The Governmental Accounting Standards Board has been busy continually reassessing and updating its standards.
In 2015, GASB finalized the Other Postemployment Benefits standards and issued eight new standards (Nos. 72-79), and this year by May 31 it added three more (Nos. 80-82). Below is a brief overview.
OPEB standards
The Other Postemployment Benefits standards Nos. 74 and 75 are designed to provide financial statement users with a more comprehensive measure of the needed resources to make good on postemployment benefits other than pensions promised by state and local governments. The standards advance accounting and financial reporting.
GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, addresses accounting and financial reporting by governments that provide OPEBs to their employees or employees of other governmental units. The statement is effective for reporting periods starting after June 15, 2017. Its counterpart, GASB Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, addresses the financial reports of defined benefit OPEB plans administered through trusts meeting specified criteria. Statement No. 74 is effective one year earlier for reporting periods starting after June 15, 2016.
In Statement No. 77, Tax Abatement Disclosures, governments granting tax abatements to individuals and businesses are required to disclose program information in the notes to financial statements through the agreement’s duration. It also requires disclosures about tax abatements initiated by other governments that reduce the reporting government’s tax revenue. State and local governments are required to incorporate the disclosures into their financial statements starting after Dec. 15.
Statement No. 80, Blending Requirements for Certain Component Units requires governments to use the blending method when presenting in their financial statements component units organized as not-for-profit corporations where the primary government is the sole corporate member. The primary government will present activities of an acquired or created legally separate NFP corporation. This blending method went into effect June 15.
GASB also is deliberating three proposed standards with plans to issue final statements and effective dates by the end of 2016.
The first proposed standard, Certain Asset Retirement Obligations, would standardize requirements on the recognition and measurement for asset retirement obligations, other than landfills. The second proposed standard, Leases, would base lease accounting on the foundational principle that all leases are financings of the right to use an underlying asset, thus requiring a single approach to accounting for leases by removing operating lease accounting.
The third draft, Fiduciary Activities, proposes to delineate specific criteria for identifying activities that state and local governments should report.
Certain Debt Extinguishments Using Existing Resources entails researching whether existing guidance on reporting current refundings and advance refundings resulting in defeasance of debt is sufficient. GASB plans to issue the standard in mid-2017.
GASB’s project on financial reporting will entail re-examination of the current model, including capital asset reporting, budgetary comparisons and special-purpose government reporting. GASB is accepting comments this year, with a draft expected in 2019.
Certified Public Accountant Kim Hamm is a partner at BKD LLP in Springfield and can be reached at khamm@bkd.com. CPA Connie Spinelli, a BKD director in Denver, contributed to this column.
