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PUBLIC ENTITY Powered By Docstoc
					    2011 - 2012
ANNUAL FINANCIAL
REPORTING PACKAGE




    Public Entity
     Risk Pools
                                                 RESOURCES


For technical assistance, BARS manual orders, training dates, and other information access www.sao.wa.gov, choose
Client Support tab and Financial Accounting and Reporting option or call (360) 725-5592.

The accounting requirements are contained in the Accounting Guidance for GAAP PUDs and Other Proprietary-Type
Districts or GAAP BARS Manual for Cities, Counties and Special Purpose Districts available on the website listed above.




                             In accordance with the Americans with Disabilities Act,
                            this document will be made available in alternate formats.
                                 Please call (360) 902-0370 for more information.
                                                          PUBLIC ENTITY RISK POOLS
                                                            REPORTING PACKAGE


                                                                      Table of Contents

                                                                                                                                                       Page

Reporting Requirements ................................................................................................................................... 1-1

Annual Report Certification/Cover Page .......................................................................................................... 1-3

Financial Statements (Risk Pools) .................................................................................................................... 3-1

Management Discussion and Analysis (MD&A) ............................................................................................. 3-3

Notes to Financial Statements (Risk Pools) ...................................................................................................... 4-1

Required Supplementary Information (Risk Pools) .......................................................................................... 5-1

Supplemental Schedules (Risk Pools) .............................................................................................................. 6-1

Notes to Financial Statements (Pool Members) ................................................................................................ 7-1
THIS PAGE LEFT BLANK INTENTIONALLY.
                                        REPORTING REQUIREMENTS


The Washington State Auditor’s Office prescribes the accounting and reporting of local governments in the State of
Washington under RCW 43.09.200. This prescription is performed using Budgetary, Accounting, and Reporting
System (BARS) manuals and special purpose district financial reporting packages. State law (RCW 43.09.230)
requires all local governments in Washington to file their annual report with our Office, as prescribed in the BARS
manuals and reporting packages, within 150 days after the close of the fiscal year.

This reporting package is for use for the external financial reporting of risk pools to the Washington State Auditor’s
Office. It is specifically designed to meet the financial reporting requirements for risk pools. Deviation from the
recommended practices should be avoided to prevent financial audit issues.

Users of reporting packages should be aware the guidance contained in this reporting package is limited to the
specific GAAP external financial reporting of Risk Pools. Additional general accounting and legal compliance
requirements for entities is listed in the GAAP BARS Manual for Cities, Counties and Special Purpose Districts.
Governments using reporting packages should review Part Three of this manual to assure they are familiar with
audit expectations for internal controls, cash receipting, etc.

Electronic reporting is encouraged when filing annual reports. Annual reports should be submitted via the Online
Filing option on the State Auditor’s website at www.sao.wa.gov. For questions and/or support e-mail
duane.walz@sao.wa.gov or call Duane Walz at (360) 725-5594. If you cannot provide the annual report in the
electronic format mail it to:

                  Annual Report
                  State Auditor’s Office
                  Local Government Support Team
                  PO Box 40031
                  Olympia, WA 98504-0031

Governments have an option to participate in the GFOA’s Certificate of Achievement for Excellence in Financial
Reporting program. To participate in this program, a government must prepare a comprehensive annual financial
report (CAFR). These reports have to provide additional information which is not required in preparation of basic
GAAP financial statements. For additional information on preparation of a CAFR see GAAP BARS Manual, Part 4,
Chapter 10.




Risk Pools                                               1-1                                                  (01-12)
                CERTIFICATION/COVER PAGE FOR ANNUAL REPORT – INSTRUCTIONS


A cover page must be included with every annual report submission.

Official Name        Enter the official name of the government. If the government operates under a “DBA” this
                     should also be listed. For example: “Thurston County Fire Protection District No. 5, doing
                     business as Black Lake Fire Department.”

MCAG No.             This is a unique identifying number assigned by the State Auditor’s Office. The pool’s
                     MCAG number can be found on our website at www.sao.wa.gov, choose Client Support tab
                     and Financial Accounting and Reporting option. If you are unable to locate the number,
                     please call (360) 725-5592.

Fiscal Year Ended    Enter the date (day, month and year) of the end of the 12 month period covered by the annual
                     report. For example, most local governments close their books and report on a calendar year
                     and would report “December 31, 2011” for their 2011 annual report.

Certification        Annual reports are required to be certified by RCW 43.09.230.

Official Address     Enter the legal business address of the government.

Official Website     Enter the official website of the government. If the government does not have a website, then
                     enter none.

Preparer             Enter the name and position of the person that the State Auditor’s Office should contact with
                     any questions regarding the entity’s annual report. Enter the phone number where our Office
                     can reach this contact person during regular business hours to discuss the annual report. More
                     than one phone number can be entered, if needed. Enter the e-mail address where our Office
                     can communicate with the contact person. If there is no email address for this person, then
                     enter none.




Risk Pools                                             1-2                                                 (01-12)
                                         ANNUAL REPORT


                              ________________________________________
                                     (Official Name of Government)

                                         ____________________
                                              MCAG No.


                Submitted pursuant to RCW 43.09.230 to the STATE AUDITOR’S OFFICE


                          FOR THE FISCAL YEAR ENDED _______________, 20__



Certified correct this ________ day of _____________, 20__, to the best of my knowledge and belief:



GOVERNMENT INFORMATION:


Official Mailing Address      ______________________________________________________

Official Website Address      ______________________________________________________



PREPARER INFORMATION and CERTIFICATION:


Preparer Name and Title       ______________________________________________________

Contact Phone Number          ______________________________________________________

Contact Fax Number            ______________________________________________________

Contact E-mail Address        ______________________________________________________

Signature                     ______________________________________________________
                                             FINANCIAL STATEMENTS
                                             GENERAL INSTRUCTIONS


Transference of risk:
All risk pools are required to report using the enterprise fund model. The following and financial reporting guidance
is specifically designed for pools where there is a transference of risk from the participant to the pool. Pools acting
solely in a banking and/or claims servicing agent capacity will not use the accounting described in the following
pages. They do not have a transfer of risk and should report claims-servicing revenue and administrative costs.
Amounts collected or due from participants, and amounts paid or to be paid for settling claims, should be reported
simply as a component of net position or liability.

Financial statements should be presented in one of the following methods:
           Separate Reporting - Almost all public entity risk pools stand alone as a separate accounting and reporting
            entity. These pools are required to have full-accrual accounting systems and conform to generally accepted
            accounting principles applicable to proprietary funds of governmental units.

           Component Unit Reporting – In June of 1991, the Governmental Accounting Standards Board (GASB)
            issued its Statement 141 which defines the financial reporting entity. The Statement is effective for
            financial statements for periods beginning after December 15, 1992, and requires governmental entities to
            evaluate their relationships with other organizations (both governmental and nongovernmental).

            When entities are created by risk pools they must be evaluated for inclusion as component units. For
            information on determining the proper reporting of entities created by or related to risk pools refer to the
            reporting entity guidance in the GAAP BARS Manual, Part 4, Chapter 1.

            Unemployment insurance pools and workers’ compensation pools that are a component unit of an
            Educational Service District (ESD), or other governmental entities, must be presented in their primary
            government (e.g., ESD) financial statements in the component unit column(s). They also should
            acknowledge their relationship with that entity in the notes to the financial statements and in the headings
            of their own statements (e.g., “__________ Pool, a Component Unit of the __________ ESD”).

           Pools that are included as part of another government reporting entity and do not issue separate financial
            reports should present the required supplementary information described on pages 5-1 – 5-6 as statistical
            information in the entity’s comprehensive annual financial report (CAFR).
Blank formats of financial statements applicable to public entity risk pools have been provided in this document.
The statement of cash flows should be presented using only the direct method. Include only those accounts used by
the pool. Prior year information (optional) should be taken from the prior year’s financial statements.




____________________________
1
        As updated by the GASBS 39, Determining Whether Certain Organizations Are Component Units.




Risk Pools                                                 3-1                                                  (01-12)
The pools have two options for presentation:

    1.   Single column presentation
         In this presentation all activities are combined in one column.
    2.   Multiple column presentation
         In this option each activity should be reported separately. All duplicating transactions should be
         eliminated. The elimination may be presented in a separate column on the face of the financial statements
         or in the notes. The pools must also present a total column for all underlying activities.1
Also, remember that if the pool presents a column for non-major funds that aggregates more than one enterprise
fund, the combining statements need to be presented when a CAFR is prepared.
The statement of net position can be also presented in the balance sheet format.
When presenting comparative financial statement information, show current year data in the left hand column and
prior year data in the right hand column. Also, please remember that the comparative financial statements should be
accompanied by comparative notes to these statements. The pool may choose to prepare either two sets of notes
(one set for each fiscal year) or one set with two year information in each note. If you did not prepare a particular
statement type last year, you will not be able to prepare that statement on a comparative basis for this year. In that
case, eliminate the prior year column of data and date the form for the current year only.




____________________________________
1
    This presentation requires additional audit procedures due to the multiple opinion units and it may result in an
    increased audit time.


Risk Pools                                               3-2                                                  (01-12)
                                     MANAGEMENT’S DISCUSSION AND
                                          ANALYSIS (MD&A)


The MD&A should include all of the components of MD&A discussed in the GASBS 34 to the extent they apply:

① A brief discussion of basic financial statements.

② Condensed comparative financial information:
     - total assets (distinguishing between capital and other assets)
     - total deferred outflows of resources
     - total liabilities (distinguishing between long-term and other liabilities)
     - total deferred inflows of resources
     - total net position (distinguishing net investment in capital assets, restricted and unrestricted)
     - operating revenues (by major source)
     - nonoperating revenues (by major source)
     - total revenues
     - operating expenses (as prescribed in the operating statement)
     - nonoperating expenses (as prescribed in the operating statement)
     - total expenses
     - excess/deficiency (before any capital contributions, contributions to term and permanent endowments,
       special and extraordinary items, and transfers)
     - capital contributions
     - contributions to term or permanent endowments
     - special/extraordinary items
     - transfers
     - change in net position
     - ending net position

③ Analysis of the pool’s overall financial position and results of operations. (The pool should specifically address
  whether its overall financial portion has improved or deteriorated. Also, the MD&A needs to address whether
  restrictions, commitments, or other limitations specifically affect the availability of pool resource for future
  use.)

④ Description of significant capital assets and long-term debt activities.

⑤ Description of significant changes in condition and estimated maintenance expenses for infrastructure assets.

⑥ Discussion of currently known facts, decision, or conditions that are expected to have a significant effect on
  financial net position or result of operations (revenues, expenses and other changes in net position). Depending
  on the facts and circumstances, it may be necessary to include a discussion of subsequent events and/or going
  concern issues (GASBS 56).

The MD&A should not go beyond the required elements listed above. The amounts reported here should agree with
related amounts in basic financial statements.

If the pool prepares comparative financial statements (i.e., basic financial statements (including notes) and RSI are
presented for both years), the MD&A is required to address both years presented in the comparative financial
statements. The comparative MD&A would include condensed financial information and related financial analysis
for both years (i.e., the pool would present its financial analysis for two years, however condensed financial
information would encompass three years).




Risk Pools                                               3-3                                                 (01-12)
             THIS PAGE LEFT BLANK INTENTIONALLY.




Risk Pools                   3-4                   (01-12)
                          STATEMENT OF NET POSITION (or BALANCE SHEET)1

The information for this statement should be taken from the pool’s general ledger after closing entries are posted.
The statement of net position should include those general ledger accounts used by the pool.

The account titles shown on the statement are for reference and are sufficient for most risk pool operations. The
account line items presented are an example and may need to be customized to the pool. These accounts listed are
deemed to be at the appropriate level of detail for most reporting risk pool activity. Many of the accounts are
required by GASBS 10. Before deleting accounts make sure the pool does not have activity in that area. In some
instances accounts additional accounts may be required. Use these blank spaces as necessary.

The statement model presented is for current year information. In GASBS 34 reporting standalone enterprise funds
usually do not present comparative statements because the MD&A is used to present comparative information. If
the comparative statement format is chosen GAAP requires the presentation of three years of data in the MD&A.

Application of the GASB Statement 14 may result in the addition of a Component Units column (or columns) in the
financial statements of the pool. The following forms do not contain provisions for component units. If the pool has
a component unit as defined by GASB Statement 14 you will need to make the appropriate modifications to the
statements. The GAAP BARS manual discusses the reporting entity and potential component units in Part 4,
Chapter 1 and provides examples of financial reporting of component units. For further information, refer to the
BARS Manual and the GASB Statement 14.

Special reporting requirements for account balances on the statement of position:

Receivables for member contributions/assessments – Receivables should only be recognized when formally assessed
by the governing body or a legally enforceable claim exists. Legal authority in a statute alone does not give
sufficient cause to report a receivable.

Restricted assets – Cash and investments are usually the largest assets held by a risk pool. All cash and investments
with external restrictions must be reported as restricted. This includes all assets (including receivables) held for a
reserve for the 70 percent confidence level. The external reserve requirement is due to WAC 82-60-03001 and is
applicable only to joint property and liability programs. Another example would include assets held for reserve to
meet eight weeks of program expenses in a health and welfare program as stated in WAC 82-65-040. In addition the
restricted assets must be classified as current or non-current. The classification is determined by the type of liability
it is related to (i.e. current/non-current).

Equity in joint venture – joint self insurance – If a risk pool has a measurable equity interest in a joint venture
(example: Government Entity Mutual, Inc.) it must report its equity interest as an asset. This is a joint venture and
should follow equity interest accounting.

Claims reserves (IBNR, Unpaid Claims, and ULAE) – The largest liability for most pools is the unpaid claims and
loss adjustment expenses. These liabilities are commonly reported as reserves. The claims liability should be
reported net of anticipated recoveries (i.e. salvage or subrogation).
      IBNR – The estimated liability for future claims are reported as Incurred but Not Reported (IBNR) claims.
      This account includes known loss events that are expected to be presented as claims, unknown loss events that
      are expected to be presented as claims, and expected future development on existing claims.
      Unpaid claims – These are the liability for claims adjustment expenses associated directly with a claim. They
      include all costs with the settlement of unpaid claims.
      ULAE (Unallocated Loss Adjustment Expense) – This liability is related to overhead costs that cannot be
      allocated to specific claims. This amount is usually calculated by an actuary; however, an estimate of claims
      based on actual costs may be used. An exception to reporting arises when there has been a transference of risk
      and the pool is no longer responsible for the costs.



1
    The statement presentation used is for a standalone enterprise fund.


Risk Pools                                                3-5                                                    (01-12)
Claims reserves for IBNR, Open Claims and ULEA liabilities need to be reported in separately. In addition the
portion of the current and non-current liabilities needs to be presented for each. The split is usually made based on
prior experience and expected activity. Methodology for classification needs to be reasonable and used consistently.
The total amount of claims reserves must tie to the claims reserve note.

Unearned member assessments – Payments and receivables for future periods that have not met revenue recognition
criteria. Revenue should be recognized over the period of insurance coverage.

Restricted component of net position – Component of net position related to external use requirements must be
reported as restricted component of net position (examples: restricted assets used to meet the 70 percent confidence
level requirements for property and liability programs; or, restricted assets set aside for eight weeks of program
expenses for health and welfare programs).

Unrestricted component of net position – Component of net position without external restrictions for use. Equity
related to joint ventures should be classified as unrestricted component of net position (example: Government Entity
Mutual, Inc.).




Risk Pools                                              3-6                                                  (01-12)
MCAG NO.                                _________________________                Page 1 of 2
                                                  (Pool)

                                     STATEMENT OF NET POSITION
                                                  , 20__


ASSETS

Current Assets:
 Cash and Cash Equivalents                                      $_____________
 Investments                                                    ______________
 Deposits with Fiscal Agents/Trustees                           ______________
 Receivables:                                                   ______________
         Member Assessments/Contributions                       ______________
         Accrued Deductibles/Co-pays                            ______________
         Excess/Reinsurance Recoverable                         ______________
         Stop Loss Recoverable                                  ______________
         Other Receivables                                      ______________
 Accrued Interest                                               ______________
 Prepayments                                                    ______________
 Restricted Assets                                              ______________
                                                                ______________
 Other Current Assets                                           ______________

        TOTAL CURRENT ASSETS                                    ______________

Noncurrent Assets:
 Capital Assets (Net of Accumulated Depreciation)               ______________
 Restricted Assets                                              ______________
 Equity in Reinsurers                                           ______________
 ______________                                                 ______________

        TOTAL NONCURRENT ASSETS                                 ______________

TOTAL ASSETS                                                    $_____________


DEFERRED OUTFLOWS OF RESOURCES
Accumulated Decrease in Fair Value
   of Hedging Activities                                        $_____________




Risk Pools                                          3-7                             (01-12)
                                                                             Page 2 of 2

LIABILITIES

Current Liabilities:
 Claim Reserves:                                   $_____________
    Incurred but Not Reported (IBNR)                                 ______________
    Unpaid Claims                                  ______________
    Unallocated Loss Adjustment Expenses           ______________
 Accounts Payable                                  ______________
 Unearned Member Assessments/Contributions         ______________
 Notes Payable                                     ______________
 Payable from Restricted Assets                    ______________
                                                   ______________
                                                   ______________
 Other Current Liabilities                         ______________

        TOTAL CURRENT LIABILITIES                  $______________


Noncurrent Liabilities:
 Claim Reserves:                                   $_____________
    IBNR                                           ______________
    Unpaid Claims                                  ______________
    Unallocated Loss Adjustment Expenses           ______________
 Compensated Absences                              ______________
 Payable from Restricted Assets                    ______________
 ______________                                    ______________
 ______________                                    ______________

        TOTAL NONCURRENT LIABILITIES               ______________

TOTAL LIABILITIES                                  $_____________

DEFERRED INFLOWS OF RESOURCES
Accumulated increase in Fair Value of
    Hedging Derivatives                            ______________
Deferred Service Concession Arrangement
    Receipts                                       ______________

TOTAL DEFERRED INFLOWS OF RESOURCES                $_____________


NET POSITION

 Net Investment in Capital Assets                  ______________
 Restricted for                                    ______________
                                                   ______________
 Unrestricted                                      ______________

TOTAL NET POSITION                                 $




SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.




Risk Pools                                   3-8                                 (01-12)
                        STATEMENT OF REVENUES, EXPENSES, AND CHANGES
                                    IN FUND NET POSITION

The information for this statement should be taken from the pool’s revenue and expense ledgers after year-end
adjustments are posted but before closing the books. The titles shown on the statement were taken from SAO’s
BARS GAAP Manual and the GFOA’s Governmental Accounting, Auditing, and Financial Reporting publication.
The statement model presented is for current year information. In GASBS 34 reporting standalone enterprise funds
usually do not present comparative statements because the MD&A is used to present comparative information. If
the comparative statement format is chosen GAAP requires the presentation of three years of data in the MD&A.

GASBS 34 requires that internal transactions between programs/funds that are duplicative in nature be eliminated in
the top level (government-wide) statements. If programs in the pool have transactions that are not external in nature
they should be eliminated (i.e., internal revenues and expenses). The elimination is also done to minimize the
grossing up effect on assets (receivables) and liabilities (payables) on the statement of net position.
The following forms do not contain provisions for component units. If the pool has a component unit as defined by
GASB Statement 14 you will need to make the appropriate modifications to the statements. The GAAP BARS
Manual discusses the reporting entity and potential component units in Part 4, Chapter 1 and provides examples of
financial statements which include component units. For further information, refer to the BARS Manual and the
GASB Statement 14.
Special reporting requirements for account balances on the operating statement:

Member assessments/contributions – These revenues are payments for insurance and insurance related services. The
revenue recognition for assessments, contributions and/or premiums should normally be over the contract period by
amortizing the payment over the full length of the coverage period. Thus, the revenue should be matched to the
insurance service as it is provided. This requires insurance payments not meeting definition of earned to be
recorded as unearned member assessments/contributions. The payments should only be classified as revenue after
the service has been provided.

Some insurance contracts are classified as retrospectively rated policies and contain an adjustment clause. The
adjustment allows the pool to determine a final assessment based on the actual experience during the coverage
period. In these contracts the final assessment has been earned and should be reported as revenue during the period
coverage was provided, as long as it can be reasonably estimated.

Premium deficiency – If the sum of expected claim costs (including IBNR) and all expected claims adjustment
expenses exceed unearned premiums a premium deficiency exits. When this situation occurs an assessments
receivable and related revenue should be recorded after a legally enforceable claim has been established and the
collectability is deemed probable.

Incurred loss and allocated loss adjustment expenses – The detail of the Claims Paid, net of recoveries and Change
in Unpaid Claims Liabilities needs to be reported. These amounts must tie to the claims reserve note.

Unallocated loss adjustment expense – These are costs related to insurance settlements that cannot be directly
related to a specific case. It usually is composed of salaries and internal costs of the pool’s claims department. The
amount reported must tie to claims reserve note.

Reinsurances – Amounts that are recoverable from reinsurers or excess insurers and that relate to paid claims should
be classified as an asset. Those recoverable amounts related to claims adjustment expenses should be classified as
reductions in expenses.




Risk Pools                                               3-9                                                  (01-12)
MCAG NO.                                  _________________________                Page 1 of 2
                                                    (Pool)

         STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION
                         For the Fiscal Year Ended , 20__


OPERATING REVENUES:

 Member Assessments/Contributions                                 $_____________
 Late Payment Assessments                                         ______________
 Supplemental Assessments                                         ______________
 Adjustment of Prior Years’ Supplemental Assessments              ______________
 Application Fees                                                 ______________
                                                                  ______________

        Total Operating Revenues                                  $_____________


OPERATING EXPENSES:

 Incurred Loss/Loss Adjustment Expenses                           $_____________
  Claims Paid                                                     ______________
  Change in Unpaid Claims Liability                               ______________
 Unallocated Loss Adjustments Expenses:                           ______________
 Excess/Reinsurance Premiums                                      ______________
 General and Administrative Expenses                              ______________
 Other                                                            ______________
 Depreciation                                                     ______________

        Total Operating Expenses                                  $_____________



OPERATING INCOME (LOSS)                                           $




Risk Pools                                          3-10                              (01-12)
                                                                               Page 2 of 2


NONOPERATING REVENUES (EXPENSES):

 Interest and Investment Income                               $_____________
 Interest Expense and Related Charges                         ______________
 Lease Income                                                 ______________
 Gains (Losses) on Capital Assets Disposition                 ______________
 General and Administrative Expenses                          ______________
 Other Nonoperating Revenues                                  ______________
 Other Nonoperating Expenses                                  ______________
 Change in Equity in Reinsurer                                ______________
                                                              ______________

        Total Nonoperating Revenues (Expenses)                $_____________


 Income before Capital Contributions, Contributions,
   to Term or Permanent Endowments, Special and
   Extraordinary Items                                        ______________

Capital Contributions                                         ______________
Contributions to Term or Permanent Endowments                 ______________
Special Items                                                 ______________
Extraordinary Items                                           ______________

        CHANGE IN NET POSITION                                $_____________

TOTAL NET POSITION, Beginning                                 $_____________

Prior Period Adjustments                                      $_____________

TOTAL NET POSITION, Ending                                    $



SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.




Risk Pools                                             3-11                       (01-12)
             THIS PAGE LEFT BLANK INTENTIONALLY.




Risk Pools                   3-12                  (01-12)
                                        STATEMENT OF CASH FLOWS

The pool must present a statement of cash flows. The only acceptable method of presentation is the direct method.
In using the direct method, a reconciliation of operating cash flows to operating income is required.
The statement of cash flows is prepared for governmental proprietary funds using four activities:
      Cash Flows from Operating Activities,
      Cash Flows from Noncapital Financing Activities,
      Cash Flows from Capital and Related Financing Activities, and
      Cash Flows from Investing Activities.
GAAP requires cash flow activity from blended component units to be presented on the statement of cash flows;
however, the statement should not contain cash flow activity from discretely presented component units.
The statement of cash flows must contain transaction information from business type activity blended component
units using either a separate column (i.e. multi-program presentation) or combined in the entity total column (i.e.
single enterprise fund presentation). If the pool has a discretely presented component unit and wants to display this
information it should be presented as supplementary information in a schedule following the notes to the financial
statements.

                                      Cash Flows from Operating Activities

In reporting cash flows from operating activities, authorities should report major classes of gross cash receipts and
gross cash payments and their sum  the net cash flow from operating activities. Cash flows from operations
include all cash related to transactions and events reported as components of operating income in the statement of
revenues, expenses, and changes in fund net position. In addition, the operating activities category is used for any
cash inflow or outflow that cannot properly be classified in one of the other three categories. Authorities should, at
a minimum, report separately these classes of operating cash receipts and payments:
a.   Cash receipts from customers,
b.   Cash receipts from interfund services provided,
c.   Other operating cash receipts (if any),
d.   Cash payments to employees for services, cash payments to other suppliers of goods or services,
e.   Cash payments for interfund services used, including payments in lieu of taxes that are payments for, and
     reasonably equivalent in value to, services provided,
f.   Other operating cash payments (if any)
The cash flows for cash receipts from customers, cash paid to employees and suppliers (item a, d and e above) may
be difficult to determine, so the pool may indirectly calculate these amounts. (See the worksheet at the end of this
section.)
Further detail of operating cash receipts and payments should be provided if the detail is useful. Interest receipts
usually do not qualify to be a part of cash flows from operating activities. Exceptions to this rule are loans that:
1) fulfill government social programs rather than for income or profit; and
2) directly benefit individual constituents of government
Program loans typically refer to loans that meet both of these exceptions. The collection of principal payments
related to program loans is reported as a cash inflow in this section.
GAAP requires operating subsidies and grants to be reported in cash flows from noncapital financing activities. If
the pool deviates from GAAP and reports operating subsidies and grants in cash flows from operating activities it
must be disclosed in Note 1, Summary of Significant Accounting Policies.

                                Cash Flows from Noncapital Financing Activities

This portion of the cash flows statement includes:
        Operating subsidies (grant proceeds) not specifically restricted to capital purposes.
        Grant payments (both capital and otherwise) to other governments.
        Borrowing and repayments (principal and interest) of debt that is not clearly attributable to capital
         purposes. Capital purposes include capital acquisition, construction, or improvement, including capital
         lease repayments.
        Borrowing to finance program loans.

Risk Pools                                              3-13                                                  (01-12)
        Transfers to and from other funds (except when a transfer is received for capital purposes).
        Tax receipts not attributable to capital purposes.
        Interest paid on noncapital-related vendor payables.

                            Cash Flows from Capital and Related Financing Activities

This portion of the cash flows statement includes:
        Borrowing and repayment (principal and interest) of debt clearly attributable to capital purposes.
        Proceeds of capital grants and contributions.
        Transfers from other funds for capital purposes.
        Payments related to the acquisition, construction, or improvement of capital assets.
        Sale or involuntary conversion of capital assets (such as insurance proceeds resulting from the loss of a
         capital asset).
        Capital-type special assessments.
        Taxes levied specifically for capital purposes or related debt service.
Interest capitalization is ignored for purposes of the statement of cash flows. Interest payments should be reported
as interest payments rather than as capital acquisition, even though the payments may be capitalized in the statement
of net position and not reported as interest expense in the statement of revenues, expenses, and changes in fund net
position.

                                       Cash Flows from Investing Activities

This portion of the cash flows statement includes:
        Receipt of interest (except on certain program loans).
        Loan collections (except for certain program loans).
        Proceeds from the sale of investments.
        Receipt of interest on customer deposits.
        Changes in the fair value of investments subject to fair value reporting and classified as cash equivalents.
Cash outflows in the investing activities category includes:

        Loans made to others (except for program loans).
        Purchase of investments.

Reconciliation

Authorities are required to provide a reconciliation of the difference between cash flows from operating activities
and operating income. This reconciliation should be presented either within the statement of cash flows or as an
accompanying schedule to the statement.

Noncash investing, capital, or financing transactions

The statement of cash flows is limited to actual inflows and outflow of cash (and cash equivalents). Therefore,
financial statement users still need information on certain noncash activities that otherwise would fail to be reported
either in the statement of revenues, expenses, and changes in fund net position or in the statement of cash flows.
Specifically, information is needed regarding noncash transactions that meet two criteria:

1.   The transaction affects recognized assets or liabilities, and
2.   The transaction would not properly have been classified as cash flows from operating activities.

This information can be presented either in a narrative or tabular format on a separate schedule accompanying the
statement of cash flows.




Risk Pools                                               3-14                                                   (01-12)
MCAG NO.                                  _________________________                Page 1 of 2
                                                    (Pool)
                                      STATEMENT OF CASH FLOWS
                                    For the Fiscal Year Ended , 20__


CASH FLOWS FROM OPERATING ACTIVITIES:
 Cash received from members                                       $_____________
 Cash payments to suppliers for goods and services                ______________
 Cash payments to employees for services                          ______________

 Other operating revenues                                         ______________

    Net Cash Provided (Used) by Operating Activities              $_____________


CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
 Proceeds from issuance of notes                                  $_____________
 Principal payments on notes                                      ______________


    Net Cash Provided (Used) by Noncapital
    Financing Activities                                          $_____________


CASH FLOWS FROM CAPITAL AND RELATED FINANCING
 ACTIVITIES:
 Purchase of office facility                                      $_____________
 Proceeds from sale of equipment                                  ______________


    Net Cash Provided (Used) by Capital
    and Related Financing Activities                              $_____________


CASH FLOWS FROM INVESTING ACTIVITIES:
 Proceeds from sales of investments                               $_____________
 Purchases of investments                                         ______________
 Interest received                                                ______________


    Net Cash Provided (Used) by Investing Activities              ______________


Increase (Decrease) in Cash and Cash Equivalents                  $_____________

Cash and Cash Equivalents, Beginning                              ______________

Cash and Cash Equivalents, Ending                                 $




Risk Pools                                             3-15                           (01-12)
                                                                                Page 2 of 2

RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED (USED) BY OPERATING
ACTIVITIES


OPERATING INCOME                                               $_____________

 Adjustment to reconcile operating income to net cash
     provided (used) by operating activities:
 Depreciation expenses                                         $_____________
 (Increase) Decrease in accrued interest                       ______________
 Provision for unallocated loss adjustment
     expenses                                                  ______________
 Increase (Decrease) in unearned member
     assessments                                               ______________
 (Increase) Decrease in member assessments
     receivable                                                ______________
 (Increase) Decrease in other prepaid expenses                 ______________
 (Increase) Decrease in insurance recoverables                 ______________
 Increase (Decrease) in claim reserves                         ______________
 Increase (Decrease) in payables                               ______________
 Increase (Decrease) in other liabilities                      ______________
                                                               ______________
                                                               ______________

NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES               $




NONCASH INVESTING, CAPITAL, AND FINANCING ACTIVITIES:

 Borrowing under capital lease(s)                              $_____________
 Contributions of capital assets from governments              ______________
 Increase in fair value of investment                          ______________
                                                               ______________
                                                               ______________



SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.




Risk Pools                                              3-16                       (01-12)
                                    NOTES TO FINANCIAL STATEMENTS
                                        GENERAL INSTRUCTIONS


The sample notes to financial statements which follow were designed to provide some disclosures required for
public entity risk pools. They are intended to furnish you with ways of phrasing the disclosures you will need to
make. Be sure to revise these sample documents to fit the unique circumstances of the pool, to delete disclosures
that do not apply to the pool’s operations, and to add others that we did not include but which are needed to help a
reader understand the pool’s financial statements. For example, the pool should disclose specific FASB
pronouncements if their application has a significant impact on the pool financial presentation.

If the pool prepared comparative financial statements1 the notes have to include information for both years.

Public entity risk pools must make at least the following disclosures:

(1)      A description of the risk transfer or pooling agreement, including the rights and responsibilities of the pool
         and the pool participants. Also, include a brief description of the number and types of entities participating
         in the pool.

(2)      The basis for estimating the liabilities for unpaid claims and claim adjustment expenses. State that the
         liabilities are based on the estimated ultimate cost of settling the claims, including the effects of inflation
         and other societal and economic factors.

(3)      The nature of acquisition costs capitalized, the method of amortizing those costs, and the amount of those
         costs amortized for the period.

(4)      The face amount and carrying amount of liabilities for unpaid claims and claim adjustment expenses that
         are presented at present value in the financial statements and the range of annual interest rates used to
         discount those liabilities.

(5)      Whether the pool considers anticipated investment income in determining if a premium deficiency exists.

(6)      The nature and significance of excess insurance or reinsurance transactions to the pool’s operations,
         including the type of coverage, reinsurance premiums ceded, and estimated amounts that are recoverable
         from excess insurers and reinsurers and that reduce the liabilities as of the balance sheet date for unpaid
         claims and claim adjustment expenses.

(7)      A reconciliation of total claims liabilities, including an analysis of changes in aggregate liabilities for
         claims and claim adjustment expenses for the current fiscal year and the prior fiscal year, in this tabular
         format:

         (a)      Amount of liabilities for unpaid claims and claim adjustment expenses at the beginning of each
                  fiscal year.

         (b)      Incurred claims and claim adjustment expenses:

                          Provision for insured events of the current fiscal year.
                          Increase (decrease) in the provision for insured events of prior fiscal years.

________________________________
1
         Comparative financial statements mean two complete sets of financial statements for each of comparative
         year. Each set should contain basic financial statements (including notes) and RSI (including MD&A).
         Both years may be combined in one presentation; however, each element (MD&A, basic financial
         statements, notes, and RSI) have to include information for both years.




Risk Pools                                                4-1                                                   (01-12)
        (c)      Payments:

                         Claims and claim adjustment expenses attributable to insured events of the current fiscal
                          year.
                         Claims and claim adjustment expenses attributable to insured events of prior fiscal years.

        (d)      Other. (Provide an explanation of each material item.)

        (e)      Amount of liabilities for unpaid claims and claim adjustment expenses at the end of each fiscal
                 year.

(8)     The aggregate outstanding amount of liabilities for which annuity contracts have been purchased from third
        parties in the claimants’ names and the related liabilities have been removed from the balance sheet.
        (Annuity contracts used to settle claims for which the claimant has signed an agreement releasing the entity
        from further obligation and for which the likelihood that the pool will be required to make future payments
        on those claims is remote should not be included in this disclosure.)




Risk Pools                                             4-2                                                  (01-12)
                                                               Table of Contents
                                                                                                                                                                Page
Note 1.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
             a. Reporting Entity ............................................................................................................................. 4-4
             b. Basis of Accounting ....................................................................................................................... 4-4
             c. Cash and Cash Equivalents ............................................................................................................ 4-5
             d. Capital Assets ................................................................................................................................ 4-5
             e. Restricted Funds ............................................................................................................................ 4-6
             f. Receivables .................................................................................................................................... 4-6
             g. Inventories ..................................................................................................................................... 4-6
             h. Investments .................................................................................................................................... 4-6
             i. Compensated Absences ................................................................................................................. 4-7
             j. Unamortized Debt Expenses .......................................................................................................... 4-7
             k. Unpaid Claims Liabilities .............................................................................................................. 4-8
             l. Deferred Policy Acquisition Costs ................................................................................................. 4-8
             m. Reinsurance .................................................................................................................................... 4-8
             n. Member Assessments and Unearned Member Assessments ................................................. 4-8
             o. Unpaid Claims ............................................................................................................................... 4-8
             p. Reserve for Unallocated Loss Adjustment Expenses ..................................................................... 4-9
             q. Exemption from Federal and State Taxes ...................................................................................... 4-9
             r. Premium Deficiency ...................................................................................................................... 4-9
             s. Deferred Outflows/Inflows of Resources....................................................................................... 4-9
Note 2.      STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY ........................................................ 4-9
Note 3.      DEPOSITS AND INVESTMENTS
             a. Deposits ....................................................................................................................................... 4-10
             b. Investments .................................................................................................................................. 4-11
             c. Derivative Instruments ................................................................................................................. 4-13
             d. Securities Lending Transactions .................................................................................................. 4-13
             e. Gains and Losses on Investments ................................................................................................ 4-13
Note 4.      RISK FINANCING LIMITS .............................................................................................................. 4-14
Note 5.      EXCESS INSURANCE CONTRACTS/REINSURANCE ................................................................ 4-15
Note 6.      MEMBERS’ SUPPLEMENTAL ASSESSMENTS AND CREDITS ................................................ 4-16
Note 7.      LONG-TERM DEBT AND LIABILITIES
             a. Long-Term Debt .......................................................................................................................... 4-17
             b. Notes Payable .............................................................................................................................. 4-20
             c. Changes in Long-Term Liabilities ............................................................................................... 4-20
Note 8.      SHORT-TERM DEBT ........................................................................................................................ 4-21
Note 9.      CAPITAL ASSETS
             a. Capital Assets .............................................................................................................................. 4-22
             b. Impaired Capital Assets ............................................................................................................... 4-23
             c. Capitalization of Interest .............................................................................................................. 4-23
Note 10.     COMMITMENTS............................................................................................................................... 4-23
Note 11.     RESTRICTED NET POSITION......................................................................................................... 4-23
Note 12.     LEASES
             a. Operating Lease(s) ....................................................................................................................... 4-24
             b. Capital Lease(s) ........................................................................................................................... 4-24
Note 13.     PENSION PLANS .............................................................................................................................. 4-27
Note 14.     OTHER POSTEMPLOYMENT BENEFIT (OPEB) PLANS ............................................................ 4-31
Note 15.     SELF-INSURANCE ........................................................................................................................... 4-32
Note 16.     DEFERRED DEBITS (OR CREDITS) .............................................................................................. 4-32
Note 17.     ACCOUNTING CHANGES .............................................................................................................. 4-32
Note 18.     EXTRAORDINARY/SPECIAL ITEMS ............................................................................................ 4-32
Note 19.     PRIOR PERIOD ADJUSTMENTS .................................................................................................... 4-33
Note 20.     CONTINGENT LIABILITIES AND LITIGATIONS ........................................................................ 4-33
Note 21.     SUBSEQUENT EVENTS .................................................................................................................. 4-34
Note 22.     RELATED PARTY TRANSACTIONS ............................................................................................. 4-34
Note 23.     TERMINATION BENEFITS ............................................................................................................. 4-35
Note 24.     PLEDGES AND SALES OF FUTURE REVENUES ........................................................................ 4-35
Note 25.     UNPAID CLAIMS LIABILITIES ...................................................................................................... 4-36
Note 26.     OTHER
             a. Bankruptcy ................................................................................................................................... 4-37
             b. Going Concern ............................................................................................................................. 4-37




Risk Pools                                                                  4-3                                                                          (01-12)
                                                                               1
                                         ______________________________
                                                      (Pool)

                                      NOTES TO FINANCIAL STATEMENTS
                                       For the Fiscal Year Ended , 20__


The notes are an integral part of the accompanying financial statements.


NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

                                           1
The accounting policies of the (pool) conform to generally accepted accounting principles as applicable to
proprietary funds of governmental units. The following is a summary of the more significant policies:

a.       Reporting Entity

         (A description of the risk transfer or pooling agreement, including the rights and responsibilities of the pool
         and the pool participants. Include the type of insurance activities provided to participants. Also, include a
         brief description of the number and types of entities participating in the pool.)

         Example:
         (Pool) is local government risk sharing pool. The members are made up of (describe entity types)
         throughout the State of Washington.       (Pool) was originally organized in (date), pursuant to
         RCW 48.62.031, 36.16.138 and 39.34. (Pool) was formed under (describe formation agreement).

         (Pool) was established to provide (describe risk transference arrangement including the rights and
         responsibilities of the pool and pool participants).

         (If the pool has a component unit(s), it should provide a brief description of it (them) and their relationship
         with the primary government. Discuss the criteria used to identify the component units and method used to
         present them (blended or discretely presented).

b.       Basis of Accounting

         The accounting records of the Pool are maintained in accordance with methods prescribed by the State
         Auditor’s Office under the authority of Chapter 43.09 RCW. The Pool also follows the accounting
         standards established by the Governmental Accounting Standards Board (GASB) Statement 10, Accounting
         and Financial Reporting for Risk Financing and Related Insurance Issues, as amended by the GASB
         Statement 30, Risk Financing Omnibus, the GASB Statement 31, Accounting and Financial Reporting for
         Certain Investments and for External Investment Funds.

         The Pool uses the full-accrual basis of accounting where revenues are recognized when earned and
         expenses are recognized when incurred. Capital asset purchases are capitalized and long-term liabilities are
         accounted for in the (appropriate) fund(s).

         The principal operating revenues of the Pool are                            .

         Operating expenses include                                            .

_______________________________________________________________________________________

NOTES TO PREPARER:
1
     Insert the official name of the public entity risk pool.




Risk Pools                                                  4-4                                                 (01-12)
c.       Cash and Cash Equivalents

         For purposes of the statement of cash flows, the (pool) considers all highly liquid investments with a
         maturity of three months or less when purchased to be cash equivalents.

d.       Capital Assets
                       1
         See Note _.

_______________________________________________________________________________________

NOTES TO PREPARER:
1
     Insert note number.




Risk Pools                                            4-5                                              (01-12)
e.       Restricted Assets


         All assets held with external restrictions on use must be classified as restricted assets. The assets should be
         further classified as current or non-current based on the related liability. Example: assets held to meet the
         70 percent confidence level per WAC 82-60-03001 should be reported as restricted.

f.       Receivables1


g.       Inventories

                                                      2
         Inventories are valued at _______________ which approximates the market value.


h.       Investments

                        3
         See Note ___.




NOTES TO PREPARER:
1
     Disclose the policy for estimating and writing off uncollectible accounts. For more details see GASBS 62,
     Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and
     AICPA Pronouncements, paragraph 33.
2
     For the various classifications of inventory items, the basis upon which their amounts are stated and, where
     practicable, indication of the method of determining the cost, for example, average cost, FIFO, and LIFO should
     be disclosed. See GASBS 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-
     November 30, 1989 FASB and AICPA Pronouncements, paragraph 210.
3
     Insert note number.




Risk Pools                                                4-6                                                   (01-12)
i.       Compensated Absences

         Compensated absences are absences for which employees will be paid, such as vacation (and sick) leave.
         The Pool records unpaid leave for compensated absences as an expense and liability when incurred.


         Vacation pay, which may be accumulated up to _ days and is payable upon resignation, retirement or death.
                                                               1
         Sick leave may accumulate (indefinitely/up to hours).

j.       Unamortized Debt Expenses

         Costs relating to the sale of bonds are deferred and amortized over the lives of the various bond issues.




NOTES TO PREPARER:
1
     If the pool has a policy that allows a payment for accrued sick leave upon resignation/termination, include a text
     to reflect this policy. For example:

         Upon resignation, any outstanding sick leave is lost.

         Sick leave does not vest until death or retirement thus no current liability is recognized.

         If an employee terminates with at least ten years of service, he/she will be paid for sick leave balances up to
         thirty days, at one-half his/her final pay rate, etc.




Risk Pools                                                4-7                                                   (01-12)
k.       Unpaid Claims Liabilities

         The Pool establishes claims liabilities based on estimates of the ultimate cost of claims, including future
         claim adjustment expenses, that have been reported but not settled, and claims that have been incurred but
         not reported. The length of time for which such costs must be estimated varies depending on the coverage
         involved. Estimated amounts of salvage and subrogation and reinsurance recoverable on unpaid claims are
         deducted from the liability for unpaid claims.

         Because actual claims costs depend on such complex factors as inflation, changes in doctrines of legal
         liability, and damage awards, the process used in computing claims liabilities does not necessarily result in
         an exact amount, particularly for coverage such as general liability.

         Claims liabilities are recomputed periodically using a variety of actuarial and statistical techniques to
         produce current estimates that reflect recent settlements, claim frequency, and other economic and social
         factors. A provision for inflation in the calculation of estimated future claims costs is implicit in the
         calculation because reliance is placed both on actual historical data that reflect past inflation and on other
         factors that are considered to be appropriate modifiers of past experience. Adjustments to claims liabilities
         are charged or credited to expense in the periods in which they are made.

l.      Deferred Policy Acquisition Costs

       Acquisition costs, which consist primarily of salaries, inspection and medical exam fees, and certain
       underwriting expenses, vary with, and are primarily related to, the issuance of new insurance policies. These
       costs are deferred and amortized on a straight-line basis over the life of the insurance contract. Deferred
       acquisition costs are reviewed periodically to determine if they are recoverable from future income, including
       investment income. If the deferred costs are not recoverable, they are charged to expense in the period of the
       review. Amortization of deferred costs in 20___ was $__________.

m.       Reinsurance

         The Pool uses reinsurance agreements to reduce its exposure to large losses on all types of insured events.
         Reinsurance permits recovery of a portion of losses from reinsurers, although it does not discharge the
         primary liability of the Pool as direct insurer of the risks reinsured. The Pool does not report reinsured
         risks as liabilities unless it is probable that those risks will not be covered by reinsurers. The amount
         deducted from claims liabilities as of                  , 20__ for reinsurance was $__________. Premiums
         ceded to reinsurers during 20__ were $__________.

n.       Member Assessments and Unearned Member Assessments

         Member assessments are collected in advance and recognized as revenue in the period for which insurance
                                                                                             1
         protection is provided. The assessment is calculated based on ____________________.

o.       Unpaid Claims

         Claims are charged to income as incurred. Claim reserves represent the accumulation of estimates for
         reported, unpaid claims, plus a provision for claims incurred, but not reported. These estimates are
         continually reviewed and updated, and any resulting adjustments are reflected in current earnings.




NOTES TO PREPARER:
1
     Describe the basis of the calculation for member assessments.



Risk Pools                                               4-8                                                   (01-12)
p.       Reserve for Unallocated Loss Adjustment Expenses

         The reserve for unallocated loss adjustment expenses represents a liability for the estimated cost to be
         incurred with respect to the settlement of claims in process and claims incurred but not reported.
         Management estimates this liability at the end of each year based upon (describe method used). The
         change in the liability each year is reflected in current earnings.

q.       Exemption from Federal and State Taxes

         Pursuant to revenue ruling number 90-74, income of Municipal Risk Pools is excluded from gross income
         under IRC Section 115(1)1.

         Chapter 48.62 RCW exempts the Pool from insurance premium taxes, and business and occupation taxes
         imposed pursuant to Chapter 82.04 RCW.

r.       Premium Deficiency2

s.       Deferred Outflows/Inflows of Resources3




NOTES TO PREPARER
1
     If the tax exempt status of the pool is different than the previous statement describe the tax liability of the pool.
2
     If the sum of expected claims costs (including IBNR) and all expected claim adjustments exceeds unearned
     premiums a premium deficiency exists. This issue needs to be disclosed and whether anticipated investment
     income is considered in determining if a premium deficiency exists.
3
     Disclosure of different types to deferred outflows/inflows of resources is required only if the information is not
     displayed on the face of the financial statements.

     In some situations, the amount reported for a component of net position (net investment in capital assets,
     restricted, and unrestricted) may be significantly affected by a transaction that has resulted in recognition of a
     deferred outflow of resources or deferred inflow of resources. If the difference between a deferred outflow of
     resources or deferred inflow of resources and the balance of the related asset or liability is significant,
     governments should provide an explanation of that effect on its net position in the notes to the financial
     statement




Risk Pools                                                  4-9                                                    (01-12)
NOTE 2 – STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY1

NOTE 3 – DEPOSITS AND INVESTMENTS

    a.   Deposits2

The (pool) deposits and certificates of deposit are entirely covered by federal depository insurance (FDIC) or by
collateral held in a multiple financial institution collateral pool administered by the Washington Public Deposit
Protection Commission (PDPC).




____________________________________________________________________________________

NOTES TO PREPARER:
1
    If there was a violation of finance-related legal or contractual provisions, the pool should disclose both:

    a.   the description of the violation(s) and
    b.   the actions taken to address the violation(s)
2
    The following disclosures are required regarding cash deposits with financial institutions:

        Legal and contractual provisions regarding deposits;
        Policies governing deposits;
        Exposure to custodian risk as of the date of the balance sheet or statement of net position;
        Defaults and recovery of prior period losses; and
        Exposure to foreign currency risk.




Risk Pools                                               4-10                                                     (01-12)
                       1
b.       Investments

As of               , 20 , the (pool) had the following investments:
Investment                                      Maturities                 Fair Value

State investment pool
U.S. Treasuries
Bankers’ acceptance
Repurchase agreements2



         Total                                                         $

Custodial credit risk is the risk that in event of a failure of the counterparty to an investment transaction the (pool)
would not be able to recover the value of the investment or collateral securities. Of the (pool’s) total position of
$         in                ,$          is exposed to custodial credit risk because the investments are held by the (pool)
brokerage firm, which is also the counterparty in those particular securities.
___________________________________________________________________________________________
NOTES TO PREPARER:
1
     The pool should briefly describe the types of investments authorized by legal or contractual provisions and
     transit’s own policies that are related to risks. If a pool has no deposits or investments policy that addresses a
     specific type of risk that it is exposed to, the disclosure should indicate that fact.

     This disclosure is required for a pool as a whole. Risk disclosures should also be made, if applicable, for
     individual major funds, nonmajor funds in aggregate, or fiduciary fund types when the risk exposures are
     significantly greater than the deposit and investment risk of pool.

     Disclose all investments including those not evidenced by securities that exist in physical or book-entry form.

     Disclosure is limited to types of investment held at year end. Indicate type of investment(s).

     The investments should be disclosed at their fair value. However, pools have the option of reporting certain
     investments at cost or amortized cost (e.g., real estate, venture capital in limited partnerships, loan receivable,
     trade accounts receivable, restricted stock, etc.). The SSAP should indicate whether the pool uses this option
     and, it so, for which one specific categories of investment. Also, if a pool uses some other than quoted market
     prices to estimate their fair values, the methods and significant assumptions should be disclosed.

     If there are material violations of these provisions, they should be disclosed.

     For any investments in external investment pools that are not SEC-registered, a brief description of any
     regulatory oversight for the pool and whether the fair value of the position in the pool is the same as the value of
     the pool shares is required.

     Pools should disclose the credit quality ratings of external investment pools and other pooled investments of
     fixed-income securities. If the investment is unrated, the disclosure should indicate that.

     Risk disclosures applicable to investments should be reported separately by investment type.              Dissimilar
     securities should not be aggregated into a single investment type.

     Disclose custodial credit risk for investments only if unregistered/uninsured securities are held either by the
     counterparty or by the counterparty’s trust department or agent, but not in pool’s name.

     If applicable, provide additional disclosures for following types of risk:

        Credit risk  disclose credit ratings for investments in debt securities, whether held directly or indirectly
         including the credit ratings for position in external investment pools. If a rating is not available, that fact
         should be disclosed. (This requirement does not apply to the debt securities of the U.S. government or
         obligations of the U.S. government agencies that are explicitly guaranteed by the U.S. government.) The


Risk Pools                                                   4-11                                                 (01-12)
NOTES TO PREPARER (Note 3 continued):

        pool should use the various rating categories (e.g., AAA, Aaa, etc.) set by nationally recognized statistical
        rating organizations (e.g., Fitch Ratings, Moody’s Investor Services, Standard & Poor’s, etc.).

       Concentration risk  disclose amount and issuer of investments that represents five percent or more of total
        investments. (This requirement does not apply to investments issued or explicitly guaranteed by the U.S
        government and investments in mutual funds, external investment pools, and other pooled investments.)

       Interest rate risk  information should be organized by investment type and amount using one of the
        following methods:
        -    segmented time distribution
        -    specific identification
        -    weighted average maturity
        -    duration
        -    simulation model.

        Any assumption made in process of applying these methods need to be disclosed.

        A pool that participates in a pooled arrangement (other than a 2a7 – like external pools investment pool)
        should disclose interest rate risk for the pooling arrangement. This disclosure is limited to investments in
        debt mutual funds, external debt investment pools, or other pooled debt investments.
        A pool should also disclose (if not disclosed already) any contractual terms for debt investments that
        expose those investments to the risk of significant changes in fair value resulting from interest rate
        fluctuation (e.g., coupon multipliers benchmark indices, embedded options, etc.).

       Foreign currency risk  disclose in U.S. dollars value of investment hold in foreign currency. Separate
        disclosure is necessary for each different foreign currency denomination and each different type of
        investment within a given currency.
    A pool should disclose all of its policies relevant to each of different types of risks, but only for those types of
    risks actually faced by the pool. If a pool does not have a policy that covers one or more of the risks it is facing,
    that fact must itself be disclosed.
    For more information see GASBS 3, 28, 31, 40 and 59.

    Disclosures required by the GASBS 40 should also be made for securities lending collateral that is reported in
    the statement of net position (or balance sheet) and for the underlying securities. See GASBS 28, as amended
    by GASBS 40.
2
    If the pool uses reverse repurchase agreements, include the following:

        State statutes permit the (pool) to enter into reverse repurchase agreements, that is, a sale of securities with
        a simultaneous agreement to repurchase them in the future at the same price plus a contracted rate of
        interest. The fair value of the securities underlying reverse repurchase agreements normally exceeds the
        cash received, providing the dealers a margin against a decline in fair value of the securities. If the
        dealers default on their obligations to resell these securities to the (pool) or provide securities or cash of
        equal value, the (pool) would suffer an economic loss equal to the difference between the fair value plus
        accrued interest of the underlying securities and the agreement obligation, including accrued interest. The
        credit exposure at year-end was $______________.

        All sales of investments under reverse repurchase agreements are for fixed terms. In investing the proceeds
        of reverse repurchase agreements, the (pool’s) policy is for the term to maturity of the investment to be the
        same as the term of the reverse repurchase agreement. Such matching existed at the year end.




Risk Pools                                               4-12                                                    (01-12)
                              1
c.   Derivative Instruments
                                       2
d.   Securities Lending Transactions
                                           3
e.   Gains and Losses on Investments

NOTES TO PREPARER:
1
          Derivatives are arrangements to receive or to make payment based on market prices without actually
          entering into the related financial or commodity transactions.
          For the required accounting and reporting information refer to GASBS 53, Accounting and Financial
          Reporting for Derivative Instruments.
          The note disclosure requirements of GASBS 53 reflect that pronouncement’s distinction between
          derivatives that function as investments and derivatives used for hedging. Like other investments,
          derivatives that function as investments generally must provide the disclosures mandated by GASBS 40,
          Deposit and Investment Risk Disclosures (an amendment of GASB Statement 3). For other derivatives
          involving hedges, GASBS 53 has essentially incorporated the disclosure requirements of GASB Technical
          Bulletin (TB) 2003-1, Disclosure Requirements for Derivatives Not Reported at Fair Value on the
          Statement of Net Assets. All the same, the credit risk disclosures of GASBS 53 will apply in all cases.
          You may also refer to examples of disclosure in the GAAP Ports BARS Manual on the SAO website at
          www.sao.wa.gov.
2
     If in the period covered by the financial statements, the pool participated in the securities lending transactions,
     the following information should be disclosed:
     ➀    source of legal or contractual authorization for the securities lending transactions;
     ➁    general description of the securities lending transactions;
           type of securities lent,
           type of collateral received,
           whether the pool has the ability to pledge or sell collateral securities without a borrower default,
           the amount by which the value of the collateral provided is required to exceed the value of underlying
               securities,
           any restrictions on the amount of the loans that can be made,
           any loss indemnification (i.e., a securities lending agent’s guarantee that it will protect the lender from
               certain losses),
           fair values of underlying securities at the balance sheet date;
     ➂    whether the maturities of the investments made with cash collateral generally match the maturities of their
          securities loans, as well as the extent of such matching at the balance sheet date;
     ➃    the amount of credit risk, if any, related to the securities lending transactions (if the lender has not credit
          risk, that fact should be stated);
     ➄    the amount of any losses on the securities lending transactions during the period resulting from the default
          of a borrower or lending agent and amounts recovered from prior period losses, if not separately disclosed
          in the operating statement.
     Securities lending transactions are subject to custodial risk disclosure requirements addressed in paragraph 9 of
     the GASBS 40, Deposits and Investments Risk Disclosures. See paragraph 10 of above Statement for
     applicability of this disclosure.
     For more details, see the GASBS 28, Accounting and Financial Reporting for Securities Lending Transactions,
     as amended by the GASBS 40, Deposits and Investment Risk Disclosure.
3
     A pool may disclose realized gains and losses computed as the difference between the proceeds of the sale and
     the original cost of the investments sold. They also should disclose that:
     a.   The calculation of realized gains and losses is independent of a calculation of the net change in the fair
          value of investments.
     b.   Realized gains and losses on investments that had been held in more than one fiscal year and sold in the
          current year were included as a change in the fair value of investments reported in the prior year(s) and the
          current year.
     For more details, see the GASBS 31, Accounting and Financial Reporting for Certain Investments and for
     External Investment Pools, as amended by the GASBS 40, Deposits and Investments Risk Disclosures.



Risk Pools                                                 4-13                                                  (01-12)
NOTE 4 – RISK FINANCING LIMITS

The following table reflects the risk financing limits on coverage policies issued and retained by (pool) at
_____ __, 20__.1


                                                     MEMBER                  SELF INSURED               EXCESS
          TYPE OF COVERAGE                         DEDUCTIBLES                RETENTION                 LIMITS

Property Loss:

         Buildings and Content

         Flood

         Earthquake

         Terrorism

Comprehensive General Liability, including:

         Professional Liability

         Terrorism Liability

         Auto Liability

         Public Officials Errors and
         Omissions

         Employment Practices Liability

         Blanket Employee Dishonesty,
         Named Position

         Boiler and Machinery

         Auto Physical Damage




NOTES TO PREPARER:

1
     Additional information should be provided for the following:

        Discuss the details of minimum deductibles for applicable types of coverage as needed in footnotes to the
         tables.
        Disclose any requirements for participant co-pays after deductibles are met.
        If options exist for participants to elect for higher deductibles they should be discussed.




Risk Pools                                               4-14                                                  (01-12)
NOTE 5 – EXCESS INSURANCE CONTRACTS/REINSURANCE1

The Pool maintains excess insurance contracts with several insurance carriers2 which provide various limits of
coverage over the Pool’s self-insured retention limits. The limits provided by these excess insurance contracts are as
follows:

Excess Insurance Contracts                             20__

General Liability                                  $________
Automobile Liability                                ________
Public Officials Liability                          ________
Police Professional Liability                       ________
Gas Liability                                       ________
Workers’ Compensation                               ________
Property                                100% Replacement Cost
                                                  Per Location
Crime                                               ________
All Lines Aggregate                                 ________
Workers’ Compensation Aggregate                     ________
Excess Liability Aggregate                          ________

Per-occurrence coverage limits provided by the Pool, including the excess insurance limits combined with the Pool’s
self-insured retention limits are as follows:

Excess Insurance Contracts                             20__

General Liability                                  $________
Automobile Liability                                ________
Public Officials Liability                          ________
Police Professional Liability                       ________
Gas Liability                                       ________
Workers’ Compensation                               ________
Property                                100% Replacement Cost
                                                  Per Location
Crime                                               ________


Reinsurance transactions related to the pool were:

Reinsurance premiums ceded during the year were ________________________. The estimated amounts that are
recoverable from excess and reinsurers that reduced the liabilities on the balance sheet were
_________________________.



NOTES TO PREPARER:
1
    Disclose:
         -   Information regarding solvency of reinsurer,
         -   Information regarding policy years of pool,
         -   Information on exposure regarding changes in excess limits,
         -   Details describing policies as occurrence based, claims paid or claims made.
2
    State the specific carriers used.




Risk Pools                                              4-15                                                  (01-12)
NOTE 6 – MEMBERS’ SUPPLEMENTAL ASSESSMENTS AND CREDITS

The interlocal governmental agreement provides for supplemental assessments to members based on actual claim
experience. (During fiscal year 20__, the Pool did not make a supplemental assessment.) (In 20__, the Pool
recorded supplemental assessments of $__________, pursuant to this provision.) (In addition, during 20__, prior
year supplemental assessments were reduced by $__________.)

The interlocal governmental agreement provides that surplus members’ fund balance be used to credit future annual
assessments. For the year ended                    , 20 , member assessments are presented net of such credits of
$__________. The board of directors has designated $____________ of members’ fund balance for this purpose for
the fiscal year ending             , 20__.




Risk Pools                                            4-16                                               (01-12)
NOTE 7 – LONG-TERM DEBT AND LIABILITIES
a.       Long-Term Debt
         The Pool has the following outstanding debt at                   , 20__:
                              Purpose        Interest Rate             Amount
                            __________       __________              $_________
                            __________       __________              __________
                            __________       __________              __________
                                                        Total        $
                                                                                       1                                      2
The annual requirements to amortize all debts outstanding as of                 , 20__, including interest, are as follows:
                                                 3
             Fiscal Year Ending                  :
                                                 Principal               Interest            Total
                                                             4
                          20___              $_________              $_________        $_________
                          20___              __________              __________        __________
                          20___              __________              __________        __________
                          20___              __________              __________        __________
                          20___              __________              __________        __________
                    20___-20___              __________              __________        __________
                    20___-20___              __________              __________        __________
                            Total            $                       $                 $
(Interest on the variable – rate         revenue bonds is paid at the                      rate and is reset semiannually.)
There is $___________________ in restricted assets of the Pool. These represent sinking funds and reserve
requirements as contained in the various indentures.
There are a number of other limitations and restrictions contained in the various bond indentures. The Pool is in
                                                                 5
compliance with all significant limitations and restrictions.



NOTES TO PREPARER:
1
     This schedule should be for debts outstanding at the end of the latest year presented and amounts may be
     rounded to the nearest hundred or thousand dollars.
2
     If the pool has additional debt that has been authorized but not issued, the unissued amounts should be listed
     here in a separate paragraph. If conduit (no-commitment) debt is reported on the statement of net position (or
     balance sheet), it needs to be included in all long-term disclosures. Otherwise, the pool should disclose:
        General description of transactions.
        Aggregate amount of all conduit debt obligations outstanding at the statement of net position (or balance
         sheet) date. If the amount of debt issued prior to January 1, 1996 (or prior to the date of implementation of
         GASB Interpretation 2) is not determinable or cannot be reasonably estimated, the pool may provide the
         aggregate original issue amount.
        A clear indication that the pool has no obligation for the debt beyond the resources provided by related
         leases or loans.
3
     If you prepare comparative financial statements show the amortization amounts beginning with the year
     proceeding the year of the pool’s annual report. List the payments by year for the next five years and then in
     five-year increments.
4
     You may present separate columns for different types of debt.
5
     You may want to disclose the details of the pool’s compliance with some restrictions, such as the ratio of
     operating revenues to debt service requirements. Also, consider disclosing the detail of changes in restricted
     assets.


Risk Pools                                                   4-17                                                      (01-12)
The (pool) has pledged future (identify pledged revenue) revenue, net of (e.g., specified operating expenses, etc.), to
repay $        in            revenue bonds issued in           , 20 . Proceeds from the bonds provided financing for
(describe the purpose). The bonds are payable solely from (identify pledged revenue) revenue and are payable
through 20 . Annual principal and interest payments on the bonds are expected to require less than percent of net
revenues. The total principal and interest remaining to be paid on the bonds is $             . Principal and interest
paid for the current year and total (identify pledged revenue) were $         and $         , respectively.1

The following bond issues have been refunded as of                  , 20__.
                    Bond Issue                                        Amount Outstanding
        ___________________________                                       $___________
        ___________________________                                       $___________
        ___________________________                                       $___________
        Total Refunded Bonds Outstanding                                  $

This advance refunding was undertaken to (reduce total debt service payments over the next ____ years by
                                                                      2
$__________, etc.) and resulted in an economic gain of $_________.

Debt service on these bonds is met by cash and investments held by the refunding trustee(s). As of           , 20___,
the trustee(s) was (were) holding cash and investments of $____________________ which are expected to fund debt
service fully. These refunded bonds constitute a contingent liability of the Pool but are excluded from the financial
statements.




_____________________________________________________________________________________________

NOTES TO PREPARER:
1
    For more details see GASBS 48, Sales and Pledges of Receivables and Future Revenues and Intra-Entity
    Transfer of Assets and Future Revenues, paragraph 21.

    The disclosures in this paragraph are not required for legally separate entities that report as stand-alone
    business-type activities whose operations are financial primarily by a single major revenue source.

    If a specific revenue stream is pledged as security for multiple debt issuances, the required disclosures may be
    combined in a single note.

    For this disclosure, pledged revenues recognized during the period may be presented net of specified operating
    expenses, based on the provisions of the pledged agreement; however, the amount should not be netted in the
    financial statements.
2
    The economic gain or loss on a refunding transaction is calculated in the following manner:

       The present value of the debt service payments related to the refunding debt is calculated using the
        following formula:

          Face amount of bonds
        + Premium (or - original issue discount)
        + Accrued interest
        – Costs not recoverable through escrow earnings
        _________________________________________
         Present value of debt service payments on refunding debt
       A calculation is made to determine what effective interest rate applied to the debt service payments on the
        refunding bonds would result in the present value determined in the previous calculation;



Risk Pools                                              4-18                                                   (01-12)
NOTES TO PREPARER (Note 7 continued):

       The effective interest rate calculated for the refunding bonds is then applied to the debt service on the
        refunded bonds to calculate the present value of debt service on the latter;
       The difference between the present value of the two debt service streams (refunding debt and refunded debt)
        constitutes the economic gain or loss on the transaction.

    For more details see GASBS 7, Advance Refundings Resulting in Defeasance of Debt and GASBS 23,
    Accounting and Financial Reporting for Refundings of Debt Reported by Proprietary Funds.




Risk Pools                                             4-19                                                (01-12)
     b.     Notes Payable

            Notes payable at              , 20__ consisted of the following:


          Mortgage note (collateralized by office facility),
              _____%, due in (year), payable in monthly
              installments of $________, including interest,
              through (month and year), at which time the interest
              will be negotiated                                                $__________

          Other, Not Collateralized                                                 __________

          Total                                                                 $

     Aggregate annual principal payments, at interest rates in effect at                         , 20___, are as follows:
                                                       1
          Years Ending:               ,           20___                      $_______________
                                                  20___                        _______________
                                                  20___                        _______________
                                                  20___                        _______________
                                                  20___                        _______________
                                                  20___-20___                  _______________
                                                  20___-20___                  _______________
                                                  Total                       $

c.          Changes in Long-Term Liabilities

            During the year ended                , 20 , the following changes occurred in long-term liabilities:

                                             Beginning                   2                   2
                                                                                                        Ending            Due
                                              Balance                                                   Balance          Within
                                                             Additions          Reductions
                                               / /20                                                     / /20          One Year
            Bonds payable:
                                            $               $                  $                    $               $
              Revenue bonds
            Less Deferred amounts:
              For issuance discounts
              On refunding
                Total bonds payable:
            Capital leases
            Compensated absences
            Claims and judgments
            OPEB

            Total long-term liabilities




NOTES TO PREPARER:
1
     Schedule future payments by year for the next five years, then add lines to show payments in five-year
     increments.
2
     Additions and reductions must be reported separately rather than netted.



Risk Pools                                                      4-20                                                        (01-12)
                                  1
NOTE 8 – SHORT-TERM DEBT

Short-term activities for the year ended             , 20 were as follows:

                         Beginning Balance                                                          Ending Balance
        Debt                                             Issued               Redeemed
                               / /20                                                                     / /20
                            $                        $                       $                       $




NOTES TO PREPARER:
1
         The pool should provide the information about short-term debt activities (e.g., anticipation notes, use of
         line of credit and similar loans, etc.) during year, even if no short-term debt is outstanding at the year end.

         The pool should describe the purpose for which the short-term debt was issued.

         The pool may also address how it intends to finance the payment of short-term debt outstanding at the end
         of the fiscal period.

         For additional requirements See GASBS 62, Codification of Accounting and Financial Reporting Guidance
         Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements, paragraph 44.




Risk Pools                                                4-21                                                  (01-12)
NOTE 9 – CAPITAL ASSETS

a.       Capital Assets
         Capital assets are defined by the Pool as assets with an initial, individual cost of more than $       and an
         estimated useful life in excess of  year(s).
                                                                      1                                          2
         Capital assets are recorded at ____________________. Donations are recorded at                              and
         reported as revenue on the statement of revenues, expenses and changes in fund net position.
         Capital assets activities for the year ended              , 20 were as follows:
                                                                 Beginning      Increase    Decrease        Ending
                                                                  Balance                                   Balance
          Capital assets not being depreciated:
            Land
            Construction in progress
            Intangible assets
          Total capital assets not being depreciated

          Capital assets being depreciated:
            Buildings
            Equipment
            Intangible assets

          Total capital assets being depreciated:

          Less accumulated depreciation for:
             Buildings
             Equipment
             Intangible assets

          Total accumulated depreciation

          Total capital assets being depreciated, net

          TOTAL CAPITAL ASSETS NET                               $              $          $                $
         (The original cost of operating property retired or otherwise disposed of and the cost of installation, less
         salvage, is charged to accumulated depreciation.) (However, in the case of the sale of a significant
         operating unit or system, the original cost is removed from the Pool capital assets accounts, accumulated
         depreciation is charged with the accumulated depreciation related to the property sold, and the net gain or
         loss on disposition is credited or charged to income.)
         (An allowance for funds used during construction is capitalized as part of the cost of Pool capital assets.
         The procedure is intended to remove the cost of financing construction activity from the income statement
         and to treat such cost in the same manner as construction labor and material costs.)
                                                                          3
         Capital assets are depreciated using               method(s) over the following estimated useful lives:
                  Asset                                 Years
                  Buildings
                  Building Improvement
                  Vehicles
                  Equipment


         (Preliminary costs incurred for proposed projects are deferred pending construction of the facility. Costs
         relating to projects ultimately constructed are transferred to the appropriate capital asset account; charges
         that relate to abandoned projects are expensed.)


NOTES TO PREPARER:
1
   Indicate valuation method used, (e.g., historical cost, estimated cost, etc.).
2
   Indicate valuation method used (e.g., fair market value, etc.).
3
   Insert straight-line, the particular accelerated or other method used.


Risk Pools                                                4-22                                                  (01-12)
                               1
b.   Impaired Capital Assets

c.   Capitalization of Interest2


                                   3
NOTE 10 – COMMITMENTS

                                                                   4
NOTE 11 – RESTRICTED COMPONENT OF NET POSITION

The Pool’s statement of net position reports $           of restricted net position, of which $         is restricted by
enabling legislation.




NOTES TO PREPARER:
1
     If is not otherwise apparent from the face of the financial statements, the pool should disclose a general
     description, the amount, and the financial statement classification of the impairment loss.

     If the pool received an insurance recovery related to the impaired asset, its amount and financial statement
     classification should be disclosed.

     The pool needs to disclose the carrying amount of impaired capital assets that are idle at year-end, regardless
     whether the impairment is considered permanent or temporary.

     For more details see the GASBS 42, Accounting and Financial Reporting for Impairment of Capital Assets and
     for Insurance Recoveries.
2
     Disclose:
          For an accounting period in which no interest cost is capitalized, the amount of interest cost incurred
              and charged to expense during the period.
          For an accounting period in which some interest cost is capitalized, the total amount of interest cost
              incurred during the period and the amount thereof that has been capitalized.
3
     Disclose significant commitments (e.g., construction contract long-term purchase agreements, cost-sharing, or
     other long-term financing or credit arrangements, etc.). For lease commitments see note 12.
4
     The pool should evaluate the legal enforceability of the enabling legal restrictions on an annual basis.

     If the restrictions were determined to be replaced by new ones, the component of net position should be
     reported as restricted for the new purpose from the period of change forward.

     If the restrictions were determined not to be legally enforceable, then they should be reported as unrestricted
     from the time of such determination forward.

     If the componentsof net position were used for purposes not specified by enabling legislation, the reporting will
     vary depending if such restrictions are enforceable or not. If the restrictions are determined to be legally
     enforceable, the component of net position should continue to be reported as restricted; otherwise, as
     unrestricted.

     For more details see the GASBS 46, Net Assets Restricted by Enabling Legislation.




Risk Pools                                                4-23                                                  (01-12)
NOTE 12 - LEASES
                                1
a.       Operating Lease(s)

         The (pool) is committed under various leases for __________. These leases are considered operating
         leases for accounting purposes. Lease expenses for the year ended              , 20__ amounted to
         $__________. Future minimum rental commitments for these leases are as follows:
                  Year
                  20___                     $__________
                  20___                       __________
                  20___                       __________
                  20___                       __________
                  20___                       __________
                  20___-20___                 __________
                  20___-20___                 __________
                  Total                     $
                            2
b.       Capital Lease(s)
         The (pool) has entered into (a) lease agreement(s) for financing the acquisition of ______________.
         These lease agreements qualify as capital leases for accounting purposes and are recorded as assets and
         as long-term liabilities at the present value of the future minimum lease payments as of the date of their
         inception. The Pool records lease payments as reductions of the long-term liability and as interest
         expense over the life of the lease. The future minimum lease payments under these lease agreements
         are as follows:
                  Year
                  20___                     $__________
                  20___                      __________
                  20___                      __________
                  20___                      __________
                  20___                      __________
                  20___-20___                __________
                  20___-20___                __________
                  Less amount
                  representing interest         __________
                  Present Value of
                  Future Minimum
                  Lease Payments            $
         The assets acquired through capital leases are as follows:
         Asset:
          Building                  $
          Equipment

         Less: Accumulated
               Depreciation
                 Total              $
         Depreciation policy for capitalized assets is described in (Capital Assets Note No. ).


NOTES TO PREPARER:
1
     Lessee:
     (1)   For operating leases having initial or remaining noncancelable lease terms in excess of one year, the
           total of minimum rentals to be received in the future under noncancelable subleases as of the date of
           the latest financial statements presented.


Risk Pools                                               4-24                                             (01-12)
_______________________________________________________________________________________

NOTES TO PREPARER (Note 12 continued):

    (2)      For all operating leases, rental expense/expenditure for each period for which a flows statement is
             presented, with separate amounts for minimum rentals, contingent rentals, and subrentals. Rental
             payments under leases with terms of a month or less that were not renewed need not be included.
    (3)      A general description of the lessee’s leasing arrangements including, but not limited to, the
             following:
                 The basis on which contingent rental payments are determined
                 The existence and terms of renewal or purchase options and escalation clauses
                 Restriction imposed by lease agreements, such as those concerning additional debt and further
                  leasing.

    Lessor:
    (1)   A general description of the lessor’s leasing arrangements.
    (2)   The cost and carrying amount, if different, of property on lease or held for leasing by major classes
          of property, and the amount of accumulated depreciation in total as of the date of the latest financial
          statements presented.
    (3)   Minimum future rentals on noncancelable leases as of the date of the latest financial statements
          presented, in the aggregate and for each of the five succeeding fiscal years.
    (4)   Total contingent rentals included in the flows statement for each period presented.

    The disclosure should be provided for next five years and five-year increments for subsequent year.
2
    Lessee:
    (1)   The gross amount of assets recorded under capital leases as of the date of each set of financial
          statements presented by major classes according to nature or function. This information may be
          combined with the comparable information for owned assets.
    (2)   The total of minimum sublease rentals to be received in the future under noncancelable subleases as
          of the date of the latest financial statements presented.
    (3)   Total contingent rentals actually incurred for each period for which a flows statement is presented.
    (4)   Assets recorded under capital leases and the accumulated amortization thereon. Unless the expense
          resulting from amortization of assets recorded under capital leases is included with depreciation
          expense and the fact that it is so included is disclosed, the amortization expense should be disclosed
          in the notes to the financial statements.

    Lessor:
          For sales-type and direct financing leases:
    (1)   The components of the net investment in sales-type and direct financing leases as of the date of each
          set of financial statements presented:
          (a)     Future minimum lease payments to be received, with separate deductions for (i) amounts
                  representing executor costs, including any gain thereon, included in the minimum lease
                  payments and (ii) the accumulated allowance for uncollectible minimum lease payments
                  receivable
          (b)     The unguaranteed residual values accruing to the benefit of the lessor
          (c)     For direct financing leases only, initial direct costs
          (d)     Related liability (see GASBS 62, Codification of Accounting and Financial Reporting
                  Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements,
                  paragraphs 224b and 226b).
    (2)   Future minimum lease payments to be received for each of the five succeeding fiscal years as of the
          date of the latest financial statements presented.
    (3)   Total contingent rentals included in the flows statement for each period presented.

    The disclosure should be provided for next five years and five-year increments for subsequent year.




Risk Pools                                               4-25                                             (01-12)
____________________________________________________________________________________________

NOTES TO PREPARER (Note 12 continued):

        For leveraged leasing see GASBS 62, Codification of Accounting and Financial Reporting Guidance
        Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements, paragraph 270.

        For leases between related parties see GASBS 62, Codification of Accounting and Financial Reporting
        Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements, paragraph 239.

        Additionally, the notes to financial statements of a seller-lessee should include a description of the terms of
        the sale-leaseback transaction, including future commitments, obligations, provisions, or circumstances that
        require or result in the seller-lessee’s continuing involvement.

        The notes to financial statements of a seller-lessee that has accounted for a sale-leaseback transaction by
        the deposit method or as a financing according to the provisions of GASBS 62, Codification of Accounting
        and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA
        Pronouncements, paragraphs 244-254 also should disclose the total minimum sublease rentals, if any, to be
        received in the future under noncancelable subleases in the aggregate and for each of the five succeeding
        fiscal years.




Risk Pools                                              4-26                                                   (01-12)
NOTE 13 – PENSION PLANS
Substantially all (pool) full-time and qualifying part-time employees participate in one of the following
statewide retirement systems administered by the Washington State Department of Retirement Systems,
under cost-sharing multiple-employer public employee defined benefit retirement plans. The Department
of Retirement Systems (DRS), a department within the primary government of the State of Washington,
issues a publicly available comprehensive annual financial report (CAFR) that includes financial statements
and required supplementary information for each plan. The DRS CAFR may be obtained by writing to:
Department of Retirement Systems, Communications Unit, P.O. Box 48380, Olympia, WA 98504-8380; or
it may be downloaded from the DRS website at www.drs.wa.gov. The following disclosures are made
pursuant to GASB Statements No. 27, Accounting for Pensions by State and Local Government Employers
and No. 50, Pension Disclosures, an Amendment of GASB Statements No. 25 and No. 27.

Public Employees’ Retirement System (PERS) Plans 1, 2, and 3

Plan Description

The Legislature established PERS in 1947. Membership in the system includes: elected officials; state
employees; employees of the Supreme, Appeals, and Superior courts (other than judges currently in the
Judicial Retirement System); employees of legislative committees; community and technical colleges,
college and university employees not participating in higher education retirement programs; judges of
district and municipal courts; and employees of local governments. PERS retirement benefit provisions are
established in Chapters 41.34 and 41.40 RCW and may be amended only by the State Legislature.

PERS is a cost-sharing multiple-employer retirement system comprised of three separate plans for
membership purposes: Plans 1 and 2 are defined benefit plans and Plan 3 is a defined benefit plan with a
defined contribution component.

PERS members who joined the system by September 30, 1977 are Plan 1 members. Those who joined on
or after October 1, 1977 and by either, February 28, 2002 for state and higher education employees, or
August 31, 2002 for local government employees, are Plan 2 members unless they exercised an option to
transfer their membership to Plan 3. PERS members joining the system on or after March 1, 2002 for state
and higher education employees, or September 1, 2002 for local government employees have the
irrevocable option of choosing membership in either PERS Plan 2 or PERS Plan 3. The option must be
exercised within 90 days of employment. An employee is reported in Plan 2 until a choice is made.
Employees who fail to choose within 90 days default to PERS Plan 3. Notwithstanding, PERS Plan 2 and
Plan 3 members may opt out of plan membership if terminally ill, with less than five years to live.

PERS Plan 1 and Plan 2 defined benefit retirement benefits are financed from a combination of investment
earnings and employer and employee contributions.

PERS Plan 1 members are vested after the completion of five years of eligible service. Plan 1 members are
eligible for retirement after 30 years of service, or at the age of 60 with five years of service, or at the age
of 55 with 25 years of service. The monthly benefit is 2 percent of the average final compensation (AFC)
per year of service. (AFC is the monthly average of the 24 consecutive highest-paid service credit months.)
The retirement benefit may not exceed 60 percent of AFC. The monthly benefit is subject to a minimum
for PERS Plan 1 retirees who have 25 years of service and have been retired 20 years, or who have 20 years
of service and have been retired 25 years. Plan 1 members retiring from inactive status prior to the age of
65 may receive actuarially reduced benefits. If a survivor option is chosen, the benefit is further reduced.
A cost-of-living allowance (COLA) was granted at age 66 based upon years of service times the COLA
amount. This benefit was eliminated by the Legislature, effective July 1, 2011. Plan 1 members may elect
to receive an optional COLA that provides an automatic annual adjustment based on the Consumer Price
Index. The adjustment is capped at 3 percent annually. To offset the cost of this annual adjustment, the
benefit is reduced.




Risk Pools                                                4-27                                              (01-12)
PERS Plan 1 provides duty and non-duty disability benefits. Duty disability retirement benefits for
disablement prior to the age of 60 consist of a temporary life annuity payable to the age of 60. The
allowance amount is $350 a month, or two-thirds of the monthly AFC, whichever is less. The benefit is
reduced by any workers’ compensation benefit and is payable as long as the member remains disabled or
until the member attains the age of 60. A member with five years of covered employment is eligible for
non-duty disability retirement. Prior to the age of 55, the allowance amount is 2 percent of the AFC for
each year of service reduced by two percent for each year that the member’s age is less than 55. The total
benefit is limited to 60 percent of the AFC and is actuarially reduced to reflect the choice of a survivor
option. A cost-of-living allowance was granted at age 66 based upon years of service times the COLA
amount. This benefit was eliminated by the Legislature, effective July 1, 2011. Plan 1 members may elect
to receive an optional COLA that provides an automatic annual adjustment based on the Consumer Price
Index. The adjustment is capped at 3 percent annually. To offset the cost of this annual adjustment, the
benefit is reduced.

PERS Plan 1 members can receive credit for military service. Members can also purchase up to 24 months
of service credit lost because of an on-the-job injury.

PERS Plan 2 members are vested after the completion of five years of eligible service. Plan 2 members are
eligible for normal retirement at the age of 65 with five years of service. The monthly benefit is 2 percent
of the AFC per year of service. (AFC is the monthly average of the 60 consecutive highest-paid service
months.)

PERS Plan 2 members who have at least 20 years of service credit and are 55 years of age or older are
eligible for early retirement with a reduced benefit. The benefit is reduced by an early retirement factor
(ERF) that varies according to age, for each year before age 65.

PERS Plan 2 members who have 30 or more years of service credit and are at least 55 years old can retire
under one of two provisions:

        With a benefit that is reduced by 3 percent for each year before age 65.
        With a benefit that has a smaller (or no) reduction (depending on age) that imposes stricter return-
         to-work rules.

PERS Plan 2 retirement benefits are also actuarially reduced to reflect the choice, if made, of a survivor
option. There is no cap on years of service credit; and a cost-of-living allowance is granted (based on the
Consumer Price Index), capped at 3 percent annually.

The surviving spouse or eligible child or children of a PERS Plan 2 member who dies after leaving eligible
employment having earned ten years of service credit may request a refund of the member’s accumulated
contributions.

PERS Plan 3 has a dual benefit structure. Employer contributions finance a defined benefit component and
member contributions finance a defined contribution component. The defined benefit portion provides a
monthly benefit that is 1 percent of the AFC per year of service. (AFC is the monthly average of the 60
consecutive highest-paid service months.)

Effective June 7, 2006, PERS Plan 3 members are vested in the defined benefit portion of their plan after
ten years of service; or after five years of service, if twelve months of that service are earned after age 44;
or after five service credit years earned in PERS Plan 2 prior to June 1, 2003. Plan 3 members are
immediately vested in the defined contribution portion of their plan.




Risk Pools                                               4-28                                              (01-12)
Vested Plan 3 members are eligible for normal retirement at age 65, or they may retire early with the
following conditions and benefits:
        If they have at least ten service credit years and are 55 years old, the benefit is reduced by an ERF
         that varies with age, for each year before age 65.
        If they have 30 service credit years and are at least 55 years old, they have the choice of a benefit
         that is reduced by 3 percent for each year before age 65; or a benefit with a smaller (or no)
         reduction factor (depending on age) that imposes stricter return-to-work rules.
PERS Plan 3 defined benefit retirement benefits are also actuarially reduced to reflect the choice, if made,
of a survivor option. There is no cap on years of service credit and Plan 3 provides the same cost-of-living
allowance as Plan 2.

PERS Plan 3 defined contribution retirement benefits are solely dependent upon contributions and the
results of investment activities.

The defined contribution portion can be distributed in accordance with an option selected by the member,
either as a lump sum or pursuant to other options authorized by the Director of the Department of
Retirement Systems.

PERS Plan 2 and Plan 3 provide disability benefits. There is no minimum amount of service credit
required for eligibility. The Plan 2 monthly benefit amount is 2 percent of the AFC per year of service.
For Plan 3, the monthly benefit amount is 1 percent of the AFC per year of service.

These disability benefit amounts are actuarially reduced for each year that the member’s age is less than 65,
and to reflect the choice of a survivor option. There is no cap on years of service credit, and a cost-of-
living allowance is granted (based on the Consumer Price Index) capped at 3 percent annually.

PERS Plan 2 and Plan 3 members may have up to ten years of interruptive military service credit; five
years at no cost and five years that may be purchased by paying the required contributions. Effective
July 24, 2005, a member who becomes totally incapacitated for continued employment while serving the
uniformed services, or a surviving spouse or eligible children, may apply for interruptive military service
credit. Additionally, PERS Plan 2 and Plan 3 members can also purchase up to 24 months of service credit
lost because of an on-the-job injury.

PERS members may also purchase up to five years of additional service credit once eligible for retirement.
This credit can only be purchased at the time of retirement and can be used only to provide the member
with a monthly annuity that is paid in addition to the member’s retirement benefit.

Beneficiaries of a PERS Plan 2 or Plan 3 member with ten years of service who is killed in the course of
employment receive retirement benefits without actuarial reduction, if the member was not at normal
retirement age at death. This provision applies to any member killed in the course of employment, on or
after June 10, 2004, if found eligible by the Department of Labor and Industries.

A one-time duty-related death benefit is provided to the estate (or duly designated nominee) of a PERS
member who dies in the line of service as a result of injuries sustained in the course of employment, or if
the death resulted from an occupational disease or infection that arose naturally and proximately out of said
member’s covered employment, if found eligible by the Department of Labor and Industries.

There are 1,197 participating employers in PERS. Membership in PERS consisted of the following as of
the latest actuarial valuation date for the plans of June 30, 2010:

 Retirees and Beneficiaries Receiving Benefits                                                       76,899
 Terminated Plan Members Entitled to But Not Yet Receiving Benefits                                  28,860
 Active Plan Members Vested                                                                         105,521
 Active Plan Members Nonvested                                                                       51,005
                                                                                    Total           262,285




Risk Pools                                               4-29                                              (01-12)
Funding Policy

Each biennium, the state Pension Funding Council adopts PERS Plan 1 employer contribution rates, PERS Plan 2
employer and employee contribution rates, and PERS Plan 3 employer contribution rates. Employee contribution
rates for Plan 1 are established by statute at 6 percent for state agencies and local government unit employees, and at
7.5 percent for state government elected officials. The employer and employee contribution rates for Plan 2 and the
employer contribution rate for Plan 3 are developed by the Office of the State Actuary to fully fund Plan 2 and the
defined benefit portion of Plan 3. All employers are required to contribute at the level established by the
Legislature. Under PERS Plan 3, employer contributions finance the defined benefit portion of the plan and member
contributions finance the defined contribution portion. The Plan 3 employee contribution rates range from 5 percent
to 15 percent, based on member choice. Two of the options are graduated rates dependent on the employee’s age.
As a result of the implementation of the Judicial Benefit Multiplier Program in January 2007, a second tier of
employer and employee rates was developed to fund, along with investment earnings, the increased retirement
benefits of those justices and judges that participate in the program.

The methods used to determine the contribution requirements are established under state statute in accordance with
Chapters 41.40 and 41.45 RCW.

The required contribution rates expressed as a percentage of current-year covered payroll, as of December 31, 2011,
are as follows:

                                      PERS Plan 1               PERS Plan 2               PERS Plan 3

             Employer*                  7.25%**                   7.25%**                   7.25%***

             Employee                   6.00%****                 4.64%****                 *****


   * The employer rates include the employer administrative expense fee currently set at 0.16%.
   ** The employer rate for state elected officials is 10.80% for Plan 1 and 7.25% for Plan 2 and Plan 3.
   *** Plan 3 defined benefit portion only.
   **** The employee rate for state elected officials is 7.50% for Plan 1 and 4.64% for Plan 2.
   ***** Variable from 5.0% minimum to 15.0% maximum based on rate selected by the PERS 3 member.

Both (pool) and the employees made the required contributions. The (pool’s) required contributions for the years
ended December 31 were as follows:

                                      PERS Plan 1               PERS Plan 2               PERS Plan 3
    2011                         $                         $                          $

    2010                         $                         $                          $
    2009                         $                         $                          $




Risk Pools                                               4-30                                                  (01-12)
                                                                      1
NOTE 14 – OTHER POSTEMPLOYMENT BENEFIT (OPEB) PLANS




__________________________________________________________________________________________

NOTES TO PREPARER:

1
        Other postemployment benefits (OPEB) are benefits provided by an employer to plan participants,
        beneficiaries, and covered dependents through a plan or other arrangement that is separate from a plan to
        provide retirement income, except for postemployment health care benefits which are always OPEB. In
        addition to postemployment health care benefits, OPEB may include life insurance, disability income,
        tuition assistance, legal services, and other assistance programs. OPEB do not include social security
        benefits financed through FICA payroll taxes. However, if the employer pays postemployment
        contributions applicable to retirees for additional Medicare benefits, those benefits should be considered
        postemployment health care benefits and should be included in all relevant disclosures. Whether a
        particular type of benefit should be consider a pension benefit or OPEB depends on how the benefit is
        provided.

        Under GASBS 43, disclosures must include:

                Plan description
                Summary of significant accounting policies
                Contributions and reserves
                Funded status and funding progress
                Actuarial methods and assumptions

        Under GASBS 45, disclosures must include:

                Plan description
                Funding policy
                Annual OPEB cost
                Net OPEB obligation (for the current year and each of the two preceding year)
                Funded status
                Actuarial methods and assumptions

        Because of the diversity of plan types, administration, and methods used to report them GASB has
        duplicated disclosure requirements in GASB Statements 43 and 45. When entities are subject to both
        statements they should not duplicate disclosures.

        For information on which, if any, of the standards apply to the pool and implementation dates refer to the
        GAAP BARS Manual, Part 3, Chapter 12, Interpretation 21, Other Postemployment Benefits, located on the
        SAO website at www.sao.wa.gov.

        Detailed information on disclosure requirements for OPEB can be found in the GAAP BARS Manual,
        Part 4, Chapter 6, Note 19, Other Postemployment Benefit (OPEB) Plans.




Risk Pools                                            4-31                                                (01-12)
                                 1
NOTE 15 – SELF-INSURANCE

Most of the (The) participating members of the Pool have elected to become self-insured for (unemployment
insurance and workers’ compensation). At        , 20__, reserves were as follows:

         Unemployment                              $________________
         Workers’ Compensation                      ________________

(The Pool is required by the state to set aside for protection to the Workers’ Compensation Fund $__________ in
cash reserves plus an additional $__________ in escrow.)


                                                    1
NOTE 16 – DEFERRED DEBITS (OR CREDITS)

In accordance with generally accepted accounting principles for regulated businesses, the Pool has deferred (losses,
costs, receipts, etc.) of $_______________ in 20__, which will be amortized on the ___________________ method
over _________ years. These (losses, costs, receipts, etc.) resulted from (brief description). These (debits or
credits) would have been included in net income for 20__, in nonregulated businesses, but for rate-making purposes
they are treated as applicable to future periods.


                                         2
NOTE 17 – ACCOUNTING CHANGES

                                                        3
NOTE 18 – EXTRAORDINARY/SPECIAL ITEMS



NOTES TO PREPARER:
1
    The need for the entire note depends on the particular circumstances of the public entity risk pool.
2
    Changes in accounting principle, in estimates and in the reporting entity and correction of error in previously
    issued financial statements are discussed in this note. The circumstances surrounding each such change should
    be separately explained. See GASBS 62, Codification of Accounting and Financial Reporting Guidance
    Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements, paragraphs 75, 85, 87 and 89.
3
    Extraordinary items are events and transactions that are distinguished by their unusual nature and by the
    infrequency of their occurrence.

    Thus, both of the following criteria should be met to classify an event or transaction as an extraordinary item:

    a.   Unusual nature - the underlying event or transaction should possess a high degree of abnormality and be of
         a type clearly unrelated to, or only incidentally related to the ordinary and typical activities of the public
         entity risk pool.

    b.   Infrequency of occurrence - the underlying event or transaction should be of a type that would not
         reasonably be expected to recur in the foreseeable future.

    Special items are significant items subject to management’s control that meet one but not both of the criteria
    used for identifying extraordinary items (e.g., early retirement, forgiveness of substantial debt, etc.).

    Descriptive captions and the amounts for individual extraordinary events or transactions should be presented,
    preferably on the face of the operating statement, if practicable. Otherwise, disclosure in related notes is
    acceptable. The nature of an extraordinary event or transaction and the principal items entering into the
    determination of an extraordinary gain or loss should be described.


Risk Pools                                                  4-32                                               (01-12)
                                                1
NOTE 19 – PRIOR PERIOD ADJUSTMENTS

                                                                   2
NOTE 20 – CONTINGENT LIABILITIES AND LITIGATIONS



NOTES TO PREPARER:
1
    Adjustments related to prior periods (and thus excluded from the operating statements for the current period) are
    limited to: (a) corrections of material errors in the financial statements of a prior period; and, (b) other material
    adjustments which meet the criteria for prior period adjustments contained in the GASBS 62, Codification of
    Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA
    Pronouncements, paragraph 62. The circumstances and justification surrounding each such adjustment should
    be separately explained in this note.

    Litigation is simply one (prevalent) type of contingency. Other types of contingencies include guarantees, the
    pledge of the government's full faith and credit on G.O. debt intended to be financed by enterprise revenues and
    various types of uncompleted contracts where the pool is obligated to perform. Both the refunded debt and the
    grant contingencies are examples of uncompleted contracts. All significant contingencies should be disclosed
    in the notes. If no accrual was made for loss contingency, disclosure should be made when there is at least a
    reasonable possibility that a loss or an additional loss may have been incurred. The disclosure should indicate
    the nature of the contingency and should give an estimate or range of the potential loss or state that such an
    estimate cannot be made.

    To keep the financial statements from being misleading, it may be necessary to disclose information regarding a
    loss contingency that did not exist at the date of financial statement, but was available after the date of financial
    statement and before their issuance.

    Also, the loss contingencies related to a guarantee should be disclosed even though the possibility of loss may
    be remote. The disclosure should include the nature and amount of the guarantee. If estimable, the value of any
    expected recovery should also be disclosed. In addition, contingencies for which it is probable that the pool will
    incur a loss should be accrued as liabilities, as should all claims and judgments. For more details see GASBS
    62, Certification of Accounting and Financial Reporting Guidance contained in Pre-November 30, 1989 FASB
    and AICPA Pronouncements, paragraphs 106-110.

    If the pool does not have any significant contingencies, disclose the following:
                  The (pool's) financial statements include all material liabilities. There are no material contingent
                  liabilities to record.

    If a lawsuit has been settled adversely and is not currently under appeal, disclosure of the pool’s liability
    belongs in a claims and judgments note rather than as a contingency note. (Where the number of contingencies
    and settlements is small, the two notes may be combined under an appropriate title, such as Judgments and
    Contingencies or Legal Matters.)

    The specific amounts recorded for contingent liabilities do not need to be itemized. Such details are normally
    not required and may be damaging to the pool's case. However, in the case of major individual contingencies, if
    the recorded estimate does not represent the full range of possible loss, the additional range of loss must be
    disclosed in the notes. Similarly, if a loss is probable but the amount is not estimable, that fact must be
    disclosed in the notes.

    BE SURE TO CONSULT WITH THE POOL’S ATTORNEY AND AUDITOR FOR APPROPRIATE
    WORDING OF THE DISCLOSURE.




Risk Pools                                               4-33                                                    (01-12)
                                      1
NOTE 21 – SUBSEQUENT EVENTS


                                                   2
NOTE 22 – RELATED PARTY TRANSACTIONS




NOTES TO PREPARER:
1
    Certain events that occur between the date of the financial statements and the date they are issued must be
    disclosed. There are two ways that subsequent events may affect the financial statements: (1) recognized
    events - they require adjustment to the financial statement; and (2) nonrecognized events - they may require
    disclosure in the notes to financial statements.

    Recognized events are those that existed at the date of the financial statement and provide additional
    information available prior to the issuance of the financial statements. Financial statements should be adjusted
    for any changes resulted from that information. For example, the settlement of litigation for an amount
    different than the liability recorded in financial statements.

    Nonrecognized events are those that provide additional information prior to the issuance of the financial
    statements but did not exist at the date of the financial statement. Examples include losses from fire or flood,
    the issuance of new debt or its advance retirement, or a change that affects the powers of the pool, its scope of
    services or its revenue structure.
    For more details refer to GASBS 56, Codification of Accounting and Financial Reporting Guidance Contained
    in the AICPA Statements on Auditing Standards.
    For disclosures regarding bankruptcy see Note 26a, Bankruptcy.
2
    The disclosures for this note are required whenever the pool transacts a significant amount of business with
    another closely affiliated entity. To determine the necessity of the disclosure, the governments should evaluate
    both form and substance of the transaction. Please refer to GASBS 56, Codification of Accounting and
    Financial Reporting Guidance Contained in the AICPA Statements on Auditing Standards GASBS 62,
    Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and
    AICPA Pronouncements for more details. Disclosure should include:

    a.    The nature of the relationship(s) involved.
    b.   A description of the transactions, including transactions to which no amounts or nominal amounts were
         ascribed, for each of the periods for which financial statements are presented, and such other information
         deemed necessary to gain an understanding of the effects of the transactions on the financial statements.
    c.   The dollar amounts of transactions for each of the periods for which financial statements are presented and
         the effects of any change in the method of establishing the terms from that used in the preceding period.
    d.   Amounts due from or to related parties of the date of each statement of net position presented and, if not
         otherwise apparent, the terms and manner of settlement.

    This disclosure could be appropriately combined with other information in a joint venture note of in a reporting
    entity note. These disclosures are also required should the pool transact business with its own officials or
    employees beyond the limited amounts permitted in Chapter 42.23 RCW.




Risk Pools                                             4-34                                                  (01-12)
                                          1
NOTE 23 – TERMINATION BENEFITS


                                                                  2
NOTE 24 – PLEDGES AND SALES OF FUTURE REVENUES




NOTES TO PREPARER:
1
    Termination benefits are benefits provided by employers to employees as an inducement to hasten the
    termination of services, or through voluntary termination, or a consequence of involuntary termination. These
    benefits include severance pay, continued health care coverage, career counseling, and outplacement services.
    In the period in which an employer becomes obligated for termination benefits the employer should make the
    following disclosures:
    1.   A description of the types of benefits provided.
    2.   The number of employees affected.
    3.   The time period over which the benefits are expected to be provided.
    4.   The cost of termination benefits it is not identifiable on the face of the financial statements.
    5.   Change in actuarial accrued liability for pension and OPEB (if affected).
    6.   Method (i.e. discounted present value) and assumptions (discount rate, healthcare cost trend rate, etc.) used
         for calculation of the liability.
    7.   If the cost of benefits cannot be estimated this should be disclosed.
    Measurement and recognition:
    When benefits are provided upon termination recognition of the liability and expense also needs to be reported
    in the financial statements. Employers need to measure the components of healthcare related benefits separately
    from non health benefits. Health care benefits should be discounted to present value using a projection of
    benefits, healthcare cost trend data and discount rate. Generally the cost of non healthcare related benefits are
    calculated as the discounted present value of expected future benefit payments. For a detailed discussion of the
    liability and expense measurement and recognition see GASB Statement 47, Accounting for Termination
    Benefits.
2
    For required disclosures refer to GASBS 48, Sales and Pledges of Receivables and Future Revenues and Intra-
    Entity Transfers of Assets and Future Revenues, paragraph 21 and 22.




Risk Pools                                              4-35                                                  (01-12)
NOTE 25 – UNPAID CLAIMS LIABILITIES

As discussed in Note , the Pool establishes a liability for both reported and unreported insured events, which
includes estimates of both future payments of losses and related claim adjustment expenses, both allocated and
unallocated. The following represents changes in those aggregate liabilities for the Pool during the past two years:
                                                                                                        1           2
                                                                                                   20          20
Unpaid claims and claim adjustment expenses/claims reserves at beginning of year                   $           $

Incurred claims and claim adjustment expenses:
   Provision for insured events of current year                                                    $           $
   Increases in provision for insured events of prior years                                        $           $

                                Total incurred claims and claim adjustment expenses                $           $

Payments:
   Claims and claim adjustment expenses attributable to insured events of current year             $           $
   Claims and claim adjustment expenses attributable to insured events of prior years              $           $

                                Total payments                                                     $           $

Total unpaid claims and claim adjustment expenses/claims reserves at end of year                   $           $


Unallocated loss adjustment expense/claims reserve at end of year                                  $____       $____


Total claims reserves at end of year                                                               $____       $____


At year-end 20 $          of unpaid claims and claim adjustment expenses are presented at their net present value of
$           . These claims are discounted at annual rates ranging from   to    percent. Unpaid claims expenses of
$             are not reported in the 20 year-end balances because the Pool has purchased annuities in claimants’
names to settle those claims.




NOTES TO PREPARER:

1
    Insert current year information.
2
    Insert previous year information.

Information in the unpaid claims liability note must tie to the ten year claims development schedule in RSI.




Risk Pools                                               4-36                                                  (01-12)
                      1
NOTE 26 – OTHER
                  2
a.   Bankruptcy


b.   Going Concern3




NOTES TO PREPARER:
1
     Disclose any other significant transactions and events (e.g., repurchase agreements, joint ventures, endowments,
     segments, etc.).
2
     Pools that have filed for bankruptcy should disclose the following:

     a.   Pertinent conditions and events giving rise to the petition for bankruptcy
     b.   The expected or known effects of such conditions and events, including:
          1. The principal categories of the claims subject to compromise or that already have been adjusted
          2. The principal changes in terms and the major features of settlement
          3. The aggregate gain expected to occur by remeasuring liabilities subject to a proposed Plan of
               Adjustment, or realized, as appropriate; or a statement that any gain is not yet reasonably estimable and
               the reasons therefore.
          4. Contingent claims not subject to reasonable estimation, based on the provisions of NCGA Statement 4
     c.   Significance of those conditions and events on the levels of service and operations of the pool, and any
          mitigating factors, such as assumption of services of other governments
     d.   Possibility of termination of the pool, or any plans to terminate the pool, as appropriate
     e.   How to obtain a copy of the pool’s Plan of Adjustment or a statement that a plan is not yet available and an
          estimate of when it will be completed.
3
          If it is determined that there is substantial doubt about a governmental entity’s ability to continue as a going
          concern for 12 months beyond the financial statements date or shortly thereafter, the notes to the financial
          statements should include disclosure of the following, as appropriate:

          a.   Pertinent conditions and events giving rise to the assessment of substantial doubt about the
               government’s ability to continue as a going concern for a reasonable period of time as discussed in
               paragraph 16 of GASBS 56
          b.   The possible effects of such conditions and events
          c.   Government officials’ evaluation of the significance of those conditions and events and any mitigating
               factors
          d.   Possible discontinuance of operations
          e.   Government officials’ plans (including relevant prospective financial information)
          f.   Information about the recoverability or classification of recorded asset amounts or the amounts or
               classification of liabilities.




Risk Pools                                                4-37                                                    (01-12)
             THIS PAGE LEFT BLANK INTENTIONALLY.




Risk Pools                   4-38                  (01-12)
                              REQUIRED SUPPLEMENTARY INFORMATION
                                     GENERAL INSTRUCTIONS


The sample required supplementary information which follow was designed to provide the disclosures required for
public entity risk pools. They are intended to furnish you with ways of phrasing the disclosures you will need to
make. Be sure to revise these sample documents to fit the unique circumstances of the pool, to delete disclosures
that do not apply to the pool’s operations, and to add others that we did not include but which are needed to help a
reader understand the financial statements.

The following revenue and claims development information should be included as required supplementary
information immediately after the notes to financial statements in the pool’s financial reports.

(1)     A table that presents the following information:

        (a)      Amount of gross premium (or required contribution) revenue and reported investment revenue,
                 amount of premium (or required contribution) revenue ceded, and amount of net reported premium
                 (or required contribution) revenue (net of excess insurance or reinsurance) and reported
                 investment revenue for each of the past ten fiscal years including the latest fiscal year.

        (b)      Amount of reported unallocated claim adjustment expenses (GASB Statement 10, paragraph 23)
                 and reported other costs (GASB Statement 10, paragraph 31) for each of the past ten fiscal years
                 including the latest fiscal year.

        (c)      Total gross amount of incurred claims and allocated claim adjustment expenses (both paid and
                 accrued before the effect of loss assumed by excess insurers or reinsurers), loss assumed by excess
                 insurers or reinsurers (both paid and accrued), and total net amount of incurred claims and
                 allocated claim adjustment expenses (both paid and accrued). Amounts should be presented as
                 originally reported at the end of each of the past ten accident years (for occurrence-based policies
                 or contracts), report years (for claims-made policies or contracts), or policy years including the
                 latest year. Amounts should be limited to provisions for claims resulting from events that
                 triggered coverage under the policy or participation contract in that year. If amounts are not
                 presented on an accident-year basis or a report-year basis, they should be reported on a policy-year
                 basis. The basis of reporting should be used consistently for all years presented.

        (d)      The cumulative net amount paid as of the end of the accident year, report year, or policy year (as
                 appropriate) and each succeeding year for each of the incurred claims and allocated expense
                 amounts presented in (c) above.

        (e)      The reestimated amount for loss assumed by excess insurers or reinsurers as of the end of the
                 current year for each of the accident years, report years, or policy years (as appropriate) presented
                 in (c).

        (f)      The reestimated amount for net incurred claims and claim adjustment expenses as of the end of
                 each succeeding year for each of the accident years, report years, or policy years (as appropriate)
                 presented in (c).

        (g)      The change in net incurred claims and claim adjustment expenses from the original estimate,
                 based on the difference between the latest reestimated amount presented in (f) above for each of
                 the accident years, report years, or policy years (as appropriate) and the original net incurred
                 claims and claim adjustment amounts reported in (c).

        Percentage information (for example, the percentage of gross incurred claims and claim adjustment
        expenses assumed by excess insurers or reinsurers) may be presented but is not required. If presented, this
        information should not obscure or distort required elements of the table.




Risk Pools                                                 5-1                                                (01-12)
(2)     In addition to the reconciliation of total claims liabilities (GASB Statement 10, paragraph 49g), a
        reconciliation of claims liabilities by type of contract, including an analysis of changes in liabilities for
        claims and claim adjustment expenses for the current fiscal year and the prior year, in the same tabular
        format required by the GASB Statement 10, paragraph 49g. If a pool has only one type of contract the
        reconciliation is not required as the information is included in the notes to the financial statements.

(3)     During the transition period when the ten years of information about claims liabilities and claim adjustment
        expenses may not be available, all information required by item (1) above should be presented only for as
        many years as that information is available. If changes in a pool’s loss, expense, reinsurance, excess
        insurance, or other transactions materially affect pool revenues, expenses, or liabilities in a manner not
        fairly disclosed or presented in the tables above, the pool should expand these disclosures to show
        additional detail (such as separate information for each type of contract) to keep the schedules from being
        misleading or to keep trends from becoming obscured.

If the pool participates in other postemployment benefits (OPEB) plans additional disclosure is required. The
requirements can be obtained from the GAAP BARS Manual located on the SAO website at www.sao.wa.gov.




Risk Pools                                              5-2                                                  (01-12)
                                           _________________________
                                                     (Pool)

                              REQUIRED SUPPLEMENTARY INFORMATION
                            _______________, 20__ Through _______________, 20__


This required supplementary information is an integral part of the accompanying financial statements.


(NOTE: The following tables should be presented immediately after the notes to financial statements. The
information contained in these tables should be modified to fit the needs of each public entity risk pool.)


1.      Ten-Year Claims Development Information

        The table below illustrates how the pool’s earned revenues (net of reinsurance) and investment income
        compare to related costs of loss (net of loss assumed by reinsurers) and other expenses assumed by the pool
        as of the end of each of the last ten years. The rows of the table are defined as follows:

             1.   This line shows the total of each fiscal year gross earned contribution revenue and investment
                  revenue, contribution revenue ceded to reinsurers, and net earned contribution revenue and
                  reported investment revenue.

             2.   This line shows each fiscal year’s other operating costs of the pool including overhead and claims
                  expense not allocable to individual claims.

             3.   This line shows the pool’s gross incurred claims and allocated claim adjustment expenses, claims
                  assumed by reinsurers, and net incurred claims and allocated adjustment expenses (both paid and
                  accrued) as originally reported at the end of the first year in which the event that triggered
                  coverage under the contract occurred (called policy year).

             4.   This section of ten rows shows the cumulative net amounts paid as of the end of successive years
                  for each policy year.

             5.   This line shows the latest reestimated amount of claims assumed by reinsurers as of the end of the
                  current year for each accident year.

             6.   This section of ten rows shows how each policy year’s net incurred claims increased or decreased
                  as of the end of successive years. (This annual reestimation results from new information received
                  on known claims, reevaluation of existing information on known claims, as well as emergence of
                  new claims not previously known.)

             7.   This line compares the latest reestimated net incurred claims amount to the amount originally
                  established (line 3) and shows whether this latest estimate of net claims cost is greater or less than
                  originally thought. As data for individual policy years mature, the correlation between original
                  estimates and reestimated amounts is commonly used to evaluate the accuracy of net incurred
                  claims currently recognized in less mature policy years. The columns of the table show data for
                  successive policy years.




Risk Pools                                                5-3                                                   (01-12)
                                          Fiscal and Policy Year Ended
                                                  (In Thousands)

                                20W0   20W1   20W2    20W3       20W4    20W5   20X6   20X7   20X8     20X9

1.   Required contribution and
     investment revenue:
       Earned                  $908    $957 $1,357 $1,493 $1,479 $1,595 $1,811 $1,993 $2,192 $2,411
       Ceded                    366     387    559    615    624    686    754    830    913 1,004
       Net earned               542     570    798    878    855    909 1,057 1,163 1,279 1,407

2.   Unallocated expenses         64     68      81         91     70      81     92    110    123       131

3.   Estimated claims and expenses
     end of policy year:
       Incurred                287      303     453     503       569     651    780    909   1,092    1,512
       Ceded                    52       54      96     111       129     148    168    186     210      251
       Net incurred            235      249     357     392       440     503    612    723     882    1,261

4.   Net paid (cumulative) as of:
      End of policy year         118    124     179     196       220     251    306    361    450       641
      One year later             177    186     268     294       330     377    459    542    675
      Two years later            254    268     385     422       474     542    660    779
      Three years later          304    321     461     506       568     649    790
      Four years later           359    379     545     597       671     766
      Five years later           404    427     614     673       756
      Six years later            445    469     674     740
      Seven years later          473    499     717
      Eight years later          473    499
      Nine years later           473

5.   Reestimated ceded
     claims and expenses         104    109     160     174       184     195    211    217    234       251

6.   Reestimated net incurred
     claims and expenses:
       End of policy year        235    249     357     392       440     503    612    723    900      1282
       One year later            294    311     447     490       550     628    765    903   1125
       Two years later           338    357     513     563       632     722    879   1038
       Three years later         380    401     577     632       710     811    988
       Four years later          422    446     641     703       789     902
       Five years later          449    474     682     748       840
       Six years later           468    494     710     779
       Seven years later         473    499     717
       Eight years later         473    499
       Nine years later          473

7.   Increase (decrease) in
     estimated net incurred
     claims and expenses
     from end of policy year     238    250     360     387       400     399    376    315    225         0




Risk Pools                                            5-4                                             (01-12)
2.      Reconciliation of Claims Liabilities by Type of Contract

        The schedule below presents the changes in claims liabilities for the past two years for the pool's two types
        of contracts: property and casualty, and employee health and accident benefits.

                                                                                       Employee Health
                                                     Property and Casualty               and Accident

                                                         (In Thousands)                  (In Thousands)

        Unpaid claims and claim adjustment
           expenses at beginning of the
           fiscal year                               ________      ________         ________      ________

        Incurred claims and claim adjustment
            expenses:

             Provision for insured events of the
              current fiscal year                    ________      ________         ________      ________

             Increases in provision for insured
              events of prior fiscal years           ________      ________         ________      ________

        Total incurred claims and claim
            adjustment expenses

        Payments:

             Claims and claim adjustment
              expenses attributable to insured
              events of the current fiscal year      ________      ________         ________      ________

             Claims and claim adjustment
              expenses attributable to insured
              events of prior fiscal years           ________      ________         ________      ________

             Total payments

        Total unpaid claims and claim
            adjustment expenses at end of the
            fiscal year




Risk Pools                                              5-5                                                  (01-12)
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Risk Pools                   5-6                   (01-12)
                                             SUPPLEMENTAL SCHEDULES


                                                         Table of Contents

                                                                                                                                    Page

Schedule 19    Labor Relations Consultant(s)..........................................................................................6-3

Schedule T-1   List of Participating Members ..........................................................................................6-5

Schedule T-2   OFM Schedule of Expenses .............................................................................................6-7




Risk Pools                                                         6-1                                                                       (01-12)
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Risk Pools                   6-2                   (01-12)
SCHEDULE 19 – LABOR RELATIONS CONSULTANT(S)

The 1993 Legislature has required the State Auditor’s Office to collect information regarding the role labor relations
consultants play in local governments. This reporting requirement is found in RCW 43.09.230, as amended by the
1993 Legislature. The statute provides that “the legislature finds and declares that the use of outside consultants is
an increasing element in public sector labor relations. The public has a right to be kept informed about the role of
outside consultants in public sector labor relations. The purpose of this act is to help ensure that public information
is available.”

Labor relations is a broad spectrum of activities which concern the relationship of employees as a group with the
local government as employer. It includes employee representation issues, negotiation of contracts, and preparation
and conduct of interest arbitrations.

A labor relations consultant is someone who agrees to perform such services for compensation. For example, a
labor relations consultant includes an attorney or other professional engaged by the local government to negotiate a
collective bargaining agreement. It would not include a firm engaged to establish a personnel manual or to
prescreen job applicants. The determining factor is the substance of services the consultant has been engaged to
perform.

This schedule is used to identify expenditures for labor relations consultants.           Disclosure should include
identification of each consultant and the terms and conditions of each agreement.

The schedule is required to be filed with the State Auditor’s Office whether or not the pool has labor relations
consultants. Prepare a schedule for each consultant. Alternative formats are acceptable, including spreadsheets, as
long as the required information is provided.




Risk Pools                                               6-3                                                   (01-12)
MCAG NO.____                      _______________________________________             Schedule 19
                                                   (Pool)

                          SCHEDULE OF LABOR RELATIONS CONSULTANT(S)
                                  For the Year Ended   , 20

Has the pool engaged labor relations consultant(s)? ____ Yes ____ No

If yes, please provide the following information for each consultant:


  Name of Firm



  Name of Consultant



  Business Address




  Amount Paid to Consultant During Fiscal Year



  Terms and Conditions, as Applicable, Including:

  Rates (e.g., hourly, etc.) _____________________________________________________________________

  Maximum Compensation Allowed _____________________________________________________________

  Duration of Services _______________________________________________________________________

  Services Provided _________________________________________________________________________

  ________________________________________________________________________________________




  Certified Correct this _____________________________ day of ____________________________, ________
  to the best of my knowledge and belief:

  Signature


  Name


  Title




Risk Pools                                               6-4                                   (01-12)
                                  LIST OF PARTICIPATING MEMBERS                                 Schedule T-1

                                     ______________________________
                                                 (Pool)


(NOTE: List all participating members of the public entity risk pool in alphabetical order. Indicate any other
identifying data you feel would be appropriate.)




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Risk Pools                   6-6                   (01-12)
                                     OFM SCHEDULE OF EXPENSES             Schedule T-2

                                   __________________________________
                                                 (Pool)

                                 For the Fiscal Year Ended       , 20__


Insurance Members                           $______________
Contracted Services:                        _______________
        Third Party Administrator Fees      _______________
        Actuarial                           _______________
        Audit Expenses                      _______________
        Brokerage Fees                      _______________
        Legal Fees                          _______________
        Other Consultant Fees               _______________
General Administrative Expenses:            _______________
        Communication                       _______________
        Supplies                            _______________
        Dues and Conferences                _______________
        Retreat/Board Meetings              _______________
        Training                            _______________
        Depreciation                        _______________
        Miscellaneous                       _______________
Other                                       _______________

        Total Operating Expenses            $______________




Risk Pools                                         6-7                         (01-12)
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Risk Pools                   6-8                   (01-12)
                                          RISK POOL MEMBER
                                    NOTES TO FINANCIAL STATEMENTS



NOTE: (a) The document, which follows, is only a sample to illustrate a portion of the notes to financial statements
for a participating pool member. This document should be tailored to meet the needs of each individual public
entity risk pool and distributed to each participating pool member for use in the notes to financial statements for
their annual financial reports, (b) this information may also be used to describe the general operations of the public
entity risk pool, and (c) this should be sent to each participating member of the pool.


NOTE X – RISK MANAGEMENT (for participating member of pool)


or


NOTE 1 - GENERAL (for public entity risk pool)


The (city/county/district) is a member of the (pool) (Pool). Chapter 48.62 RCW authorizes the governing body of
any one or more governmental entities to form together into or join a pool or organization for the joint purchasing of
insurance, and/or joint self-insuring, and/or joint hiring or contracting for risk management services to the same
extent that they may individually purchase insurance, self-insure, or hire or contract for risk management services.
An agreement to form a pooling arrangement was made pursuant to the provisions of Chapter 39.34 RCW, the
Interlocal Cooperation Act. The Pool was formed on (date) when (city/county/district) in the state of Washington
joined together by signing an Interlocal Governmental Agreement to pool their self-insured losses and jointly
purchase insurance and administrative services. (Number of participating members) (city/county/district) have
joined the Pool.

The Pool allows members to (state purposes: i.e., jointly purchase insurance coverage, establish a plan of self-
insurance, and provide related services, such as risk management, etc.). (State type of policy coverage: i.e.,
coverage for public official liability is on a “claims made basis.” All other coverages are on an “occurrence” basis.)
The Pool provides the following forms of group purchased insurance coverage for its members: list by type of
policy: i.e., property, liability, vehicle, other mobile equipment, electronic data processing equipment, bonds of
various types, excess liability, public official liability, and machinery breakdown, etc.

Members make an annual contribution to fund the Pool. The Pool acquires insurance from unrelated underwriters
that are subject to a per-occurrence deductible of $__________. Members are responsible for the first $__________
of the deductible amount of each claim, while the Pool is responsible for the remaining $__________. Insurance
carriers cover all losses over $__________ to the maximum limits of each policy. Since the Pool is a cooperative
program, there is a joint liability among the participating members.

Each new member pays the Pool an admittance fee. This amount covers the member’s share of organizational
expenses and the cost of analyzing their loss data and risk profile. Members contract to remain in the Pool for a
minimum of (number) year(s), and must give notice (number) year(s) before terminating participation. The
Interlocal Governmental Agreement is renewed automatically each year after the initial (number) year period. Even
after termination, a member is still responsible for contributions to the Pool for any unresolved, unreported, and in-
process claims for the period they were a signatory to the interlocal governmental agreement.




Risk Pools                                               7-1                                                  (01-12)
The Pool is fully funded by its member participants. Claims are filed by members with (name of third party
administrator, if appropriate) which has been contracted to perform claims adjustment, loss prevention, and property
appraisal services for the Pool. Fees paid to the third party administrator under this arrangement for the year ended
_______________, 20___ were $__________, which included fees for appraisal services. For ____ 1, the Pool has
contracted with the third party administrator to perform claims adjustment and loss prevention services for
$__________.

The Pool is governed by a board of directors which is comprised of one designated representative from each
participating member. An executive committee is elected at the annual meeting, and is responsible for conducting
the business affairs of the Pool.




NOTES TO PREPARER:
1
    Insert next reporting year.




Risk Pools                                              7-2                                                  (01-12)

				
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