keeping state fiscal officials informed
Volume 29, Number 4
NASACT First Vice President Glen Gainer Testifies at IRS Hearing
on 3% Withholding Requirement
G len Gainer, state auditor of West Virginia and NASACT’s
ﬁrst vice president, testiﬁed on Thursday, April 16,
before the Internal Revenue Service on challenges inherent in
Mr. Gainer concentrated his remarks on the choices states
are facing nationwide−to either modify existing systems or to
purchase new systems or components in order to comply with the
implementing Section 3402(t) of the Internal Revenue Code, also increased reporting and withholding burden. He noted that while
known as the “three percent withholding” requirement. the IRS is simply carrying out the mandate as crafted by Congress,
Section 3402(t) was added to the Tax Increase Prevention and the precedent of requiring lower levels of government to collect what
Reconciliation Act of 2005 during conference negotiation with is essentially a federal tax on contractors is concerning, particularly
little knowledge, consultation or debate. In addition to being an the notion of the federal government conscripting state and local
unfunded mandate, the provision has a substantial impact on state governments to act in its stead. Mr. Gainer further remarked:
accounting and procurement systems, on-going operations and The costs associated with this new law bear no tangible
administration, prompt pay options, and contract competitiveness. beneﬁt for state and local governments, and while we agree
NASACT, along with other government groups, has long sought with the notion of assuring that taxpayers pay all of their
full repeal of the onerous provision. applicable taxes, this unfunded mandate places an undue
During his testimony, Mr. Gainer commented: burden on my state and those across the country.
NASACT has done extensive outreach to its membership to In addition to highlighting the systems issues, Mr. Gainer
gauge the impact of implementation, and the responses are remarked on the issues surrounding the inclusion of credit and
quite telling. It seems that many of my colleagues operate payment card transactions, stating that in theory, requiring
under old systems, some homegrown, and the capacity to add withholding for credit and purchase card transactions will
additional components is costly, if not questionable. I can cause states to prohibit the use of payment or credit cards for
tell you that at this time when our states are facing severe amounts over $10,000, which will in turn cause states to lose the
budget shortfalls, the priority of our leadership is to provide efﬁciencies and cost savings gained.
needed services to our citizens. Without signiﬁcant funding, Mr. Gainer concluded his remarks by stating that NASACT
our ability to comply with the three percent withholding will continue to advocate for full repeal of the provision.
requirement, even with an extended implementation date of However, short of repeal, the IRS should consider a pilot
January 1, 2012, is very questionable. approach so that serious implementation issues can be identiﬁed
prior to the January 1, 2012, implementation date.
States Continue to Express Serious Concerns
Over 3% Withholding Requirement
W est Virginia State Auditor Glen Gainer (at podium at
left) testiﬁed on behalf of NASACT at the latest hearing
examining issues surrounding the so-called “3% withholding
requirement,” which was passed as part of the 2005 TIPRA
legislation. To see NASACT’s past activity in relation to this
issue, visit www.nasact.org/washington/annoucements.cfm
NASACT News − April 2009 page 1
News From Washington
OMB Releases Additional Recovery Federal Funding Accountability and Transparency Act (FFATA).
Agencies may request of OMB additional recipient reporting
Act Guidance immediately by submitting a recommendation to OMB.
Section 2.17 – Flexibility in State Reporting – Collection and
O n April 3, the U.S. Ofﬁce of Management and Budget
released additional guidance concerning the implementation
of the American Recovery and Reinvestment Act of 2009. While
Federal agencies are to give the states ﬂexibility in the
the guidance is directed at federal agencies, portions of the collection and submittal of required information. It will be
guidance relate to recipient reporting in accordance with Section up to the state to determine whether a central point within the
1512 of the Recovery Act. state will be responsible for submitting the required reports or
Of note is the requirement that recipient reporting, as required whether to have individual state agencies report. The state should,
by Section 1512 of the Recovery Act, be submitted centrally at however, assign a responsible ofﬁce to oversee Section 1512 data
the federal level. OMB is, however, giving recipients the option collection to ensure quality, completeness, and timeliness of data
to collect and report centrally or in a more decentralized manner submissions. There is no responsibility at the state level when
where reporting is done agency-by-agency. An immediate the state is not the prime recipient (i.e., funds that go directly to a
concern of states trying to modify systems to capture the required locality).
information is the ability of federal agencies to add additional
data elements and reporting outside the standard data elements Section 3 – Governance, Risk Management and Program
devised by OMB. Integrity
While speciﬁc to federal agencies, Section 3 provides a lot of
Specific Excerpts of the Guidance Document of detail on oversight and risk assessment that may be of beneﬁt to
states looking to implement their own plans to assess risk.
Note for Recipients
Section 3.11 – Identifying Risks
Section 2.10 – Reporting by Prime Recipient of Federal
This section provides questions that can be used to identify
Funding (receives federal funds through a grant, cooperative
risk. Management at the state level may wish to use this
agreement, loan or contract)
approach, although speciﬁc to federal agencies, to identify areas
Prime recipients are responsible for reporting on their own use
that may need more or less oversight.
of funds and that of any sub-awards. Reporting is only required
for discretionary appropriations and the details are to be spelled
Section 5.1 – Grants
out in the terms and conditions of the grant. States should be
This section provides that agencies should utilize standard
prepared to report by July 10; however, the initial statutory
practices but also evaluate additional actions in awarding
deadline is October 10, 2009. Further details on reporting will be
grants. Agencies should continue to award competitively to the
available no later than 45 days before the October 10 deadline on
maximum extent practicable in meeting the objectives of the act.
Note that on existing grants, OMB is discouraging supplements
Section 2.13 – Jobs Created to existing agreements because funds must be tracked and
Prime recipients should provide a description of the accounted for separately.
employment impact of the Recovery Act funded work, including OMB is also encouraging federal agencies to begin outreach
types of jobs (job titles) and an estimate of the number of on the requirement for Central Contractor Registration (CCR).
jobs created or retained by project, activity and contract. Only In order to register with CCR, a recipient must obtain a Dun and
compensated jobs are to be reported. Section 2.13 provides details on Bradstreet Universal Numbering System (DUNs) number. This
FTE estimates and deﬁnes jobs created and jobs retained. requirement is problematic for states, as it is very difﬁcult for the
state to manage the numbers.
Section 2.14 – Central Collection
Information (reports in accordance with Section 1512) will Section 5.2 – Solicitation and Evaluation of Competitive
be collected centrally; however, federal agencies may obtain an Grants
exception in limited circumstances. The central federal collection Federal agencies are required to post funding opportunity
point should be established in time to collect the recipient reports announcements on www.grants.gov.
on October 10, 2009.
Section 5.6 – Audit Tools for Accountability
Section 2.15 – Agencies May Collect Additional Data Federal agencies will be performing a risk analysis of
Agencies may require additional information beyond what is Recovery Act programs and will request that OMB designate any
required under Section 1512 of the Act; however, the information high risk programs as Single Audit major programs (programs
will be part of the award terms and conditions. This section also which must be tested in a particular year).
notes that OMB holds the authority to require information from
recipients for all tiers of sub-awards in accordance with the (article continued, next page)
NASACT News − April 2009 page 2
News From Washington
Section 5.7 – Effectiveness of Single Audits Davis–Bacon and Buy American provisions in addition to listing
OMB Circular A-133 will be used to notify auditors of any the required information under Section 1512 of the act. In sum,
new requirements. Ofﬁces of inspectors general (OIGs) are to the interim guidance on standard award terms provides that
reach out to the auditing profession and provide technical assistance recipients and sub-recipients:
and training as well as perform quality control reviews to ensure
that Single Audits are properly performed and that improper Maintain a current registration in the CCR database–to register
payments and other non-compliance are fully reported. OIGs will with CCR, an entity must have a valid DUNS number.
perform follow-up reviews of Single Audit quality with emphasis Report quarterly on project and activity status, sub-grant and
on Recovery Act funds and report the results on Recovery.gov. subcontract information.
Provide notice that Buy American requirements apply to
Section 5.8 – Single Audit Results certain iron, steel and manufactured goods.
Single Audit reports ﬁled with the Federal Audit Provide notice of wage rate requirements that apply to certain
Clearinghouse will be made publicly available on the Internet projects.
with a link on Recovery.gov. Federal agencies are to submit Ensure proper accounting and reporting of Recovery Act
synopses of Single Audit ﬁndings related to obligations and expenditures in Single Audits
expenditures of Recovery Act funding.
Appendix 4 – Program Risk Considerations Appendix 9 was released on April 23 in the Federal
While speciﬁc to federal agencies, this appendix provides Register. OMB is requesting comment on this document no
insight into what considerations are taken into account in later than June 22, 2009. In order to include your comments in
assessing risk. NASACT’s association response, please send your comments
to Cornelia Chebinou (firstname.lastname@example.org) by COB on
Appendix 9 June 5, 2009. A copy of the notice may be obtained from
An issue of importance to NASACT members is the standard NASACT's Washington ofﬁce; to request a copy of the notice,
award information that will become part of Title 2 of the Code call (202) 624-5451.
of Federal Regulations. This section provides information on
ARRA Resources Online Risk Assessments
ARRA - Accountability, Reporting and Risk Areas
Risk Factors for the Recovery and Reinvestment Act
N ASACT has links to a host of Recovery Act resources
on its website. The following resources are contained
on the page for the Committee on Accounting, Reporting Congressional Hearings
and Auditing, the NASACT committee tasked with Senate Hearing on March 5, 2009 - “Follow the
monitoring Recovery Act implementation issues. To view Money: Transparency and Accountability for Recovery
the documents, visit www.nasact.org/nasact/committees/ and Reinvestment Spending”
cara/downloads/recovery/recovery.cfm (you must be House Hearing on March 19, 2009 - “Stimulus Waste
logged into the site as a member to view the information). and Fraud: Who are the Watchdogs?”
House Hearing on April 1, 2009 - “IRS Oversight: Are
Tax Compliance Costs Slowing Economic Recovery?”
Senate Hearing on April 2, 2009 - “Recovery and
American Recovery and Reinvestment Act of 2009
Reinvestment Spending: Implementing a Bold
Recovery and Reinvestment Act Conference Report
OMB Implementation Guidance - Phase I
Data Elements for Reports Under Section 1512 of the
Build America Bonds and School Bonds Fact Sheet
American Recovery and Reinvestment Act of 2009,
Build America Bonds Forms
Public Law 111-5
IRS Information Related to the American Recovery and
OMB Guidance on ARRA Implementation - Phase II
Reinvestment Act of 2009
Presidential Memorandum - Ensuring Responsible
Spending of Recovery Act
Build America Bonds Guidance Correspondence
ARRA-Related COBRA Guidance - IRS Letter from NASACT and Other State Groups
ARRA-Related COBRA Guidance - DOL Requesting Coordination
Invitation from Vice-President to ARRA Implementation
NASACT News − April 2009 page 3
NASACT Hosts Call to Discuss ARRA ARRA requires an October 10 reporting date for those receiving
funds. OMB’s guidance issued on February 18 listed a July 10
Implementation Issues reporting date for two reasons: (1) OMB wanted to respond to the
wishes of Congress and the public to collect the data as quickly as
ARRA Update Calls to be Held Periodically to possible, and (2) OMB wants to have a preliminary period in order
Keep Members Informed to work out any logistical problems prior to the October 10 date as
required by the law. A complication with this plan is that OMB will
not be ready with the central reporting solution by the July 10 date.
T hrough its Committee on Accounting, Reporting and Auditing
(CARA), NASACT held a conference call on Wednesday,
April 8, to keep members apprised of emerging issues surrounding
OMB is still working to determine the best course of action given
the realities of the time constraints and the work that remains to be
done. Currently, the objective is to collect at least some data by the
the implementation of the American Recovery and Reinvestment July 10 date and to do so without undue cost, effort or waste.
Act of 2009. NASACT will be holding these calls periodically as The guidance also addresses issues related to the implementation
states work to implement ARRA. The date for the next call will be of ARRA as it relates to the Davis-Bacon Act and the Buy American
announced in the coming weeks.. Act. These two acts have a history of being related to federal
The call was moderated by CARA co-chairs Randy Roberts, contracts, not federal assistance. Guidance related to these two items
director of professional practice, Arizona, and David McDermott, can be found in Appendix 9 of the guidance document. Additional
state controller of Colorado. The call featured an update from guidance will be provided once OMB understands the nature of the
representatives from the U.S. Ofﬁce of Management and Budget public’s additional questions and any areas that may need additional
and the U.S. Government Accountability Ofﬁce. clariﬁcation.
Danny Werfel, deputy controller at OMB, opened Gene Dodaro, acting comptroller general at GAO, gave
the conversation by reporting that OMB released ARRA an update on recent activities of GAO as related to ARRA
implementation guidance on Friday, April 3. The guidance implementation. He said that GAO has two objectives: (1) to ensure
document is out for public review, with a deadline of April 17 for that the ARRA funds are being spent and (2) to ensure that they
feedback. After that time, OMB is committed to issuing an updated are being spent for their intended purposes. GAO is also intensely
memo if it seems to be warranted. focused on the upfront safeguards that states and localities are
States have been seeking to discern how reporting and auditing implementing and what, if any, issues need additional clariﬁcation
for ARRA funds will differ from standard operating procedures. regarding guidance or reporting procedures.
Mr. Werfel said that there are three main areas of difference: data GAO has worked with 16 states to conduct early examinations of
reporting, “Davis Bacon,” and “Buy American”; it is in these implementation efforts. GAO will have a state-by-state summary of
three areas that the OMB guidance issued on April 3 is focused. the ﬁndings, which should be issued at the end of April.
Speciﬁcally, the guidance focuses heavily on agency reporting There was a question and answer session at the end of the call.
since there is a host of atypical requirements as compared to current
reporting practices. The new focus will be on recipient reporting, for
Questions and Answers
which there will be two work streams.
The ﬁrst work stream is deﬁning the data. A Federal Register Q: Some questions were expressed regarding Section 1512
notice on April 1 announced the data requirements. There will be a quarterly reporting requirements. If, as is stated in the April
central portal for data collection at www.federalreporting.gov; OMB 3 guidance, the federal government look towards a central
is still working on the logistics of the portal. reporting process, will centralized reporting replace the
The second work stream deals with how the data will ﬂow monthly reporting already required by grantors?
from the local and state levels up to the federal government. The A: There is no one-size-ﬁts-all answer to this question. ARRA
major question states have asked in relation to this topic is will creates some unique reporting requirements that may go above
states have to centrally collect recipient information or will a and beyond current, in many cases longstanding, reporting
decentralized structure allow states to delegate this task to agencies requirements. OMB is reluctant to disrupt existing baseline reports
or even recipients. OMB’s guidance opts for a ﬂexible approach or to do anything that may hamper the new reporting model being
to this matter, allowing for centralized or decentralized reporting. developed. Combined reporting may be an idea worth exploring
However, the guidance does still hold the state responsible for in the long-term, but it is not realistic given the July10/October
facilitating the process. He noted that the state role only relates to 10 reporting timeframes in place for ARRA. States and local
state-administered programs. governments should think about ARRA as a separate reporting
He said that OMB is still very much in work mode on www. exercise. The 1512 reports create a baseline that is required by
federalreporting.gov and is working to iron out issues including law. On a case-by-case basis, there may be additional reporting
web-enablement, security, format and architecture. requirements and elements that agencies may determine need
A third aspect of the overall data collection issue is how the data supplemental information. There has also been some desire
will be processed at the federal level. Millions of lines of data will expressed to measure program performance beyond just the data
be reported, and OMB is working through how to process the data
and report it in meaningful ways. (article continued, next page)
NASACT News − April 2009 page 4
ARRA Update Call Recap The architecture document, which will be much more detailed than
(continued from page 3) the April 3 guidance, Appendix 9, or items already published in the
Federal Register, has not yet been widely distributed and will not be
collected through 1512. All these considerations are out there. As in the Federal Register. It should come out in a few weeks.
things stand now, OMB is concentrating on minimizing disruption
to the current reporting model and maximizing the success of the Q: When will GAO be issuing reports to the 16 states which it
pending reporting model. examined?
Q: The guidance suggests that states should establish a A: The target date is to provide the information on April 17, with
position to oversee 1512 data collection, quality, completeness, a short turnaround. The write-up for each state will go to the
timeliness, etc. If states assign such a position, then how can a governor’s ofﬁce or designee for clariﬁcation and response.
decentralized approach work?
Q: Those programs designated as high-risk should be addressed
A: OMB understands that this is a tough question. OMB would in the new Compliance Supplement. What is the date for the
like to start a set of working groups to examine the key question of new Compliance Supplement?
data collection and quality/oversight/etc. Based on the ﬁndings, the
process can be streamlined. This very question is one reason for the A: The target date for the new Compliance Supplement is April 30.
July 10 reporting date prior to the October 10 date deﬁned in law. However, the 2009 Compliance Supplement will not include the
new high-risk programs. High-risk programs associated with the
Q: Is there a way for OMB to provide data tools to better help Recovery Act will be included in the 2010 Compliance Supplement.
states track ARRA funds? For FY 2009 audits, the only high-risk programs will be in the
Medicaid cluster. There will be an appendix to the 2009 Compliance
A: OMB has had several calls on this issue to examine the Supplement that will address the additional ARRA requirements,
life cycle of funds–notiﬁcation, award, obligation, and outlay. with reference to an addendum that can be expected by June 30.
OMB is asking agencies how quickly they can aggregate the
data and how they can disaggregate it. Unfortunately, each Q: Will there be new CFDA numbers for ARRA funds or just a
level of disaggregation causes more challenges for agencies to new preﬁx to designate ARRA monies?
collect that information, and unfortunately, the federal systems
are not able to automate the information in any real-time way. A: There will be both. If there is a program that has separate ARRA
OMB is trying to match the realities of system capabilities with requirements, a new CFDA number would be desirable.
the concrete data needs and the desired reporting capacities.
Ultimately, OMB will seek to come up with a data reporting Q: Has OMB done any analysis of how things like new CFDA
model that is feasible for agencies. numbers and the new risk appendix will impact the auditing of
Q: The data elements were exposed April 1 in the Federal
A: OMB has estimated that the scope of audits will deﬁnitely be
Register. Will the associated architecture document also be in
the Federal Register, and if so, when?
Q: Is there any new guidance or thoughts on funding for
A: The April 1 Federal Register notice included data deﬁnitions that
administrative costs that states will need to bear to implement
support the terms and conditions for grants. Appendix 8 (standard
terms and conditions for contracts) from the April 3 guidance has
been published in the Federal Register. The “assistance” package A: There is no deﬁnitive guidance at this point. OMB and others
has not yet been in the Federal Register, but it was ﬁnished in time understand the enormity of the issue. Vetting of the various options
to include it in the April 3 guidance as Appendix 9 (standard terms by policymakers is underway. Hopefully a decision point can be
and conditions for grants). (Appendix 9 has subsequently been reached in the very near future, and a memo on this topic can be
published in the Federal Register - see page 3.) expected in the near future.
Stay Tuned for Future Updates!
The date for the next ARRA update will be announced very soon, so stay tuned! To ﬁnd Recovery Act resources, notes
from the conference call, and other CARA resources, visit www.nasact.org/nasact/committees/cara/index.cfm. NASACT will
continue to provide information to members in e-mail alerts as it becomes available.
NASACT News − April 2009 page 5
Comptrollers Gather in Annapolis for 2009 Annual Conference
By Glenda Johnson, Communications Manager his leadership of NASC’s Committee on Accounting and
T he National Association of State Comptrollers held its
twenty-eighth annual conference on March 25-27, 2009, in
Annapolis, Maryland, at the Loews Annapolis Hotel. Conference
She also presented a Distinguished Service Award to Merideth
Hackney, chief of Idaho’s Bureau of Systems Administration, in
host Peter Franchot, comptroller of Maryland, welcomed
attendees on the morning of Wednesday, March 25, as did NASC ...her thoughtful and steady leadership of the Multi-
President Kim Garnero, director of Alaska’s Division of Finance. State Consortium on Internal Control and her substantial
Over 105 NASC members, corporate partners and guests were in contributions to the project, which will produce an internal
attendance at the conference. control tool available to all state governments.
The conference featured topics including implementation
issues surrounding the American Recovery and Reinvestment At the banquet, President Garnero also made a special
Act of 2009, updates from the Governmental Accounting presentation to Pat O’Connor, association director of NASC. Pat
Standards Board, sessions on government transparency websites will be retiring at the end of April this year following a career
and initiatives, and much more. A complete list of conference of almost 19 years with NASACT. President Garnero presented
sessions and speakers can be found of page 17 of this newsletter. to Pat a memory book that included letters and messages from
PowerPoint presentations from each session are available on NASC members, both current and past.
NASACT’s website at www.nasact.org/conferences_training/nasc/ A number of meetings preceded the conference. The NASACT
annualconference.cfm. Executive Committee met on Tuesday, March 24 (see pages 7-8
The conference also featured a number of roundtable sessions, for a recap). Additionally, the NASC Committee on Accounting
which are always popular with attendees. The roundtables and Financial Reporting and the NASC Executive Committee
provided an opportunity to submit questions and topics for met that day. A Government Benchmarking Forum was also held
discussion among the attendees at the conference. A highlight on Tuesday for those participating or interested in NASACT’s
of the conference was the Federal/State Dialogue Roundtable, Benchmarking Program.
which was held Wednesday morning. The session included NASC wishes to thank all those who helped plan the
representatives from the Ofﬁce of Management and Budget conference, especially members of the Conference Program
and the Internal Revenue Service, who discussed Recovery Committee, chaired by Calvin McKelvogue, chief operating
Act implementation guidance and issues; improper payments; ofﬁcer of Iowa’s State Accounting Enterprise. Very special
the Federal Funding Accountability and Transparency Act; and thanks go to our conference host Peter Franchot, for welcoming
an update on issues surrounding the three percent withholding us to Maryland in a gracious and hospitable manner, and to
requirement. John Kenney of his staff, who was instrumental in planning
On Wednesday, March 12, a conference banquet was held. the conference. Many thanks go to all those who participated
In addition to providing a valuable networking opportunity on the program as speakers or moderators, and to all who
for members, the banquet featured the presentation of several attended during these tough ﬁnancial times for states. NASC
awards. President Garnero presented a President’s Award to acknowledges with gratitude those companies that provided
David McDermott, state controller of Colorado, recognizing his: sponsorship of the conference: Accenture, BearingPoint, CGI,
Deloitte, IBM, KPMG, MAXIMUS, Oracle, SAP, The Hackett
...knowledge and expertise in the areas of governmental Group, MasterCard, and SB & Company.
accounting and ﬁnancial reporting, his steadfast participation The 2010 NASC Annual Conference will be held in Des
on technical committees of NASC and NASACT, and Moines, Iowa, on March 24-26 at the Embassy Suites Hotel.
Maryland Hosts Welcome NASC Members
S hown at left: Peter Franchot (MD), host of the NASC conference,
and Kim Garnero (AK), president NASC. Comptroller Franchot
presented President Garnero with a Certiﬁcate of Recognition and
welcomed attendees to the annual conference banquet. Ms. Garnero
served as NASC’s president from March 2008 through March 2009.
NASACT News − April 2009 page 6
NASACT Executive Committee GASMO: Mr. Partridge, chair, also gave a report on activities
of the Government Accounting Standards and Market Oversight
Meeting Highlights (GASMO) Committee. Mr. Partridge reported that the Financial
Accounting Foundation has a new chair, John J. Brennan.
By Glenda Johnson, Communications Manager NASACT, along with the Government Finance Ofﬁcers
Association, National Council of State Legislatures, and National
T homas McTavish, auditor general of Michigan and president
of NASACT, welcomed committee members, staff, and
guests to an Executive Committee meeting, held March 24,
Governors Association, has been working for some time with
the FAF to ﬁnd a suitable funding solution for the Governmental
2009, in Annapolis, Maryland, in conjunction with the annual Accounting Standards Board. On November 18, 2008, the FAF
conference of the National Association of State Comptrollers. issued a resolution giving the state groups 90 days to come up
Highlights from the meeting follow. with a suitable funding solution. At the end of that time, the
FAF authorized one of its committees to pursue other solutions,
Annual Conference: President McTavish, chair and lead including federal involvement. Mr. Partridge offered kudos to the
conference host for the upcoming 2009 NASACT Annual NGA and NCSL for their leadership on this matter. The hope is
Conference, gave an update on conference planning activities. that states will be able to begin full funding of GASB in 2013.
Planning for the technical program and social activities for the Toward that goal, the government groups sent a team to the FAF’s
conference is well underway. Staff is also working to secure ofﬁces to begin a due diligence review of GASB’s budget. The
corporate associates for the event. See page 14 for a complete team will report back to the government groups and then next
preview of conference events. He encouraged everyone to steps will be considered.
attend the conference and emphasized the importance of coming Mr. Poynter mentioned that the FAF also has several new
together in August to examine efforts to implement the American trustees, including Cynthia Eisenhauer, the ﬁrst government
Recovery and Reinvestment Act of 2009. He also reported that trustee selected using the revised selection process instituted by
there will be a special half-day roundtable on the Wednesday the FAF and agreed upon by the government groups.
following the conference to speciﬁcally address ARRA
implementation issues. Membership Development: Barb Hinton, legislative post
auditor of Kansas and chair, reported that the committee met in
CARA: Kinney Poynter, NASACT’s executive director, January 2009 to discuss three things: (1) NASACT’s current new
reported that NASACT’s Committee on Accounting, Reporting member outreach/orientation process, (2) the development of a
and Auditing (CARA) continues to meet regularly. NASACT mentor program, and (3) a method to encourage state
Further, he reported that staff recommends that NASACT use treasurers to join NASACT.
the CARA as its vehicle for examining ARRA implementation Twenty-one new state auditors, comptrollers or treasurers have
issues. The CARA is already in place and is populated by come into ofﬁce recently and have received new member kits from
representatives from almost every state. The thought is to have NASACT. These new ofﬁcials have also been paired up with a
regular calls of the CARA, inviting representatives from the mentor, an existing member of NASACT who may be able to offer
Government Accountability Ofﬁce and the Ofﬁce of Management assistance or expertise as the new person settles into ofﬁce. Staff
and Budget to participate. Staff recommended that the ﬁrst call provided letters of introduction for use by the mentors.
be held in April following the issuance of guidance by OMB The committee has directed staff to draft a letter to be sent to
on implementation (see pages 4-5 for recap of this call). The all state treasurers who are not currently members of NASACT in
Executive Committee agreed that the CARA was the best vehicle an effort to encourage participation. The letter will be signed by
for handling ARRA implementation matters for the association. the treasurer members of NASACT’s Executive Committee.
FMIAC: Clark Partridge, state comptroller of Arizona
and chair, gave an update on the activities of the Financial Training and Professional Development: Tom Marks,
Management and Intergovernmental Affairs Committee. He deputy auditor general of Pennsylvania and chair, reported that
reported that the committee has been working on a number of an audio conference is planned for April 29, 2009, and will cover
issues, perhaps most notably continuing its work toward repeal the topic of GASB No. 54. Additionally, he reported that the
of the three percent withholding requirement, which would committee decided to cancel the 2009 NASACT Training Forum
require federal, state and local governments to withhold three due to the economic downturn and travel restrictions within the
percent on most payments for property and services. NASACT states. The event was scheduled to be held in Portland, Oregon.
and other government groups have been working for repeal for Tentatively, the committee is planning to hold the 2010 Training
several years. A provision was included in the recent Recovery Forum in Portland instead.
Act legislation delaying implementation for one year, but states
are still hoping for full repeal. The Internal Revenue Service is Budget: Marty Benison, comptroller in Massachusetts and
holding a hearing on April 16 to examine implementation issues. chair, gave an overview of the current status of NASACT’s FY
Glen Gainer, state auditor of West Virginia and NASACT’s ﬁrst 2009 budget and presented for approval by the committee the FY
vice president, will be testifying on behalf of NASACT (see page
1 for a recap of NASACT’s testimony). (article continued, next page)
NASACT News − April 2009 page 7
NASACT Executive Committee Meeting Recap Administrative Items: Mr. Poynter gave an update on
(continued from page 7) various miscellaneous activities of the association:
2010 budget. A motion was made and unanimously approved to NASACT has renewed its contract with The Hackett Group
accept the proposed budget for FY 2010. for the benchmarking program. The price went up slightly to
$88,000 for a single benchmark. This increase represents a
Time and Place: Nancy Kopp, state treasurer of Maryland normal cost-of-living increase over a three year period (about
and second vice president of NASACT, reported that the 10%). The contract is effective through November 30, 2011.
2009 Annual Conference is scheduled to be held in Dearborn, Since the last report to the committee, West Virginia has
Michigan. The 2010 conference will be held in Charleston, West benchmarked three functions. Michigan is presently doing a
Virginia. As president in 2011, she has the right of ﬁrst refusal to ﬁnance benchmark, and Kentucky and Texas have expressed
host the 2011 conference. She reported that after conferring with interest. Massachusetts just added two benchmarks to its
her co-hosts, the state auditor and state comptroller in Maryland, initial benchmark. Tennessee will likely undergo its second
she has decided against hosting the conference. round in the program in 2011.
Staff will put out a bid to all the states for ﬁnd a host for For the twenty-eighth year, NASACT will participate in the
the 2011 conference. See page 18 for more information on this Tennessee Government Auditor Training Seminars. The
opportunity. seminars are co-sponsored by NASACT and the Tennessee
FAF Trustee/GASB Board Selection Task Force: Mr. Comptroller of the Treasury. Four two-day sessions are to be
Poynter repeated that Cynthia Eisenhauer has been appointed held in April/May 2009: (1) Chattanooga, (2) Nashville, (3)
to serve as the newest FAF government trustee. She is the ﬁrst Morristown and (4) Jackson.
trustee to be selected using the new process developed by the NASACT continues to provide administrative services to the
FAF and approved by the government groups. Additionally, Association of Local Government Auditors. ALGA is
Michael Belsky was appointed to the GASB. The term of GASB currently planning its annual conference for May 4-5, 2009, in
member Richard Tracy ends on June 30, 2009. The FAF is San Francisco, California.
seeking candidates to ﬁll the spot, which is typically held by a NASACT is participating with the Association of Government
local government auditor. Accountants and Grant Thornton in a CFO study examining
current issues faced by government chief ﬁnancial ofﬁcers.
National Performance Management Advisory NASACT has launched a new website, updating the look of
Commission: Peter Franchot, comptroller of Maryland, the site and the organization of content contained on the site.
offered an update on the activities of the National Performance Pat O’Connor will be retiring at the end of April 2009. She
Management Advisory Commission, on which he serves as will be replaced by Kim O’Ryan, who was serving as ﬁnance
NASACT’s representative. The commission held its last meeting manager. Lori Slagle was hired to be NASACT’s ﬁnance
on October 22, 2008, in Lexington, Kentucky; the meeting was manager to ﬁll the vacancy that will be left when Kim
co-hosted by NASACT and the Council of State Governments. succeeds Pat.
At the meeting, the commission agreed on the major components
of a national principles-based framework for public sector Draft minutes from the meeting can be found at www.nasact.
performance measurement and management. Over the next six org/nasact/committees/executive/index.cfm (you must be logged
months, the commission will be working to build upon the basic in as a member of the site to view the ﬁle).
framework identiﬁed at the meeting. In addition, the commission The NASACT Executive Committee will hold its next meeting
will be conducting ﬁeld research to identify state and local in conjunction with the 2009 NASACT Annual Conference in
governments whose experience exempliﬁes one or more of the Dearborn, Michigan, on August 16.
The commission is expected to complete a ﬁrst draft of the ***
framework in May 2009. The next meeting is scheduled for May Questions about the content of this article or the
20-21 in Phoenix, Arizona. Information about the commission’s meeting may be directed to Glenda Johnson at
progress will be posted on its website at www.pmcommission.org. email@example.com or (859) 276-1147.
NASACT Committee Resources
Are you looking for committee rosters, minutes or resources? To see a complete list of committees and associated information,
visit NASACT’s committee pages at www.nasact.org/nasact/committees/index.cfm. You must be logged in as a member of the
site to view some content.
NASACT News − April 2009 page 8
Members Hear About NASC’s and Finance Tracks will be offered.
Ms. Bolander also reported for the Advisory Committee on
Activities and Elect New Leaders State Comptrollers: Technical Activities and Functions, since
at Business Meeting Chair Richard Eckstrom, South Carolina, was not present.
Chapters 1–7 (the current portion) of the 2008 edition have
By Pat O’Connor, NASC Association Director been on NASACT’s website since December 2008. Forty-
four states provided information for the current portion. With
regard to the long-term portion, we have complete or partial
T he National Association of State Comptrollers held a
business meeting in Annapolis, Maryland, on March 26,
2009, in conjunction with its 28th annual conference. President
information from 39 states. Chapters 8–10 are in draft and
are presently being reviewed. The rest of the book will be
published in late spring or summer.
Kim Garnero, Alaska, introduced the members of the Executive
In the absence of Chair Herb Maguire, Pennsylvania, Lisa Pusich,
Committee and a new member in attendance, Greg Grifﬁn, state
Alaska, summarized the activities of the Statement 51 Work
accounting ofﬁcer, Georgia.
Group. The group held its ﬁrst meeting in May 2008 and
has had four meetings since then. Staff from 22 states are
Strategic Committee Reports participating, as well as Greg Driscoll, a partner at KPMG
who worked on Statement 51 while he was a practice fellow
Ms. Garnero, who reported for the Program Committee in the
at the GASB, and Lisa Avis of the GASB’s staff. The group
absence of Chair Calvin McKelvogue, Iowa, expressed
did a survey on thresholds for capitalizing intangible assets.
satisfaction with the program and observed that holding
It will hold meetings on April 23 and May 28, 2009, to help
the conference in the DC area was especially timely, as
states prepare beginning balances for July 1, the beginning of
representatives from the federal government were able to
FY 2010 and the year of implementation of Statement 51 for
participate in a very informative roundtable discussion about
nearly all states.
implementing the Recovery Act and other matters of interest
Ms. Pusich also reported for the Derivatives Implementation
to the states.
Network in the absence of Chair Eric Berman, Massachusetts.
David McDermott, Colorado, chair of the Committee on
Mr. Berman did an overview of Statement No. 53 at the ﬁrst
Accounting and Financial Reporting, summarized the
meeting of the network, in January 2009. A guest speaker
committee’s meeting on March 24, 2009. Bob Attmore, chair,
at the March meeting discussed auditing derivatives. Randy
and Dave Bean, director of research and technical activities,
Finden of the GASB staff is attending the meetings and
both at the GASB, were on hand to discuss the board’s
providing supporting for the network. The Implementation
technical agenda. They mentioned fair value reporting, lease
Guide for Statement 53 will be published at the end of March
accounting, and intergovernmental dependency. Since August
2009. This group will also hold an extra meeting to prepare
2008, the CAFR has participated in responding to four due
for the beginning of FY 2010; the next meetings will be on
process documents from the GASB.
May 19 and June 16, 2009. Ms. Pusich observed that this
Brenda Bolander, Oklahoma, chair of the Middle Management
group has been very helpful to Alaska.
Conference Committee, said that an excellent program for
Merideth Hackney, Idaho, co-chair of the Multi-State
the Middle Management Conference has been posted to
Consortium on Internal Control, thanked the staff from the
NASACT’s website. However, attendance will be low due
to travel freezes in many states. The Payroll and Travel and (article continued, next page)
P-card Tracks have been cancelled this year, so only the Audit
NASC Chooses Two New Executive Committee
A t its business meeting, NASC chose the 2009-10 Executive
Committee. New to the committee this year will be Sadie
Rodriguez-Hawkins (WA) and Paul Christofferson (MT). Following the
meeting, conference host Franchot took a moment to speak with the
committee members present at the conference. Shown at left: Brenda
Bolander (OK), Paul Christofferson (MT), Clark Partridge (AZ), Mr.
Franchot, Kim Garnero (AK), and Kim Wallin (NV). See page 10 for a
complete list of the 2009-10 Executive Committee.
NASACT News − April 2009 page 9
NASC Business Meeting Recap increase from $1,500 to $2,000 and the registration fee for
(continued from page 9) members for NASC’s annual conference will increase from
$250 to $300.
states who are participating in drafting a tool which states Kim Wallin, Nevada, chair of the Committee on Outreach,
may use to monitor compliance with internal controls across announced that the committee has sent welcoming materials
the statewide enterprise. In addition to an Internal Control to three new members since August 2008: Greg Grifﬁn, state
Guidebook and question sets for payables, cash, the control accounting ofﬁcer, Georgia; Mark Kaiser, director, Division
environment, and risk management which have already of Accounting, Missouri; and Gary Pfeiffer, secretary of
been posted to NASACT’s website, the group is working on ﬁnance, Delaware.
a glossary and question sets for IT and ﬁnancial reporting. Trisha Neely, Delaware, chair of the Resolutions Committee,
Other areas yet to be assigned include receivables, budgets brought before the members three resolutions, which all
and planning, ethics and procurement. passed unanimously. They were to recognize Kim Garnero’s
Clark Partridge, Arizona, co-chair of the Committee on Shared leadership and service as the association’s president for the
Practices, observed that this committee has had a long and past year, to thank Peter Franchot, Maryland for his gracious
successful history and has given rise to several information- hospitality as host of the 2009 annual conference, and to
sharing projects. Over about the last decade, NASC’s recognize the service of Pat O’Connor, NASC association
members have organized conference call groups to assist director, for her service to the association during her nearly 19
with the implementation of new GASB standards (e.g., years with NASACT.
OPEB, Statement 51 and Statement 53) as well as ongoing Mr. Carlson, chair of the Nominating Committee, presented
information sharing groups (E-commerce, ERP, Payroll, the slate of ofﬁcers and members of the Executive Committee
Travel and P-card, and the new Transparency Information for the 2009-2010 term:
Sharing Group). Given this history of activity to meet current
and on-going needs for the sharing of information, the − President, Calvin McKelvogue, chief operating ofﬁcer,
members of the Committee on Shared Practices recommended Statewide Accounting Enterprise, Iowa
to the president of NASC that the committee be disbanded. − Vice president, Clark Partridge, state controller, Arizona
With the concurrence of the other members of the Executive − Secretary/treasurer, Brenda Bolander, state comptroller,
Committee, Ms. Garnero took that action. Oklahoma
Paul Christofferson, Montana, a co-chair of the Transparency − Immediate past president, Kim Garnero, director,
Information Sharing Group, said that the group held its ﬁrst Division of Finance, Alaska
meeting in November 2008 and meets every other month. − Richard Eckstrom, comptroller general, South Carolina.
Topics of discussion include the creation and management of − Kim Wallin, state controller, Nevada.
transparency websites and other aspects of transparency, such − Sadie Rodriguez-Hawkins, senior assistant director,
as interim reporting and reports to citizens. Mr. Christofferson Ofﬁce of Financial Management, Washington,
did a survey about existing websites which he will send to − Paul Christofferson, administrator, State Accounting
NASACT staff for posting on the website. Division, Montana.
This slate was adopted by the members.
Administrative Committee Reports Pat O’Connor made some brief comments about her annual
report on the Technical Services Program. She drew special
Mr. Partridge, secretary/treasurer and chair of the Committee attention to the work of the Multi-State Consortium on Internal
on the Financial Plan, presented NASC’s ﬁnancial plan for Control, inviting the members to review and comment on the
FY 2010. The Executive Committee agreed to the plan and it draft documents which have been post to the website. She also
was adopted as part of NASACT’s budget when NASACT’s described NASACT’s new website and told the members that
Executive Committee approved the budget on March 24, they could ﬁnd information about all of NASC’s activities under
2009. NASC’s plan shows an excess of expenses over revenue the NASC button at the top of the home page.
of about $20,000. He observed that none of the NASACT The meeting ended with the presentation of a plaque to Ms.
dues paid by state comptrollers are included in NASC’s Garnero in thanks for her service as NASC’s president. Ed Ross,
ﬁnancial plan. He added that NASC has increased two fees state controller, Kentucky, the longest serving state comptroller in
for FY 2010: the fee for the technical services program will the United States, made the presentation.
NASC Committee Opportunities
The lifeblood of NASC is its committees. Would you like to volunteer for a committee? To see a complete list of the committee
opportunities, visit www.nasact.org/nasc/committees/index.cfm. To indicate your interest in serving on a committee, email Kim
O’Ryan at firstname.lastname@example.org.
NASACT News − April 2009 page 10
Your Input Is Requested! Through its Audit Standards and Reporting Committee,
the National State Auditors Association will be responding to
this exposure draft. In order to have your comments included
GASB ITC, Pension Accounting and Financial Reporting in NSAA’s response, please send them to Sherri Rowland
(email@example.com) by Monday, June 22, 2009.
O n April 6, the Governmental Accounting Standards Board
issued an invitation to comment on Pension Accounting and
Financial Reporting. This ITC addresses the following key issues:
On page 6 of the exposure draft, the ASB is seeking your
feedback on two “Issues for Consideration.” Those issues relate
to the deﬁnition of subsequent events and the reissuance of the
the process on which pension accounting and ﬁnancial reporting auditor’s report.
should focus; recognition of employers’ pension liabilities and Also on page 6 of the exposure draft, the ASB is seeking
expenses; alternative approaches to the measurement of unfunded your response to the four questions listed under the “Guide for
pension obligations; the use of actuarial methods; and reporting Respondents” that concern changes resulting from applying the
by employers in cost-sharing multiple-employer pension plans and clarity drafting conventions and converging with the ISA and their
reporting by pension plans. effect on the content of the SAS.
GASB has included a complete listing of the questions posed When preparing your comments, it would be helpful if you
in the ITC. They can be found on pages x-xii of the document. could address the “Issues for Consideration” as well as the four
The board is also interested in any other comments you may have questions under the “Guide for Respondents.”
relating to pension accounting and ﬁnancial reporting. The input Download the exposure draft and related supplementary materials
received on this document will help the board determine whether at www.aicpa.org/Professional+Resources/Accounting+and+Auditing/
modiﬁcations should be proposed to current pension standards. Audit+and+Attest+Standards/Exposure+Drafts+of+Proposed+
The ITC and a plain-language supplement to the ITC can be Statements/.
downloaded from the GASB’s website at www.gasb.org.
NASACT will be preparing an association position on this ITC.
In order to have your comments included in NASACT’s response, Mark Your Calendar!
please send them to Sherri Rowland (firstname.lastname@example.org) or Kim
O’Ryan (email@example.com) by Friday, July 3, 2009. NASACT CARA − April 28 (this will not be an ARRA update call)
NSAA Human Resources Info Sharing Group − April meeting
cancelled (next meeting, July 30)
NASC Transparency − May 5
AICPA SAS, Subsequent Events and Subsequently
NASC ERP − May 7
Discovered Facts NASC Multi-State Consortium − May 7
NASC State Government Payroll − May 13
T he Auditing Standards Board of the American Institute
of Certiﬁed Public Accountants has issued a proposed
statement on auditing standards, Subsequent Events
NASC Derivatives Implementation Network − May 19
NASC Travel and Purchase Card − May 20
NASC E-Commerce Info Sharing Group − May 27
and Subsequently Discovered Facts. This proposed SAS
supersedes SAS No. 1, AU section 530, AU section 560,
AU section 561, and SAS No. 58 (paragraphs .71-.73). This
proposed SAS represents the redrafting of the superseded
SASs to apply the ASB’s clarity drafting conventions and to
converge with International Standards on Auditing (ISAs).
New Look for Bill Tracker Unveiled
By Neal Hutchko, Policy Analyst
W ith the update of the new NASACT website in March,
the Washington Bill Tracker has a new look too. The
Bill Tracker provides up-to-the-minute information and links
on committee status, congressional actions, and sponsors of
critical issues, such as the repeal of the three percent withholding
requirement and grants reporting requirements. The Bill Tracker
has been populated with the new H.R. and S. numbers, as well as
bill language, as they have been introduced since the beginning
of the 111th Congress this past January. When new bills become
available through the General Printing Ofﬁce, they are added to the
Bill Tracker. Visit the new Bill Tracker today at www.nasact.org.
NASACT News − April 2009 page 11
News From Washington
Treasury Releases Build America governmental issuer in an amount equal to 35 percent of the
interest payment on the Build America Bonds. As an example, if
Bonds Guidance By Neal Hutchko, Policy Analyst a state or local government were to issue Build America Bonds at
a 10 percent taxable interest rate, the Treasury Department would
T he White House Intergovernmental Affairs Ofﬁce and the
Treasury Department recently hosted a conference call
regarding new guidance for the Build America Bonds section
make a payment directly to the government of 3.5 percent of that
interest, and the government’s net borrowing cost would thus be
only 6.5 percent on a bond that actually pays 10 percent interest.
of the American Recovery and Reinvestment Act. The bonds Treasury also issued guidance on the Qualiﬁed School
are meant to provide funding for state and local governments to Construction Bonds and Qualiﬁed Zone Academy Bonds. Based
pursue much needed capital projects while getting Americans on ARRA, these bond programs will have new and expanded
back to work. authorizations. For Qualiﬁed School Construction Bonds,
Under ARRA, these bonds are designed to provide new the guidance divides the $11 billion national bond volume
funding opportunities for state and local governments, at a authorization for 2009 among the states and the 100 largest local
substantially lower borrowing cost. Build America Bonds provide school districts based on federal school funding. For Qualiﬁed
a deeper federal subsidy to state and local governments (equal Zone Academy Bonds, the guidance divides the $1.4 billion bond
to 35 percent of the taxable borrowing cost) than traditional national bond volume authorizations for each of 2008 and 2009
tax-exempt bonds. These bonds are also targeted, as the among the states based on poverty levels.
guidance indicates that the bonds should fund capital project Both notices on the Build America Bonds guidance can
works on public buildings, courthouses, schools, transportation be found on NASACT’s website at www.nasact.org/nasact/
infrastructure, government hospitals, public safety facilities and committees/cara/downloads/recovery/recovery.cfm (you must
equipment, water and sewer projects, environmental projects, be logged into the site to view the information). The section also
energy projects, government housing projects and public utilities. provides the Internal Revenue Service’s forms (www.irs.gov/pub/
The bonds, which allow a new direct federal payment subsidy, irs-pdf/f8038cp.pdf ) and instructions (www.irs.gov/pub/irs-pdf/
are taxable bonds issued by state and local governments that will i8038cp.pdf ) regarding the Build America Bonds.
give them access to the conventional corporate debt markets. Questions about this topic may be directed to Neal Hutchko,
At the election of the state and local governments, the Treasury NASACT’s policy analyst, at firstname.lastname@example.org or (202) 624-
Department will make a direct payment to the state or local 5451.
Moody’s Gives Negative Outlook to Committee Chairman Barney Frank issued a statement saying:
All Local Governments “I am troubled by the action of Moody’s Investors
Service to issue a negative outlook across the board on
By Neal Hutchko, Policy Analyst
America’s municipalities, which could raise the interest
rates on cities and towns, making it more expensive
I n mid-April, Moody’s Investors Service assigned local
governments a negative outlook, the ﬁrst time the credit
rating company gave such an assessment to the overall group
to borrow funds for infrastructure improvements.
Today’s action could result in an unjustiﬁable burden on
local governments, and this may have the unintended
of debt issuers. According to the report, the localities most at
consequence of undercutting the simulative effect of the
risk of having their bond ratings downgraded will be those with
economic recovery package. Interest rates on full faith and
industries such as real estate, auto manufacturing or ﬁnancial
credit general obligation bonds are already too high and
services, or those that rely on falling revenue sources such as
there is no demonstrated record of default. The House
sales and real-estate transfer taxes; volatile variable-rate debt;
Financial Services Committee will be holding a hearing in
and a high proportion of ﬁxed or legally mandated costs.
early May to explore the unfair treatment of full faith and
The report’s assessment did not sit well with members of
credit general obligation bonds.”
Congress or local government associations. House Financial Services
Sign Up Today for a NASACT Training Seminar!
N ASACT members can take advantage of many specialized training seminars. Sessions are scheduled by request
and may be tailored to meet speciﬁc needs within ofﬁces of state auditors, state comptrollers and state treasurers.
Experienced consultants conduct one- and two-day sessions and can cover a range of topics. For more information
about NASACT’s training seminars program or to see a complete list of course titles, contact Fay Kurkjy at NASACT,
(859) 276-1147 or email@example.com.
NASACT News − April 2009 page 12
Register Now for NSAA 2009 in The Conference Hotel
Savannah, Georgia This year’s annual conference will be held at the Hyatt
Regency Savannah. Uniquely situated on the River Front Plaza,
By Donna Maloy, Conference Manager the Hyatt Regency offers unequaled access to the historic district,
shops, entertainment and business centers. The Hyatt Regency
G eorgia State
is offering a special rate of $175/night plus applicable taxes. To
reserve a room, call (912) 238-1234 and ask for the National
State Auditors Association annual conference rate. This rate will
be available until the cutoff date of May 15, 2009.
Hinton invites you
to attend the 2009 The Conference Program
NSAA Annual The conference Program Committee is working on a slate of
Conference, to be topics that will cover issues facing state auditors and their staffs
held in Savannah, during these trying economic times. The complete agenda will be
Georgia, June 17–19, 2009. posted to NASACT’s website as it becomes available.
Savannah is a city where, whoever you are or wherever you Online registration is now open. Detailed information and
are from, you will be welcomed with true Southern hospitality. registration can be found on NASACT’s website at www.nasact.
Hip and historic, robust and reﬁned, Savannah is where you will org. Questions may be addressed to Donna Maloy at dmaloy@
ﬁnd amazing architecture and rich history–along with global nasact.org or (859) 276-1147.
sophistication, funky nightlife and fabulous food.
NASACT’s Next Audio Conference: Join us for this timely training event to learn about the ﬁnal re-
quirements of GASB’s most recent standard. Dean Mead, GASB
GASB No. 54 project manager, will discuss the key requirements of GASB
Wednesday, April 29, 2009, 2:00 p.m. EDT No.54. He will be joined by Robert Attmore, chair of GASB, or
David Bean, GASB director of research, who will provide com-
ments during the audio conference and be available for questions
N ASACT, in conjunction with the Association of Govern-
ment Accountants and the Association of Local Government
Auditors, is pleased to announce the latest in its series of audio
during the last 25 minutes of the event.
This audio conference offers something for all government au-
conferences addressing timely issues in government auditing and ditors, ﬁnancial statement preparers, and ﬁnancial managers who
ﬁnancial management. want to know more about GASB No. 54. Please share this oppor-
The audio conference will address key requirements of GASB tunity with others in your government interested in this topic.
Statement No. 54, Fund Balance Reporting and Governmental
Fund Type Deﬁnitions. Issued in March 2009, this statement will General Information
enhance the usefulness of fund balance information by providing
clearer fund balance classiﬁcations that can be more consistently Date: Wednesday, April 29, 2009
applied, and by clarifying the existing governmental fund type Time: 2:00 – 3:50 p.m. ET
deﬁnitions. This statement also establishes fund balance classi- Speakers Dean Mead, Research Manager, GASB
ﬁcations that comprise a hierarchy based primarily on the extent Robert H. Attmore, Chair, GASB
to which a government is bound to observe constraints imposed David R. Bean, Director of Research, GASB
upon the use of the resources reported in governmental funds. CPE: Two Credits
The initial distinction that is made in reporting fund balance Cost: $249.00 per site (unlimited attendance) if you
information is identifying amounts that are considered nonspend- register on or before Friday, April 24, 2009, and
able, such as fund balance associated with inventories. The $299.00 thereafter.
statement also provides for additional classiﬁcation as restricted,
committed, assigned, and unassigned based on the relative Register
strength of the constraints that control how speciﬁc amounts can
be spent. Governments are required to disclose information about Register online and ﬁnd additional information at www.nasact.
the processes through which constraints are imposed on amounts org/conferences_training/events.cfm. Online registration will be
in the committed and assigned classiﬁcations. open until 4:30 p.m. EDT on Monday, April 27, 2009. Questions
Deﬁnitions of these terms and practical guidance in making may be directed to (859) 276-1147.
the distinctions will be provided during the audio conference.
NASACT News − April 2009 page 13
Registration is Now Open for the the cut-off date of July 14, 2009. After this date, rooms will be
offered on a space- and rate-available basis only. To book
NASACT Annual Conference! your room, call (313) 441-2000 and reference the NASACT
Annual Conference. Visit The Ritz Carlton Dearborn website
P lease join us in
the Great Lakes
State of Michigan
for additional information: www.ritzcarlton.com/en/Properties/
on August 15-19, Social Events
2009, to celebrate
the 94th NASACT Social events for all conference attendees will begin on
Annual Conference! Saturday with a golf tournament and a hospitality suite open
Automobile house where attendees will be able to grab a bite to eat and relax
enthusiasts, history before heading out for dinner or retiring to their rooms. Sunday
buffs and beach bums begins with the annual 5K fun run/walk followed by brunch and
alike can all ﬁnd the day will end with a reception at the Henry Ford Museum.
something to enjoy in After Monday’s sessions, all attendees will be welcome to attend
this great state. a reception at Seldom Blues, a jazz supper club located on the
This year’s annual Detroit River front. Tuesday will conclude with the State Night
conference will be Dinner in the Ritz Carlton’s Ballroom.
held at The Ritz Carlton Hotel in Dearborn, Michigan. Dearborn
offers an inviting, comfortable and historic ambiance while Golf Tournament
providing all of the amenities of “big city” living. Located just
12 miles from downtown Detroit, guests will ﬁnd their short The NASACT annual golf tournament will be held at
commute from Detroit Metropolitan Airport a pleasant experience Shepherd’s Hollow Golf Club located in Clarkston, Michigan.
as they take in Dearborn’s landscape of tree-lined neighborhoods The course is located just 30 miles north of Detroit on 350
and parks, green beltways and ﬁelds of sunﬂowers. acres of rolling woodlands. The cathedral of trees that adorn
this course provide a park-like retreat for any golfer. Enjoy the
Conference Program Northern Michigan ambiance as you capture picturesque views
and nature’s wildlife around every corner. Shepherd’s Hollow
NASACT’s annual conference Program Committee has is ranked by Golf Digest as the thirty-seventh best public golf
surveyed the members, and based on the survey results, has course in the country. Visit Shepherd’s Hollow Golf Club website
begun developing the technical program. A draft program will be for additional information: www.shepherdshollow.com.
posted soon. The program will feature many “of-the-moment”
issues such as Recovery Act implementation, issues surrounding
the three percent withholding requirement, and the economic Guest and Children’s Program
Activities planned for registered guests and children include
visits to Greenﬁeld Village, the Henry Ford Estate, and the Ford
Special Roundtable Event Rouge Factory.
The conference will be followed on Wednesday, August 19,
by a special half-day roundtable that will focus on the American Registration Fees
Recovery and Reinvestment Act and the issues involved with
implementation. Representatives from the U.S. Ofﬁce of Registration fees for the 2008 NASACT Annual Conference
Management and Budget and the U.S. Governmental Accounting are as follows:
Ofﬁce will be invited to participate. All members are encouraged
to stay and attend this timely, relevant information sharing Members and staff: $600
opportunity. Other governmental personnel: $725
Non-governmental personnel: $1,000
Conference Hotel Guests (age 18 and over): $200
Teens (age 13-17): $75
The Ritz Carlton Hotel is located in Fairlane, one of Children (age 6-12): $50
Dearborn’s most prestigious addresses. Minutes away from
beloved historic, cultural and recreational treasures, the hotel will Registration and complete information about the conference
be the ideal location for NASACT’s annual conference. is now posted to NASACT’s website under Upcoming Events at
The negotiated conference rate for this year’s conference is www.nasact.org. Questions about the conference may be directed
$139/night plus applicable taxes. This offer is guaranteed until to Donna Maloy at firstname.lastname@example.org or (859) 276-1147.
NASACT News − April 2009 page 14
News From Around the Nation
GAO Issues Single Audit Report
T he U.S. Government Accountability Ofﬁce has released a report entitled Single Audit: Opportunities Exist to Improve the
Single Audit Process and Oversight. The report can be found on GAO’s website at www.gao.gov/cgi-bin/getrpt?GAO-09-
307R. This report identiﬁes further actions needed to improve federal oversight and accountability for federal grant funds. GAO’s
recommendations can be found at www.gao.gov/products/GAO-09-307R#recommendations.
GASB Issues Statement No. 55 on Auditing Standards No. 69, The Meaning of Present Fairly
in Conformity With Generally Accepted Accounting Principles,
rather than in the authoritative literature of the GASB. Statement
T he Governmental Accounting Standards Board has issued
GASB Statement No. 55, The Hierarchy of Generally
Accepted Accounting Principles for State and Local Governments.
55 moves relevant portions of that SAS to the GASB literature
without substantive changes. Because the GASB chose not to
The statement incorporates the hierarchy of generally accepted reconsider the guidance provided in the SAS, the order of priority
accounting principles (GAAP) for state and local governments into for accounting and ﬁnancial reporting guidance will remain
the GASB’s authoritative literature. It is intended to make it easier unchanged in practice.
for preparers of state and local government ﬁnancial statements “The board concluded that the GAAP hierarchy should
to identify and apply the “GAAP hierarchy,” which consists of reside in the accounting literature established by the GASB,”
sources of accounting principles used in the preparation of ﬁnancial said Robert Attmore, GASB chairman. “This statement will
statements so that they are presented in conformity with GAAP and accomplish that objective while making it easier for preparers
the framework for selecting those principles. of state and local government ﬁnancial statements to locate and
The statement will improve ﬁnancial reporting by contributing apply important guidance that they previously had to look to the
to the GASB’s efforts to codify all GAAP for state and local auditing literature to ﬁnd.”
governments so that they derive from a single source. Statement 55 is effective immediately. To obtain a copy of the
Prior to the statement, the GAAP hierarchy was set forth in the statement, call the GASB Order Department at (800) 748-0659 or
American Institute of Certiﬁed Public Accountants’ Statement log on to www.gasb.org for more information.
MSRB Plans Continuing Disclosure statements and notices of material events. Beginning July 1,
all submissions by municipal issuers of continuing disclosures
Pilot Program on EMMA will be made electronically to the MSRB instead of to multiple
information repositories, which sell the information to investors.
The MSRB also will post the documents on its EMMA website for
T he Municipal Securities Rulemaking Board (MSRB) recently
requested permission from the Securities and Exchange
Commission to establish a pilot phase for submission and
public viewing, 24-7.
Lanza said that, once the pilot is operational, issuers who
dissemination of continuing disclosure documents and related previously have submitted material event notices to the MSRB
information from municipal bond issuers. If approved, the MSRB under its prior submission system to meet their continuing
will establish a short-term utility on its Electronic Municipal Market disclosure obligations would be able to make such submissions
Access (EMMA) system to accept voluntary electronic submissions electronically to the MSRB’s pilot continuing disclosure system
of continuing disclosures and make them publicly available on the in fulﬁllment of such disclosure obligations. However the MSRB
EMMA website. The MSRB has requested a pilot start date on takes no position on whether pilot submissions would satisfy any
or around May 11, 2009, with an end date of July 1, 2009, when other provisions of existing continuing disclosure undertakings.
EMMA’s permanent continuing disclosure system begins. Today’s announcement follows the MSRB’s request for
“This pilot phase will give municipal bond issuers and investors SEC permission to make EMMA a permanent, all-electronic
an excellent preview of how EMMA will collect and disseminate disclosure system. If approved, EMMA, which has been operating
continuing disclosure documents,” said Ernesto Lanza, MSRB’s for nearly a year on a pilot basis for primary market documents,
general counsel. “When fully operational, the MSRB’s continuing also would become the ofﬁcial public distribution channel for
disclosure system will promote widespread access to disclosure municipal primary market disclosure documents and transparency
documents through the EMMA website for free and will for the information. The MSRB has requested establishing the permanent
ﬁrst time place individual investors on the same footing as industry EMMA system on or around May 11, 2009.
professionals.” The MSRB also this week published speciﬁcations for EMMA’s
Continuing disclosure includes information such as annual primary market automated submission interface and for EMMA’s
ﬁnancial and operating information about issuers, audited ﬁnancial primary market subscription service.
NASACT News − April 2009 page 15
Fraud News to Use Grant Fraud Uncovered
Provided courtesy of the Oregon State Controller’s Ofﬁce
Grant dollars are susceptible to several forms of ﬁnancial
abuse. Some of the most common forms are embezzlement,
Contributing Factors to Fraud theft or bribery concerning programs receiving grant funds,
false statements, false claims, and mail/wire fraud. Some of
I nstances of fraud within government organizations, on
average, have about a 24-month duration and lead to
approximately $100,000 in losses. In general, the most
the more speciﬁc common scenarios are charging personal
expenses as business expenses against a grant, charging
for costs which have not been incurred or are not attributable
commonly cited contributor to fraud is an overall lack of to a grant, and charging for inﬂated labor costs or hours,
internal controls, followed by a lack of management review or categories of labor which have not been incurred. There
and an override of existing controls. Internal controls are a are several areas of grant programs that are particularly
key component of mitigating, detecting, and limiting fraud. susceptible to abuse. Some of these include processes that
Internal audits, surprise audits, and management review involve large expenditures or appropriation of cash, sub-
of internal controls are thought to be three of the most recipient pass through, documentation for and review of
common controls that help in the ﬁght against fraud. payment, management review prior to payment, and review
of grant outcomes.
The American Recovery and Reinvestment Grant fraud is most commonly committed by grant
Act of 2009 recipients (company ofﬁcers, business partners, board
members, and managers), employees working on or
As many of you are probably aware, the recent passage within the grant process (bookkeepers, ﬁnancial staff,
of the Recovery Act could lead to an increased potential and other involved employees), and individuals engaged
for fraud, waste and abuse. It is important to ensure with the grant recipient (contractors, subcontractors
that your organization has considered the potential for and consultants). There are several red ﬂags that can
misuse and taken steps to ensure there are adequate potentially be a warning of fraud. Some of these include
fraud prevention controls in place. In grant programs it the appearance of conﬂicts of interest, unaccountable
is especially important to consider preventative controls. funds, lack of segregation of duties, and altered,
Once grant dollars have been disbursed fraudulently or inadequate or missing documentation.
improperly, the government is likely to recover only a few
pennies on the dollar. In the context of grant programs, What Can You Do?
preventative controls are those mechanisms that keep
ineligible individuals and questionable organizations Ensure that your organization has a handle on basic
from gaining access to grant funds in the ﬁrst place. The internal controls: there are appropriate documentation,
Government Accountability Ofﬁce recommends that some approvals and authorizations; transactions are accurately
of the following controls be considered: validating data recorded and appropriately reported; adequate segregation
used in decision making against other government or third of duties exists; assets are appropriately safeguarded;
party sources; whenever possible, inspecting information and accountability can be traced within the organization.
to conﬁrm its validity prior to payment; conducting system It is also important to be aware of some of the areas of
edit checks to identify problems before payments are potential risk and weaknesses within the organization.
made; and training staff on fraud awareness. Some common areas are providing insufﬁcient resources
ARRA provides for extraordinary levels of transparency, for segregation of duties, management override of
and as such there will be a great deal of scrutiny on the controls, difﬁculty obtaining qualiﬁed accounting personnel,
way funds are expended. It is increasingly important to and controlling information technology. Operations can
ensure that your programs are operating effectively and also be strengthened by staying alert to possibility of fraud,
efﬁciently. For more information about ARRA and its monitoring operational activities, considering audit ﬁndings,
progress, visit www.recovery.gov. and staying aware of internal control weaknesses.
Fraud Facts Newsletter − Free for Members!
W ould you like your staff to know more about fraud facts and repercussions? The Oregon State Controller’s Ofﬁce publishes a monthly
newsletter called “First Friday Fraud Facts” that aims to promote awareness of the potential for fraud in the public sector and the costs and
ramiﬁcations. Now you can use this newsletter to promote fraud issues within your ofﬁce. All you need to do is change a few items in the ﬁle and
it will be print-ready for distribution to your ofﬁce or division.
The ﬁle is formatted in Microsoft Publisher. If you would like to receive a copy of the newsletter for distribution to your staff, please email your
request to Glenda Johnson at email@example.com.
NASACT News − April 2009 page 16
NASC 2009 Annual Conference Recap
B elow is a complete listing of sessions and speakers from the
recent NASC annual conference. To download handouts or
PowerPoint presentations from the conference, visit NASACT’s
Web site at www.nasact.org/conferences_training/nasc/annual-
conference.cfm. Presentations from conferences from the past
several years may also be found at this web address.
DON’T LET A GOOD FINANCIAL CRISIS GO TO WASTE What Is the Value of Your Government Debt? Using Analytics to
State of the States
Caroline Rapking, Vice President, CGI
Scott Pattison, Executive Director, National Association of State Ted London, Senior Executive Consultant, CGI
Matt Bailey, Senior Manager, Deloitte Consulting, LLP
TOWARD IMPROVED MANAGEMENT IN GOVERNMENT
Making Changes – Experiences to Date in Massachusetts’
Executive Ofﬁce of Health and Human Services’ Statewide Shared Services
Mark Howard, Management Consulting Lead, U.S. State/Local William Greer, Vice President, Government and Higher
Government and Education, Accenture Education, SAP Public Services
Terry Dougherty, Assistant Secretary, Administration and
Finance, Executive Ofﬁce of Health and Human Services (MA) Virginia’s Approach to Performance Leadership and
FEDERAL IMPACTS ON THE STATES Jane Kusiak, Executive Director, Council on Virginia’s Future (VA)
Accountability. Transparency. Are You Prepared to Meet the MANAGING SECURITY
Statutory Requirements of the American Recovery and
Reinvestment Act of 2009? Peak Performance Using Governance, Risk and Compliance
Kathie Schwerdtfeger, Partner, Deloitte & Touche LLP
Sarah Sheehan, Manager, Deloitte Consulting Keith Johnson, Director, State and Local Government, Oracle
The MSRB’s Electronic Municipal Market Access (EMMA)
System: Real-Time Disclosure in the Municipal Market Building the Internal Audit Function
Jennifer Galloway, Chief Communications Ofﬁcer Kathy Sheppard, Deputy Comptroller (MA)
Justin Pica, Director, Uniform Practice Policy, Municipal
Securities Rulemaking Board LOOKING TO THE FUTURE
Vision Becomes Reality: Using XBRL for Grant Reporting
GASB UPDATE AND INSIGHTS INTO TWO NEW STATEMENTS
Kim Wallin, State Controller (NV) and member of NASC’s
GASB Update Executive Committee
Robert Attmore, Chair, Governmental Accounting Standards A Plan for an Internal Control Monitoring Program for States
Paul Carlson, State Accounting Administrator (NE) and Immediate
David Bean, Director of Research and Technical Services,
Past President of NASC
EXPANDING TRANSPARENCY AND ACCOUNTABILITY
Implementation of GASB Statement No. 51
Greg Driscoll, Partner, KPMG
John Reidhead, Director, Division of Finance (UT)
GASB No. 53, Accounting and Financial Reporting for
Derivative Instruments Transparency at Work in Texas
Graylin Smith, Managing Partner, SB & Company, LLC Tom Mathey, Assistant Director, Fiscal Management Division (TX)
Balancing Transparency and Privacy
REAPING THE BENEFITS OF INFORMATION TECHNOLOGY
April Gunn, Data Analysis Director, Ofﬁce of the Auditor of Public
The Changing Face of Government
Leveraging Transparency to Drive Change Within State
Don Edmiston, Senior Government Advisor, BearingPoint, Inc. Government
Robert Powell, Senior Advisor-Government Policy, Cansler Bryan DeGraw, Manager, The Hackett Group
Fuquay Solutions, Inc. Sheresa Norton, Senior Advisor, The Hackett Group
NASACT News − April 2009 page 17
Calendar of Events Register for these events at www.nasact.org.
April 27-28 Tennessee Training Seminar, Chattanooga, TN NASACT News
April 29 Audio Conference: GASB No. 54, Fund Balance Reporting and
Governmental Fund Type Definitions APRIL 2009
May 4-5 Tennessee Training Seminar, Nashville, TN
R. Kinney Poynter
May 11-12 Tennessee Training Seminar, Morristown, TN Executive Director
May 18-19 Tennessee Training Seminar, Jackson, TN
June 17-19 NSAA Annual Conference, Savannah, GA Cornelia Chebinou
Washington Ofﬁce Director
August 15-19 NASACT Annual Conference, Dearborn, MI
September 29-October 2 NSAA IT Workshop and Conference, Harrisburg, PA Glenda Johnson
National Association of State
March 24-26 NASC Annual Conference, Des Moines, IA Auditors, Comptrollers
June 15-17 NSAA Annual Conference, Carefree, AZ and Treasurers
August 7-11 NASACT Annual Conference, Charleston, WV
449 Lewis Hargett Circle, Suite 290
Lexington, KY 40503-3590
P (859) 276-1147, F (859) 278-0507
NASACT Seeks a Host State for the 2011 Washington Ofﬁce
Annual Conference 444 N. Capitol Street, NW, Suite 234
Washington, DC 20001
by Donna Maloy, Conference Manager P (202) 624-5451, F (202) 624-5473
N ASACT’s annual conference is held each August. NASACT’s president has the
right of ﬁrst refusal to host the conference during his or her year of presidency.
Should the president choose not to host in his/her state, the opportunity will be made
available to the general membership for bid. As such, NASACT is currently seeking a NASACT Officers
host state for the 2011 conference.
By agreeing to host the NASACT annual conference, your state will take on Thomas H. McTavish
responsibility involving commitments of time, energy, resources and dollars. By President
the same token, agreeing to share the unique “ﬂavors” of your state with NASACT Auditor General, Michigan
conference delegates adds your state to a prestigious group−one that has facilitated the
planning of many memorable NASACT conferences in the past. Hosting the NASACT Glen B. Gainer, III
First Vice President
annual conference can be a very rewarding experience!
State Auditor, West Virginia
If you are interested in ﬁnding out more about hosting the conference, please do not
hesitate to contact Donna Maloy at firstname.lastname@example.org or (859) 276-1147. Nancy K. Kopp
Second Vice President
State Treasurer, Maryland
States that Barbara J. Hinton
NASACT has Secretary
not visited Legislative Post Auditor, Kansas
for an annual
Martin J. Benison
Delaware Comptroller, Massachusetts
Kansas The next issue of NASACT News
Maine will be published in May 2009.
To submit articles, photos or ideas,
North Dakota contact Glenda Johnson by May 15
Vermont at email@example.com or
Wisconsin phone at (859) 276-1147.
NASACT News − April 2009 page 18
NASC Annual Conference Recap
NASC President Kim Garnero (AK) presents a President’s Merideth Hackney (ID) receives a Distinguished Service Award
Award to David McDermott (CO). from NASC President Kim Garnero (AK) in recognition of her
work with NASC’s Multi-State Consortium on Internal Control.
Ed Ross (KY), the longest-serving state comptroller in NASC, Ed Ross (KY) presents a President’s Plaque to Kim Garnero
and outgoing NASC president, Kim Garnero (AK) at the busi- (AK) in recognition of her year of service as NASC’s president
ness meeting. in 2008-09.
NASACT President Tom McTavish (MI) pulls a name out of the NASC President Kim Garnero (AK) and NASACT President
hat for a free registration to the 2009 NASACT Annual Confer- Tom McTavish (MI) chat after the conference banquet.
ence. John Radford (OR) was the lucky winner.
NASACT News − April 2009 page 19
NASC Annual Conference Recap
The NASC Committee on Accounting and Financial Reporting David McDermott (CO), far right, co-chairs the Committee on
met on the day before the conference. Accounting and Financial Reporting.
Peter Franchot (MD), host of the conference, welcomes The Federal/State Roundtable was one of the most popular
President Kim Garnero (AK) and all the attendees during the sessions of the conference, where, among other topics, federal
conference’s opening remarks. reps focused on Recovery Act implementation issues.
NASC Past President Paul Carlson (NE) and Executive NASC Executive Committee member Brenda Bolander (OK)
Committee member Kim Wallin (NV) sat at the headtable and Secretary/Treasurer Clark Partridge also sat at the head
during the conference banquet. table during the banquet.
NASACT News − April 2009 page 20
NASC Annual Conference Recap
Pat O’Connor, NASC association director, receives a memory Pat receives a standing ovation from the crowd in recognition
book, presented by President Kim Garnero (far right) on behalf of her years of service to the association. Pat will retire from
of the association. NASACT at the end of April with nearly 19 years of service.
Harvey Eckert (former comptroller, PA, and lifetime member of NASC Association Director Pat O’Connor, NASACT Executive
NASACT), NASACT Executive Director Kinney Poynter, and Director Kinney Poynter and NASC President Kim Garnero
NASACT President Tom McTavish (MI) at the banquet. (AK) at the conference banquet.
Conference host Peter Franchot (MD) arranged a tour of Bill Kilmartin (former comptroller, MA, far left) and Harvey
Maryland’s State House for conference attendees on Thursday Eckert (former comptroller, PA, center) re-visit memories of
afternoon. receiving the prestigious Louis L. Goldstein Award.
NASACT News − April 2009 page 21