Concepts Statement
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Transcript Concepts Statement
Governmental
Accounting and
Reporting Update
GFOA Spring Conference
May 3, 2010
Agenda
Federal perspective
Environment
Implementation stories
What is happening now?
What is waiting?
Future considerations
Remaining GASB
34/35 Issues /
Inconsistencies
GASB 34 / 35 Issues
MD&A requirements for BTAs, clarification of
exceptions to general requirements
Grants and contracts, exchange and exchange-like
Federal financial aid, Pell grants, direct lending
Library books
Split-interest agreements
Perkins Loan
Other Issues
Fund raising function used?
Other functions / programs
Matrix presentation for functional and natural
expenses
Federal Perspective
Federal Perspective
IPEDS Technical Review Panel focused on Consistency of reporting (GASB/FASB)
Need for more useful information
IPEDS changes – Part C Expenses
Optional for FY June 30, 2009, allows for similar
allocation of FASB institutions Operations and Maintenance of Plant
Depreciation
Interest Expense
Part C-Expenses and Other Deductions (non
Aligned)
Part C- Expenses and Other Deductions
(Aligned)
Before
After Allocation Change
Allocation
($ in millions)
Instruction
173
197
24
Research
125
143
18
Public Service
68
78
10
Academic Support
35
40
5
Student Services
25
28
3
Institutional Support
27
31
4
Auxiliary Enterprises
81
91
10
Operations and
Maintenance of Plant
35
0
-35
Depreciation
33
0
-33
6
0
-6
608
608
0
Interest Expense
Total
NACUBO AR 2010-1
Issued February, 2010
Offers guidance for public institutions
For IPEDS Reporting only
NACUBO AR 2010-1
Select categories of cost
Review methodologies of cost
Explore availability of date
Consider mission, objectives and practices of
your institution
NACUBO AR 2010-1
The NACUBO APC and NACUBO survey support
the use of the following common allocation
methodologies Direct assignment based on functional category of space
Assignable square footage
Salaries and wages, or salaries and wages plus benefits
Total expenses by function
Combination of the above
Governmental Reporting
Environment
Codification of FASB, AICPA, Pre GASB
authoritative
GASB
Service Efforts and Accomplishments
Concepts
Focus on Accountability
FAF confirmed jurisdictional authority to include in financial
accounting and reporting standards
International Financial Reporting Standards
Watch Out !
New changes – OPEB, Pollution Remediation
Derivatives
Impact on legal restrictions
Bonds covenants
Labor / collective bargaining negotiations
FY 2009 Implementation Stories
Statement 45 – Accounting and Reporting by
Employers for Other Post Employment
Benefits
Statement 49 – Accounting and Financial
Reporting for Pollution Remediation
Obligations
Statement 52 - Land and Other Real Estate Held
as Investments
2009 GASB Implementation Guide – Pell
Grants
What is Happening Now?
Effective FY 2010 –
Statement 51 – Accounting and Financial
Reporting for Intangible Assets
Statement 53 – Accounting and Financial
Reporting for Derivative Instruments
Statement 55 – Hierarchy of GAAP for State
and Local Governments
Statement 56 – Codification of Accounting and
Financial Reporting Guidance Contained in the
AICPA SAS
What is Happening Now?
Statement 58 – Accounting and reporting for
Chapter 9 Bankruptcies
Concepts Statement 4 – Elements of Financial
Statements
Concepts Statement 5 – Service Efforts and
Accomplishments
2009 GASB Implementation Guide
Statement 51
Accounting for Intangible Assets
Effective for periods beginning after
June 15, 2009 (FY 2010)
Intangible Assets
Easements
Water rights
Timber rights
Patents
Trademarks
Computer software
Recognition
Must be identifiable
Specified conditions approach for internally
generated assets (computer software)
Amortization
Required over useful life
Limited by legal or contractual provisions
May have indefinite life if no limits
Implementation
Retroactively
GASB 34 - Phase 1 or 2
Assets acquired after June 30, 1980
Except indefinite useful life
Except internally generated assets
GASB 34 – Phase 3
Retroactive application encouraged not required
Statement 53
Accounting and Financial Reporting
for Derivatives
Effective for periods beginning after
June 15, 2009 (FY 2010)
Derivatives
Fair Value
Derivative instruments are measured on the statement of
net assets at fair value
Fair value changes are reported on the “changes statement”
as investment income
Hedges are an exception
Changes in fair value are reported on the statement of net
assets as a deferral, charges or credits
Derivatives ?
Interest rate swap
Basis swap
Exchange payments based on changes of two variable rates
Swaption
Variable rate to fixed rate
Fixed rate to variable rate
Gives the purchaser of the option the right but not the
obligation to enter into interest rate swap
Commodity swap
Reduce exposure to a commodity call risk
What is Not a Derivative
Normal purchase or sale contracts
Loan commitments
Financial Guarantees
Contracts not exchanged – traded (earthquake or weather
derivatives)
Investments (endowments) where underlying asset is a
derivative
Hedge and Hedge Accounting
Requirements
Association – instrument is associated with a hedgeable item
Substantial offsets – instrument is effective in providing changes
in cash flows or fair values that substantially offset the cash flow
or fair value of a hedgeable item
If the requirements are met, hedge accounting must be
applied.
Accounting is not dependent on documentation
Hedge Accounting
Effectiveness must be evaluated
Qualitative method
Quantitative method
When a method becomes ineffective in a later
period, another method may be used
Disclosure Requirements
Significant terms
Risks – credit, interest rate, basis, termination, rollover,
market access, foreign currency
If another evaluation method is used , details must be
provided
Investment derivative requires credit, interest rate,
foreign currency risks
Contingencies
Hedged debt
Synthetic guaranteed investment contracts
Statement 55
Hierarchy of Generally Accepted
Accounting Principles for State
and Local Governments
Effective immediately
Moves the definitions from AICPA Audit Guide
Statement 56
Codification of Accounting and
Reporting Guidance Contained
in the AICPA Statements of
Auditing Standards
Effective immediately
Moves the definitions from AICPA Statement
of Auditing Standards
Statement 59
Accounting and Financial
Reporting for Chapter 9
Bankruptcies
Effective immediately
Addresses bankrupt governmental units under
chapter 9
Concepts Statement 4
Elements of Financial
Statements
Concepts Statement Elements of Financial Statement
Resource – An item of present service capacity
Assets – Resources the entity presently controls
Liabilities – Present obligations to sacrifice resources or
future resources that the entity has little or no
discretion to avoid
Deferred outflow of resources – A consumption of net
resources by the entity that is applicable to a future
reporting period
Concepts Statement Elements of Financial Statement
Deferred inflow of resources – An acquisition of
net resources by the entity that is applicable to a
future reporting period
Net Position – The residual of all other elements
presented in the statement of financial position
Concepts Statement Elements of Financial Statement
Outflow of resources – A consumption of net
resources by the entity that is applicable to the
reporting period
Inflow of resources – An acquisition of net resources
by the entity that is applicable to the reporting period
Before an item can be reported in a financial statement
it must meet appropriate recognition and measurement
criteria. A separate project will define these criteria.
Concepts Statement 5
Service Efforts and
Accomplishments Reporting
Concepts Statement SEA Reporting
Amended Concept Statement 2
Clarifies scope limitation “beyond the scope of the GASB”
to exclude –
Goals and objectives of governmental services
Specific nonfinancial measures or indicators of service
performance
Standards or benchmarks of service performance
Focuses on types of SEA performance measures –
Measures of service efforts
Measures of service accomplishments
Measures that relate service efforts to service accomplishments
What is Waiting?
Effective FY12 GASB 54 - Fund Balance Reporting and
Governmental Fund Type definitions
GASB 57 – OPEB Measurements by Agent
Employers and Agent Multiple –Employer Plans
Exposure Draft - Reexamination of GASB 14
Issued March, 2010
May be effective in FY 13
International Financial
Reporting Standards
IFRS
Future Considerations
Exchange – like revenues
Fiduciary responsibilities
In-kind contributions
Irrevocable charitable trusts
Reporting unit presentation and GASB 14
Financial performance measures
Reexamination Projects
Compensated absences
Debt refundings
Deferred compensation plans
NACUBO Issues
FASB component units disclosures in a GASB
based financial report
GASB 14 Revisited
Alternative SRECNA
Pell and Direct Lending
Questions?
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