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Published February 22, 2017
MOFD director threatens to resign over financials

In its analysis of the district financial statements, the Moraga-Orinda Fire District financial reporting ad hoc committee, comprising directors John Jex and Craig Jorgens, found that the district reported $20 million more in assets than it actually had, a mistake that the committee insisted the district correct before publication.
"The liability associated with a false and misleading financial statement is tremendous," said Jex, a retired Deloitte audit partner. "I would not be able to serve on the board if you put out a financial statement that you know is incorrect."
In 2005, the district purchased a $28 million pension obligation bond to pay down its unfunded pension liability with its retirement plan manger, the Contra Costa County Employees' Retirement Association. MOFD carried this prepayment -$20 million by 2016 - on its books, in addition to the net pension liability that CCCERA provided the district, which already included the prepayment. In effect, the district reported the same asset twice.
Pension reporting rules changed with the issuance of Statement No. 68 from the Governmental Accounting Standards Board in 2012, which directed government entities to stop reporting a prepaid unfunded pension liability as an asset by the fiscal year ending June 30, 2015. According to the MOFD ad hoc committee, the district continues to report its prepaid pension liability incorrectly, and the $20 million prepayment should be written off. Jorgens said that based on GASB 68 Contra Costa County, a CCCERA member, wrote off $300 million.
MOFD administrative services director Gloriann Sasser said that in 2015 she followed the guidance of the California Committee on Municipal Accounting in implementing the rules of GASB 68. The district auditor made no adjustments to her work and MOFD received an award from the Government Finance Officers Association for excellence in its financial reporting. "The GFOA director said that if we had implemented GASB 68 wrong, they would tell me," Sasser said.
Jorgens spoke with a senior staff member of the Governmental Accounting Standards Board who he said will offer guidance on correct implementation of the pension accounting standards on a conference call. Until that occurs, the ad hoc committee advised that the district not publish, post online or otherwise indicate that its financial statement for the fiscal year ending June 30, 2106 is accurate. "We will be materially misstating a fact by $20 million that we have to supply to the public and our creditors," Jorgens said. The district plans to schedule the GASB 68 conference call at a special board meeting March 1.
MOFD remains sensitive about employee pension accounting. In 2008, the district incorrectly calculated the pension of its retiring fire chief, and the CCCERA board ruled that the chief had to return more than $1 million in improperly earned retirement benefits.


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