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<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial",sans-serif">Hello ACFR Contacts,<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial",sans-serif"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial",sans-serif">As part of the implementation efforts of GASB 87 the SARS unit has been reviewing where agencies have been recording lease entries and two issues have arisen that I’d like to
address with this email. Both issues pertain to the entries that are necessary at the commencement of a lease as shown in Exhibit C of the draft OAM on Leases,
<a href="https://www.oregon.gov/das/Financial/Acctng/Documents/15.60.30%20draft.pdf">
15.60.30</a><o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial",sans-serif"><o:p> </o:p></span></p>
<p class="MsoNormal"><img border="0" width="1262" height="226" style="width:13.1458in;height:2.3541in" id="Picture_x0020_1" src="cid:image001.png@01D89CD9.9A3D6220"><span style="font-size:10.0pt;font-family:"Arial",sans-serif"><o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial",sans-serif"><o:p> </o:p></span></p>
<ol style="margin-top:0in" start="1" type="1">
<li class="MsoListParagraph" style="margin-left:0in;mso-list:l0 level1 lfo3"><b><u><span style="font-size:10.0pt;font-family:"Arial",sans-serif">Lease Payments occurring in GAAP Fund 0001</span></u></b><span style="font-size:10.0pt;font-family:"Arial",sans-serif">
– I understand that most agencies that are making their lease payments out of GAAP Fund 0001 have found that they are unable to record Step 1 in that GAAP Fund because the appropriation does not allow for a revenue item. If this occurs, enter Steps 1 and 2
in GAAP Fund 8500 using T-Codes 908R and 909R as shown above. SARS will make an ACFR adjustment to record the revenue and expenditure in the ACFR General Fund. I conferred with SFMS and for any leases initiated in
<b><u>FY 2023 and beyond</u></b> for which the lease payments are made in GAAP Fund 0001, please submit a request to SFMS to create a D23 Fund that rolls up to GAAP Fund 0054 and record Steps 1 and 2 in that D23 Fund. The draft OAM will be revised to provide
greater clarity around this issue.<o:p></o:p></span></li></ol>
<p class="MsoListParagraph"><span style="font-size:10.0pt;font-family:"Arial",sans-serif"><o:p> </o:p></span></p>
<ol style="margin-top:0in" start="2" type="1">
<li class="MsoListParagraph" style="margin-left:0in;mso-list:l0 level1 lfo3"><b><u><span style="font-size:10.0pt;font-family:"Arial",sans-serif">Steps 1 and 2 being recorded in GAAP Fund 8500</span></u></b><span style="font-size:10.0pt;font-family:"Arial",sans-serif">
– The only time Steps 1 and 2 should occur in GAAP Fund 8500 is due to the scenario described above. If lease payments are being made from any fund other than GAAP Fund 0001, Steps 1 and 2 should be recorded in that GAAP Fund making the payments. Since the
GAAP Fund that makes the lease payments can be a fund that follows the economic resources measurement focus (i.e., proprietary and fiduciary funds) or one that follows the current financial resources measurement focus (i.e., governmental fund), both steps
have an “X” in the respective measurement focus column. However, paragraph 36 of GASB 87 states that governmental funds report the lease proceeds other financing source and the capital outlay expenditure in the year a lease is initiated. Therefore, agencies
that makes payments on leases in a governmental fund need to record Steps 1 and 2 in that governmental fund, not GAAP Fund 8500.
<o:p></o:p></span></li></ol>
<p class="MsoListParagraph"><span style="font-size:10.0pt;font-family:"Arial",sans-serif"><o:p> </o:p></span></p>
<p class="MsoNormal" style="margin-left:.5in"><span style="font-size:10.0pt;font-family:"Arial",sans-serif">If your agency has recorded Steps 1 and 2 in GAAP Fund 8500 but the lease payments are not recorded in GAAP Fund 0001, please correct the entries and
remove them from GAAP Fund 8500 and record them in the GAAP Fund that is making the entry. If multiple GAAP Funds are making the payments, allocate the Step 1 and 2 entries in those respective GAAP Funds in a commensurate manner.
<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left:.5in"><span style="font-size:10.0pt;font-family:"Arial",sans-serif"><o:p> </o:p></span></p>
<p class="MsoNormal" style="margin-left:.5in"><span style="font-size:10.0pt;font-family:"Arial",sans-serif">This is another area we will look to add more clarity about in the OAM.
<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left:.5in"><span style="font-size:10.0pt;font-family:"Arial",sans-serif"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial",sans-serif">I appreciate everyone’s efforts implementing this important standard. If you have any questions, please consult your SARS analyst.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial",sans-serif"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial",sans-serif">Thank you,<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial",sans-serif"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial",sans-serif">Rob<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial",sans-serif"><o:p> </o:p></span></p>
<p class="MsoNormal"><b><span style="font-size:8.0pt;font-family:"Verdana",sans-serif;color:#353535">Robert W. Hamilton, CPA<o:p></o:p></span></b></p>
<p class="MsoNormal"><b><span style="font-size:8.0pt;font-family:"Verdana",sans-serif;color:#353535">Statewide Accounting and Reporting Services Manager</span></b><b><span style="font-family:"Verdana",sans-serif;color:#353535"><o:p></o:p></span></b></p>
<p class="MsoNormal"><span style="font-size:8.0pt;font-family:"Verdana",sans-serif">Chief Financial Office</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:8.0pt;font-family:"Verdana",sans-serif">Department of Administrative Services</span><span style="font-size:8.0pt"><o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:8.0pt;font-family:"Verdana",sans-serif">Cell: (971) 719-3031<o:p></o:p></span></p>
<p class="MsoNormal"><a href="https://gcc02.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.oregon.gov%2FDAS%2Ffinancial%2Facctng&data=05%7C01%7CRobert.W.HAMILTON%40das.oregon.gov%7Cb26de4a4013e44254cfe08da6b2b6b25%7Caa3f6932fa7c47b4a0cea598cad161cf%7C0%7C0%7C637940131463811861%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=kZwTB6RerPC%2FoW6CbBASjM3vgi2HplkduG7cI8x0JcA%3D&reserved=0"><span style="font-size:8.0pt;font-family:"Verdana",sans-serif;color:blue">http://www.oregon.gov/DAS/financial/acctng</span></a><span style="font-size:8.0pt;font-family:"Verdana",sans-serif"><o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:8.0pt"> <o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:8.0pt;font-family:"Verdana",sans-serif;color:#353535">Data Classification: Level 1 - Published</span><o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
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