2013 Fall Conference
SD Association of School Business Officials
GASB Updates and Annual Reports
Rod Fortin—Director of Local Gov’t Assistance
Department of Legislative Audit
300 S. Sycamore Avenue, Suite 102
Sioux Falls, SD 57110-1323
ph. (605) 367-5810
rod.fortin@state.sd.us
1
GASB UPDATES

GASB STATEMENT 63, Financial Reporting
of Deferred Outflows of Resources, Deferred
Inflows of Resources, and Net Position
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Addresses questions associated with display of
deferred inflows/outflows in balance sheet
Terminology changes
Describes the Statement of Net Position
Does NOT expand usage of deferrals
Effective Date: Periods beginning after 12/15/2011
Schools FY2013
2
GASB UPDATES

GASB STATEMENT 65, Items Previously
Reported as Assets and Liabilities

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Closely related to GASB 63
Initially intended to look back at whether any existing
assets & liabilities should instead be reported as
deferrals
Effective Date: Periods beginning after 12/15/2012
Schools FY2014
3
GASB 63
Identifies 5 elements that make up a
statement of financial position:
 Assets
 Liabilities
 Deferred outflows of resources
 Deferred inflows of resources
 Net position
4
GASB 63
This differs from what the composition
currently required by Statement 34, which
requires the presentation of
 Assets
 Liabilities
 Net assets
5
DEFINITIONS
Assets: Resources with present service capacity that
the government presently controls
Deferred outflows of resources: A consumption of net
assets by the government that is applicable to a future
reporting period
Liabilities: Present obligations to sacrifice resources
that the government has little or no discretion to avoid
Deferred inflows of resources of resources: An
acquisition of net assets by the government that is
applicable to a future reporting period
6
DISPLAY REQUIREMENTS
•
•
•
Deferred outflows of resources should be reported in
a separate section following assets
Deferred inflows of resources should be reported in a
separate section following liabilities
Net position components resemble the existing
components of net assets, but also include the effects
of deferred outflows of resources and deferred inflows
of resources
• Net investment in capital assets
• Restricted
• Unrestricted
7
ILLUSTRATION
S ta te me nt o f N e t P o sitio n
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GOVERNMENTAL FUNDS

Governmental Activities in Governmentwide Statements:

Statement of Net Position:
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assets + deferred outflows – liabilities – deferred
inflows = net position
Governmental Fund Format:

Balance Sheet:

Assets + deferred outflows = liabilities + deferred
inflows + fund balance
9
NOTE DISCLOSURES
•
Governments should provide details of different
types of deferred amounts in the notes if
significant components of the total deferred
amounts are obscured by aggregation on the
face of the statements
•
If the amount reported for a component of net
position is significantly affected by deferred
inflows or outflows, governments should
disclose an explanation in the notes
10
CHANGES
•
There are few items that GASB standards
require to be reported as deferred
outflows/inflows of resources as of today:
•
•
•
Statement 53–Derivative Instruments
Statement 60–Service Concession Arrangements
NOT SO FAST…Statements 65, 67, 68
and 69 also have items that are reported
as deferred outflows of resources or
deferred inflows of resources.
11
GASB STATEMENT 65

ITEMS PREVIOUSLY REPORTED AS
ASSETS AND LIABILITIES
12
GASB 65—OBJECTIVE

To determine whether certain balances
currently reported as assets and liabilities
should continue to be reported as such or
instead should be reported as:



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A deferred outflow of resources, or
An outflow of resources (expense/expenditures)
OR
A deferred inflow of resources, or
An inflow of resources (revenue)
13
DEFERRED OUTFLOWS
Transactions in which the resulting item should be
classified as deferred outflows of resources:
•
Resources advanced to another government in relation
to a government-mandated nonexchange transaction or
a voluntary nonexchange transaction when time
requirements are the only eligibility requirements that
have not been met by the other government (paragraph
19 of Statement No. 33, Accounting and Financial
Reporting for Nonexchange Transactions)
14
DEFERRED OUTFLOWS
•
•
Deferred debit amounts resulting from the refunding of
debt (paragraph 5 of Statement No. 23, Accounting and
Financial Reporting for Refundings of Debt Reported by
Proprietary Activities, and paragraph 221 of Statement
No. 62, Codification of Accounting Financial Reporting
Guidance Contained in Pre-November 30, 1989 FASB
and AICPA Pronouncements)
The purchase of future revenues within the same
financial reporting entity (paragraphs 13–16 of Statement
No. 48, Sales and Pledges of Receivables and Future
Revenues and Intra-Entity Transfers of Assets and
Future Revenues)
15
DEFERRED OUTFLOWS
•
Deferred loss resulting from sale-leaseback
transactions (paragraph 242 of Statement 62)
•
Net balance (debit) of direct loan origination costs,
including any portion related to points, for mortgage
loans held for resale prior to the point of sale (paragraph
467 of Statement 62)
•
Fees paid to permanent investors to ensure the ultimate
sale of loans prior to the point of sale (paragraph 469 of
Statement 62)
16
OUTFLOWS
Transactions in which the resulting item should
be recognized as outflows of resources:
•
Acquisition costs for insurance entities and public entity
risk pools (paragraphs 28–30 of Statement No. 10,
Accounting and Financial Reporting for Risk Financing
and Related Insurance Issues, and paragraphs 412–414
of Statement 62)
•
Initial direct costs incurred by the lessor for operating
leases (paragraph 227 of Statement 62)
17
OUTFLOWS
•
•
•
Debt issuance costs (paragraph 12 of Statement No. 7,
Advance Refundings Resulting in Defeasance of Debt,
and paragraph 187 of Statement 62)
Net balance (debit) of direct loan origination costs,
including any portion related to points, related to lending
activities (paragraph 45 of Statement 10 and paragraph
434 of Statement 62)
Fees paid related to a purchased loan or a group of
loans (paragraph 442 of Statement 62)
18
OUTFLOWS
•
•
•
Net balance (debit) of direct loan origination costs,
including any portion related to points, for mortgage
loans held for investment (paragraph 467 of Statement
62)
Net balance (debit) of direct loan origination costs,
including any portion related to points, for mortgage
loans held for resale after the sale occurs (paragraph
467 of Statement 62)
Fees paid to permanent investors to ensure the ultimate
sale of loans after the ultimate sale occurs (paragraph
469 of Statement 62)
19
DEFERRED INFLOWS
Transactions in which the resulting item should be
classified as deferred inflows of resources:
•
•
Resources received in advance in relation to an imposed
nonexchange transaction (paragraph 18 of Statement
33)
Resources received in advance in relation to a
government-mandated nonexchange transaction or a
voluntary nonexchange transaction when time
requirements are the only eligibility requirements that
have not been met by the receiving government
(paragraph 19 of Statement 33)
20
DEFERRED INFLOWS
•
Deferred credit amounts resulting from the refunding of
debt (paragraph 5 of Statement 23, and paragraph 221
of Statement 62)
•
Proceeds from the sale of future revenues (paragraphs
13–16 of Statement 48)
•
Unavailable revenue related to the application of
modified accrual accounting (Statement No. 6,
Accounting and Financial Reporting for Special
Assessments, and Statement 33)
21
DEFERRED INFLOWS
•
Deferred gain resulting from sale-leaseback transactions
(paragraph 242 of Statement 62)
•
Net balance (credit) of loan origination fees, excluding
any portion related to points, for mortgage loans held for
resale prior to the point of sale (paragraph 467 of
Statement 62)
•
Net balance (credit) of loan origination fees related to
points for lending activities and mortgage loans held for
investment (paragraph 45 of Statement 10 and
paragraphs 434 and 467 of Statement 62)
22
DEFERRED INFLOWS
•
Resources generated by current rates intended to
recover costs that are expected to be incurred in the
future (paragraph 482 of Statement 62)
•
Gains or other reductions of net allowable costs
intended to reduce rates over future periods
(paragraph 482 of Statement 62)
23
INFLOWS
Transactions in which the resulting item should be
recognized as inflows of resources:
•
Net balance (credit) of loan origination fees, excluding
any portion related to points, related to lending activities
(paragraph 45 of Statement 10 and paragraph 434 of
Statement 62)
•
Commitment fees realized upon exercise or expiration of
the commitment (paragraphs 437 and 438 of Statement
62)
24
INFLOWS
•
Commitment fees charged for entering into an
agreement that obligates the government to make or
acquire a loan or to satisfy an obligation of the other
party under a specified condition when exercise is
considered remote (paragraphs 437 and 438 of
Statement 62)
•
Fees received related to a purchased loan or a group of
loans (paragraph 442 of Statement 62)
•
Net balance (credit) of loan origination fees, excluding
any portion related to points, for mortgage loans held for
investment (paragraph 467 of Statement 62)
25
INFLOWS
•
Net balance (credit) of loan origination fees, including
any portion related to points, for mortgage loans held for
resale after the sale occurs (paragraph 467 of Statement
62)
•
Fees that are realized after the funding of mortgage
loans has occurred or after the commitment to guarantee
the funding of mortgage loans expires (paragraph 469 of
Statement 62)
•
Fees realized when a commitment is arranged directly
between a permanent investor and a borrower
(paragraph 470 of Statement 62)
26
ASSETS– NOT CHANGED
In the Basis for Conclusion the Board affirmed
items resulting from the following transactions
should be classified as an ASSET:
•
•
Prepayments (paragraph 73 of NCGA Statement No. 1,
Governmental Accounting and Financial Reporting
Principles)
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 (paragraph 19 of Statement 33)
27
ASSETS– NOT CHANGED
•
The purchase of future revenues from a government
outside the financial reporting entity (paragraphs 13–16
of Statement 48)
•
Initial subscriber installation costs in relation to cable
television systems (paragraph 398 of Statement 62)
•
Capitalized incurred costs related to regulated activities
(paragraph 480 of Statement 62)
•
Circumstances in which a pension plan’s net position
exceeds the total pension liability
28
LIABILITIES—NOT CHANGED
In the Basis for Conclusion the Board affirmed the items
resulting from the following transactions should be
classified as a liability:
•
Resources received in advance in relation to a derived
tax revenue nonexchange transaction (paragraph 16 of
Statement 33)
•
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 (paragraph 19 of Statement 33)
29
LIABILITIES—NOT CHANGED
•
Resources received in advance of an exchange
transaction (paragraph 23 of Statement 62)
•
Excess of initial hookup revenue over of direct selling
costs in relation to cable television systems (paragraph
397 of Statement 62)
•
Premium revenues for insurance entities and public
entity risk pools received in advance (paragraphs 19–21
of Statement 10, and paragraphs 405 and 406 of
Statement 62)
30
LIABILITIES—NOT CHANGED
•
Commitment fees charged for entering into an
agreement that obligates the government to make or
acquire a loan or to satisfy an obligation of the other
party under a specified condition, unless exercise is
remote (paragraphs 437 and 438 of Statement 62)
•
Fees that are received for guaranteeing the funding of
mortgage loans (paragraph 469 of Statement 62)
•
Fees received for arranging a commitment directly
between a permanent investor and a borrower
(paragraph 470 of Statement 62)
•
Refunds imposed by a regulator (paragraph 482 of
31
OTHER AREAS


Use of the term deferred should be limited to
deferred inflows and deferred outflows of
resources.
Major fund calculation guidance is amended

Use aggregate assets/deferred outflows and
aggregate liabilities/deferred inflows in the
calculation.
32
Transaction
Before Implementation of
GASB 65
After Implementation of
GASB 65
Gain/ Loss on Defeasance
Previously deducted
from/added to new debt
liability
Deferred outflow/inflow
of resources
Debt Issuance Costs
Previously deferred charge
(asset)
All costs except prepaid
bond insurance are
expensed as incurred
Certain (not all) resources
received in advance in
voluntary nonexchange
transactions
Deferred revenue (liability)
Deferred inflow of
resources
Gain/Loss on
Deferred charge (asset) or
Sale/Leaseback Transaction deferred credit (liability)
Deferred inflow or outflow
of resources
Lending Activities
Deferred revenue
Deferred inflow of
resources
Lending Activities
(Origination Costs)
Deferred revenue
Expense as incurred
33