation
percentages
Cost Sharing Audit Opinion
In our opinion, the schedules referred to
above present fairly, in all material
respects, the employer allocations and net
pension liability, total pension expense,
total deferred outflows of resources, and
total deferred inflows of resources, for the
total of all of the participating teacher
employers…
Defining Roles for Cost Sharing
Plan
Auditors
• Provide opinions on 2014 Schedule of Allocations and
Pension Amounts and related notes
• Provide opinions on 2013 Schedule of Allocations and NPL
and related notes
• Evaluate information provided for recognition and
disclosure
Employers • Recalculate allocation percentage and pension amounts
Employer
Auditors
• Test census data for active employees
• Evaluate competence and independence of plan auditor
• Recalculate allocation percentage and pension amounts
APA Audit Specifications
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APA issues audit specifications for local
government auditors
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Specifications require employer auditors to
provide APA examination reports on census
data
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Examinations for cities, towns, and counties
are due October 1st
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Examinations for authorities, boards, and
commissions are due November 1st
APA Audit Specifications
APA Pension Questions:
 Contact VRS Project Manager, Zach Borgerding
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804-225-3350 (303)
Zach.Borgerding@apa.virginia.gov
APAVRSSupport@apa.virginia.gov
APA General Questions:
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Contact Local Government Manager, Rachel Reamy
LocalGovernment@apa.virginia.gov
Lessons
Learned and
Future Changes
Opportunities for Audit Efficiency
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Will perform some GASB 67 and 68
procedures concurrently
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No longer will have to obtain evidence over
initial opening balances
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May eventually elect to issue a service
organization controls report instead of opining
at the employer level for agent multiple plans
Opportunities For Improvement
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VRS will begin process earlier
VRS will prepare standard calculations and
allocations
Develop additional reports, as needed
Modify disclosure information and guidance
using input from employers and their auditors
Evaluate use of SOC-1, Type 2 Report
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Coordinate decision with APA
Engage consultant to assist in development
May facilitate work when similar reporting is
required for OPEB plans
Questions?
Thank You