2013 IAPD/IPRA SOARING TO NEW HEIGHTS                  CONFERENCE      GASB: WHERE THE FUN BEGINS AND NEVER ENDS          ...
GASB STATEMENT NO. 63      Financial Reporting Of Deferred Outflows Of Resources, Deferred      Inflows Of Resources, And ...
GASB STATEMENT NO. 63      Financial Reporting Of Deferred Outflows Of Resources, Deferred      Inflows Of Resources, And ...
GASB STATEMENT NO. 65      Items Previously Reported As Assets And Liabilities      • Issued in March 2012         • Effec...
GASB STATEMENT NO. 65      Items Previously Reported As Assets And Liabilities      • Accrual basis financial statements s...
GASB STATEMENT NO. 66        Technical Corrections, 2012      • Issued March 2012         • Conflict between GASB S-10 and...
GASB PENSION PROJECT      • Where we have been        • GASB Statement No. 25, Financial Reporting for Defined Benefit    ...
GASB PENSION PROJECT      • Where we have been        • GASB Statement No. 50 (2007)        • Moved 1 year of funded statu...
GASB PENSION PROJECT      • Where are we now        • Current pension project            • Research agenda in January 2006...
GASB STATEMENT NO. 68      Accounting And Financial Reporting For Pensions      • Issued June 2012      • Accounting and f...
GASB STATEMENT NO. 67      • Pension Plan Reporting         • Defines a pension plan            • Administered through an ...
GASB STATEMENT NO. 68      • Does not cover other post employment benefits other than pensions        (OPEB)         • Con...
GASB STATEMENT NO. 68      • Liabilities for defined benefit pensions         • Liabilities to employees for pension benef...
GASB STATEMENT NO. 68      • Recognize and record a net pension liability         • Measured as of employers fiscal year e...
GASB STATEMENT NO. 68      • Measuring the net pension liability         • Projected benefit payments            • Assumpt...
GASB STATEMENT NO. 68      • Measuring the net pension liability         • Entry age actuarial cost method is required    ...
GASB STATEMENT NO. 68      • Modified accrual basis/current financial resources measurement        focus financial stateme...
GASB STATEMENT NO. 68      • Notes to financial statements         • Separate disclosures for each plan you participate in...
GASB STATEMENT NO. 68      • Notes to financial statements         • Contribution Requirements            • Employee      ...
GASB STATEMENT NO. 68      • Notes to financial statements         • Discount rate (continued)            • Bond index rat...
GASB STATEMENT NO. 68      • Notes to financial statements         • Schedule of changes in net pension liability         ...
GASB STATEMENT NO. 68      • Notes to financial statements         • Measurement date of net pension liability, date of ac...
GASB STATEMENT NO. 68      • Notes to financial statements         • Schedule of deferred inflows/outflows related to pens...
GASB STATEMENT NO. 68      • Required supplementary information         • Schedule reporting            • A-Total pension ...
GASB STATEMENT NO. 68      • Required supplementary information         • If employer contributions are not actuarially de...
GASB STATEMENT NO. 68      • Cost sharing plans         • Employer recognizes proportionate share of collective net       ...
GASB STATEMENT NO. 69      Government Combinations And Disposals Of Government Operations      • Issued January 2013 (1/8)...
GASB STATEMENT NO. 69      • Also covers combinations of operations         • Less than an entire separate legal entity   ...
GASB STATEMENT NO. 69      • A government acquisition is a government combination in which a        government acquires an...
GASB STATEMENT NO. 69      • Mergers with no significant consideration exchanged and creation of        new government    ...
QUESTIONS?               Presented by:           Frederick G. LantzPartner-in-Charge, Government Services                S...
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GASB: Where the Fun Begins and Never Ends!

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The Governmental Accounting Standards Board (GASB) has been very active over the last year issuing a number of final pronouncements and due process documents including Statement No. 68, Accounting and Financial Reporting for Pensions, which revises and establishes new financial reporting requirements for most governments that provide their employees with pension benefits. This session reviewed the recent pronouncements from GASB.

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GASB: Where the Fun Begins and Never Ends!

  1. 1. 2013 IAPD/IPRA SOARING TO NEW HEIGHTS CONFERENCE GASB: WHERE THE FUN BEGINS AND NEVER ENDS Presented by: Frederick G. Lantz, CPA Partner-in-Charge, Government Services Sikich LLP 1415 W. Diehl Road, Suite 400 Naperville, IL 60563 (630) 566-8557 flantz@sikich.com GASB UPDATE • GASB Statements to be Implemented • Statement No. 63 through Statement No. 69 • GASB Due Process Documents • Exposure drafts • Discussion memorandums • Invitations to comment (ITC) 2© 2013 Sikich LLP. All Rights Reserved. 1
  2. 2. GASB STATEMENT NO. 63 Financial Reporting Of Deferred Outflows Of Resources, Deferred Inflows Of Resources, And Net Position • Issued June 2011, effective for fiscal years ending December 31, 2012 and thereafter • GASB Concepts Statement No. 4, Elements of Financial Statements • Assets -resources with present service capacity that the government presently controls (BS) • Liabilities-present obligations to sacrifice resources that the government has little or no discretion to avoid (BS) • Outflow of resources is a consumption of net assets by the government that is applicable to the reporting period (IS) • Inflow of resources is an acquisition of net assets by the government that is applicable to the reporting period (IS) 3© 2013 Sikich LLP. All Rights Reserved. GASB STATEMENT NO. 63 Financial Reporting Of Deferred Outflows Of Resources, Deferred Inflows Of Resources, And Net Position • A deferred outflow of resources is a consumption of net assets by the government that is applicable to a future reporting period (BS) • A deferred inflow of resources is an acquisition of net assets by the government that is applicable to a future reporting period (BS) • Net position is the residual of all other elements presented in a statement of financial position (BS/IS) • Replaces net assets but not fund balances 4© 2013 Sikich LLP. All Rights Reserved. 2
  3. 3. GASB STATEMENT NO. 63 Financial Reporting Of Deferred Outflows Of Resources, Deferred Inflows Of Resources, And Net Position • Reporting • Deferred outflows • After assets • No subtotal of assets and deferred outflows required (?) • Deferred Inflows • After liabilities • No subtotal of liabilities and deferred inflows required (?) • Net Position • A+DO-L-DI=NP • Replaces Net Assets/Fund Balances 5© 2013 Sikich LLP. All Rights Reserved. GASB STATEMENT NO. 64 Derivative Instruments: Application Of Hedge Accounting Termination Provisions • Issued Modifies GASB S-53, Accounting and Financial Reporting for Derivative Instruments • Issued in July 2011 • Effective for fiscal years ending June 30, 2012 and thereafter • Continuation of effective hedge after replacement of a swap counterparty • Specifies criteria to be met to continue to apply hedge accounting 6© 2013 Sikich LLP. All Rights Reserved. 3
  4. 4. GASB STATEMENT NO. 65 Items Previously Reported As Assets And Liabilities • Issued in March 2012 • Effective for fiscal years ending December 31, 2013 and thereafter • GASB Concepts Statement No. 4 limits use of terms “deferred outflows” and “deferred inflows” of financial resources to those instances specifically identified in GASB pronouncements • Consider implementing with GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position 7© 2013 Sikich LLP. All Rights Reserved. GASB STATEMENT NO. 65 Items Previously Reported As Assets And Liabilities • Review items currently reported as assets or liabilities • Meet the definition of an asset or liability from GASB S-63, continue to report as such • If not, classify as a deferred inflow or deferred outflow • Accrual basis financial statements specific guidance • Issuance of debt • Debt issue costs are expensed, not capitalized and amortized • Does not apply to bond insurance • Market related premiums/discounts continue to be capitalized and amortized • May require a prior period adjustment 8© 2013 Sikich LLP. All Rights Reserved. 4
  5. 5. GASB STATEMENT NO. 65 Items Previously Reported As Assets And Liabilities • Accrual basis financial statements specific guidance • Accounting gain or loss on refunding of debt • Deferred inflow (gain) or deferred outflow (loss) • Amortize into interest expense • Nonexchange transactions – Accrual basis • Most deferred revenue from nonexchange transactions becomes a deferred inflow of resources • Imposed nonexchange transactions (e.g., property taxes) • Government-mandated nonexchange transactions and voluntary nonexchange transactions (e.g., grants) 9© 2013 Sikich LLP. All Rights Reserved. GASB STATEMENT NO. 65 Items Previously Reported As Assets And Liabilities • Specific guidance • Regulated operations • Governmental funds – modified accrual basis • All deferred revenue in governmental funds becomes deferred inflow of resources • Major fund calculation • Combine assets with deferred outflows • Combine liabilities with deferred inflows • Use of the term “deferred” only allowed in reference to the categories • “deferred” revenues become “unavailable” or “unearned” 10© 2013 Sikich LLP. All Rights Reserved. 5
  6. 6. GASB STATEMENT NO. 66 Technical Corrections, 2012 • Issued March 2012 • Conflict between GASB S-10 and S-54 • GASB S-10 Insurance activities in general fund or internal service fund but not special revenue fund • GASB S-54 definition of a governmental funds • Tort fund meets the definition of a special revenue fund • Solution follow GASB S-54 • Effective for fiscal years ending December 31, 2013 and thereafter • Many Park Districts early implemented in 2012 11© 2013 Sikich LLP. All Rights Reserved. GASB STATEMENT NO. 67 AND NO. 68 • GASB Pension Fund Accounting and Financial Reporting Changes • Two issues • Employers accounting for the costs of pensions • Significant changes • Accounting and reporting by the Pension Plan • Not many changes 12© 2013 Sikich LLP. All Rights Reserved. 6
  7. 7. GASB PENSION PROJECT • Where we have been • GASB Statement No. 25, Financial Reporting for Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Plans (1994) • GASB Statement No. 27, Accounting for Pensions by State and Local Governmental Employers (1994) • Both still effective today 13© 2013 Sikich LLP. All Rights Reserved. GASB PENSION PROJECT • Where we have been • GASB Statement No. 25 and No. 27 • Allowed the use of 5 different actuarial cost methods • Amortization over at most 30 years (after initial 10 years) • Assets generally at fair value • Net Pension Obligation/Asset (NPO/NPA) • Annual Required Contribution (ARC) versus funded • ARC > funding= NPO; ARC<funding= NPA • Unfunded Actuarial Accrued Liability in RSI 14© 2013 Sikich LLP. All Rights Reserved. 7
  8. 8. GASB PENSION PROJECT • Where we have been • GASB Statement No. 50 (2007) • Moved 1 year of funded status into the notes 15© 2013 Sikich LLP. All Rights Reserved. GASB PENSION PROJECT • Where we have been • Problem • Budget friendly, modified accrual basis • Accrual basis, liability when earned by employee, regardless of funding • Lack of comparability due to choices of actuarial valuations and assumptions • Not recognizing spikes, cost of retro benefits or true cost of pensions and any changes • Does not measure interperiod equity 16© 2013 Sikich LLP. All Rights Reserved. 8
  9. 9. GASB PENSION PROJECT • Where are we now • Current pension project • Research agenda in January 2006 • Five roundtable discussions in 2007 • Current project agenda in April 2008 • Invitation to Comment (ITC) March 2009 • Preliminary Views (PV) June 2010 • Exposure Draft (ED) July 2011 • Final Pronouncements June 2012 17© 2013 Sikich LLP. All Rights Reserved. GASB PENSION PROJECT • Where are we are heading • “The final statements relate to accounting and financial reporting, not to how governments approach the funding of their pension plans. Pension funding is a policy decision made by government officials” • GASB has “divorced” accounting for pension from funding of pensions 18© 2013 Sikich LLP. All Rights Reserved. 9
  10. 10. GASB STATEMENT NO. 68 Accounting And Financial Reporting For Pensions • Issued June 2012 • Accounting and financial reporting for defined benefit pensions and defined contribution pensions provided to employees and volunteers of state and local government employers plans • Employer reporting • Special funding non-employer situations • Teachers Retirement System (TRS) in Illinois 19© 2013 Sikich LLP. All Rights Reserved. GASB STATEMENT NO. 68 • Effective for fiscal periods beginning after June 15, 2014 • Fiscal year ending June 30, 2015 and thereafter • December 31, 2015 • April 30, 2016 • May 31, 2016 • Early implementation allowed and encouraged • Will depend on IMRF 20© 2013 Sikich LLP. All Rights Reserved. 10
  11. 11. GASB STATEMENT NO. 67 • Pension Plan Reporting • Defines a pension plan • Administered through an irrevocable trust • Retains current basic financial statements • Statement of plan net position • Statement of changes in plan net position • Notes greatly expanded • RSI greatly expanded • Can reduce disclosures in employers report 21© 2013 Sikich LLP. All Rights Reserved. GASB STATEMENT NO. 67 • Effective for plans for fiscal periods beginning after June 15, 2013 • Fiscal year ending June 30, 2014 and thereafter • December 31, 2014 • April 30, 2015 • May 31, 2015 • Early implementation allowed and encouraged • Applicable to IMRF but not to most park districts or forest preserve districts 22© 2013 Sikich LLP. All Rights Reserved. 11
  12. 12. GASB STATEMENT NO. 68 • Does not cover other post employment benefits other than pensions (OPEB) • Continue to follow GASB S-45 • Possible changes in the future 23© 2013 Sikich LLP. All Rights Reserved. GASB STATEMENT NO. 68 • Defines types of defined benefit plans • Single employer • Police and Fire Pension plans in Illinois • Multiple employer • Agent • IMRF • Cost-sharing • SURS, TRS, IMRF in certain instances 24© 2013 Sikich LLP. All Rights Reserved. 12
  13. 13. GASB STATEMENT NO. 68 • Liabilities for defined benefit pensions • Liabilities to employees for pension benefits • Net Pension Liability • Liabilities for payments to a defined benefit pension plan • Net Pension Obligation 25© 2013 Sikich LLP. All Rights Reserved. GASB STATEMENT NO. 68 • Accrual basis, economic resources measurement focus financial statements (Entity-wide, enterprise funds) • Recognize and record a net pension liability • Actuarial present value of projected benefit payments • Total pension liability • Less pension plans net position (net assets) • Measured as of employers fiscal year end or 1 year old, consistently 26© 2013 Sikich LLP. All Rights Reserved. 13
  14. 14. GASB STATEMENT NO. 68 • Recognize and record a net pension liability • Measured as of employers fiscal year end or 1 year old, consistently • Timing of IMRF • Actuarial valuations performed at least biennially • Annually if significant changes in plan benefits or demographics 27© 2013 Sikich LLP. All Rights Reserved. GASB STATEMENT NO. 68 • Measuring the net pension liability • Projected benefit payments • Assumptions – Actuarial Standards of Practice • Projected benefit payments • Future salary increases (if part of the formula for benefits) • COLAs • Projected service credits 28© 2013 Sikich LLP. All Rights Reserved. 14
  15. 15. GASB STATEMENT NO. 68 • Measuring the net pension liability • Projected benefit payments • Assumptions – Actuarial Standards of Practice • Discount rate – single rate that reflects • Long-term expected rate of return on plan investments (IRR) to the extent that the plan’s net position is sufficient to make projected benefit payments, assuming assets are invested to achieve that return • Yield or index rate for 20 year, tax exempt GO municipal bond rated AA/aa or higher 29© 2013 Sikich LLP. All Rights Reserved. GASB STATEMENT NO. 68 • Measuring the net pension liability • Discount rate calculation • Projected cash inflows • Employer and employee contributions related to current employees, active and inactive • Based on five year history • Payments to existing retirees and future retirees (currently active or inactive) • Net position > benefit payments – IRR • Otherwise blended rate impacted by borrowing rate • IMRF will perform this calculation for you 30© 2013 Sikich LLP. All Rights Reserved. 15
  16. 16. GASB STATEMENT NO. 68 • Measuring the net pension liability • Entry age actuarial cost method is required • Attribution made on individual employee basis • Each employees service cost level as a percentage of projected pay • Inflation rate if no projected pay (e.g., volunteers) • Start as of date employees service credits begin to accrue • Otherwise blended rate impacted by borrowing rate • Report liability in all accrual based financial statements 31© 2013 Sikich LLP. All Rights Reserved. GASB STATEMENT NO. 68 • Report net pension liability (NPL) in all accrual based financial statements • Changes in the NPL recognized as pension expenses in the current period except for: • Difference between projected and actual investment rate of return – amortize over closed 5 years • Differences between expected and actual economic or demographic assumptions and/or changes in these assumptions– closed period reflecting remaining service lives • Differences not reported as pension expense of the current period are reported as deferred outflows or deferred inflows of resources related to pensions 32© 2013 Sikich LLP. All Rights Reserved. 16
  17. 17. GASB STATEMENT NO. 68 • Modified accrual basis/current financial resources measurement focus financial statements (e.g., general fund) • Net pension liability to the extent liquidated with available spendable resources • Pension expenditure = • Amounts paid by the employer to the pension plan • Change in NPL to the extent liquidated with available spendable resources • Unpaid matured benefits (no plan assets) 33© 2013 Sikich LLP. All Rights Reserved. GASB STATEMENT NO. 68 • Notes to financial statements • Total of all • Pension liabilities • Pension assets • Deferred inflows/outflows of resources related to pensions • Pension expense/expenditure for the period • Unless fully disclosed on face of financial statements 34© 2013 Sikich LLP. All Rights Reserved. 17
  18. 18. GASB STATEMENT NO. 68 • Notes to financial statements • Separate disclosures for each plan you participate in • Separate primary government from discretely presented component units for disclosures • Plan description • Name • Type of plan • Benefit terms • Classes of employees covered, types of benefits 35© 2013 Sikich LLP. All Rights Reserved. GASB STATEMENT NO. 68 • Notes to financial statements • Plan description (continued) • Key elements of benefit formula • Benefit changes • COLAs • Authority for establishing and amending benefit changes • Number of employees covered • Inactive receiving benefits • Inactive not receiving benefits • Active employees 36© 2013 Sikich LLP. All Rights Reserved. 18
  19. 19. GASB STATEMENT NO. 68 • Notes to financial statements • Contribution Requirements • Employee • Employer • Authority for changing • Basis for determining employer contributions • Contribution $ or % of covered payroll • Reference to pension plan separate financial statements • And how to obtain separate report • IMRF’s separate report does not contain individual employer information 37© 2013 Sikich LLP. All Rights Reserved. GASB STATEMENT NO. 68 • Notes to financial statements • Information about the net pension liability • Assumptions • Inflation • Salary changes • COLAs • Mortality assumptions and table • Dates of experience studies • Discount rate • Change from prior period • Cash flow assumptions • Long-term expected rate of return 38© 2013 Sikich LLP. All Rights Reserved. 19
  20. 20. GASB STATEMENT NO. 68 • Notes to financial statements • Discount rate (continued) • Bond index rate incorporated, if applicable • Period of projected benefit payments each rate applies to • Assumed asset allocation of the portfolio • Long-term real rate of return for each asset class • RRR Arithmetic or geometric means • Impact on net pension liability of 1% swing higher and lower in discount rate • Cash flow assumptions • Long-term expected rate of return 39© 2013 Sikich LLP. All Rights Reserved. GASB STATEMENT NO. 68 • Notes to financial statements • Pension Plans Fiduciary Net Position • Reference to separately issued plan report • Otherwise disclose summary plan financial information in notes for each plan 40© 2013 Sikich LLP. All Rights Reserved. 20
  21. 21. GASB STATEMENT NO. 68 • Notes to financial statements • Schedule of changes in net pension liability • Beginning balance of total pension liability, the plans fiduciary net assets and the net pension liability • Service cost • Interest on total pension liability • Changes of benefit terms • Differences between actual and expected experience • Changes in assumptions or other inputs • Contributions from employer/non-employer contributor • Contributions from employees 41© 2013 Sikich LLP. All Rights Reserved. GASB STATEMENT NO. 68 • Notes to financial statements • Schedule of changes in net pension liability • Plan net investment income • Benefit payments • Refunds • Administrative expenses • Other changes in net pension liability, disclosed separately • Spikes • Retroactive benefits • Ending balance of total pension liability, plan fiduciary net position and net pension liability 42© 2013 Sikich LLP. All Rights Reserved. 21
  22. 22. GASB STATEMENT NO. 68 • Notes to financial statements • Measurement date of net pension liability, date of actuarial valuation used to calculate total pension liability, and if roll forward procedures were used • Brief description of changes in assumptions • Description of changes in benefit terms • Pension expense recognized in the period • Deferred inflows/outflows related to pensions 43© 2013 Sikich LLP. All Rights Reserved. GASB STATEMENT NO. 68 • Notes to financial statements • Deferred inflows/outflows related to pensions • Changes due to expected/actual experience • Changes in assumptions or other inputs • Net difference between projected and actual investment experience • Employer contributions to the plan subsequent to the measurement date of the net pension liability (if not the employer’s fiscal year end) 44© 2013 Sikich LLP. All Rights Reserved. 22
  23. 23. GASB STATEMENT NO. 68 • Notes to financial statements • Schedule of deferred inflows/outflows related to pensions by year for 5 years and in the aggregate thereafter that will be recognized in pension expenses • Schedule that will be recognized as a reduction of the net pension liability 45© 2013 Sikich LLP. All Rights Reserved. GASB STATEMENT NO. 68 • Required supplementary information • Separate for each plan • 10 years of information (prospective) • Schedule of changes in net pension liability, as of measurement date • Same information required for notes to financial statements 46© 2013 Sikich LLP. All Rights Reserved. 23
  24. 24. GASB STATEMENT NO. 68 • Required supplementary information • Schedule reporting • A-Total pension liability • B-Plans fiduciary net position • C-Net pension liability • D-B as a % A • E-Covered payroll • F-C as a % of E 47© 2013 Sikich LLP. All Rights Reserved. GASB STATEMENT NO. 68 • Required supplementary information • If employer contributions are actuarially determined, a schedule reporting • A-Actuarially determined contribution • B-Actual contributions • C-A-B • D-Covered payroll • E-B/A as a % of D 48© 2013 Sikich LLP. All Rights Reserved. 24
  25. 25. GASB STATEMENT NO. 68 • Required supplementary information • If employer contributions are not actuarially determined • A-Statutory or contractually required contribution • B-Actual contributions • C-A-B • D-Covered payroll • E-B/A as a % of D 49© 2013 Sikich LLP. All Rights Reserved. GASB STATEMENT NO. 68 • Notes to required supplementary information • Significant methods and assumptions used each year • Factors that significantly impact trends 50© 2013 Sikich LLP. All Rights Reserved. 25
  26. 26. GASB STATEMENT NO. 68 • Cost sharing plans • Employer recognizes proportionate share of collective net pension liability • Employer contribution as a % of total contributions • Proportionate share of pension expense and deferred inflows/outflows related to pensions • Special funding situations • Employer reports entire NPL, adjusted for legally required non-employer funding 51© 2013 Sikich LLP. All Rights Reserved. GASB PENSION REPORTING • Communication between employer and plan administrators is critical for timing • Required actuarial information greatly expanded • More time for preparation • Separate actuarial valuations for accounting versus funding 52© 2013 Sikich LLP. All Rights Reserved. 26
  27. 27. GASB STATEMENT NO. 69 Government Combinations And Disposals Of Government Operations • Issued January 2013 (1/8) • Effective for fiscal years ending December 31, 2014 and thereafter • Early implementation is encouraged 53© 2013 Sikich LLP. All Rights Reserved. GASB STATEMENT NO. 69 • Accounting for government combinations • Mergers and acquisitions • Accounting for disposals of operations • Transfers, sales, abandonments • Includes combinations of separate legal entities • Governmental entities with other governments • Governmental entities with not-for-profit entities • Governmental entities with for-profit entities 54© 2013 Sikich LLP. All Rights Reserved. 27
  28. 28. GASB STATEMENT NO. 69 • Also covers combinations of operations • Less than an entire separate legal entity • Operation is an integrated set of activities conducted and managed for the purpose of providing identifiable services with associated assets or liabilities • Must cover the entire “operation” • Likewise, covers disposals of government operations • Whether transferred or sold 55© 2013 Sikich LLP. All Rights Reserved. GASB STATEMENT NO. 69 • A government merger is a government combination of legally separate entities in which no significant consideration is exchanged and either • Two or more entities cease to exist as legally separate entities and are combined to form one or more new governments, or • One or more legally separate governments or nongovernmental entities cease to exist and their operations are absorbed into, and provided by, one or more continuing governments. 56© 2013 Sikich LLP. All Rights Reserved. 28
  29. 29. GASB STATEMENT NO. 69 • A government acquisition is a government combination in which a government acquires another entity, or the operations of another entity, in exchange for the payment of significant consideration. The acquired entity or operation becomes part of the acquiring government’s legally separate entity. 57© 2013 Sikich LLP. All Rights Reserved. GASB STATEMENT NO. 69 • A transfer of operations is a government combination involving the operations, rather than a combination of legally separate entities, and in which no significant consideration is exchanged. • A transfer of operations is either a transfer of operations to a continuing government or • A transfer of operations to form a new government. 58© 2013 Sikich LLP. All Rights Reserved. 29
  30. 30. GASB STATEMENT NO. 69 • Mergers with no significant consideration exchanged and creation of new government • The new government combines the statements of position from the separate entities as of the combination date • Book value, no write up to fair value • Consider capital asset impairment • If a new government is not created, the combination occurs at the beginning of the continuing governments fiscal year 59© 2013 Sikich LLP. All Rights Reserved. GASB STATEMENT NO. 69 • Acquisitions (consideration exchanged) • Accounted for as of the close date • Report at acquisition value (fair value) • Transfer of operations • Special item in the transferees and transferors report • Disposals of operations • Gain or loss on disposal • Special item 60© 2013 Sikich LLP. All Rights Reserved. 30
  31. 31. QUESTIONS? Presented by: Frederick G. LantzPartner-in-Charge, Government Services Sikich LLP 1415 W. Diehl Road, Suite 400 Naperville, IL 60563 (630) 566-8557 flantz@sikich.com 31

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