The Governmental Accounting Standards Board has recently issued two GASB Statements that will affect the way a governmental entity presents its financial statements going forward. Those GASB statements are GASBS 63 and GASBS 65. We have broken this blog into two blogs. Part I will discuss the ramifications of GASBS 63 and Part II will discuss the ramifications of GASBS 65.
GASB Statement 63:
GASB Statement 63 is going to be implemented for all governments with periods beginning after December 15, 2011. This means most governments with a year end of December 31, 2012 or June 30, 2013 will need to begin implementing the changes noted in this GASB Statement.
GASBS 63 requires governments to now present, in addition to its assets and liabilities, sections for both Deferred Outflows of Resources and Deferred Inflows of Resources. GASBS 63 defines these items as transactions that result in the consumption or acquisition of net assets in one period that are applicable to future periods, respectively. The examples the GASB provides for instances where this would occur are in derivative transactions and concession arrangements. However, the list gets longer when implementing GASB Statement 65 as we will discuss in Part II of this blog.
Also being effected is the term “Net Assets”. This term is now being replaced with the term “Net Position” on the face of the statements. For your governmental, proprietary and fiduciary statements, you will now refer to the residual amount remaining after the effects of your assets plus deferred outflows less your liabilities and deferred inflows as Net Position rather than Net Assets, Proprietary or Fiduciary Fund Balance, or equity. This will also affect the titles of those statements to replace the term net assets with net position.
The previously component of net assets title “Net Assets Invested in Capital Net of Related Debt” is now going to be named “Net Investment in Capital Assets”. It also changed the calculation of that amount to include the effects of deferred outflows and inflows related to the acquisition, construction or improvements of those related capital assets. Lastly, it removes the portion of debt or deferred inflows related to unspent proceeds of those capital related financing transactions from the calculation of Net Investment in Capital Assets.
To learn more about GASBS 63 and 65 and read the GASBS in their entirety, go to http://www.gasb.org/ and navigate to “Pronouncements”. Also, Henry & Horne is presenting a free CPE event in late January to discuss more details of these GASB Statements. The CPE is expected to last two hours in the morning and other topics aside from the GASB Statements discussed will be presented as well, such as examples of CAFR presentation and how to read a CAFR. Free breakfast will be served. To sign up email email@example.com.
Brian Hemmerle, CPA, CFE