GASB Update
California Society of Municipal Finance Officers
February 21, 2013
Michelle Czerkawski, GASB Project Manager
The views expressed in this presentation are those of the speaker.
Official positions of the GASB are determined only after extensive due process and deliberation.
Session Agenda
Board appointments
 Recently issued Statements

◦ Review of effective dates
◦ Statements effective for 2013 FYEs—key
provisions
◦ Statements effective for post-2013 FYEs—
brief overview

Current-agenda projects
Current Board Members
Member
Term Expires
Bob Attmore, Chair
2014 (retiring in 2013)
Jim Brown
2017—first term
Bill Fish
2016—first term
Michael Granof
2015—first term
David Sundstrom
2014—first term
Jan Sylvis
2017
Marcia Taylor
2015
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RECENTLY ISSUED
STATEMENTS
Effective Dates—FYE June 30

2013
◦
◦
◦
◦

Statement 60—Service Concession Arrangements
Statement 61—Financial Reporting Entity
Statement 62—Codification of AICPA & FASB
Statement 63—Deferrals Presentation
2014
◦ Statement 65—Assets & Liabilities—Reclassification & Recognition
◦ Statement 66—Technical Corrections
◦ Statement 67—Pension Plans

2015
◦ Statement 68—Pension Accounting for Employers & Nonemployer
Contributing Entities
◦ Statement 69—Government Combinations & Disposals of Government
Operations
5
2013 FYEs:
Statement 60
Service Concession
Arrangements (SCAs)
Effective for Periods Beginning after December 15, 2011
Definitions
SCAs are a type of public-private or
public-public partnership.
 The term public-private partnership is
used to refer to a variety of:

◦ Service arrangements
◦ Management arrangements
◦ SCAs
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Scope

Transferor conveys to operator right & related obligation to
provide public services through the operation of a capital
asset in exchange for significant consideration
◦ Examples: Up-front payment, installment payments, new facility,
improvements to existing facility
Operator collects & is compensated from fees from third
parties
 Transferor determines /has the ability to modify or approve:

◦ What services the operator is required to provide
◦ To whom the operator is required to provide the services
◦ Prices or rates that can be charged for the services

Transferor entitled to significant residual interest in the
service utility of the facility at end of the arrangement
8
Facilities Associated with SCAs

If new & purchased/constructed by
operator or existing that has been
improved by the operator
◦ Transferor reports:
 New facility or improvement—capital asset at fair
value when placed in operation
 Any contractual obligations—liabilities, with
deferred inflow of resources
9
Upfront or Installment Payments

Transferor reports:
◦ Up-front payment or present value of
installment payments—asset
◦ Any contractual obligations—liabilities, with
deferred inflow of resources
◦ Revenue as deferred inflow of resources is
reduced
 Systematic & rational manner
 Over term of the arrangement
 Beginning when facility is placed into operation
10
Liabilities—Contractual Obligations

Liabilities at present value if significant &
either:
◦ Directly relates to the facility
 Relates to ownership of facility or arises from
transferor’s responsibility to assure facility remains fit
for particular purpose of arrangement
 Examples: obligations for capital improvements,
insurance, maintenance on the facility
◦ Relates to transferor commitment to maintain
minimum/ specific level of service in connection
with operation of facility
 Examples: providing a specific level of police/emergency
services for facility, or providing minimum level of
maintenance to areas surrounding facility
11
2013 FYEs:
Statement 61
The Financial Reporting
Entity—Omnibus
Effective for Periods Beginning after June 15, 2012
12
Significant Effects

Increased emphasis on financial
relationships
◦ Raises the bar for inclusion
Refocused & clarified requirements to
blend certain component units (CUs)
 Improved recognition of ownership
interests

◦ Joint ventures
◦ CUs
◦ Investments
13
Inclusion Criteria

Statement 14 required inclusion if
potential CU is fiscally dependant
◦ Primary government has authority over:
 Budget, or
 Setting taxes & charges, or
 Issuing debt

Statement 61 adds requirement for a
financial benefit or burden before
inclusion is required
14
Blending Requirements: Narrowed
Statement 14 requires blending if Primary
Government (PG) & CU have
“substantively the same” governing body
 Statement 61 modifies that requirement
to also include:

◦ A financial benefit/burden relationship, or
◦ PG has “operational responsibility” for CU
 PG’s personnel manage activities of CU like a fund,
program, or department of the primary government
15
Blending Requirements: Broadened

Include CUs whose total debt outstanding
is expected to be repaid entirely or
almost entirely by revenues of the PG
◦ Even if the CU provides services to
constituents or other governments, rather
than exclusively or almost exclusively to the
PG
16
Note Disclosures

Clarifies that current disclosures require:
◦ Rationale for including each CU
◦ Whether CU is discretely presented, blended,
or included as a fiduciary fund
No new disclosures
 Practical consideration—can aggregate
similar CUs for disclosure

17
2013 FYEs:
Statement 62
Codification of
Pre-November 30, 1989 FASB
and AICPA Pronouncements
Effective for Periods Beginning after December 15, 2011
18
Five Classifications

Conflict with or contradict GASB standards
◦ FASB Statement 4—Gain or loss on debt extinguishments
◦ FASB Statement 43—Compensated absences

Are not applicable to governments
◦ FASB Statement 84—Convertible debt

Rarely applicable (excluded)
◦ FASB Statement 19–Oil & Gas

Are applicable to governments
◦ FASB Statement 34—Capitalization of interest

Will be addressed in GASB projects (applicable, but
excluded)
◦ APB Opinion 16—Business combinations
19
Basic Guidance

Statement 20 is superseded
◦ All applicable pre-11/30/89 standards are
contained in the GASB’s codification
◦ All potentially applicable post-11/30/89 nonGASB standards will be “other accounting
literature”

Guidance on 29 topics is brought into the
GASB literature
20
Significant Topics









Special & extraordinary items (APB Opinion 30)
Comparative financial statements (ARB 43)
Related parties (FASBS 57)
Prior-period adjustments (FASBS 16 & APB
Opinion 9)
Accounting changes & error corrections (APB
Opinion 20 & FASBI 20)
Contingencies (FASBS 5 & FASBI 14)
Extinguishments of debt (APB Opinion 26 &
FASBS 76)
Inventory (ARB 43)
Leases (FASBS 13, 22, 98 & FASBI 23, 26, 27)
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Specialized Topics
Sales of real estate (FASBS 66)
Real estate projects (FASBS 67)
Research & development arrangements
(FASBS 68)
 Broadcasters (FASBS 63)
 Cable television systems (FASBS 51)
 Insurance enterprises (FASBS 60)
 Lending activities (FASBS 91)
 Mortgage banking activities (FASBS 65)
 Regulated operations (FASBS 71, 90, 101)



22
2013 FYEs:
Statement 63
Financial Reporting of Deferred
Outflows of Resources, Deferred
Inflows of Resources, and Net
Position
Effective for Periods Beginning after December 15, 2011
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Background

Concepts Statement 4—five elements in a
statement of financial position
◦
◦
◦
◦
◦

Assets
Liabilities
Deferred outflows of resources
Deferred inflows of resources
Net position
Differs from composition required by
Statement 34
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“New” Elements

Deferred outflows of resources
◦ 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
◦ 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
◦ Residual of all elements presented in a statement of
financial position
◦ = Assets + Deferred Outflows – Liabilities – Deferred
Inflows
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Display Requirements
Deferred outflows of resources reported in a
separate section following assets
 Deferred inflows of resources reported in a
separate section following liabilities
 Net position components

◦ Resemble net asset components under Statement 34
 Net investment in capital assets
 Restricted
 Unrestricted
◦ Include the effects of deferred outflows & deferred
inflows of resources

Governmental funds continue to report fund
balance
26
Deferred Outflows/Inflows of
Resources

Prior standards
◦ Statement 53—Derivative Instruments
◦ Statement 60—Service Concession
Arrangements

Post-issuance standards
◦ Statement 65—Items Previously Reported as
Assets & Liabilities
◦ Statement 68—Pensions
◦ Statement 69—Government Combinations
27
Later FYEs:
Statement 65
Items Previously Reported as
Assets and Liabilities
Effective for Periods Beginning after December 15, 2012
28
Deferred Inflows of Resources
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

29
Deferred Outflows of Resources
Grant paid in advance of meeting timing
requirement
 Deferred amounts from refunding of
debt (debits)
 Cost to acquire rights to future revenues
(intra-entity)
 Deferred loss from sale-leaseback

30
Outflows of Resources
Debt issuance costs (other than
insurance)
 Initial costs incurred by lessor in an
operating lease
 Acquisition costs for risk pools
 Loan origination costs

31
Inflows of Resources
Loan origination fees
 Commitment fees (after exercise or
expiration)

32
Later FYEs:
Statement 66
Technical Corrections—2012
Effective for Periods Beginning after December 15, 2012
33
Conflicts

Statement 62 with
◦ Statement 13—Leases
◦ Statement 48
 Purchase of a loan or group of loans
 Servicing fees related to mortgage loans

Statement 10 with
◦ Statement 54—Risk financing pools
34
Later FYEs:
Statement 67
Financial Reporting for
Pension Plans
Effective for Fiscal Years Beginning after June 15, 2013
35
Overview
Approved June 2012
 Pension plans
 Few accounting changes
 Notes/RSI

◦ Changes to reflect new measures of employer
liability
◦ Disclosure of annual rate of return

Implementation Guide planned for Q2
2013
36
Later FYEs:
Statement 68
Accounting and Financial
Reporting for Pensions
Effective for Fiscal Years Beginning after June 15, 2014
37
Overview



Approved June 2012
Employer reporting & certain governmental
nonemployer contributing entities
Changes in liability & expense recognition
◦ Break with funding measures
◦ Similar recognition for all types of employers
(single, agent, cost-sharing)


Notes disclosure/RSI changes
Additional implementation guidance planned
for Q1 2014
38
Later FYEs:
Statement 69
Government Combinations
and Disposals of Government
Operations
Effective for Transactions Occurring in Financial Reporting
Periods Beginning after December 15, 2013
Scope

Combinations in which no consideration
is provided
◦ Government mergers
◦ Transfers of operations

Combinations in which consideration is
provided
◦ Government acquisitions

Disposal of government operations
40
Mergers & Transfers of Operations

Assets & liabilities at carrying values
◦ Presumption of GAAP

Reporting
◦ Mergers
 New entity
 Continuing entity
◦ Transfers of operations

Adjustments
◦ Accounting principles, policies, & estimates
◦ Capital asset impairment
◦ Transaction eliminations
41
Acquisitions

Assets (& liabilities) at acquisition value
◦ Recognition based on GAAP applicable to
state & local governments
◦ Market-based entry price measurements
◦ Exceptions

Difference between consideration given
and net position acquired
◦ “Goodwill”—deferred outflow of resources
◦ Contribution received or reduction of noncurrent assets
42
Note Disclosures—
All Combinations

General information
◦ Brief description of the combination &
identification of the entities involved
◦ Date of the combination
◦ Primary reasons for the combination
43
Additional Note Disclosures

Mergers & transfers of operations
◦ Carrying values recognized as of the merger
date
◦ Description of significant adjustments
◦ Amounts recognized

Acquisitions
◦ Brief description of consideration provided
◦ Total amount of net position acquired
◦ Brief description of contingent consideration
arrangements
Disposals of Government
Operations

Includes all disposals of operations (transfers
or sales)
◦ Gains & losses reported as special items

Costs associated with disposals of
government operations
◦ Consider only costs directly associated with
disposal

Disclosures
◦ Description of the circumstances leading to the
discontinuation
◦ Operations revenues, expense, & non-operating
items
45
CURRENT AGENDA
PROJECTS
46
Projects in Process

Conceptual Framework—Recognition &
Measurement Approaches
◦ PV—June 2011

Economic Condition Reporting—Financial
Projections
◦ PV—November 2011

Financial Guarantees
◦ ED—June 2012



Fair Value—Measurement & Application
GAAP Hierarchy
Other Postemployment Benefits
47
RESEARCH AGENDA
PROJECTS
48
Research Agenda
Electronic Financial Reporting
 Fiduciary Responsibilities
 Leases
 Tax Abatement Disclosures

49
FOR ADDITIONAL
INFORMATION/
RESOURCES:
WWW.GASB.ORG
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