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2013 GASB Update
2013 GASB Update
2013 GASB Update
2013 GASB Update
2013 GASB Update
2013 GASB Update
2013 GASB Update
2013 GASB Update
2013 GASB Update
2013 GASB Update
2013 GASB Update
2013 GASB Update
2013 GASB Update
2013 GASB Update
2013 GASB Update
2013 GASB Update
2013 GASB Update
2013 GASB Update
2013 GASB Update
2013 GASB Update
2013 GASB Update
2013 GASB Update
2013 GASB Update
2013 GASB Update
2013 GASB Update
2013 GASB Update
2013 GASB Update
2013 GASB Update
2013 GASB Update
2013 GASB Update
2013 GASB Update
2013 GASB Update
2013 GASB Update
2013 GASB Update
2013 GASB Update
2013 GASB Update
2013 GASB Update
2013 GASB Update
2013 GASB Update
2013 GASB Update
2013 GASB Update
2013 GASB Update
2013 GASB Update
2013 GASB Update
2013 GASB Update
2013 GASB Update
2013 GASB Update
2013 GASB Update
2013 GASB Update
2013 GASB Update
2013 GASB Update
2013 GASB Update
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2013 GASB Update

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  1. A Global Reach with a Local Perspective www.decosimo.comDecosimo - GASB UpdateChristopher D. Flaig – chrisflaig@decosimo.com
  2. CONTACT ME Christopher D. Flaig, CPA Assurance Principal chrisflaig@decosimo.com 513-579-1717 The contents and opinions contained in this article are for informational purposes only. The information is not intended to be a substitute for professional accounting counsel. Always seek the advice of your accountant or other financial planner with any questions you may have regarding your financial goals.2
  3. GASB UPDATE – AN APPETIZER SUMMARY OF GASB PRONOUNCEMENTS  EFFECTIVE FOR PERIODS BEGINNING AFTER JUNE 15, 2011 (YEAR ENDING JUNE 30, 2012)  GASB 57 – OPEB Measurements by Agent Employers and Agent Multiple-Employer Plans  GASB 64 – Derivative Instruments: Application of Hedge Accounting Termination Provisions (an amendment to GASB Statement No. 53)3
  4. GASB UPDATE – AN APPETIZER SUMMARY OF GASB PRONOUNCEMENTS  EFFECTIVE FOR PERIODS BEGINNING AFTER DECEMBER 15, 2011 (YEAR ENDING DECEMBER 31, 2012)  GASB 60 – Accounting and Financial Reporting for Service Concession Arrangements  GASB 62 – Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements  GASB 63 – Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position4
  5. GASB UPDATE – AN APPETIZER SUMMARY OF GASB PRONOUNCEMENTS  EFFECTIVE FOR PERIODS BEGINNING AFTER JUNE 15, 2012 (YEAR ENDING JUNE 30, 2013)  GASB 61 – The Financial Reporting Entity: Omnibus and Amendment of GASB Statements No. 14 and No. 345
  6. GASB UPDATE – AN APPETIZER SUMMARY OF GASB PRONOUNCEMENTS  EFFECTIVE FOR PERIODS BEGINNING AFTER DECEMBER 15, 2012 (YEAR ENDING DECEMBER 31, 2013)  GASB 65 – Items Previously Reported as Assets and Liabilities  GASB 66 – Technical Corrections – 2012 (an amendment of GASB No. 10 and GASB No. 62)6
  7. GASB UPDATE – AN APPETIZER SUMMARY OF GASB PRONOUNCEMENTS  Other statements:  GASB 58 – Accounting and Financial Reporting for Chapter 9 Bankruptcies (for periods beginning after June 15, 2009)  GASB 59 – Financial Instruments Omnibus (for periods beginning after June 15, 2009)7
  8. GASB 57 – OPEB Measurements by AgentEmployers and Agent Multiple-EmployerPlans8
  9. GASB 57 – OPEB Measurements by AgentEmployers and Agent Multiple-EmployerPlans Background  Addresses issues related to the use of alternative measurement method and the frequency and timing of measurements  Agent Employers and Agent Multiple-Employer OPEB Plans  FYI – OPERS, STRS, SERS are cost-sharing, multiple- employer plans (not agent / trust plans)9
  10. GASB 64 – Derivative Instruments: AnApplication of Hedge AccountingTermination Provisions10
  11. GASB 64 – Derivative Instruments: AnApplication of Hedge AccountingTermination Provisions Background  Clarifies whether an effective hedge exists AFTER the replacement of a swap counterparty or a swap counterparty’s credit support provider  GASB 53 – Derivatives should be reported at fair value  Fair value should be reported as a direct change  UNLESS – a hedge exists11
  12. GASB 64 – Derivative Instruments: AnApplication of Hedge AccountingTermination Provisions Hedge  To reduce risk of market volatility  GASB 53 – Derivatives should be reported at fair value  Fair value should be reported as a direct change  UNLESS – a hedge exists  Associate the asset / liability or future cash flows with derivatives to offset risk12
  13. GASB 64 – Derivative Instruments: AnApplication of Hedge AccountingTermination Provisions Hedge Accounting  If a hedge exists:  Defer recognition (statement of activities) of change in fair value of hedging derivative  Hedge Terminates  No longer effective  End of transaction13
  14. GASB 64 – Derivative Instruments: AnApplication of Hedge AccountingTermination Provisions But what happens when there is a default by the counterparty?  What is the response?  Amend and replace the counterparty  New agreement with a new counterparty  In summary, continue to use hedge accounting if:  Collectability is still probable  Assignment / in-substance assignment represent essentially same terms14
  15. GASB 60 – Accounting and FinancialReporting for Service ConcessionArrangements (SCA)15
  16. GASB 60 – Accounting and FinancialReporting for Service ConcessionArrangements (SCA) Background  SCAs – Public/Private or Public/Public Partnerships  More prevalent than ever before16
  17. GASB 60 – Accounting and FinancialReporting for Service ConcessionArrangements (SCA) SCAs  Government (aka transferor)  Gives right to operate an asset FOR  Consideration  Cash (upfront payment or installment payments)  Asset improvements / asset construction  Operator  Gives up consideration (as noted above)  Receives revenues17
  18. GASB 60 – Accounting and FinancialReporting for Service ConcessionArrangements (SCA) SCA include but not limited to:  Arrangements in which OPERATOR  Designs and builds facility  Obtains right to collect fees from 3rd parties for usage  Example:  Construct municipal complex for the right to lease a portion of the facility to a 3rd party18
  19. GASB 60 – Accounting and FinancialReporting for Service ConcessionArrangements (SCA) SCA include but not limited to:  Arrangements in which OPERATOR  Provides significant consideration in exchange for the right to access an existing facility  And obtains right to collect fees from 3rd parties for usage  Example:  Parking garage19
  20. GASB 60 – Accounting and FinancialReporting for Service ConcessionArrangements (SCA) SCA include but not limited to:  Arrangements in which OPERATOR  Designs and builds a facility for the Government  Finance construction costs  Provide associated services  Collect associated fee  Convey facility to Government at the end of arrangement  Example:  Toll road20
  21. GASB 60 – Accounting and FinancialReporting for Service ConcessionArrangements (SCA) Required Criteria for GASB 60 (all must be present):  The transferor conveys to the operator the right and related obligation to use capital assets to serve the public  In exchange for significant consideration  The operator is compensated by 3rd party fees  The transferor retains control over service and rates  The transferor is entitled to significant residual interest in service utility21
  22. GASB 60 – Accounting and FinancialReporting for Service ConcessionArrangements (SCA) DOES NOT INCLUDE:  Contracts to operate ancillary services  Concessions / Souvenirs  Privatized or outsourced services  Arrangements where the operator is compensated by the transferor (Government) versus 3rd party fees  Summary - excludes agency relationships  Arrangements in which operator accepts 3rd party payments and remits to the transferor for an established fee22
  23. GASB 60 – Accounting and FinancialReporting for Service ConcessionArrangements (SCA) NOT APPLICABLE TO GOVERNMENTAL FUNDS23
  24. GASB 60 – Accounting and FinancialReporting for Service ConcessionArrangements (SCA) Transferor Accounting and Financial Reporting  If facility is an existing facility  Continue to report as an asset  If facility is NEW (purchased / constructed / improved)  (A)Report capital asset at fair value when placed in operation  (B)Any direct contractual obligations as liabilities  Difference between (A) and (B) as Deferred Inflow of Resources24
  25. GASB 60 – Accounting and FinancialReporting for Service ConcessionArrangements (SCA) Transferor Accounting and Financial Reporting  Liabilities  Obligation directly relates to the facility; or  Obligation relates to a commitment made to maintain a minimum level of service  Example – providing a level of police and fire services for the facility  Example – providing maintenance to areas surrounding the facility  Record liability at present value25
  26. GASB 60 – Accounting and FinancialReporting for Service ConcessionArrangements (SCA) Transferor Accounting and Financial Reporting  Depreciation  Do not depreciate if the arrangement requires the operator to return the asset in original or enhanced condition at the end of the agreement26
  27. GASB 60 – Accounting and FinancialReporting for Service ConcessionArrangements (SCA) Transferor Accounting and Financial Reporting  Deferred inflow needs to be recognized as revenue  Systematic / Rational manner over the life of agreement beginning when the facility is placed in operation  Liability should be reduced as the obligation is satisfied  As obligations are satisfied  Deferred inflows should be recognized  Then recognized as revenues in the same manner as above  Additional asset improvements should be recognized27
  28. GASB 60 – Accounting and FinancialReporting for Service ConcessionArrangements (SCA) Transferor Accounting and Financial Reporting  If an up-front payment is received…..  Essentially the same accounting  Up-front payment or present value of installment payments posted as an asset  Book contractual liability (as noted previously)  Net equals deferred inflow of resources  Amortize deferred inflow of resources (as noted previously) in a systematic and rational manner over the life of the agreement28
  29. GASB 60 – Accounting and FinancialReporting for Service ConcessionArrangements (SCA) Public – Public Partnership….a Government as the OPERATOR…..  Record an “Intangible Asset” –  Why – “right to….access facility or collect fees, etc.”  Equates to the amount paid for the facility / upfront payments  Improvements increase the value of the asset  Amortize asset in a systematic and rational manner over the life of the agreement  Also – consider a liability if the “asset” (the facility) needs to be returned in a certain condition29
  30. GASB 60 – Accounting and FinancialReporting for Service ConcessionArrangements (SCA) REVENUE SHARING ARRANGEMENT  Government Operator  Revenues – TOTAL amount collected  Expense – TOTAL amount to be paid to TRANSFEROR  Government Transferor  Revenue – only recognize the amount due to you!  If amounts are FIXED – then book via PV as installment amounts30
  31. GASB 60 – Accounting and FinancialReporting for Service ConcessionArrangements (SCA) Key Disclosures – see disclosure checklist Year of implementation – changes to comply should be treated as adjustments of prior periods Restate prior year (as applicable) with a cumulative effect of the change on beginning assets if at all possible31
  32. GASB 62 – Codification of Accounting andFinancial Reporting - November 30, 1989Guidance32
  33. GASB 62 – Codification of Accounting andFinancial Reporting - November 30, 1989Guidance Background  GASB 34  Provided (for Governmental and BTAs) should follow GASB and FASB (pre November 30, 1989) UNLESS FASB conflicted or contradicted GASB  Supersedes GASB 20  As such the ELECTION for BTAs to use FASB POST 11/30/1989 is eliminated33
  34. GASB 62 – Codification of Accounting andFinancial Reporting - November 30, 1989Guidance OBJECTIVE  Incorporate FASB and AICPA pronouncements  Practical effect:  Same standard  No real change expected  No longer an “option” to elect to follow……  May continue to follow as other accounting literature So what is really happening here – the codification!!34
  35. GASB 63 – Financial Reporting of DeferredOutflows of Resources, Deferred Inflows ofResources and Net Position35
  36. GASB 63 – Financial Reporting of DeferredOutflows of Resources, Deferred Inflows ofResources and Net Position OBJECTIVE  The current equation –  Assets less liabilities = net assets  GASB reviewed concepts statement #4  What about things that are not really assets OR liabilities  And the mezzanine was born Deferred outflows of resources (FKA assets / debits) Deferred inflows of resources (FKA liabilities / credits)36
  37. GASB 63 – Financial Reporting of DeferredOutflows of Resources, Deferred Inflows ofResources and Net Position DEFERRED OUTFLOWS VS. ASSETS  Deferred outflows  Consumption applicable to future periods  Example – Resources provided to a grantee when only the time requirement has not been met  Assets  Resources with present service capacity that the government presently controls  Example - Prepaids37
  38. GASB 63 – Financial Reporting of DeferredOutflows of Resources, Deferred Inflows ofResources and Net Position DEFERRED INFLOWS VS. LIABILITIES  Deferred inflows  Acquisitions applicable to future periods  Example – Proceeds of sale of future revenues (unavailable)  Liabilities  Present obligations to sacrifice resources that really cannot be avoided  Example – Payments received for services yet to be performed38
  39. GASB 63 – Financial Reporting of DeferredOutflows of Resources, Deferred Inflows ofResources and Net Position SOME NOTES  Do not net inflows with outflows  Assets should be added with outflows – subtotal  Liabilities should be added with inflows – subtotal  For governmental funds still a balance sheet with subtotals…..  For entity-wide – net assets NOW renamed as net position39
  40. GASB 63 – Financial Reporting of DeferredOutflows of Resources, Deferred Inflows ofResources and Net Position NEW – STATEMENT OF NET POSITION (NO LONGER NET ASSETS)  Net Investment in Capital Assets – New title!  Unrestricted  Restricted40
  41. GASB 63 – Financial Reporting of DeferredOutflows of Resources, Deferred Inflows ofResources and Net Position Implementation Guidance  Retrospective application  No increase in “equity” – but how things are classified from the prior year will change  See the illustrative GFOA CAFR statements attached41
  42. GASB 65 – Items Previously Reported asAssets and Liabilities42
  43. GASB 65 – Items Previously Reported asAssets and Liabilities Background – jump ahead from GASB 63  Required for years ended 12/31/2013  Early implementation encouraged  Provides detailed information  Provides guidance on placement of various accounts43
  44. GASB 65 – Items Previously Reported asAssets and Liabilities Background  Report and continue to keep as asset / liability  Report as a Deferred Inflow / Outflow (still on balance sheet – just a new section)  Report as inflow/outflow (to the P&L – never to the balance sheet)44
  45. GASB 65 – Items Previously Reported asAssets and Liabilities For each account – the approach to be used:  Is the account an asset or liability  Yes – stay as is  Or is it a Deferred Outflow / Inflow  Yes – a new place on the balance sheet (SONP)  Fall back plan - report as inflow/outflow (to the P&L)45
  46. GASB 65 – Items Previously Reported asAssets and Liabilities What I once knew to be true, AKA what were once assets are now deferred outflows (some examples)  Refunded debt – the excess of the price over the original carrying amount  Resources provided to a grantee when only the time requirement has not been met46
  47. GASB 65 – Items Previously Reported asAssets and Liabilities What I once knew to be true, AKA what were once assets are now P&L outflows (some examples)  Debt issuance costs (except prepaid insurance)  Initial direct costs of operating leases47
  48. GASB 65 – Items Previously Reported asAssets and Liabilities What I once knew to be true, AKA what were once liabilities are now Deferred Inflows (some examples)  Revenue of a governmental fund not yet recognized because it is not yet AVAILABLE  Refunded debt – the excess of the price over the original carrying amount  Property taxes – received or recognized as a receivable prior to the period they were INTENDED to finance48
  49. GASB 65 – Items Previously Reported asAssets and Liabilities What I once knew to be true, AKA what were once liabilities are now Deferred Inflows (some examples)  Resources received from a grantor when only the time requirement has not been met  Other imposed non-exchange revenues received or recognized as receivables prior to the period when the use of the resource is required or first permitted49
  50. GASB 65 – Items Previously Reported asAssets and Liabilities What I once knew to be true, AKA what were once Liabilities are now P&L Inflows (some examples)  Loan origination fees50
  51. Things to remember….. Private – Public Partnership – GASB 60 Component Units – get ready to re-evaluate for GASB 61 (but not until 6/30/2013 and after) FASB Codification – no longer GASB 20 - GASB 62 GASB 64 – If you have derivatives GASB 63 & 65 – some changes in classification!! GASB 66 – Mess-ups getting cleaned up! For next time – Pensions….Pensions…Pensions!!51
  52. Thank you!52

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