Spring 2006 issue of Horizons

and decreases in other long-term liabilities, such as accrued compensated absences, instead of grossing up the increas- es and decreases as required. Another debt-related reporting mistake is the combining of long-term and short-term debt disclosures. These should be reported separately. • A common error is the failure to limit investment concentra- tion risk disclosure to debt issues involving a single user and defining risk rather than describing policies. GASB Statement No. 40, Deposit and Investment Risk Disclosures (GASB40), requires the disclosure of any concentration of credit risk as it relates to investments in debt securities. Disclosures are often erroneously made for issuers of positions in mutual funds and investment pools. For this disclosure purpose, the term “issuer” does not relate to investment company man- agers or pool sponsors in the case of external investments pools, mutual funds or other similar pooling arrangements. It should be understood as referring to the underlying invest- ments themselves, however. Based on this definition of “issuer,” the notes must disclose concentration risk, which is defined as positions of 5 percent or more in the securities of a single issuer. The concentration disclosures do not have to be applied to U.S. government obligations and obligations explicitly guaranteed by the U.S. government. Perhaps the most important aspect of GASB 40 is the disclo- sure of investment policies as they relate to the various types of risks being presented. Many financial statements define the risk as opposed to describing the policies in place that address the risks.

R UBIN B ROWN JOINS THE AICPAG OVERNMENTAL A UDIT Q UALITY C ENTER

As just one example of our commitment to quality, RubinBrown has joined the AICPA Governmental Audit Quality Center. The Center is a firm-based voluntary mem- bership center designed to help CPAs meet the challenges of performing quality audits in the unique and complex public sector industry. The primary purpose of the center is to pro- mote the importance of quality governmental audits and the value of such audits to purchasers of governmental audit services. Our participation in organizations such as the Governmental Audit Quality Center helps keep us abreast of issues and trends affecting governmental organizations. In addition, the Center has strict membership guidelines in place to ensure member firms are of the highest quality and have an avenue to maintain that quality. For more information on the Governmental Audit Quality Center, visit: http://gaqc.aicpa.org/. Questions? Contact either Jeff Winter, Partner-in-Charge, Public Sector Services Group 314-290-3408 jeff.winter@rubinbrown.com or Rodney Rice, Partner, Assurance Services Group 314-290-3403 rodney.rice@rubinbrown.com

43 • spring 2006 issue