Critical Information Concerning FY18 Financial Audit

Superintendents and Business Managers,

Over the last month, information was released that greatly impacts the presentation of the audited financial statements of each school district in our state.  The information comes from the Governmental Accounting Standards Board (GASB), which is the independent, private-sector organization that establishes accounting and financial reporting standards for U.S. state and local governments that follow Generally Accepted Accounting Principles (GAAP).  The State of Mississippi requires local and state government entities to prepare their audits using GAAP, and thereby requires that school districts follow the GASB standards.

Several years ago, a standard was adopted that required all districts to report a proportionate share of the Public Employees’ Retirement System’s retirement liability (GASB 68) on their audited financial statements.  By reporting this liability, some districts were negatively affected on their financial audit by no fault of their operations or financial condition.

School districts now face a similar situation with the implementation of another GASB standard that requires the reporting of the liability associated with the State of Mississippi’s Health Plan Other Post-Employment Benefits (OPEB) liability.  GASB standards 74 and 75 outline the requirements that state and local government entities must follow to report this liability and the method by which the liability may be calculated.   According to the standard, all entities who participate in the state health plan must report this liability beginning with the FY2017-2018 financial audit.  School districts may once again face a negative impact because of adding this OPEB liability to the financial statements.

The Mississippi Department of Education has been actively engaged with the Office of the State Auditor and the Department of Finance and Administration to develop a plan for school districts on the implementation of the new standards.  More detailed information will be forthcoming by July 1 on the implementation of the plan and the steps that school districts will need to take to report the liability.  We encourage you to continue preparation for the financial audit and to communicate with your financial auditor as more information is made available.

If you have questions concerning this information, please contact me at (601)359-5254 or Donna Nester in the Office of School Financial Services at 601-359-3294, if you have questions related to GASB 74/75 standards.

 

Felicia Gavin, Ph.D.
Chief Operations Officer

MISSISSIPPI DEPARTMENT OF EDUCATION
P.O. Box 771|Jackson, MS|39205-0771
Tel (601) 359-5254|Fax (601) 359-6740