Residual Payments Consultant Agreement

					National Association of
  State Comptrollers

    GASB Update
      March 25, 2009
                  Topics for Discussion

•    FAF Changes
•    Recent GASB Pronouncements
•    Current Projects
•    Research Projects

    The views expressed in this presentation are those of Messrs. Attmore and
            Bean. Official positions of the GASB are determined only after
                  extensive public due process and deliberation.
                                   Board of Trustees

                                    Administration and   Governmental Accounting
 Financial Accounting
                                    Support Functions        Standards Board
   Standards Board

   Financial Accounting
                                                         Governmental Accounting
Standards Advisory Council                               Standards Advisory Council

                    FAF Changes
• New FAF Chairman
  – Jack Brennan, Chairman – The Vanguard Group
• New Government Trustee
  – Cynthia Eisenhauer – Consultant and Former Chief of Staff, Iowa
                   Governor Thomas J. Vilsak
• Additional New Trustees:
  – Jeffrey Diermeier, Former CEO & President - CFA Institute
  – Dennis Kass, Chairman & CEO - Jennison Associates
• FAF Oversight Committee
• GASB Funding
          New Pronouncements
• Statement 53 - Accounting and Financial
      Reporting for Derivative Instruments
• Statement 54 - Fund Balance Reporting and
      Governmental Fund Type Definitions
• Statement 55 - The Hierarchy of Generally
      Accepted Accounting Principles for State and
      Local Governments
• Statement 56 - Codification of Accounting and
      Financial Reporting Guidance Contained in
      the AICPA Statements on Auditing Standards
      Statement 54

Fund Balance Reporting and
 Governmental Fund Type
     What Do You Need to Know About
              Statement 54?
• New presentation hierarchy based primarily on
  spending constraints placed upon use of resources
  versus availability for appropriation
• New fund balance presentation classifications:
  – Non-spendable—Inventory, long-term receivables
  – Restricted—Statement 34/46 definition
  – Committed—Formal action of governing body
  – Assigned—Similar to designations expressing intent
  – Unassigned
   What Do You Need to Know About
            Statement 54?
Governmental Fund Type Definitions
  – Special revenue fund—used to account for and report the
    proceeds of specific revenue sources that are restricted or
    committed to expenditure for specified purposes other
    than debt service or capital projects.
  – Capital projects fund—used to account for and report
    financial resources that are restricted, committed, or
    assigned to expenditure for capital outlays including the
    acquisition or construction of capital facilities and other
    capital assets.

        Additional Changes

• New note disclosures required
• Addresses classification of “stabilization” or
  “rainy day” amounts
• Effective for periods beginning after June 15,
  2010 – early implementation is encouraged

Statements 55 and 56

  GAAP Hierarchy
  AICPA Omnibus
  What Do You Need to Know About
      Statements 55 and 56?
• Accounting and financial reporting guidance
  currently found in the AICPA’s Statements on
  Auditing Standards brought into the GASB
  literature “as is.”
• Statement 55—GAAP Hierarchy
  – First step in the potential reexamination of current
    multi-level hierarchy
• Statement 56—AICPA Omnibus
  – Related party transactions, subsequent events,
    and going concern considerations
          Current Projects

• Pension Accounting and Financial Reporting
• Public Private Partnerships
• Service Efforts and Accomplishments Reporting
• Statement 14 (Reporting Entity) Reexamination
• Recognition and Measurement Attributes –
  Concepts Statement
• Chapter 9 Bankruptcies
• Financial Instruments Omnibus

            Scope of the
   Postemployment Benefits Project
• Basic approach
  – Funding base with parameters
  – Liability driven
  – Something in between
• How the actuarial liability should be measured
  – Salary projects
  – Discount rate
• Plan reporting
• Cost sharing allocations for employers

  Public/Private Partnership Proposals
• Who should report the capital asset in a service
  concession arrangement—transferor versus the
   – The transferor determines or regulates what services the
     operator is required to provide and how the operator is
     required to provide them with the property, to whom the
     operator is required to provide them, and the price ranges
     or rates that can be charged for services;
   – The transferor is entitled to—through ownership,
     beneficial entitlement, or otherwise—significant residual
     interest in the property at the end of the arrangement.
• When should upfront payments be recognized?
   – Generally, over the life of the agreement.
      SEA Reporting—Scope

• What the project is:
  – Focus on voluntary reporting
  – Focus on suggested guidelines
  – Focus on clarifying GASB’s role
• What the project is not:
  – Establishing performance measures
  – Establishing performance benchmarks
  – Requiring SEA Reporting

    Proposed Essential Components of
          Effective SEA Reports

•   Purpose and Scope
•   Major Goals and Objectives
•   Key Measures of SEA Performance
•   Discussion and Analysis of Results and

    Proposed Qualitative Characteristics of
        SEA Performance Information
•   Relevance
•   Understandability
•   Comparability
•   Timeliness
•   Consistency
•   Reliability

      Statement 14 Reexamination

•   Fiscal dependency—is it enough?
•   Misleading to exclude criteria for inclusion
•   Blending versus discrete presentation
•   Criteria for major component units
•   Fiduciary activities
•   Disclosures

    Why The Conceptual Framework
             Is Important
• The “Map Quest” or “Google Earth” of standards
• Most recent Concepts Statement, Elements of Financial
  Statements, already has had an affect on standards
   – Intangible assets
   – Derivative instruments
• Recognition and Measurement Attributes will do the
   – Governmental funds—what belongs in a fund for financial
     reporting purposes
   – Fair value (remeasured value) versus historical cost (initial

        Chapter 9 Bankruptcies

• Not a signal that GASB knows that more
  bankruptcies are coming
• Will provide guidance on liability restructuring
• Exposure Draft scheduled to be released in
   Financial Instruments Omnibus

• Will address significant issues that have arisen
  since the release of:
  – Statement 31
  – Statement 40
  – Statement 53
• Exposure Draft scheduled to be released in
           Research Agenda

• Codification of FASB Pronouncements (pre-
  November 1989)
• Economic Condition Reporting
• Electronic Financial Reporting
• Fair Value Measurement
• Certain OPEB Implementation Issues

Telephone—(203) 847-0700
Web site—


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