GASB Update—The Past, Present,
and Future
The views expressed in this presentation are those of the GASB Chairman, Vice Chairman, and Director. Official
positions of the GASB on accounting matters are determined only after extensive due process and deliberation.
1
The Past
The Creation of the GASB
2
The Antonio Years
Statements 1-28
3
The First Board
4
The Top Five Accomplishments
 A strong and independent GASB
- Rule 203
- Five-year review
 Conceptual framework
- Objectives of financial reporting
- Service efforts and accomplishments
 Financial reporting entity
 Pension standards
 Developing the basic underpinnings of the new model
5
Biggest Challenges
 Five-year review
- Survival of the GASB
- Birmingham, Raleigh, or Norwalk
 Moving past Statement 11
Second Board
6
The Allen Years
Statements 29-45
7
Top Five Accomplishments
 Financial reporting model
- Statement 34
 Other Postemployment Benefits (OPEB) standards
 Staking out the governmental model
- Nonexchange transactions
- Capital asset impairment
- Interpretation 6—Modified accrual
 Fair value reporting for investments
 Moving the Board from five to seven members
- Member with NASC background
- Member with financial statement user background
8
Biggest Challenges
 Financial reporting model
 Service efforts and accomplishments
9
The Attmore Years
Statements 46-71
10
Top Five Accomplishments
 New pension standards
 Stable funding source
 Conceptual framework
- Communication methods
- Elements (deferred and deferred outflows)
- Measurement
 Derivatives reporting
 Suggested guidelines
11
Biggest Challenges
 Call for the GASB’s demise
 Financial projections—scope of authority
12
The Vaudt Years
Statements 72-???
13
Current Board Members
14
GASB-31 Years of Excellence in Standards Setting
 Seventy-seven Statements
- Fifty-six Statements still are effective or will be effective
 Thirty-four Statements considered broad (for example, Statements 14, 34, 68, 75)
 Twenty-two Statement considered necessary, but narrow (for example, Statements 13, 41, 58, 69)
15
Final Pronouncements
The Vaudt Years
16
Statement 72
Fair Value Measurement
And Application
17
Fair Value
 What: Statement establishes how fair value should be
measured
and applied
elements
of financial and
 What:
new standards
fortomergers,
acquisitions,
transfers
and–disposals
operations
statements
and whatofshould
be disclosed
 Why:
more
common,
but volume
no governmentWhy:becoming
The GASB
receives
a large
of questions
specific
guidance
about fair
value; the standards have not been broadly
addressed
 When:
fiscal previously
years ending December 31, 2014 and later
 When: Statement 72 issued February 2015; effective
for reporting periods beginning after June 15, 2015
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Fair Value – MEASUREMENT
 Definition of fair value
 The price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market
participants at the measurement date.
 An exit price
 Other characteristics of fair value measurement
 Market-based
 Based on a government’s principal or most advantageous
market
19
Fair Value – APPLICATION
 Definition of an investment
 A security or other asset that a government holds primarily for the purpose of income
or profit and with a present service capacity that is based solely on its ability to
generate cash or to be sold to generate cash
 Assets and liabilities that meet the definition of an investment generally should
be measured at fair value
20
Statement 74
Financial Reporting for
Postemployment Benefit Plans
Other Than Pension Plans
Statement 75
Accounting and Financial
Reporting for Postemployment
Benefits Other Than Pensions
21
What is OPEB?
Other postemployment benefits – all
postemployment benefits promised to
employees other than pensions
Principally, retiree health insurance –
but also life insurance, disability, legal
services, and other benefits
Includes:
 Payments made to insurance
companies on behalf of retirees,
 Payments directly to retirees, and
 Subsidizing retiree premiums by
allowing them to be insured in the same
group as active employees
22
OPEB Reporting—Key Provisions
 Mirrors pension standards
 Measurement may increase size of
long-term obligation and annual cost
for OPEB
 Recognize the net liability on the
face of the financial statements
 Present more extensive note
disclosures and supporting
schedules
23
OPEB Reporting—Key Provisions
 Objective: to establish a consistent
set of standards for all
postemployment benefits—more
transparent reporting of the liability
and more useful information about
the liability and costs of benefits
 Implementation dates: periods
beginning after June 15, 2016
(plans) and June 15, 2017
(employers)
24
Other Highlights
 Identical in most respects to pension standards in
Statements 67 and 68
 Recognize net OPEB liability in accrual-basis financial
statements
 Recognize many portions of change in net OPEB liability as
OPEB expense immediately; others deferred and
recognized as OPEB expense over shorter periods than
previously
 Cost-sharing governments and nonemployer contributing
entities report proportionate shares of collective net OPEB
liability, OPEB expense, and OPEB-related deferrals
 Enhanced notes and RSI
25
OPEB Standards Mirror Pension Standards
 Once you know how to implement the pension standards,
you will know how to implement the OPEB standards
 OPEB has 2 key assumptions subject to sensitivity
analyses:
 Discount rate +1% and discount rate –1%
 Healthcare cost trend rate +1% and healthcare cost trend rate –1%
26
Statement 76
The Hierarchy of Generally
Accepted Accounting Principles
for State and Local Governments
27
The GAAP Hierarchy
 What: Statement 76 establishes a revised hierarchy of
generally accepted accounting principles and exposed the
entire Comprehensive Implementation Guide for public
comment
 Why: The GAAP hierarchy was incorporated (by Statement
55) from the auditing literature essentially “as is”—this
project simplifies the hierarchy and explains how to identify
the relevant literature within the hierarchy
 When: Effective for periods beginning after June 15, 2015
28
GAAP Hierarchy—Key Provisions
Level 1—GASB Statements
Reduce GAAP Hierarchy from four
levels to two levels
Level 2—GASB Technical Bulletins
and Implementation Guides and
AICPA pronouncements cleared by
the GASB
Nonauthoritative—further clarifies role of
concepts statements
29
Tax Abatement Disclosures: Statement 77
30
Tax Abatement Disclosures
 What: The Board issued Statement 77, which requires disclosures about a
government’s tax abatement agreements
 Why: Information about revenues that governments forgo is essential to
understanding financial position and economic condition, interperiod equity,
sources and uses of financial resources, and compliance with finance related
legal or contractual requirements
 When: Effective for periods beginning after December 15, 2015
31
Definition and Scope
 Does not include all transactions that reduce tax revenues
 Emphasis is on the substance of the arrangement meeting
the definition, not on its name or form
 Would apply only to arrangements meeting this definition:
- A reduction in tax revenues that results from an agreement
between one or more governments and an individual or entity
in which (a) one or more governments promise to forgo tax
revenues to which they are otherwise entitled and (b) the
individual or entity promises to take a specific action after the
agreement has been entered into that contributes to economic
development or otherwise benefits the governments or the
citizens of those governments.
32
General Disclosure Principles
 A government would disclose separately (a) its own tax
abatements and (b) tax abatements that are entered into by
other governments and reduce the reporting government’s
taxes
 Disclose own tax abatements by major program
 Disclose those of other governments by the government
and specific tax abated
 May disclose individual tax abatements above quantitative
threshold established by the government
 Disclosure would commence in the period in which a tax
abatement agreement is entered into and continue until the
tax abatement agreement expires, unless otherwise
specified
33
Current Technical Agenda Projects
Redeliberation
Due Process Stage
Earlier Stages
PV – Leases
 ED – External
Investment Pools
 Asset
Retirement
Obligations
 PV – Fiduciary
Responsibilities
 ED – Irrevocable
Spilt-Interest
Agreements
 Pension Issues
 ED – Blending
Requirements
34
GASB Chairman
What is the GASB doing beyond the technical agenda and
here is what I see looking into the crystal ball …
35
Enhancing Communications
 GASB Outlook
 A new form of communication directed at the “C” suite
 Detailed communications are still available for the techies
 Webcasts focused on due process documents
 Fair value
 Other postemployment benefits
 Leases
 Many more to come
36
Enhancing Communications
 Updated website
 Timely information on projects
 Technical inquiry portal
 Implementation tools
 Postretirement Implementation Tools
 Fact sheets
 Plain-language articles
 Podcasts and video discussions of specific provisions
 Statements
 Pension Implementation Guide
 More to come
37
Beyond the Agenda: Continuing Priorities
 Engaging with GASB stakeholders
 Encouraging broad participation in our process
 Conducting regular listening tours
38
Beyond the Agenda: Improving Relationships
 External
 Meetings with organization execs & congressional leaders in 20132014 and 2014-15
o Strengthening already strong relations (NASBA, AICPA, NASACT)
o Reintroducing GASB to some (National Governors Association, National
Conference of State Legislatures, Council of State Governments)
o Establishing relations with others (National School Boards Association)
 Great standards are built with good, open communication and trust
 Internal
 Breaking down silos to increase efficiency
o Boards can leverage off each other
 Still need to always recognize why the GASB exists
o Board and staff expertise in the public sector – a unique environment
39
Beyond the Agenda: Stakeholder
Collaboration
 Pension Communications Resource Group
 Statements 67 & 68
o Significant impact on the information available about pension promises
o Learning curve to understand
 Stakeholder collaborative effort
o Facilitated by GASB
o Identify materials already produced and build upon those resources
o Equip state & local governments with a roadmap and resources to
address questions
40
Pre-Agenda Research Activities




Financial Reporting Model Reexamination
Debt Extinguishments
Debt Disclosures, including Direct Borrowing
Going Concern
41
Financial Reporting Model Reexamination
 What: In August 2013, the Board decided to begin preagenda research examining the effectiveness of the
financial reporting model
 Why: The GASB is committed to ensuring standards
remain effective; most of the requirements of Statement 34
became effective between 2002 and 2004
 When: The research was completed0 in July – Board to
consider adding project to current agenda in September
2015
42
Financial Reporting Model Reexamination
 Added to the agenda in August 2013
 Top priority of GASAC
 Staff research and roundtables with preparers, auditors and
users conducted in 2013
 Separate preparer, auditor, and user surveys conducted in
2014
 Interviews with preparers, auditors, and users conducted in
2015
 Research complete – preparing papers for Board review
43
Final Thought
The only ideas that are off of the table
are the ones you don’t share with us. So,
make sure your ideas are on the table.
We’d love to hear from you!
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Questions?
Web site—www.gasb.org
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