Norwalk, CT, June 30, 2009—The Governmental Accounting Standards Board (GASB) issued two Exposure Drafts (EDs) of proposed Statements, Accounting and Financial Reporting for Service Concession Arrangements, and Financial Instruments Omnibus. The proposed Statements are intended to increase transparency in these financial activities.
The proposed Statement on service concession arrangements (SCAs) would establish accounting and financial reporting requirements for these types of partnership arrangements between governments and private entities and between multiple governmental entities. An SCA is an arrangement between a government (the transferor) and an operator in which (a) the transferor conveys to an operator the right and related obligation to provide services through the use of infrastructure or another public asset (a “facility”) and (b) the operator collects fees from third parties. Recent examples of SCAs include long-term arrangements associated with toll roads. The proposal provides guidance on determining whether the transferor should report the facility subject to the SCA as its capital asset, and reporting guidance for addressing upfront or installment payments related to the SCA. It also provides reporting guidance for governments acting as operators in an SCA.
“As governments increasingly partner with private and other public entities to provide services to citizens, taxpayers and other financial statement users need clear, understandable, and comparable information about the costs, revenues, and obligations associated with these partnerships,” said Robert Attmore, chairman of the GASB.
The proposed Statement on financial instruments is intended to update and improve existing standards regarding financial reporting and disclosure requirements of some financial instruments for which significant issues have been identified in practice. The amendments would:
· Extend the use of fair value measurement to unallocated insurance contracts to improve the consistency of reporting by pension and OPEB plans
· Emphasize the applicability of SEC requirements to certain external investment pools—known as 2a7-like pools—to provide practitioners with improved guidance
· Limit interest rate risk disclosures for investments in mutual funds to bond mutual funds to eliminate disclosures that may not provide decision-useful information
· Address the applicability of Statement No. 53, Accounting and Financial Reporting for Derivative Instruments, to certain financial instruments to clarify which financial instruments are within the scope of that standard and provide greater consistency in financial reporting.
Mr. Attmore stated, “We encourage our constituents to review both EDs and provide feedback on whether or not they think they would indeed lead to improved reporting in these areas.”
The EDs, and instructions on submitting written comments, can be downloaded free of charge at www.gasb.org/exp. The deadline for submitting written comments on Accounting and Financial Reporting for Service Concession Arrangements is September 30, 2009, and a public hearing on the proposal is scheduled for October 6, 2009. Written comments on the Financial Instruments Omnibus ED are due by October 30, 2009.
Wednesday, July 1, 2009
GASB Proposes Suggested Guidelines for Voluntary Reporting of SEA Performance Information
Norwalk, CT, June 30, 2009—The Governmental Accounting Standards Board (GASB) issued Proposed Suggested Guidelines for Voluntary Reporting, SEA Performance Information. The purpose of this document is to obtain feedback from constituents on suggested guidelines intended to provide a common framework for the effective external communication of SEA performance information.
The reporting of SEA performance information provides more information about a government’s actual performance in providing services to its citizens than can be included in traditional financial statements, and is therefore an important method of demonstrating accountability and stewardship. The suggested guidelines are intended to help state and local governments that choose to communicate SEA performance information to citizens, elected officials, and other interested parties to do so more effectively.
While it is beyond the scope of the GASB to establish the goals and objectives of state and local government services, to develop specific nonfinancial measures or indicators of service performance, or to set benchmarks for service performance, research has shown that many constituents consider it appropriate at this time for the GASB to issue conceptually based suggested guidelines for voluntary reporting of SEA performance information.
Constituents are invited to provide feedback on the suggested guidelines, which include what the GASB has identified as the four essential components of an effective SEA report, the six qualitative characteristics of SEA performance information, and three keys to effective communication.
The four components identified are purpose and scope, major goals and objectives, key measures of SEA performance, and discussion and analysis of results and challenges. The six qualitative characteristics, as set forth in Concepts Statement No. 1, Objectives of Financial Reporting, are relevance, understandability, comparability, timeliness, consistency, and reliability. The three keys to effective communication are intended audiences, multiple levels of reporting, and forms of communication.
Constituents are encouraged to review the proposed suggested guidelines and provide feedback. Written comments are due by October 30, 2009. The document—including instructions on submitting comments—can be downloaded from the GASB’s website at www.gasb.org/exp. Individuals can also obtain one copy of the Proposal free of charge by contacting the GASB Order Department at 1-800-748-0659.
The reporting of SEA performance information provides more information about a government’s actual performance in providing services to its citizens than can be included in traditional financial statements, and is therefore an important method of demonstrating accountability and stewardship. The suggested guidelines are intended to help state and local governments that choose to communicate SEA performance information to citizens, elected officials, and other interested parties to do so more effectively.
While it is beyond the scope of the GASB to establish the goals and objectives of state and local government services, to develop specific nonfinancial measures or indicators of service performance, or to set benchmarks for service performance, research has shown that many constituents consider it appropriate at this time for the GASB to issue conceptually based suggested guidelines for voluntary reporting of SEA performance information.
Constituents are invited to provide feedback on the suggested guidelines, which include what the GASB has identified as the four essential components of an effective SEA report, the six qualitative characteristics of SEA performance information, and three keys to effective communication.
The four components identified are purpose and scope, major goals and objectives, key measures of SEA performance, and discussion and analysis of results and challenges. The six qualitative characteristics, as set forth in Concepts Statement No. 1, Objectives of Financial Reporting, are relevance, understandability, comparability, timeliness, consistency, and reliability. The three keys to effective communication are intended audiences, multiple levels of reporting, and forms of communication.
Constituents are encouraged to review the proposed suggested guidelines and provide feedback. Written comments are due by October 30, 2009. The document—including instructions on submitting comments—can be downloaded from the GASB’s website at www.gasb.org/exp. Individuals can also obtain one copy of the Proposal free of charge by contacting the GASB Order Department at 1-800-748-0659.
2009 GASAC Project Prioritization
The following are projects idenfitied as priorities by the GASAC
OPEB: Certain Implementation Issues
Codification of Pre-November 30, 1989 FASB Pronouncements
Fair Value Measurement
Government Combinations
Economic Condition Reporting: Fiscal Sustainability
Reexamination-Demand Bonds-Interpretation 1
Tax Abatement Disclosures
Electronic Financial Reporting
Reexamination-Securities Lending-Statement 28
Financial Transactions with Characteristics of Both Loans and Grants
Financial Performance Measurements
Reexamination-Compensated Absences-Statement 16
Reexamination-Conduit Debt-Interpretation 2
Exchange-like Revenues
Reexamination-Debt Refundings-Statements 7 and 23
Reexamination-Deferred Compensation Plans-Statement 32
In-Kind Contributions
Reexamination-Risk Financing-Statements 10 & 30 and Interpretation 4
Present Value
Reporting Unit Presentations
Irrevocable Charitable Trusts
Popular Reporting
Reexamination-Escheat Property-Statement 21
Preservation Method
Reexamination-Landfills-Statement 18
OPEB: Certain Implementation Issues
Codification of Pre-November 30, 1989 FASB Pronouncements
Fair Value Measurement
Government Combinations
Economic Condition Reporting: Fiscal Sustainability
Reexamination-Demand Bonds-Interpretation 1
Tax Abatement Disclosures
Electronic Financial Reporting
Reexamination-Securities Lending-Statement 28
Financial Transactions with Characteristics of Both Loans and Grants
Financial Performance Measurements
Reexamination-Compensated Absences-Statement 16
Reexamination-Conduit Debt-Interpretation 2
Exchange-like Revenues
Reexamination-Debt Refundings-Statements 7 and 23
Reexamination-Deferred Compensation Plans-Statement 32
In-Kind Contributions
Reexamination-Risk Financing-Statements 10 & 30 and Interpretation 4
Present Value
Reporting Unit Presentations
Irrevocable Charitable Trusts
Popular Reporting
Reexamination-Escheat Property-Statement 21
Preservation Method
Reexamination-Landfills-Statement 18
Friday, June 26, 2009
GASB Issues Two Exposure Drafts on OPEB Measurements and Chapter 9 Bankruptcies
Norwalk, CT, June 26, 2009—The Governmental Accounting Standards Board (GASB) today issued two Exposure Drafts (EDs) of proposed Statements, OPEB Measurements by Agent Employers and Agent Multiple-Employer Plans, and Accounting and Financial Reporting for Chapter 9 Bankruptcies. The EDs contain proposals intended to improve consistency in the financial reporting and the measurement of retiree health insurance and other postemployment benefits (OPEB) and the effects of Chapter 9 bankruptcy. Users and preparers of state and local governmental financial reports are encouraged to review and provide comment on the proposed Statements.
The proposed Statement on OPEB measurements addresses issues related to measurement of OPEB obligations by employers participating in agent multiple-employer OPEB plans, and would amend Statement No. 43, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, and Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions. (In agent multiple-employer plans, separate liabilities are calculated and separate asset accounts are kept for each participating government, rather than being administered and accounted for as a single plan as is done in a cost-sharing plan.) Specifically, it addresses the circumstances in which certain agent employers are eligible to use the alternative measurement method; the requirement that a defined benefit OPEB plan obtain an actuarial valuation; and requirements in Statements 43 and 45 regarding the frequency and timing of determining OPEB measures by agent multiple-employer plans and participating employers.
The proposed Statement on Chapter 9 bankruptcies would provide guidance for state and local governments that have petitioned for protection from creditors by filing for bankruptcy under Chapter 9 of the United States Bankruptcy Code. It would establish requirements for recognizing and measuring the effects of the bankruptcy process on assets and liabilities, and for classifying changes in those items and related costs.
“With the current economic environment putting stress on state and local government resources, it became necessary for the GASB to address the financial reporting issues associated with local governments filing for bankruptcy protection under Chapter 9,” said Robert Attmore, chairman of the GASB.
“By issuing these EDs, the GASB is directly addressing issues raised by practitioners and users of governmental financial statements,” stated Mr. Attmore. “We encourage constituents of the GASB to review the proposals and provide their feedback.”
The EDs can be downloaded free of charge at www.gasb.org/exp. The deadline for written comments on both documents is August 28, 2009.
The proposed Statement on OPEB measurements addresses issues related to measurement of OPEB obligations by employers participating in agent multiple-employer OPEB plans, and would amend Statement No. 43, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, and Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions. (In agent multiple-employer plans, separate liabilities are calculated and separate asset accounts are kept for each participating government, rather than being administered and accounted for as a single plan as is done in a cost-sharing plan.) Specifically, it addresses the circumstances in which certain agent employers are eligible to use the alternative measurement method; the requirement that a defined benefit OPEB plan obtain an actuarial valuation; and requirements in Statements 43 and 45 regarding the frequency and timing of determining OPEB measures by agent multiple-employer plans and participating employers.
The proposed Statement on Chapter 9 bankruptcies would provide guidance for state and local governments that have petitioned for protection from creditors by filing for bankruptcy under Chapter 9 of the United States Bankruptcy Code. It would establish requirements for recognizing and measuring the effects of the bankruptcy process on assets and liabilities, and for classifying changes in those items and related costs.
“With the current economic environment putting stress on state and local government resources, it became necessary for the GASB to address the financial reporting issues associated with local governments filing for bankruptcy protection under Chapter 9,” said Robert Attmore, chairman of the GASB.
“By issuing these EDs, the GASB is directly addressing issues raised by practitioners and users of governmental financial statements,” stated Mr. Attmore. “We encourage constituents of the GASB to review the proposals and provide their feedback.”
The EDs can be downloaded free of charge at www.gasb.org/exp. The deadline for written comments on both documents is August 28, 2009.
Friday, June 19, 2009
GASB Marks Its 25th Anniversary
The GASB has posted a new video to its website. In this three-minute video presentation, GASB Chairman Robert H. Attmore and David R. Bean, the GASB’s director of research and technical activities, offer a message marking the 25th anniversary of the GASB.
The GASB Video Series features Board members and project staff members addressing new standards and pronouncements and other GASB topics in brief video presentations.
The video may be viewed at www.gasb.org.
The GASB Video Series features Board members and project staff members addressing new standards and pronouncements and other GASB topics in brief video presentations.
The video may be viewed at www.gasb.org.
Wednesday, May 20, 2009
GASB Standards and Guidance Subscriptions
The GASB offers three subscription plans that provide finance and accounting professionals and users of governmental financial information with the critical tools necessary for staying up-to-date on all the latest changes in governmental GAAP.
The GASB Subscription provides you with printed copies of new pronouncements as soon as they are issued, as well as the GASB’s monthly newsletter, The GASB Report. You also will receive notification when Exposure Drafts, discussion documents, and selected research reports are released. Stay ahead of the curve with access to the current information a GASB Subscription provides.
The GASB Board Package gives you the inside scoop on GASB projects by delivering the full complement of public materials provided to the Board members for their deliberations. You will receive the materials on a convenient CD-ROM that is mailed shortly after each Board meeting.
The Governmental Accounting Research System (GARS) on CD-ROM provides ready access to all the necessary governmental accounting literature on your personal computer or in a stand-alone network configuration. GARS has been demonstrated to significantly reduce research time.
Call (800) 748-0659 or visit www.gasb.org and click on GASB Store to order.
The GASB Subscription provides you with printed copies of new pronouncements as soon as they are issued, as well as the GASB’s monthly newsletter, The GASB Report. You also will receive notification when Exposure Drafts, discussion documents, and selected research reports are released. Stay ahead of the curve with access to the current information a GASB Subscription provides.
The GASB Board Package gives you the inside scoop on GASB projects by delivering the full complement of public materials provided to the Board members for their deliberations. You will receive the materials on a convenient CD-ROM that is mailed shortly after each Board meeting.
The Governmental Accounting Research System (GARS) on CD-ROM provides ready access to all the necessary governmental accounting literature on your personal computer or in a stand-alone network configuration. GARS has been demonstrated to significantly reduce research time.
Call (800) 748-0659 or visit www.gasb.org and click on GASB Store to order.
GASB Adds Projects to Its Current and Research Agendas
In April, GASB Chairman Robert H. Attmore added a number of new projects to the Board’s current and research agendas. The changes to the technical plan were made in part based on feedback from the Governmental Accounting Standards Advisory Council (GASAC). The GASAC reviewed the GASB’s research projects and potential projects list at its meeting in March and provided input on which projects they considered the highest priorities.
Two practice issues addressing (1) the codification of pre-November 30, 1989, FASB pronouncements that apply to governments and (2) implementation issues relating to other postemployment benefits (OPEB), were moved from the research agenda to the current agenda. In addition, two projects were added to the research agenda addressing demand bonds and government combinations and spin-offs. All four of these projects were rated as high-priority by the GASAC.
Codification of Pre-November 30, 1989 FASB Pronouncements
The objective of this project is to identify specific provisions in Financial Accounting Standards Board (FASB) Statements and Interpretations, Accounting Principles Board Opinions, and Accounting Research Bulletins of the AICPA Committee on Accounting Procedure, issued on or before November 30, 1989, that do not conflict with or contradict GASB pronouncements. The GASB will incorporate those provisions into its own literature. An expert group that will provide the Board technical feedback has been formed, and deliberations are scheduled to begin in July.
OPEB Implementation Issues
The objective of this project is to consider whether to modify certain requirements related to the measurement of actuarial liabilities for OPEB by agent employers. This project includes consideration of (1) the timing and frequency of the measurement of actuarial liabilities for OPEB by agent employers and (2) the guidelines regarding use of the alternative measurement method by agent employers with small individual OPEB plans. Project deliberations began in May and an Exposure Draft should be issued at the end of June.
Demand Bonds—Interpretation 1 Reexamination
The objective of this project is to evaluate the effectiveness of GASB Interpretation No. 1, Demand Bonds Issued by State and Local Governmental Entities, in terms of whether the standards continue to address the relevant accounting and reporting issues and meet the information needs of financial statement users. Interpretation 1, which was issued in December 1984, addresses the classification—either short-term or long-term—of demand bonds. The major issues to be discussed are whether Interpretation 1 can effectively be applied in the current economic environment and whether the accounting and disclosures required by the Interpretation continue to provide decision useful information.
Government Combinations and Spin-offs
The primary objective of this project is to consider the financial reporting requirements when governmental entities are combined through annexation, consolidation, acquisition, or other means. This project will include an analysis of government combinations that have taken place in both the general governmental area (city/county consolidations and consolidated school districts, for example) and the business-type activities area (healthcare organizations, for example). In addition, the project will address certain devolution or ”spin-off” issues.
Additional information about these projects is available on the GASB’s website at www.gasb.org in the Project Pages section.
Two practice issues addressing (1) the codification of pre-November 30, 1989, FASB pronouncements that apply to governments and (2) implementation issues relating to other postemployment benefits (OPEB), were moved from the research agenda to the current agenda. In addition, two projects were added to the research agenda addressing demand bonds and government combinations and spin-offs. All four of these projects were rated as high-priority by the GASAC.
Codification of Pre-November 30, 1989 FASB Pronouncements
The objective of this project is to identify specific provisions in Financial Accounting Standards Board (FASB) Statements and Interpretations, Accounting Principles Board Opinions, and Accounting Research Bulletins of the AICPA Committee on Accounting Procedure, issued on or before November 30, 1989, that do not conflict with or contradict GASB pronouncements. The GASB will incorporate those provisions into its own literature. An expert group that will provide the Board technical feedback has been formed, and deliberations are scheduled to begin in July.
OPEB Implementation Issues
The objective of this project is to consider whether to modify certain requirements related to the measurement of actuarial liabilities for OPEB by agent employers. This project includes consideration of (1) the timing and frequency of the measurement of actuarial liabilities for OPEB by agent employers and (2) the guidelines regarding use of the alternative measurement method by agent employers with small individual OPEB plans. Project deliberations began in May and an Exposure Draft should be issued at the end of June.
Demand Bonds—Interpretation 1 Reexamination
The objective of this project is to evaluate the effectiveness of GASB Interpretation No. 1, Demand Bonds Issued by State and Local Governmental Entities, in terms of whether the standards continue to address the relevant accounting and reporting issues and meet the information needs of financial statement users. Interpretation 1, which was issued in December 1984, addresses the classification—either short-term or long-term—of demand bonds. The major issues to be discussed are whether Interpretation 1 can effectively be applied in the current economic environment and whether the accounting and disclosures required by the Interpretation continue to provide decision useful information.
Government Combinations and Spin-offs
The primary objective of this project is to consider the financial reporting requirements when governmental entities are combined through annexation, consolidation, acquisition, or other means. This project will include an analysis of government combinations that have taken place in both the general governmental area (city/county consolidations and consolidated school districts, for example) and the business-type activities area (healthcare organizations, for example). In addition, the project will address certain devolution or ”spin-off” issues.
Additional information about these projects is available on the GASB’s website at www.gasb.org in the Project Pages section.
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