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					GAAP Update




     Presented by
      Paul E. Glick
Glick Consulting Group
The GASB




           2
The Board




            3
     Current Board Members
Member                                    Term Expires
Bob Attmore, Chair                        2014
Mike Belsky                               2013—first term
Michael Granof                            2015---first term
David Sundstrom                           2014—first term
Jan Sylvis                                2012—first term
Marcia Taylor                             2015
Jim Williams                              2012


News Release From The GASB 10/06/11
Michael Belsky Resigns from the Governmental
Accounting Standards Board
                                   4
                   GASB Funding
• The FAF anticipates that pursuant to the
  provisions of Section 978(a) of the Dodd-Frank
  Wall Street Reform and Consumer Protection
  Act of 2010 (WSRA), the SEC will take formal
  action to direct the Financial Industry
  Regulatory Authority (FINRA) to establish, and
  will thereafter approve, rules for the
  assessment and collection of accounting
  support fees from FINRA’s members to fund
  the annual operating budget, including
  expenses, capital and accrued items of the
  GASB.

                         4
                     GASB Funding
•
    The GASB accounting support fees for 2011
    reflects a forecasted commencement date of
    GASB accounting support fee collections of
    July 1, 2011, and therefore represents fifty
    percent (50%) of GASB’s total recoverable
    expenses.




                           4
                    GASB Funding

• GASB’s 2011 budgeted contributions of
  $550,000 contemplates that the GASB will no
  longer actively solicit contributions as of July
  1, 2011 in anticipation of the collection of
  GASB accounting support fees pursuant to
  WSRA Section 978(a) and therefore only
  includes one half-year of contribution activity




                           4
 GASB Post Employment
  Benefit Accounting and
Financial Reporting Project




            GCG          9
                   Objectives

• Consider The Possibility Of Improvements
  To The Existing Standards Of Accounting
  And Financial Reporting For
  Postemployment Benefits—including
  Pension Benefits And Other
  Postemployment Benefits (OPEB)—by
  State And Local Governmental Employers
  And By The Trustees, Administrators, Or
  Sponsors Of Pension Or OPEB Plans

GCG                 101
                    Objectives

• This Project Addresses Both Pension
  Plans And OPEB Plans, However, The
  Majority Of The Efforts Have Currently
  Been On Pension Plans




GCG                  111
              Summary of Proposals

• A Government Would Report In Its Financial
  Statements A Net Pension Liability Equal To The
  Difference Between The Total Pension Liability
  And The Value Of Assets Set Aside In A Pension
  Plan To Pay Benefits To Current Employees,
  Retirees, And Their Beneficiaries

• Note Impact On G-W Financial Statements And
  Enterprise Fund Statements




GCG                     121
              Summary of Proposals

• All Assumptions Used In Projecting Benefit
  Payments Would Conform To Actuarial Standards
  Of Practice, Unless Otherwise Stated By The
  GASB.

• Future Salary Increases And Future Periods Of
  Employment With The Government Would
  Continue To Be Incorporated Into Projections Of
  Benefit Payments.




GCG                     131
             Summary of Proposals

• Automatic COLAs And Other Automatic
  Postemployment Benefit Changes Would
  Continue To Be Incorporated Into Projections Of
  Benefit Payments, And Ad Hoc COLAs And Other
  Ad Hoc Postemployment Benefit Changes Would
  Be Included As Well If An Employer’s Practice
  Indicates That They Are Essentially Automatic.




GCG                     141
              Summary of Proposals

• The Discount Rate Would Combine:

• (1) The Long-term Expected Rate Of Return On
  Plan Investments As Long As The Pension Plan Is
  Projected To Have Assets To Make Projected
  Benefit Payments For Current Employees,
  Retirees, And Their Beneficiaries, And

• (2) A Tax-exempt, High-quality Municipal Bond
  Index Rate Beyond That Point.



GCG                     151
             Summary of Proposals

• Projected Benefit Payments Would Be
  Discounted To Each Employee’s Entry Age And
  Attributed Over The Employee’s Expected Term
  Of Service As A Level Percentage Of Payroll.




GCG                    161
                Summary of Proposals
• The Factors That Are Incorporated Into The Calculation Of
  Annual Pension Expense Would Be Introduced In The
  Following Ways:

• Pensions Earned,
• Interest On The Total Pension Liability,
• Changes In Benefits,
• The Effect On The Total Pension Liability Of Differences
  Between Assumed And Actual Economic And Demographic
  Factors And Changes Of Assumptions, As They Relate To
  Inactive Employees,
• Projected Earnings On Plan Investments
• Changes In Plan Assets Other Than Investments Would Be
  Incorporated Into The Calculation Of Pension Expense
  Each Year As They Occur.

GCG                          171
           Summary of Proposals


• A Government Participating In A Cost-
  sharing Plan Would Report A Liability In
  Its Own Financial Statements That Is
  Equivalent To Its Long-term Proportionate
  Share Of The Collective Net Pension
  Liability.




GCG                 181
              Summary of Proposals

• Governments Would Be Required To Disclose
  Descriptions Of Their Pensions And The Persons
  Covered By Them, As Well As Assumptions That
  Underlie The Measurement Of The Net Pension
  Liability.

• Governments In Single And Agent Plans Would
  Disclose Information About: The Change In The Total
  Pension Liability, Plan Assets Held For Paying
  Pensions, And The Net Pension Liability During The
  Current Period; Components Of The Current-period
  Pension Expense; And The Change In Deferred
  Outflows And Inflows During The Period.
GCG                       191
              Summary of Proposals

• Governments Would Present 10-year RSI
  Schedules Containing Information About: The
  Change In The Total Pension Liability, Plan
  Assets Held For Paying Pensions, And The Net
  Pension Liability; Pension Liability Ratios; Ratios
  Of Actuarially Calculated Contributions (If
  Applicable); And Notes To The Schedules.
•




GCG                      201
             Current Activities
Currently Reviewing Comments to An ED

Tentatively Effective For Financial
 Statements For Periods Beginning After
 June 15, 2012, With Some Exceptions




GCG                 211
         The Planned Schedule

• Exposure Draft – November 2010

• Final Statement – May 2011
              GASB Statements
• GASB Statement 51: Accounting and Financial
  Reporting for Intangible Assets

• GASB Statement 52: Land and Other Real Estate
  Held as Investments by Endowments

• GASB Statement 53: Accounting and Financial
  Reporting for Derivative Instruments

• GASB Statement 54: Fund Balance Reporting
  and Governmental Fund Type Definitions
               GASB Statements
• GASB Statement 55: The Hierarchy of Generally
  Accepted Accounting Principles for State and
  Local Governments

• GASB Statement 56: Codification of Accounting
  and Financial Reporting Guidance Contained in
  the AICPA Statements on Auditing Standards

• GASB Statement 57: OPEB Measurements by
  Agent Employers and Agent Multiple Employer
  Plans
              GASB Statements
• GASB Statement 58: Accounting and Financial
  Reporting for Chapter 9 Bankruptcies

• GASB Statement 59: Financial Instruments
  Omnibus

• GASB Statement 60: Accounting and Financial
  Reporting for Service Concession Arrangements
               GASB Statements
• GASB Statement 61: The Financial Reporting
  Entity: Omnibus

• GASB Statement No. 62: Codification of
  Accounting and Financial Reporting Guidance
  Contained in Pre-November 30, 1989 FASB and
  AICPA Pronouncements

• Statement No. 63; Financial Reporting of
  Deferred Outflows of Resources, Deferred Inflows
  of Resources, and Net Position
•
GASB Financial Guarantees
         Project
                 Objectives

• To Establish Additional Guidance
  Regarding The Recognition And
  Disclosure Of Financial Guarantees
  Made And Received By State And
  Local Governments




GCG               281
          Accounting and Financial
             Reporting Issues

• What Types Of Financial Guarantees Are
  Made And Received By State And Local
  Governments?

• What Specific User Needs Exist Regarding
  A Government’s Financial Guarantees And
  What Decision-useful Or Accountability
  Information Would Be Needed To Meet
  Those Needs?


GCG                 291
           Accounting and Financial
              Reporting Issues

• 3. Are Current Accounting And Financial
  Reporting Standards Appropriate To Meet
  Essential Financial Statement User
  Needs? What Should Be The Measurement
  Basis For Guarantees Made? Received?

• 4. If Current Standards Are Not
  Considered To Be Adequate, What
  Additional Potential Requirements Should
  Be Considered?

GCG                 301
             Current Schedule

• An Exposure Draft Is Planned For
  June Of 2012

• A Final Statement Is Planned For
  February 2013




GCG               311
GASB Statement No. 63:
Financial Reporting of
  Deferred Outflows of
  Resources, Deferred
   Inflows of Resources,
    and Net Position
                Objectives

• This Statement Provides Financial
  Reporting Guidance For Deferred
  Outflows Of Resources And Deferred
  Inflows




GCG              331
                  GASB Concepts
                  Statement No. 4
• GASBCS 4 Introduced And Defined Those
  Elements As A Consumption Of Net Assets By
  The Government That Is Applicable To A Future
  Reporting Period, And An Acquisition Of Net
  Assets By The Government That Is Applicable To
  A Future Reporting Period, Respectively.

• Previous Financial Reporting Standards Do Not
  Include Guidance For Reporting Those Financial
  Statement Elements, Which Are Distinct From
  Assets And Liabilities.
GCG                         341
 GASB Concepts Statement No. 4


• Assets – Resources With Present Service
  Capacity That The Government Presently
  Controls.

• Liabilities – Present Obligations To
  Sacrifice Resources That The Government
  Has Little Or No Discretion To Avoid.

• .
GCG                 351
 GASB Concepts Statement No. 4

• Outflow Of Resources – A
  Consumption Of Net Assets By The
  Government That Is Applicable To
  The Reporting Period.

• Deferred Outflow Of Resources – A
  Consumption Of Net Assets By The
  Government That Is Applicable To A
  Future Reporting Period.

GCG               361
 GASB Concepts Statement No. 4

• Inflow Of Resources – An Acquisition
  Of Net Assets By The Government
  That Is Applicable To The Reporting
  Period.

• Deferred Inflow Of Resources – An
  Acquisition Of Net Assets By The
  Government That Is Applicable To A
  Future Reporting Period.

GCG               371
      Items That May Be Reported
         As Deferred Inflows And
                Outflows:

 •     Deferred Outflows:
      – Deferred Refunding Loss
      – Deferred Charges


       Deferred Inflows:
         Deferred Revenues (Unearned)
         Deferred Refunding Gain

GCG                   381
 Items That May Not Be Reported
As Deferred Inflows And Outflows
• An Asset:
      – Prepaid Rent


• A Liability:
      – A Grant Cash Advance




GCG                    391
        Net Asset Reporting

• Net Assets = Net Position




GCG                401
      GASBS 63 Effective Date

• For Periods Beginning After
  December 15, 2011




GCG               411
             GASBS 63

• To Summarize,, Who Really Cares?




GCG              421
 GASB Statement No. 62:
Codification of Accounting
 and Financial Reporting
   Guidance Contained in
 Pre-November 30, 1989
     FASB and AICPA
     Pronouncements
             Objectives

• Incorporates Into The GASB’s
  Authoritative Literature Certain
  Accounting And Financial Reporting
  Guidance That Is Included In The
  Following Pronouncements Issued
  On Or Before November 30, 1989,
  Which Does Not Conflict With Or
  Contradict GASB Pronouncements

GCG               441
   Economic Condition
   Reporting: Financial
      Projections

  (This Project May Have Far Reaching
Implications For Everyone In This Room)
                Project Objectives

• To Identify The Information That Users Of
  Governmental Financial Reports Need To Assess
  A Governmental Entity’s Fiscal Sustainability;

• To Compare Those Needs With The Information
  That Users Receive Under Current Accounting
  And Financial Reporting Standards And From
  Other Sources; And

• To Consider Reporting Alternatives For
  Additional Information Needed By Users
               Predicting The Future


• This Project Is Not About Predicting The Future;

• It Is About Equipping Users With The Information
  They Need To Assess A Government’s Ongoing
  Financial Viability

• Focus More Generally On Information That Users
  Need To Assess Economic Condition, Including
  Fiscal Sustainability
                  GFOA’s Position

• The GFOA Executive Board, At Its March 2010
  Meeting, Unanimously Passed A Resolution
  Stating That The GFOA "Adamantly Opposes Any
  Effort On The Part Of The GASB To Set Standards
  Of Reporting For Fiscal Sustainability."

• The GFOA Believes That "The Issue Of Assessing
  A Government's Future Fiscal Sustainability
  Clearly Is Beyond The Scope Of Accounting And
  Financial Reporting" And That The GASB's
  Initiative "Exceeds Its Legitimate Authority And
  Expertise" And Is An "Inappropriate Use Of
  Scarce Resources."
         Specific Necessary Measures

• Projections Of The Major Individual Inflows Of
  Resources In Dollars And As A Percentage Of
  Total Inflows Of Resources Along With
  Explanations Of The Known Causes Of Resource
  Fluctuations (Including Nonrecurring Resources)

• Projections Of The Major Individual Outflows Of
  Resources By Program Or Function In Dollars
  And As A Percentage Of Total Outflows Of
  Resources Along With Explanations Of The
  Known Causes Of Resource Fluctuations
        Specific Necessary Measures


• Projections Of Major Individual Financial
  Obligations And Total Financial Obligations
  Including Bonds, Pensions, OPEB, And Long-
  term Contracts

• Projections Of Annual Debt Service Payments
  (Principal And Interest)
   Specific Necessary Measures


• Narrative Discussion Of The Major
  Intergovernmental Service
  Interdependencies That Exist And The
  Nature Of Those Service
  Interdependencies.
       Some Debatable Issues

• Projection Period

• Identification and Development of
  Assumptions

• Where to Report Fiscal Sustainability
  Information

• Basis of Accounting
       Some Debatable Issues

• Phase-in Period For Implementation

• Required Disclaimers For Assumptions
  And Projections
             Current Schedule

• A Preliminary Views Document Will
  Be Issued In October Of 2011

• An Exposure Draft Is Planned For
  October Of 2012 And A Final
  Statement Is Planned For August
  2013



GCG               541
Other GASB Projects

    (As Time Permits)
Electronic Reporting Project




                               56
                   Electronic Financial
                        Reporting
• The Objective Of This Project Is To Monitor The
  Effect Of The Electronic Media

• On Information Delivery And User Needs. Extensive
  Research Into The Evolving State Of The Art In
  Electronic Financial Reporting By State And Local
  Governments Will Provide The Board With A Basis
  For Evaluating The Need To Develop Standards For
  Financial Reports Intended For This Medium.




  GCG                       571
            Electronic Financial
                 Reporting

• The Project Also Involves The
 Development Of A Prototype
 Electronic Financial Reporting
 Demonstration Model To Illustrate
 The Potential For Electronic
 Reporting And Provide A Framework
 Within Which The Board Can
 Consider Future Standards.
 GCG               581
                Two Specific Issues
•     The Development Of Extensible
      Business Reporting Language (XBRL), A
      Standardized Digital Language For
      Business Financial Reporting

•     The Growth In Governments’ Use Of
      Electronic Media To Report Their
      Financial Results In The Absence Of A
      Standard Format Like XBRL

    GCG                  591
                  Potential Benefits
•     It Would Help The GASB To Be
      Proactive, Rather Than Reactive, In
      Establishing Financial Reporting
      Standards.

•     The Ability For Hands-On Application
      Would Allow The Board To Evaluate
      Alternatives In Both A Traditional And
      Electronic Reporting Environment.

    GCG                  601
                   Potential Benefits
•     It Would Enhance The Board’s Responsiveness
      To Real-World Situations

•     Developing A Model That Governments May
      See As A “Prototype” (And Could Use Or
      Emulate) Would Enhance Experimentation. The
      Board Would Benefit By An Increased
      Awareness Of What Governments Are Actually
      Doing



    GCG                    611
       Lease Accounting—
     Reexamination of NCGA
Statement 5 and GASB Statement
               13




                             62
                 Objective
• The Objective Of This Project Would Be To
  Reexamine Issues Associated With Lease
  Accounting, Considering Improvements To Existing
  Guidance

• The FASB And The International Accounting
  Standards Board (IASB) Have Current Projects That
  Propose To Replace Private Sector Guidance.




GCG                     631
          Reexamination Projects
•     Accounting for Prior-Period
      Adjustments, Accounting Changes,
      and Error Corrections
•     GASBS 42 - Asset Impairment
•     Capitalization of Interest Cost
•     GASBS 16 – Compensated
      Absences
•     Costs and Initial Rental Operations
      of Real Estate
•     GASBI 2 – Conduit Debt
GCG                  641
          Reexamination Projects
•     GASBS 7 & 23 – Bond Refundings
•     GASBS 32 – Deferred Compensation
      Plans
•     GASBS 21 – Escheat Property
•     Extinguishment of Debt
•     Financial Reporting Model—
      Reexamination of Statements 34, 35,
      and 37


GCG                 651
          Reexamination Projects
•     Inventory
•     GASBS 18 – Landfills
•     GASBS 33 & 36 - Nonexchange
      Transactions
•     Nonmonetary Transactions
•     GASBS 38 & 40 – Note Disclosures
•     Regulated Operations
•     Research and Development Costs
•     Revenue Recognition—Exchange
GCG   Transactions 661
          Reexamination Projects
•     Right of Offset
•     GASBS 10, 30 & GASBI 4 – Risk
      Financing
•     Sales of Real Estate
•     GASBS 28 – Security Lending
•     Troubled Debt Restructurings




GCG                671
              Potential Projects
•     Accounting for Asset Retirement
      Obligations
•     Exchange Like Revenues
•     Financial Performance
      Measurements
•     Financial Transactions with
      Characteristics of Both Loans
      and Grants


GCG                 681
                Potential Projects
•     In-Kind Contributions
•     Irrevocable Charitable Trusts
•     Popular Reporting
•     Present Value
•     Preservation Method
•     Reporting Unit Presentations
•     Tax Abatement Disclosures



GCG                    691
         We Are Finished

• Thanks again to Marcum LLP For
  Sponsoring This Seminar

• Any Questions, Feel Free to Email
  Paul

 pglick@mindspring.com

				
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