U T System GASB 87Planon Implementation Dana Malone

U. T. System GASB 87/Planon Implementation Dana Malone and Marili Cavazos

GASB Statement No. 87, Leases • First begin considering software that you will use • We ruled out People. Soft and other software solutions with no lessor side or those that would not be ready for our timeframe • We reviewed AMT, UGAAP, CCH and Planon in the RFP process because they were the only ones who responded to our RFP. • Downside of implementing software early is less options available 2

GASB Statement No. 87, Leases • Step #1 is identifying your population • We were fortunate enough at System Administration to have Content Navigator where all non-real estate contracts are stored • System Administration was also fortunate for all real estate contracts to go through Real Estate Office • Unfortunately, System Administration has lots of lessor leases • Institutions had a mixed bag of central and decentralized leases, which makes it harder to identify your population 3

GASB Statement No. 87, Leases • Once we identified our population, we broke it down into the following buckets – – – Commodities Construction Hotel Event Insurance Services (look for embedded leases) Leased equipment Leased space MOUs Online Data Service Software Cloud-Based Software PC Server Based 4

GASB Statement No. 87, Leases • UT System primarily has – – – Copiers PC’s Vehicles Leased space – lessee and lessor Ground Leases • Excluded leases due to following reasons – Month to Month/Year to Year leases - paragraph 12 cancellable leases – Leases based solely on usage – paragraph 22 based on usage excluded, example parking where amount changes based on usage (disclosure only) – Short-term leases – paragraph 16 – MOUs with no term – indefinite – Interdepartmental leases 5

GASB Statement No. 87, Leases • Issues we identified with our leases – Embedded leases – example, buy coffee supplies get coffee machines free and buy sandwiches get vending cooler free – Parking revenues where number of staff and receipt varies monthly – Rental of copiers includes card reader software with separate software contract – included copiers, but not software due to exclusion 6

GASB Statement No. 87, Leases • We created program codes (AKA chartfields) for all lease payments to help us distinguish between short-term and long-term leases • We query that information to make sure we had our entire population to validate that we had not missed any leases • This is also necessary to validate the lease payments being removed in the journal entries 7

GASB Statement No. 87, Leases • While we have implemented many GASB Statements over the years, we have not implemented many software solutions, therefore we engaged a Project Manager that has worked on several software implementations to help us • This proved invaluable to keeping us and all the institutions on track – creation of dashboards • She also was very helpful in translating the IT lingo when dealing with software vendor 8

GASB Statement No. 87, Leases • • • Once a software is picked, you must decide how contracts will be entered Rather than enter each individual lease, we entered each lease including all assets on each schedule with same start and end date This was done for ease, as well as vendors often charge based on volume The Comptroller’s Office allows computing NPV based on individual leases or schedules Obviously entering individual leases will lead to more immaterial leases We also made the decision early on not to replicate the GASB 87 calculations into the People. Soft Asset Management System 9

GASB Statement No. 87, Leases • Since we are audited, we had to prove to the auditors that our immaterial leases were in fact immaterial • We had Planon compute the NPV for each lease and flag any that fell under $100 K as immaterial • Accounting entries are only produced for material leases, but we can run reports on immaterial leases for auditors 10

GASB Statement No. 87, Leases • We close leases monthly in Planon to generate journal entries that interface with People. Soft • Now that GASB moved the effective date of GASB 87, we post and unpost monthly until next fiscal year • Don’t underestimate the time needed to be sure the interfaces work, because that took more time than anticipated 11

GASB Statement No. 87, Leases • We benefitted by implementing the software early and allowing more time to practice lease modifications, applying options, and terminations • What was unanticipated was the amount time required for system maintenance (upgrades and refreshes). For other software like People. Soft, the IT department handles the maintenance. Our PM is on contract to handle this for us. This will be an issue with any software. • We also did not anticipate how much of Marili’s time would be required going forward for this GASB Statement. 12

Questions? 13