FY2016 CCDOA Financial Report as of 6302016.pdf - page 62

Notes to Financial Statements
For the Fiscal Years Ended June 30, 2016 and 2015
(o) Legal Defense Costs
The Department does not accrue for estimated future legal costs and related defense costs, if any, to
be incurred in connection with outstanding or threatened litigation and other disputed matters;
instead, it records these costs as period costs when the related services are rendered.
(p) Use of Estimates
The preparation of financial statements in accordance with U.S. Generally Accepted Accounting
Principles requires the Department to make estimates and assumptions that affect certain reported
amounts and disclosures. Accordingly, actual results could differ from these estimates and assumptions.
(q) Accounting Changes and Restatements
GASB 72 is effective for fiscal years beginning after June 15, 2015, and is retroactive for all fiscal periods
presented. The Department maintains various instruments impacted by GASB 72. Investment
instruments held with the Clark County Investment Pool and Bank of New York Mellon ("Trustee") have
been consistently presented at fair value prior to the implementation of GASB 72. The Department
maintains derivative instruments in the form of interest rate swaps. Under GASB 53, these derivative
instruments had a value equal to the mark-to-market value. The mark-to-market value did not
incorporate the risk adjusted valuation which would be necessary to convert the derivative instruments
to fair value under GASB 72. As of June 30, 2016, the derivative instruments for FY 2016 are stated at fair
value as required under GASB 72. However, the necessary information required to restate the
derivative instruments as of June 30, 2015, to fair value under GASB 72 was not available; therefore the
derivative instruments for FY 2015 were stated at mark-to-market value. The Department did not restate
the beginning net position in the Statements of Revenues, Expenses, and Changes in Net Position as it
relates to GASB 72 for either FY 2016 or FY 2015.
As a result of implementing GASB 68 and GASB Statement No. 71,
Pension Transition for Contributions
Made Subsequent to the Measurement Date
("GASB 71"), the Department restated for FY 2015 the
beginning net position in the Statements of Revenues, Expenses, and Changes in Net Position,
effectively reducing the net position as of July 1, 2014, by $144.7 million. The reduction in net position
resulted from establishing the net pension liability of the Department and the deferral of FY 2014
pension contributions paid to the State of Nevada Public Employees’ Retirement System. Refer to Note
5, "Retirement Plans," for further details.
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