GASB Update #3

Service Concession Arrangements
Reporting Entity
Codification of AICPA and FASB
Deferrals Presentation
Statement 65 – Assets and Liabilities – Reclassification and
Statement 66 – Technical Corrections
Statement 67 – Financial Reporting for Pension Plans
Statement 68 – Accounting and Financial Reporting for Pensions
Statement 69 – Government Combinations and Disposals of
Government Operations
Objective of Statement
Incorporate into GASB’s authoritative literature (pre Nov
1989) which does not conflict with or contradict GASB
1. FASB Statements and Interpretations
2. Accounting Principles Board Opinions (APBs)
3. Accounting Research Bulletins of the AICPA Committee on
Accounting Procedure(ARBs)
Statement 62 eliminated the election contained in paragraph 7 of
GASB Statement No. 20, Accounting and Financial Reporting for
Proprietary Funds and Other Governmental Entities That Use
Proprietary Fund Accounting, as amended, for enterprise funds and
business-type activities to apply post November 30, 1989, FASB
1. Disclosure reference to pre-1989 use of FASB standards to be
2. All references to FASB should be removed (unless a specific
adoption to a FASB ASC is elected)
3. Disclosure should be made to the adoption of this standard also if
prior period adjustment occurred
4. Communicated to Those Charged With Governance (Optional if it
does not materially affect statements?)
5. Auditor’s Report as Emphasis of Matter if adoption materially
effects financial statements.
How the Changes in This Statement will Improve Financial Reporting
“The requirements in this Statement will improve financial reporting
by contributing to the GASB's efforts to codify all sources of generally
accepted accounting principles for state and local governments so
that they derive from a single source. This effort brings the
authoritative accounting and financial reporting literature together in
one place, with that guidance modified as necessary to appropriately
recognize the governmental environment and the needs of
governmental financial statement users. “
Organization of This Statement
• By Topic-each topic contains provisions derived from FASB and
AICPA pronouncements that address the subject matter.
• Some language has been changed to be more specific
• i.e. “Business-Type or Governmental Activities”
• The order in which the topics are presented corresponds
to the order of the primary locations within the GASB
Codification of Governmental Accounting and Financial
Reporting Standards, where the topics are codified.
-Accounting Changes adopted to conform
• Applied retroactively by restating prior periods
• If restatement not practical-the cumulative effect reported as a
restatement of beginning net asset, fund balances, or fund equity
• The F/S should disclose the nature of any restatement and its effect
Since FASB introduced its codification, its
original pronouncements are nonauthoritative
• Action-No longer reference FASB (unless exception)
GASB 34, p. 17 required application of preNovember 30, 1989 FASB statements, etc.
• Action-No longer need to elect to apply post 11.30.1989.
can apply when it does not conflict with GASB guidance
Capitalization of interest costs (FAS 34, 62)
Statement of net position classification (ARB 43,
APB 12, FAS 6)
Special and extraordinary items (APB 30)
Comparative financial statements (APB 30)
Related Parties (FAS 57)
Prior-period adjustments (FAS 16, APB 9)
Accounting changes and error corrections (APB
20, FIN 20)
Extinguishment of debt (APB 36, FAS 76)
Troubled debt restructuring (FAS 15)
Inventory (ARB 43)
Contingencies (FAS 5, FIN 14)
Leases (FAS 13,22,98, FIN 23,26,27)
Regulated operations (FAS 71, 90, 101)
An amendment of GASB Statements 10 and 62
• Amends GASB 10 to comply with GASB No. 54 and No. 34
regarding fund type classifications
• Amends GASB 62 modifying guidance on accounting for
1. Operating lease payments that vary from a straight-line
2. The difference between the initial investment (purchase
price) and the principal amount of a purchased loans
3. Servicing fees related to mortgage loans that are sold
Changes clarify how to apply:
• GASB 13-Accounting for Operating Leases with Scheduled
Rent Increases
GASB 48-Sales and Pledges of Receivables and Future
Revenues and Intra-Entity Transfers of Assets and Future
Effective periods beginning after December 15, 2012.
Concept Statement 4 and 5 (June 2007) identifies 5 elements that make
up a statement of financial position:
Deferred outflows of resources
Deferred inflows of resources
Net position
This differs from the composition currently required by Statement 34,
which requires the presentation of assets, liabilities, and net assets in a
statement of financial position
Resources with present service capacity that the gov’t controls
Present obligations to sacrifice resources
Deferred outflows of resources
A consumption of net assets applicable to a future reporting period
has a positive effect on net position, similar to assets
Deferred inflows of resources
An acquisition of net assets applicable to a future reporting period
has a negative effect on net position, similar to liabilities
Net position
The residual of all elements presented
= assets + deferred outflows – liabilities – deferred inflows
Reporting Requirements
Report these new classifications in the following manner:
deferred outflows in a separate section following assets
deferred inflows in a separate section following liabilities
May subtotal deferred outflows with assets and deferred inflows
with liabilities
Net Position components resemble net asset components under
Statement 34 but include the effects of deferred outflows and inflows
Net investment in capital assets
Formatting Requirements
Economic Resources Measurement Focus
assets + deferred outflows – liabilities – deferred inflows = net
The traditional balance sheet is still acceptable:
assets + deferred outflows = liabilities + deferred inflows + net
Current Resources Measurement Focus
Required: assets + deferred outflows = liabilities + deferred inflows
+ fund balance
Concept Statement No. 4 Elements of Financial Statements and
GASB 63 limited recognition of deferred inflows and outflows
to balances examined through GASB due process, previously
only GASB No. 53 Accounting and Financial Reporting for
Derivative Instruments & No. 60 Accounting and Financial
Reporting for Service Concession Arrangements.
The objective of this statement is reexamine existing guidance
on balances through due process:
properly classify certain items that were previously reported as
assets and liabilities as deferred outflows/inflows of resources or
recognize certain items that were previously reported as assets
and liabilities as outflows of resources (expenses or
expenditures) or inflows of resources (revenues)
Deferred Inflows
Grants earned in advance of meeting timing
requirements (availability criteria)
Deferred amounts from refunding of debt (credits)
Proceeds from sales of future revenues
Deferred gain from sale-leaseback
“Regulatory” credits
Unavailable revenue related to the application of
modified accrual accounting
Deferred Outflows
Grants incurred in advance of timing requirement
Deferred amount from refunding of debt (debits)
Cost of acquire rights to future revenues (intra-entity)
Deferred loss from sale-leaseback transaction
Outflows of Resources (Expenditures or Expenses)
Debt issuance costs (other than insurance)
Initial costs incurred by lessor in an operating lease
Acquisition costs for risk pools
Loan Origination costs
Inflows of Resources (Revenues)
Loan origination fees
Commitment fees (after exercise or expiration)
Classification has not changed for:
◦ Prepayments
◦ Resources advanced to another government in
relation to a government-mandated nonexchange
transaction or a voluntary nonexchange transaction
when eligibility requirements other than time
requirements have not been met
◦ The purchase of future revenues from a
government outside the financial reporting entity
◦ Circumstances in which a pension plan’s net
position exceeds the total pension liability
Classification has not changed for
◦ Resources received in advance in relation to a
derived tax revenue nonexchange transaction
◦ Resources received in advance in relation to a
government-mandated nonexchange transaction or
a voluntary nonexchange transaction when
eligibility requirements other than time
requirements have not been met
◦ Resources received in advance of an exchange
◦ Refunds imposed by a regulator
Revenues and other
governmental fund
financial resources
should be recognized n
the accounting period
in which they become
both measureable and
and available
When an asset in
recorded in
governmental fund
financial statements, but
the revenue is not
available, the
government should
report a deferred inflow
of resources until such
time as the revenue
becomes available
Revenue-not available
Other Changes
The term deferred revenues should no longer be used:
Could be confused with deferred inflows/outflows
No guidance on a replacement term
Recommend use of advance as the accounting for the
availability and earned criteria are now distinct
There have been no changes to the Major Fund criteria except
the following:
Deferred outflows should be combined with assets
Deferred inflows should be combined with liabilities
September 30,
2014 (Years
beginning after
Early application
is encouraged
Required to be
retroactively for
all periods

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