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Financial Reporting and Regulatory Update

Second Quarter 2019

Effective dates for all GASB statements

Governmental Accounting Standards Board (GASB)

GASB statement

Effective dates – reporting periods beginning after

Early adoption

Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions (GASB Statement 75)

Supersedes the requirements of Statement 45 and now requires governments to report a liability on the face of the financial statements for the other postemployment benefits (OPEB) that they provide along with requiring governments to present more extensive note disclosures and required supplementary information about their OPEB liabilities.
 
June 15, 2017 Permitted
Omnibus 2017
(GASB Statement 85)
Addresses issues found during the application of guidance related to blending a component unit, reporting goodwill, classifying real estate held by insurance entities, measuring certain money market investments and participating interest-earning investment contracts at amortized cost, and various pension and OPEB issues.
 
June 15, 2017 Permitted
Certain Debt Extinguishment Issues
(GASB Statement 86)
Provides guidance for transactions in which cash and other monetary assets acquired with only existing resources (that is, resources other than the proceeds of refunding debt) are placed in an irrevocable trust for the sole purpose of extinguishing debt. This guidance generally follows the same requirements as Statement 7, “Advance Refundings Resulting in Defeasance of Debt.” Under Statement 7, government entities must consider debt to be considered defeased in substance when the debtor irrevocably places cash or other monetary assets acquired with refunding debt proceeds in a trust to be used solely for satisfying scheduled payments of both principal and interest of the defeased debt.
 
June 15, 2017 Permitted
Certain Asset Retirement Obligations
(GASB Statement 83)
Applies when a government has legal obligations to perform future asset retirement activities related to its tangible capital assets. Under this statement, the government is required to recognize a liability and a corresponding deferred outflow of resources related to such obligations. This guidance also identifies the circumstances that trigger recognition of these transactions.
 
June 15, 2018
 
Permitted
Certain Disclosures Related to Debt, Including Direct Borrowings and Direct Placements
(GASB Statement 88)
Clarifies which liabilities governments should include in their note disclosures related to debt and requires that all debt disclosures present direct borrowings and direct placements of debt separately from other types of debt.
 
June 15, 2018 Permitted
Fiduciary Activities
(GASB Statement 84)
Improves guidance regarding the identification of fiduciary activities for accounting and financial reporting purposes and how those activities should be reported. Establishes criteria for identifying fiduciary activities of all state and local governments and clarifies whether and how business-type activities should report their fiduciary activities.
 
Establishes criteria for identifying fiduciary activities of all state and local governments focused on 1) whether a government is controlling the assets of the fiduciary activity and 2) the beneficiaries with whom a fiduciary relationship exists. Separate criteria are included to identify fiduciary component units and postemployment benefit arrangements that are fiduciary activities.
 
Dec. 15, 2018 Permitted
Majority Equity Interests
(GASB Statement 90)
Revises and clarifies the guidance for reporting a government’s majority equity interest in a legally separate organization and improves the relevance of financial statement information for certain component units.
 
Dec. 15, 2018 Permitted
 
Leases
(GASB Statement 87)
Revises recognition and measurement for lease contracts by lessors and lessees by requiring recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and as inflows of resources or outflows of resources recognized based on the payment provisions of the contract. Establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset.
 
Dec. 15, 2019 Permitted
 
Accounting for Interest Cost Incurred Before the End of a Construction Period
(GASB Statement 89)
Supersedes guidance set forth in Statement 62, “Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements,” which generally required capitalization of interest cost incurred before the end of a construction period. Statement 89 requires that interest cost incurred before the end of a construction period be recognized as an expense in the period in which the cost is incurred for financial statements prepared using the economic resources measurement focus and not be included in the historical cost of a capital asset reported in a business-type activity or enterprise fund.
               
Dec. 15, 2019 Permitted
 

Conduit Debt Obligations (GASB Statement 91)

Clarifies the definition of a conduit obligation and stipulates that a   conduit debt obligation is a liability of the third-party obligor, not the issuer, thus eliminating the option for government issuers to recognize    a conduit debt obligation as a liability. Establishes standards for accounting and financial reporting of additional commitments extended  by issuers and arrangements associated with conduit debt obligations and improves required note disclosures.
Dec. 15, 2020 Permitted