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GASB Roundup for State and Local Governments: A Review and a Look Ahead
GASB has been busy lately, to say the least. In the last five years, it has issued more than 20 new statements, and plenty more are in the works. Many of its more recent standards affect pensions and other post-employment benefits (OPEB), while a forthcoming project could mean a major overhaul in government financial reporting. There is a lot of information to be aware of.
Read our primer that explains how the new GASB 68 and 71 rules affect state and local governments.Learn more
These standards have tremendous impact on state and local government accounting and reporting procedures, and it’s hard to keep up. Here’s a brief summary of recently issued statements and a look at what’s on the horizon. Make sure your organization is on top of the changes and staying compliant.
Recap of GASB 68 through 80
GASB 68: Accounting and Financial Reporting for Pension Plans — An Amendment of GASB Statement No 27, and GASB 71: Pension Transition for Contributions Made Subsequent to Measurement Date — An Amendment of GASB Statement No. 68
GASB 68 and 71 replace GASB 27 and 50 and require that state and local governments recognize a net pension liability for pension plans administered through an irrevocable trust. In addition, governments will recognize a deferred outflow of resources for any contributions made subsequent to the net pension liability measurement date, along with deferred outflows and inflows of resources for various other factors. GASB 68 requires more detailed disclosures compared to prior pension-related statements and additional required supplementary information (RSI) schedules.
GASB 68 and 71 are effective for periods beginning after June 15, 2014 (year-ends June 30, 2015, and December 31, 2015).
GASB 72: Fair Value Measurement and Application
GASB 72 provides specific guidance on how to measure fair value for a market transaction. This statement requires the use of certain valuation techniques, including a market approach, cost approach, or income approach, in which all three techniques maximize the use of observable inputs and minimize the use of unobservable inputs. This brings governments closer to commercial reporting.
GASB 72 is effective for periods beginning after June 15, 2015 (year-ends June 30, 2016, and December 31, 2016).
GASB 73: Accounting and Financial Reporting for Pensions and Related Assets That Are Not Within the Scope of GASB 68
GASB 73 establishes requirements for governmental entities that have a pension plan not funded through a trust and therefore not within the scope of GASB 68. This statement requires the entity to recognize a total pension liability, along with related deferred outflows and inflows of resources for differences in expected and actual experience and the effects of changes in assumptions.
GASB 73 is effective for periods beginning after June 15, 2016 (year-ends June 30, 2017, and December 31, 2017).
GASB 74: Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans
This statement requires that OPEB plans administered through a trust present a statement of fiduciary net position and a statement of changes in fiduciary net position.
GASB 74 is effective for periods beginning after June 15, 2016 (year-ends June 30, 2017, and December 31, 2017).
GASB 75: Accounting and Financial Reporting for Postemployment Benefit Plans Other Than Pensions
This statement replaces the requirements of GASB 45 and establishes new standards for recognizing and measuring OPEB liabilities and expense. It also requires recognition of certain deferred outflows of resources and deferred inflows of resources related to OPEB plans.
GASB 75 is effective for periods beginning after June 15, 2017 (year-ends June 30, 2018, and December 31, 2018).
GASB 76: The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments
GASB 76 reduces the GAAP hierarchy from four levels to two levels. Level A is the most authoritative level and includes GASB statements and interpretations. Level B includes other, less authoritative guidance, such as GASB technical bulletins and implementation guides, as well as GASB-cleared literature published by the AICPA.
GASB 76 is effective for periods beginning after June 15, 2015 (year-ends June 30, 2016, and December 31, 2016).
GASB 77: Tax Abatement Disclosures
GASB 77 requires certain information to be disclosed about tax abatement agreements entered into between a government and individuals or entities. Such agreements usually relate to economic development, in which a government promises to forgo tax revenues in return for some type of contribution to the governmental entity or its citizens.
GASB 77 is effective for periods beginning after December 15, 2015 (year-ends December 31, 2016, and June 30, 2017).
GASB 78: Pensions Provided Through Certain Multiple-Employer Defined Benefit Pension Plan
This statement provides further guidance on pensions. In particular, GASB 78 focuses on cost-sharing, multiple-employer pension plans that are not only offered to state and local government employers but also to private employers. Similar to GASB 68, this statement requires more detailed disclosures, along with an RSI schedule of contributions.
GASB 78 is effective for periods beginning after December 15, 2015 (year-ends December 31, 2016, and June 30, 2017).
GASB 79: Certain External Investment Pools and Pool Participants
This statement amends GASB 31 and establishes criteria for which an external investment pool can qualify to measure all its investments at amortized cost.
GASB 79 is effective for periods beginning after June 15, 2015 (year-ends June 30, 2016 and December 31, 2016).
GASB 80: Blending Requirements for Certain Component Units—An Amendment of GASB Statement No. 14
This statement sets forth requirements for blending a component unit incorporated as a not-for-profit corporation in which the primary government is the sole corporate member.
GASB 80 is effective for periods beginning after June 15, 2016 (year-ends June 30, 2017, and December 31, 2017).
GASB projects on the horizon
GASB has several other projects in development related to the following issues:
- Guidance on how to recognize a liability for certain asset retirement obligations other than landfills
- Criteria for identifying activities that should be reported as fiduciary activities
- Modifications to the financial reporting model, exploring the elimination of “boilerplate” requirements of management’s discussion and analysis, alternative formats of government-wide financial statements, placement of fiduciary fund statements and budgetary comparisons, and options that would reduce overall complexity and permit more timely financial reporting
- Changes in accounting treatment for leases, in which anything with a lease term greater than one year would be placed on the balance sheet
How we can help
CLA’s state and local government practitioners can help your organization comply with all recent GASB statements and prepare for those that will be issued in the near future. We understand the spirit and intent behind the rules and can provide guidance in implementing procedural changes that efficiently align with the standards.