In order to establish identification criteria under the significant developmental delay category and in order to conduct the required training sessions prior to the 1996-97 school year, rules must be in place as soon as possible.
Publication Date:
July 31, 1996
Effective Date:
July 31, 1996
Expiration Date:
December 28, 1996
EMERGENCY RULES NOW IN EFFECT
Securities
Rules adopted creating s. SEC 2.01 (1) (c) 5 and (d) 5, relating to designating alternative accounting guidelines for the preparation of financial statements for certain governmental issuers of securities.
Finding of Emergency
The Office of the Commissioner of Securities for the State of Wisconsin finds that an emergency exists and that rules are necessary for the immediate preservation of the public peace, health, safety or welfare. A statement of the facts constituting the emergency follows:
A. Background Information Regarding Predecessor Emergency Rules Issued in 1982 and 1994.
Chapter 53, laws of 1981, took effect on January 1, 1982 and provided that the exemption from registration under s. 551.22 (1), Stats., for securities (other than revenue obligations) issued by any state or any local subdivision of the state or any agency or corporate or other instrumentality thereof, will be available “...only if the issuer's financial statements are prepared according to generally accepted accounting principles or guidelines which the commissioner designates by rule.” The purpose of that statutory provision was to insure that financial statements prepared by governmental entities relating to their debt securities offerings are based on some recognized uniform accounting standards in order that a potential public investor can make a fully-informed and well-reasoned decision whether to purchase such debt securities.
As a result of the amendments created by Chapter 53, Laws of 1981, those governmental issuers of general obligation securities after January 1, 1982 that did not have their current financial statements prepared totally according to generally accepted accounting principles (“GAAP”), would not be able to utilize the securities registration exemption in s. 551.22 (1) (a), Stats., for the sale of their securities to the general investing public. Rather, those governmental issuers of such securities first would have had to obtain a registration which involves an extensive filing and review process under the Wisconsin Uniform Securities Law or, alternatively, make a regulatory filing under a registration exemption in order to offer the securities to the general public.
At the time the amendment to s. 551.22 (1) of the Stats., was enacted in 1982, many governmental issuers did not prepare their financial statements totally in accordance with GAAP. The result of the statutory change would have posed a hardship on those issuers of governmental general obligation securities subject to the full-GAAP financial statement requirement due to the time it would take for governmental issuers to be able to have their financial statements prepared totally according to GAAP.
To alleviate any disruption to the borrowing plans of governmental issuers of securities and the municipal securities marketplace, the Wisconsin Commissioner of Securities office promulgated emergency rules in 1982 that included the designation of alternative accounting guidelines (from full-GAAP) for the preparation of financial statements for certain governmental issuers of securities. The alternative (to full-GAAP) accounting guidelines were set forth by emergency rule in s. SEC 2.01 (1) (c) 2 and 3 for financial statements for fiscal years ending on or before December 31, 1985. [which was extended in later years by subsequent rule to December 31, 1990] which were either: (i) prepared in accordance with GAAP, but which were qualified for the fixed asset group or (ii) prepared in compliance with accounting guidelines or procedures mandated by state law or by rule of any state agency or recommended by any state agency. Additional emergency rule subsections under s. SEC 2.01 (1) (d) adopted in 1982 provided the method of determining accounting principles and guidelines.
Similar action to adopt emergency rules was taken in 1994 by the Commissioner of Securities Office after being informed by representatives of Wisconsin municipal/governmental securities issuers, bond attorneys and certified public accountant firms that the Governmental Accounting Standards Board (“GASB”) had issued in June 1991 Statement No. 14: “The financial reporting entity.” GASB Statement No. 14 requires that housing authorities and other types of authorities, commissions or boards of municipal/governmental entities (referred to as “component units”) be included in the financial statements of the particular municipal/governmental entity in order for such financial statements to be considered “full-GAAP” without qualification. GASB Statement No. 14 became effective accounting periods beginning after December 31, 1992.
The parties who informed the Commissioner's Office regarding GASB Statement No. 14 stated that GASB Statement No. 14 would have an immediate, negative impact on the availability or use of the registration exemption in s. 551.22 (1) (a), Stats., by those governmental/municipal securities issuers who had component units that would be subject to GASB Statement No. 14 and who heretofore have had their general purpose financial statements prepared in full compliance with GAAP. In particular, auditors for such municipal/governmental issuers with component units subject to GASB statement No. 14 generally would no longer be able to issue unqualified opinions for general purpose financial of municipal governmental issuers--namely, that such financial are prepared, totally and without qualification, on the basis of generally accepted accounting principles. Two areas of concern in that regard where identified by the auditor groups, and with respect to each of the two areas, although the auditors could include unaudited information regarding such component units in the governmental issuers' general purpose financial statements, the auditor's opinion would have to be qualified, thus precluding use of the s. 551.22 (1) (a) exemption on a self-executing basis for offers and sales of the governmental issuers' securities to the public.
Therefore, in similar fashion to emergency rule-making action taken by the agency in 1982, and for the purpose of alleviating disruption that would occur to the near-term borrowing/bonding plans of governmental issuers of securities claiming registration exemption status under s. 551.22 (1) (a), Stats., and because it would require a period of time for those governmental issuers to be able to have their financial statements prepared according to full-GAAP including the additional requirement under GASB Statement No. 14 (which necessitates having the audit report include all “component units” of a governmental/municipal issuer), the Office of the Wisconsin Commissioner of Securities, in consultation with representatives of municipal issuers, municipal bond dealers, financial advisors, bond attorneys and certified public accountant groups, promulgated emergency rules that: (i) designated (in current subpar. (c)2) as an alternative accounting guideline, GAAP but where the auditor's opinion is qualified with respect to the omission of component units required to be included by GASB Statement No. 14; (ii) designated (in current subpar. (c)3) as an alternative accounting guideline, GAAP but where the auditor's opinion is qualified with respect to the unaudited financial statements of an included component unit; and (iii) designated (in current subpar. (c)4) as an alternative accounting guideline, GAAP but where the auditor's opinion is qualified with respect to the general purpose financial statements for component units whose securities financial statements are not presented in accordance with generally accepted accounting principles, but which are included in the reporting entity in accordance with GASB Statement No. 14.
B. Recent Accounting Developments Warranting Present Emergency rule Treatment.
The Commissioner's Office was recently informed by representatives of various Wisconsin governmental securities issuers (principally with respect to Wisconsin public school district and Wisconsin vocational school district issuers of debt securities), bond attorneys, and certified public accounting firms that interpretations by the Governmental Accounting Standards Board (“GASB”) through its staff with respect to accounting treatment for property tax recognition may cause many Wisconsin public school districts and vocational school districts to have the audit opinions for their financial statements qualified with respect to the deferral of taxes. The existence of a qualified audit opinion would preclude use of the s. 551.22 (1) (a), Stats., registration exemption on a use of the s. 551.22 (1) (a), Stats., registration exemption on a self-executing basis for offers and sales of a school district's debt securities to the public.
The specific accounting issue involves interpretation of the current accounting standard for property tax recognition established by the National Council on Governmental Accounting (“NCGA”) Interpretation 3 “Revenue Recognition--Property Taxes.” The accounting interpretation issue is presented as a result of the interplay of the following two factors: (1) most public school and vocational school districts operate on (and their financial statements are prepared on) a July 1 to June 30 fiscal year; (2) the Wis. Statutes authorize the various Wisconsin local units of government to allow the payment of property taxes (which provide the funding for payment of public school and vocational school district debts and obligations) to be made in installments on January 1 and July 31 of a given year (for example 1996) relating to taxes levied (in the 1996 example given) for a school district's fiscal year extending from July 1, 1995 to June 30, 1996.
Because the July 31 date for payment of the second property tax installment is after the June 30 fiscal year for the school districts, the staff of the GASB in communications with representatives of Wisconsin accounting organizations and school district associations on the issue, set forth the GASB staff's view that the July 31 tax installment revenues may not be recognized for purposes for fiscal years ending the preceding June 30. As a result, auditors for Wisconsin public school districts and vocational school districts would need to show in such school districts' financial statements, deferred revenue for the July 31 installment property taxes. Despite requests for reconsideration, the GASB staff has not changed its position.
Such GASB staff interpretation has resulted in property tax revenue and fund balance amounts as shown in most Wisconsin school districts' audit reports being different from that required to be shown in such districts' Annual Reports and budget documents, thus causing confusion as to what a particular district's financial position actually is. The State of Wisconsin Department of Public Instruction believes that the GASB staff interpretation, in the context of the Wisconsin statutes governing the timing of property tax levies and payments, does not result in appropriate school district revenue and fund balance financial statement presentations.
As a consequence, Wisconsin public school and vocational school districts may be requesting that their external auditors prepare their district's audited financial without showing deferred revenue for uncollected property taxes--which may result in the auditor issuing a qualified opinion. The issuance of such a qualified audit opinion would preclude use of the s. 551.22 (1) (a), Stats., registration exemption on a self-executing basis for offers and sales in Wisconsin of the school district's debt securities to the public.
Therefore, in similar fashion to emergency rule-making action taken by the agency in 1982 and 1994, and for the purpose of alleviating disruption that would occur to the near-term borrowing/bonding plans of governmental school district issuers that regularly claim exemption status under s. 551.22 (1) (a), Stats., for the offer and sale in Wisconsin of their debt securities, the Office of the Wisconsin Commissioner of Securities, in consultation with representatives of school district issuers, bond attorneys and accounting groups, is adopting these emergency rules designating an alternative-to-full-GAAP financial statement provision to deal with this accounting issue to enable school district issuers to continue to use the exemption in s. 551.22 (1) (a), Stats., on a self-executing basis.
The emergency rule created in s. SEC 2.01 (1) (c)5 designates as a permitted alternative accounting guideline for purposes of use of the registration exemption in s. 551.22 (1) (a), Stats., GAAP, but where the auditor's opinions is qualified with respect to the recognition of property tax revenue. The emergency rule created in s. SEC 2.01 (1) (d)5 provides that the auditor's opinion with respect to the financial statements of a school district issuer covered by the emergency rule in s. SEC 2.01 (1) (c)5 must contain language corresponding to the qualification language in s. SEC 2.01 (1) (c)5.
Publication Date:
June 24, 1996
Effective Date:
July 1, 1996
Expiration Date:
November 28, 1996
Hearing Date:
September 4, 1996
Statements of Scope of Proposed Rules
Commerce
Subject:
Ch. Comm 1 - Wisconsin environmental procedures.
Description of policy issues:
Description of the objective of the rule:
The objectives of this rule revision are to establish and delineate the environmental procedures for those actions undertaken by the Department of Commerce.
Description of existing policies relevant to the rule and of new policies proposed to be included in the rule and an analysis of policy alternatives:
The Department of Commerce was created as of July 1, 1996, by combining the former Department of Development with the Division of Safety and Buildings of the former Department of Industry, Labor and Human Relations, along with related programs from the Department of Natural Resources and Department of Agriculture, Trade and Consumer Protection. Currently, the environmental procedures of the former Department of Development are delineated in chapter DOD 7, those covering the Division of Safety and Buildings are enumerated in chapter ILHR 1, and those for the Department of Natural Resources are found in chapter NR 150.
The rules of the proposed chapter Comm 1 will address the statutory responsibilities and obligations relating to s. 1.11, Stats. The chapter will delineate the actions typically undertaken by the Department and will categorize Department actions as to the impact on the quality of the human environment and establish procedures to describe and determine the impact on the quality of the human environment.
Section 1.11, Stats., directs all state agencies to consider the environmental impacts of their proposed actions. The only policy alternative to the proposed rule-making activity would be to leave the current administrative codes of chs. DOD 7 and ILHR 1 in place; however, this alternative would most likely result in confusion as to what actions would now be associated with the Department of Commerce and what environmental procedures would be followed.
Statutory authority for the rule:
The Department of Commerce is initiating this rule-making activity under the statutory authority of ss. 101.02 (1) and 560.02 (4), Stats., and interpreting s. 1.11, Stats.
Estimate of the amount of time that state employes will spend to develop the rule and of other resources necessary to develop the rule:
It is estimated that the rule-making activity relating to environmental procedures will require the following:
Administration Input time 60 hours
Staff Research time 96 hours
Rule Drafting time 160 hours
Rule Coordination time 16 hours
Rule Promulgaton time 72 hours
TOTAL TIME: 404 hours
Commerce
Subject:
Ch. ILHR 60 - Relating to child day care facilities.
Description of policy issues:
Description of the objective of the rule:
The objective of the rule is to promulgate administrative rules to permit children under the age of 24 months to be cared for on a floor other than the first floor or ground floor of a group day care center.
Description of existing policies relevant to the rule and of new policies proposed to be included in the rule and an analysis of policy alternatives:
The Department's current policy is to protect the public health, safety and welfare of small children in day care facilities by limiting children under the age of 24 months to those floor levels providing immediate egress to grade from the facility. The policy is proposed to allow infants and toddlers on upper or lower floor levels of a day care facility when adequate safeguards are in place.
Since this is a mandate by law, there is no policy alternative.
Statutory authority for the rule:
Section 101.02 (15) (j), Stats.
Estimate of the amount of time that state employes will spend to develop the rule and of other resources necessary to develop the rule:
Administrative time: 10 hours
Code Consultant time: 80 hours
Program Manager time: 40 hours
Program Staff time: 24 hours
TOTAL TIME: 154 hours
Commerce
Subject:
Chs. Comm 16; ILHR 2, 3, 7, 8, 9, 10, 11, 12, 13, 17, 18, 20 to 25, 27, 32, 33, 34, 41, 42, 43, 45, 47, 48, 50 to 64, 66, 67, 68, 69, 70, 71, 81 to 87 and 90 - Relating to plan review and inspection general procedures within the Divisions of Safety & Buildings, and of Environmental & Regulatory Services.
Description of policy issues:
Description of the objective of the rule:
The objectives of this rule revision within the Divisions of Safety & Buildings and of Environmental & Regulatory Services are to:
a) Standardize plan review and inspection data and details needed to conduct these business functions;
b) Standardize efficient submittal processes for plan review applications and approvals;
c) Standardize processes to more effectively and efficiently manage inspection activities; and
d) Rely on current technology to facilitate communication, and manage and maintain an accurate database.
Description of existing policies relevant to the rule and of new policies proposed to be included in the rule and an analysis of policy alternatives:
The Department's current policies for plan review applications and approvals vary widely throughout the technical program areas. Currently, separate application forms are required for a plan submittal; in some programs appointments are required, in others, none are required. Application forms currently require similar, but not identical, information about the customer and/or the plan proposed for review and approval. For plan approval, there are many and various letters generated to communicate the action taken by the Department; because of a lack of an integrated database and non-standard technology, these processes have been found to be inefficient and, in some cases, redundant.
The Department's current policies for managing mandatory and discretionary inspections vary widely throughout the technical program areas, for example:
1) Inspection reports require similar, but not identical information about the customer, a proposed project or an existing structure;
2) Mechanisms to trigger or schedule an inspection and time frames to conduct an inspection are not applied consistently throughout the various programs;
3) Certificates of operation are issued in a variety of formats; and
4) The enforcement procedures involve different vocabulary and steps across the programs.
