gasb update presented by:brian a. ritschel, cpa manager 1
TRANSCRIPT
GASB UPDATE
Presented by: Brian A. Ritschel, CPAManager
1
GASB Current Developments
TOPICS GASB New Pronouncements
Statement No. 41, Budgetary Comparison Schedules- Perspective Differences (amendment of GASB No. 34)
Statement No. 42, Accounting and Financial Reporting for Impairment of Capital Assets and for Insurance Recoveries
2
TOPICS GASB New Pronouncements
Statement No. 43, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans
Statement No. 44, Economic Condition Reporting: The Statistical Section (an amendment of NCGA Statement 1)
3
TOPICS
Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions
Statement No. 46, Net Assets Restricted by Enabling Legislation (an amendment of GASB No. 34)
4
GASB STATEMENT NO. 42
ACCOUNTING AND FINANCIAL REPORTING FOR IMPAIRMENT OF CAPITAL ASSETS
AND FOR INSURANCE RECOVERIES
5
EFFECTIVE DATE:Periods beginning after December 15, 2004(Fiscal Year Ending June 30, 2006)Earlier application is encouraged
6
Asset impairment is a significant, unexpected decline in the service utility of a capital asset
7
Identifying Impairments Events or changes in circumstance that indicate
impairment should be prominent Generally expected to have prompted
discussion by governing board, management, or media
8
Common Indicators of Impairment Evidence of physical damage Enact or approval of laws or regulations or
other Environmental factors Technological development or evidence of
obsolescence
9
A Change in the manner or expected duration of use of an asset
Construction stoppage
10
Impairment Test The magnitude of the decline in service utility
is significant The decline in service utility is unexpected
11
Measurement of Impairment Assets that are continuing to be used by the
government: Restoration cost approach for assets with physical
damage Service units approach for legal/environmental
changes, technological obsolescence, and some changes in duration or manner of use
Deflated depreciation replacement cost for some assets with a change in duration or manner of use
12
Assets that are not being used and construction stoppage: Lower of carrying value or fair value
13
Reporting Impairment Losses As program or operating expense, special item,
or extraordinary item per Statement 34 Disclose general description, amount, and
financial statement classification, if not evident from financial statements
14
Temporary Impairments Impairments are assumed to be permanent,
unless Evidence is available to demonstrate impairment is
temporary Temporary impairments should not be recorded
15
Insurance Recoveries Net impairment loss with insurance recovery Replacement/restoration of asset is a
separate transaction
16
Applies to all insurance recoveries, not only those related to impairment Governmental funds would not report an impairment loss. Insurance recovery would be Other Financing Source. Replacement would be expenditure
17
GASB STATEMENT NO. 43
Financial Reporting for Postemployment Benefit Plans
Other Than Pension Plans
18
Phases
AnnualRevenues
Periods Beginning
After
June 30FiscalYear
I $ 100 M 12/15/05 2007
II $ 10-100 M 12/15/06 2008
III Under $ 10 M 12/15/07 2009
EFFECTIVE DATE:Earlier application is encouraged
19
Uniform Standards of Financial Reporting for Other Postemployment Benefit Plans (OPEB Plans)
Postemployment Benefits “Other Than Pension Benefits” includes (a) Postemployment Healthcare Benefits and (b) Other Types
Objectives
20
Approach Follows GASB Statement No. 25, Financial Reporting for Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Plans
21
SCOPE
Agreement between Employers and Plan Members and their Beneficiaries in which: Employer contributions to the Plan are
irrevocable Plan Assets are dedicated to providing benefits
to their retirees and their beneficiaries in accordance with the terms of the Plan
Plan Assets are legally protected from creditors of the employer(s) or the Plan administrator
22
Statement Provides: Financial reporting of Plan Assets, Liabilities
and Net Assets Disclosure of Actuarial Information about the
funded status and funding progress of the Plan and contributions made to the Plan in comparison to Annual Required Contributions (ARC)
This Statement includes Defined Benefit OPEB Plans and Defined Contribution Plans
Single-Employer, Agent Multiple-Employer or Cost-Sharing Multiple-Employer Plans
23
Financial Reporting Framework
The Financial Statements and Required Schedules are: Statement of Plan Net Assets Statement of Changes in Plan Net Assets Schedule of Funding Progress - - Actuarially
determined Funded Status
24
Schedule of Employer Contributions - - Contributions made by Employers in relation to the ARC
Notes to the Financial Statements Required Supplementary Information
25
Actuarial Valuation
An Actuarial Valuation should be performed at the following minimum frequency: Plans with total membership of 200 or more - -
at least biennially Plans with total membership of fewer than 200
- - at least triennially
56
Alternative Measurement Method for Plans with fewer than 100 Members Disclosure in Notes to Financial Statements the
use of this method and all significant assumptions as listed in this Statement
Statement includes calculation methods and default values for use with the Alternative Measurement Method
27
GASB STATEMENT NO. 44
Economic Condition Reporting: The Statistical Section
(an amendment of NCGA Statement 1)
28
EFFECTIVE DATE:Periods beginning after June 15, 2005(June 30 Fiscal year in 2006)Earlier application is encouraged
29
Objectives Amends NCGA Statement 1, Governmental
Accounting and Financial Reporting Principles, regarding the Statistical Section
The Statistical Section presents detailed information, generally in 10-Year trends, to aid users to better understand the Basic Financial Statements and Related Disclosures
30
The Statistical Section is a required part of Comprehensive Annual Financial Report (CAFR)
NCGA Statement 1 presented fifteen tables or schedules
31
The Statement presents five categories of information as follows: Financial Trends Information
Net Assets Change in Net Assets Governmental Funds
32
Revenue Capacity Information Revenue Base Revenue Rates Revenue Payers Property Tax Levies and Collections
33
Debt Capacity Information Ratios of Outstanding Debt Ratios of General Bonded Debt Direct and Overlapping Debt Debt Limitation Pledged-Revenue Coverage
34
Demographic and Economic Information Demographic and Economic Indicators Principal Employers
Operating Information Government Employees Operating Indicators Capital Assets Pension and OPEB Plans
Narrative Explanations
35
GASB STATEMENT NO. 45
Accounting and Financial Reporting by Employers for Postemployment
Benefits Other Than Pensions
36
Phases
AnnualRevenues
Periods Beginning
After
June 30FiscalYear
I $ 100 M 12/15/06 2008
II $ 10-100 M 12/15/07 2009
III Under $ 10 M 12/15/08 2010
Note: All component units to implement same year as the primary government
EFFECTIVE DATE:Earlier application is encouraged
37
Objectives
Financial Accounting and Reporting for Other Postemployment Benefits (OPEB)
The Approach is consistent with GASB Statement No. 27, Accounting for Pensions by State and Local Governmental Employers
38
Measurement
Single-Employer or Agent Multiple-Employer defined benefit OPEB Plans required to measure and disclose annual OPEB Cost On Accrual Basis of Accounting
Annual OPEB cost would equal employer’s Annual Required Contribution (ARC) with adjustments for Net OPEB obligation, if any
39
ARC includes: Normal cost for the year, and Amortization of unfunded actuarial accrued
liabilities (or funding excess) not to exceed thirty years
Actuarial Valuation: Frequency and timing Methods Assumptions
Alternative Measurement Method
40
Net OPEB Obligations
Cumulative difference between annual OPEB Cost and Employer’s Contributions to the Plan (including OPEB liability or Asset at Transition)
Employer’s are required to measure Net OPEB Obligation equal to: ARC, Year’s interest on Net OPEB Obligation, and Adjustment to ARC to offset the effect of
actuarial amortization of past under-or over contributions
41
Financial Statement Recognition and Disclosure
Employer to recognize OPEB Expenses in Government-Wide, Proprietary and Fiduciary Fund Financial Statements
Net OPEB Obligations are to be displayed as liabilities (or assets) in Government-Wide, Proprietary and Fiduciary Fund Financial Statements
42
Disclosures are required: Descriptive information about each Plan,
including funding policy, Contributions made in comparison to annual
OPEB Cost, Change in Net OPEB Obligation, Funded status as of most recent actuarial
valuation date, and Nature of actuarial valuation process and
significant methods and assumptions used
43
Required Supplementary Information (RSI) Schedule of funding progress for most recent
actuarial valuation and two preceding valuations, together with notes regarding significant trends affecting the amounts presented
44
GASB STATEMENT NO. 46
NET ASSETS RESTRICTED BY ENABLING LEGISLATION
(an amendment of GASB No. 34)
45
EFFECTIVE DATE:Periods beginning after June 15, 2005.
(Fiscal Year Ending June 30, 2006) Earlier application is encouraged.
46
INTRODUCTION Enhance the usefulness and comparability
of net asset information. Clarify the meaning of Legally
Enforceability. Specify the accounting and financial
reporting requirements.
47
SCOPE AND APPLICABILITY
Establishes and modifies requirements related to restrictions of net assets resulting from enabling legislation.
Amends GASB No. 34. Discuss examples of Programs restricted
by enabling legislation.
48
DETERMINING LEGAL ENFORCEABILITY
A Government can be compelled by an external party to use resources created by enabling legislation only for the purposes specified by the legislation.
49
External Party include citizens, public interest groups or the judiciary.
“Generally, the enforceability of an enabling legislation restriction is determined by professional judgment.”
50
CHANGES IN CIRCUMSTANCES
New enabling legislation that replaces the original enabling legislation by establishing new restrictions.
Resources used for a purpose other than those stipulated in the enabling legislation, reevaluate the legal enforceability of the restrictions.
51
DISCLOSURE REQUIREMENT
Disclose the amount of net assets at end of reporting period that are restricted by enabling legislation in the notes to the financial statements.
52