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GASB Update
NC GFOA 2019 Spring ConferencePresented byGregory S. Allison
Preliminary Views
Financial Reporting Model Improvements
Background
Preliminary Views issued September 2018Exposure Draft anticipated in June 2020Final standard anticipated in February 2022
Governmental Fund Recognition Concepts
Short-term financial resources measurement focus replaces the current financial resource measurement focusBalances, outflows and inflows of resources from short-term transactions recognized as they occurBalances, outflows and inflows of resources from long-term transactions recognized when payments are due
Governmental Fund Recognition (cont.)
ExamplesConcept of availability as currently known replacedAccrued interest on long-term debt reported on the balance sheetInflows = RevenueOutflows = Expenditures
Governmental Fund Financial Statements
Short-term Financial Resources Balance SheetStatement of Short-term Financial Resource FlowsShort-term assets/liabilities, deferred inflows/outflowsInflows and outflows would be reported for both current and non-current activityE.g., Salaries vs. debt service
Proprietary Fund Financial Statements
Multiple categories on the resource flows statementOperating revenues/expensesNonoperating revenues/expensesSubsidiesFinancing revenues/expensesResources from capital disposalsInvestment revenue/expensesOther (e.g., capital contributions)
Budgetary Comparisons
Budgetary information reported one way – Required Supplementary Information (RSI)Original and final budget amounts presentedFinal budget vs. actual amounts reported
Other Issues Addressed
Major component unitsReport individually either as currently done at government-wide or as combining financial statements following the fund financialsSchedule of government-wide expenses by function or programOnly by entities that prepare a CAFRPresented as supplementary information
Revenue andExpense Recognition
Invitation to Comment issued January 2018Preliminary Views anticipated May/June 2020Exposure Draft anticipated December 2021Final standard Spring 2023
Key Considerations in the ITC
Exchange/nonexchange modelPerformance obligation/no performance obligation modelAlternative model
Exchange/Nonexchange Model
Exchange transaction?Recognize revenue and expense on an earnings recognition approachGovernment controls a resource or incurs an obligation, ANDEvent not applicable to a future periodNonexchangetransaction?Recognize based on GASB Statement No. 33,Accounting and Financial Reporting forNonexchangeTransactionsDerived tax revenuesImposednonexchangerevenuesGovernment-mandated and voluntarynonexchangetransactions
Performance Obligation/No Performance Obligation Model
Performance obligation defined:A promise in abinding arrangementbetween a government and another party to provide distinct goods or services to a specific beneficiaryA binding arrangements includes contracts, grant agreements, enabling legislation, etc.Recognize revenue when there is a transfer of goods and services to a beneficiary for consideration expected to be receivedRecognize expense when there is a receipt of goods or services from another party in return for consideration committed to be paid
Performance Obligation Determinants
Determine considerationAllocate consideration to performance obligationRecognize revenue/expense as each performance obligation is fulfilled
No Performance Obligation
Recognize based on GASB Statement No. 33,Accounting and Financial Reporting for Nonexchange Transactions
Alternative Models
Exchange transaction?Follow the performance obligation approachNonexchange transaction?Recognize based on GASB Statement No. 33,Accounting and Financial Reporting for Nonexchange Transactions
Current Projected Project Timeline
Preliminary Views comment period ends in February 2019Exposure Draft anticipated June 2020Final Standard anticipated February 2022Implementation 2024??

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GASB Update - ncgfoa.org