Upcoming GASB Pronouncements. Prepared for the North Dakota SBHE BAFC by Robin Putnam

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1 Upcoming GASB Pronouncements Prepared for the North Dakota SBHE BAFC by Robin Putnam North Dakota University System June 2011

2 Upcoming GASB Pronouncements 2 GASB Statement No. 54 Fund Balance Reporting and Governmental Fund Type Definitions. Effective Date: July 1, GASB Statement No. 57 OPEB Measurements by Agent Employers and Agent Multiple-Employer Plans. Effective Date: July 1, 2012 GASB Statement No Accounting and Financial Reporting for Bankruptcies. Effective Date: July 1, 2010 GASB Statement No. 59 Financial Instrument Omnibus. Effective Date: July 1, 2011 GASB Statement No. 60 Accounting and Financial Reporting for Service Concession Arrangements. Effective Date: July 1, 2012 GASB Statement No. 61 The Financial Reporting Entity (Component Unit Reporting). Effective Date: July 1, 2013

3 GASB 54 and GASB 57 3 GASB 54 Fund Balance Reporting and Governmental Fund Type Definitions. Effective Date: July 1, Not applicable to NDUS. Changes definitions and categories of fund balance in the Statement of Net Assets. Applicable only to governmental funds. GASB 57 OPEB Measurement by Agent Employers and Agent Multiple- Employer Plans. Effective Date: July 1, Allows certain employers that have an individual OPEB plan with less than 100 plan members to use a less complex and less expensive measurement method than a full actuarial valuation. Permits aggregation of results of actuarial valuations in certain plans. Clarifies measurement frequency and timing requirements for certain employers.

4 GASB 58 and GASB 59 4 GASB 58 Accounting and Financial Reporting for Bankruptcies. Effective Date: July 1, Establishes requirements for recognizing and measuring the effects on assets and liabilities of governments filing for Chapter 9 bankruptcy protection. GASB 59 Financial Instruments Omnibus. Effective Date: July 1, States that SEC requirements of certain external investment pools - known as 2a7-like pools are applicable to provide users consistent information on these types of pools. Clarifies which financial instruments are within scope of GASB Statement 53 Accounting for Derivatives. Clarifies interest rate risk information disclosures.

5 GASB 60 5 GASB 60 Accounting and Financial Reporting for Service Concession Arrangements (SCAs) Effective Date: July 1, SCAs are public-private or public-public partnerships. Common examples: Student housing Parking ramps Bookstores GASB 60 provides guidance on which entity should report the capital assets, when to recognize up-front payments and how to record obligations of the transferor to the operator.

6 GASB 60 6 GASB 60 applies if the following criteria are met: An institution transfers to an operator the right and obligation to provide services through the use and operations of a capital asset in exchange for significant consideration. Operator collects and is compensated by fees from third parties. The institution is entitled to significant residual interest in the facility at the end of the arrangement. The institution determines or has the ability to determine: What services the operator is required to provide To whom the services will be provided The prices or rates to be charged.

7 GASB 60 7 Institution: Reports existing facility or improvement to facility as a capital asset. Related liabilities are recorded at present value. Records an up-front payment or the present value of installment payments as an asset. Deferred revenue is recorded for future inflows revenue is recognized systematically over the life of the contract by reducing deferred revenue.

8 GASB 61 8 GASB 61 The Financial Reporting Entity Effective Date: July 1, Amends GASB Statement 14 for Component Unit (CU) Reporting. Statement14 requires a CU be reported in the primary government s (PG) financial statements if the PG has authority over: Determining the budget Levying taxes and charges or setting rates Issuing debt. Statement 61 requires a financial benefit or burden relationship to exist between the PG and CU for the CU to be included in the PG. Statement14 requires a CU to be included if exclusion would make the PG financial statements misleading or incomplete. Statement 61 eliminates incomplete and states the determination should be based on the nature and significance of relationship with the PG. Based on preparer professional judgment.

9 GASB 61 9 Blending: GASB 61 clarifies scenarios permitted for blending: The PG and CU have substantively the same governing body. Ongoing financial benefit/burden relations or PG management is also responsible for the CU. CU provides services entirely, or almost entirely, to the PG or benefits the PG exclusively, or almost exclusively. PG will pay most or all of the CU s debt.

10 GASB Discrete Presentation Major CU Statement 61 provides guidance for determining major CUs. Nature of services provided by CU to citizens. Significant transactions with the PG. Significant financial benefit/burden relationship. Eliminates consideration of each CU s significance relative to other CU s.

11 GASB Disclosures: Statement 61 requires: Determination on a CU-by-CU basis (not in totality). Rationale for including each CU. Whether it is discretely presented, blended or included as a fiduciary fund. Significant financial benefit/burden relationship.

12 Other GASB Projects 12 Statement of Net Position Significantly changes Statement of Net Assets (SNA) Creates new categories: Deferred outflows example: prepaids Report after assets section in SNA Deferred inflows example: deferred revenue Report after liabilities section in SNA Net Assets will be renamed Net Position Comment period ended February 2011 Issue final statement: May Effective: FY 2012 Pension Accounting And Financial Reporting by Employers Exposure Draft expected to be issued in June 2011 Derivative Instruments Application of Hedge Accounting Termination Provisions Comment period ended: April 2011 Issue final statement: June Effective: FY 2012 Financial Guarantees Exposure Draft expected to be issued June 2012

GASB Update. Rob Churchman, Partner. April 9, 2013

GASB Update. Rob Churchman, Partner. April 9, 2013 GASB Update Rob Churchman, Partner April 9, 2013 Agenda GASB 60: Service Concession Arrangements GASB 61: The Financial Reporting Entity GASB 62 & 66: Pre-1989 FASB/AICPA Pronouncements & Technical Corrections