Highlights from GASB’s January Meeting
During a two-day meeting last month at its offices in Norwalk, Connecticut, the Governmental Accounting Standards Board (“GASB”) discussed the following topics:
- Leases. The GASB tentatively decided that the Exposure Draft, Leases, should include governments with principal ongoing operations consisting of leasing assets to other entities. Such governments should be required to disclose upcoming lease payments that are part of the lease receivable, presenting principal and interest separately.
- Blending Requirements for Certain Component Units. After reviewing a preballot draft of a final Statement, Blending Requirements for Certain Component Units, the GASB made clarifying revisions on the draft document.
- Irrevocable Split-Interest Agreements. The GASB continued its redeliberations decided to proceed with the project despite feedback to delay until the reexamination of Statement No. 33, Accounting and Financial Reporting for Nonexchange Transactions.
- Financial Reporting Model Reexamination. Discussions continued regarding the following three approaches to the recognition of elements of financial statements and presentation for governmental fund financial statements:
- Near-term financial resources;
- Near-term financial resources with current-period operating liabilities; and
- Working capital.
The GASB tentatively decided to continue to develop the approaches. They also tentatively decided to further explore presentation alternatives for resources flows.
- Debt Extinguishment Issues. After reviewing the scope of this project, the GASB tentatively decided to include the consideration of:
(a) Whether using solely existing resources left in an irrevocable trust to retire a bond merits defeasance accounting as noted in Statement No. 7, Advance Refundings Resulting in Defeasance of Debt;
(b) The deferral treatment of the distinction between the reacquisition price and the debt’s net carrying amount when existing resources are used alongside refunding bond proceeds, and when only existing resources are left in an irrevocable trust to retire bonds;
(c) Disclosure requirements; and
(d) The treatment of prepaid insurance in regard to a refunded bond.
- Implementation Guidance—Update. The GASB reviewed feedback and considered proposed modifications in relation to the Exposure Draft, Implementation Guide 20XX-XX. No objections were made to the proposed modifications, and the GASB offered additional suggestions for clarification purposes. The GASB also tentatively decided to exclude proposed Questions 4.69 and 5.37 from the Implementation Guide.
Topics: Blending Requirements for Certain Component Units, Debt Extinguishment, financial reporting, Governmental Accounting Standards Board "GASB", Implementation Guide 20XX-XX, Irrevocable Split-Interest Agreements, lease accounting