Jack Reagan, Audit Partner
CliftonLarsonAllen LLP
cliftonlarsonallen.com
©2013 CliftonLarsonAllen LLP
©2013 CliftonLarsonAllen LLP
Effect of New GASB
Standards on Local
Governments
©2013 CliftonLarsonAllen LLP
Effective Dates—FYE June 30
• 2013
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Statement 60—Service Concession Arrangements
Statement 61—Financial Reporting Entity
Statement 62—Codification of AICPA and FASB
Statement 63—Deferrals Presentation
• 2014
– Statement 65—Assets and Liabilities—Reclassification and
Recognition
– Statement 66—Technical Corrections
– Statement 67—Pension Plans
• 2015
– Statement 68—Pension Accounting for Employer and
Nonemployer Contributing Entities
– Statement 69—Government Combinations and Disposals of
Government Operations
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Effective for Periods
Beginning After December 15, 2011
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Statement 63
Financial Reporting of
Deferred Outflows of
Resources, Deferred
Inflows of Resources, and
Net Position
• Deferred outflows of resources
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Definitions
– A consumption of net assets by the government that is
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 by the government that is
applicable to a future reporting period
– Has a negative effect on net position, similar to liabilities
• Net position
– The residual of all elements presented in a statement of
financial position
– = assets + deferred outflows – liabilities – deferred inflows
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• Deferred outflows should be reported in a separate
section following assets
• Similarly, deferred inflows should be reported in a
separate section following liabilities
• Net Position components resemble net asset
components under Statement 34, but include the
effects of deferred outflows and deferred inflows
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Display Requirements
– Net investment in capital assets
– Restricted
– Unrestricted
• Governmental funds continue to report fund balance
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Effective for Periods
Beginning After December 15, 2012
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Statement 65
Items Previously Reported
as Assets and Liabilities
• Grants received in advance of meeting timing
requirement
• Deferred amounts from refunding of debt (credits)
• Proceeds from sales of future revenues
• Deferred gain from sale-leaseback
• “Regulatory” credits
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Deferred Inflows of Resources
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• Grant paid in advance of meeting timing
requirement
• Deferred amounts from refunding of debt (debits)
• Cost to acquire rights to future revenues (intraentity)
• Deferred loss from sale-leaseback
• Debt issuance costs (other than insurance)
• Initial costs incurred by lessor in an operating lease
• Acquisition costs for risk pools
• Loan origination costs
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Deferred Outflows of Resources
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• Loan origination fees
• Commitment fees (after exercise or expiration)
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Inflows of Resources
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Effective for Fiscal Years
Beginning After June 15, 2014
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Statement 68
Accounting and Financial
Reporting for Pensions
• Liabilities to the pension plan (payables)
• Liabilities to employees for pensions
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Defined Benefit Pensions
– “Net pension liability” (NPL)
◊ Total pension liability (TPL), net of pension plan’s fiduciary net
position
• TPL = actuarial present value of projected benefit payments
attributed to past periods
• Fiduciary net position as measured by pension plan
– Single/agent employers recognize 100 percent of NPL
– Cost-sharing employers recognize proportionate shares of
collective NPL
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• Should be a single rate that reflects:
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Discount Rate
– The long-term expected rate of return on plan investments
that are expected to be used to finance the payment of
benefits to the extent that
◊ Plan net position is projected to be sufficient to make projected
benefit payments, and
◊ Assets are expected to be invested using a strategy to achieve that
return
– A yield or index rate for 20-year, tax exempt general
obligation bonds with an average rating of AA/Aa or higher
to the extent that the conditions for the use of the longterm expected rate of return are not met
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• A government participating in a cost-sharing plan
would report a liability in its own financial
statements that is equivalent to its proportionate
share of the net pension liability of all the employers
in the cost-sharing plan.
• Approach uses a basis for allocation of proportionate
share based on the employer’s contribution effort
relative to that of all contributors
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Cost-Sharing Employers
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• Tax Abatement Research Project
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One to Keep an Eye On
– May require disclosure of tax abatements or incentives
◊ Property tax relief for the elderly
◊ Property tax relief incentives
◊ Utilities rate relief incentives
◊ Other discounts form regularly assessed taxes and fees
– Will show what tax would be gross and then the discounts
from tax granted by tax class
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Potentially new statement titles
New categories on statement of net position
May need to modify bond covenants
Historical trend data may need to be modified
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Impact of Deferrals Presentation
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• Major items will be reclassified
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Impact of Items Previously Reported as
Assets and Liabilities
– Especially debt issuance costs
• Previously reported net assets will change
• Again, may need to modify bond covenants
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• Significant change in discount rate
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Impact of Pension Standards
– Decrease in rate
– Increase in liabilities (significant increase)
• Recording of share of VRS liabilities
– Currently reported in notes
– Will be reported in statement of net position
– Everyone will be recording
• Additional analysis of the Moody’s way
– Even higher liabilities to be reported
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Jack Reagan
Audit Partner
CliftonLarsonAllen LLP
4250 N Fairfax Drive
Arlington, VA 22203
jack.reagan@cliftonlarsonallen.com
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©2013 CliftonLarsonAllen LLP
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Contact Information
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