New GASB Statement on Leases Issued
The Governmental Accounting Standards Board (“GASB”) has issued a new single model to help state and local governments report leasing agreements. GASB Statement (“GASBS”) No. 87, Leases, categorizes leases as financing arrangements that allow customers to use the leased asset. Per the standard, governments that act as lessees must report a liability for the contract, as well as report an intangible asset indicating their ability to use the leased item. For government entities that are lessors, they must disclose a receivable for the lease and a deferred inflow of resources. Nonfinancial assets such as vehicles, heavy equipment, and property are. Read More.
GASB Newsletter Discusses New Leases Standard
In its latest newsletter, GASB Outlook, the Governmental Accounting Standards Board (“GASB”) highlights the board’s forthcoming standards on lease accounting. Expected to be issued later this month, the new standard is necessary due to the current leasing guidance predating the GASB. The existing guidance also does not consider the conceptual framework, such as the definitions of assets and liabilities. Further, the new guidance will eliminate the distinction between operating and capital leases by handling all leases as financings. The lease standard will be effective for reporting periods starting after December 15, 2019. Read the full newsletter article on GASB.org.
Outgoing FASB Member Reflects on Tenure
As his tenure on the Financial Accounting Standards Board (“FASB”) winds down, Lawrence Smith is looking back on the accomplishments he helped the board achieve. In a letter on the FASB website, Smith highlights efforts of the past 15 years (10 on the board, 5 as staff member) such as the Accounting Standards Codification, the elimination of qualifying special purpose entities, and the new leases standard. Smith also discusses some of his regrets while with the FASB, and recommends future efforts the board should undertake. Smith’s full letter can be viewed on FASB.org.
ASBCA Holds that Leases are not Necessarily Subject to CAS 404
In Exelis, Inc., ASBCA No. 60131 (29 Aug. 2016), the Armed Services Board of Contract Appeals (“ASBCA”) held that a concern whether a building lease was a capital lease or an operating lease is not subject to Cost Accounting Standards (“CAS”) 404. In 2007, the Defense Contract Audit Agency (“DCAA”) released its audit of Exelis’ 2004 final indirect cost rates. DCAA questioned Exelis’ lease costs, finding that the building lease was a capital lease instead of an operating lease as claimed by Exelis and that Exelis could only include building depreciation in its indirect cost pool rather than the entire. Read More.
Topics: Armed Services Board of Contract Appeals "ASBCA", Cost Accounting Standards "CAS", Defense Contract Audit Agency "DCAA", Defense Contract Management Agency "DCMA", Federal Acquisition Regulation "FAR", GAAP, Indirect Cost Rates, leases
FASB Announces Top Priorities for 2017
After issuing several key Accounting Standards Updates and announcing new board members last year, the Financial Accounting Standards Board (“FASB”) is preparing for a busy 2017. In a five-minute video, FASB Technical Director Sue Cosper outlines the FASB’s top priorities for this year. The FASB’s top priorities for 2017 include: Finalizing the hedging and long-duration insurance standards; Supporting the implementation of its revenue recognition, leases, and credit losses standards; Potential improvements to nonprofit financial reporting, particularly distinguishing between exchanges and contributions; and Redeliberating feedback on the Invitation to Comment and continuing to focus on its Conceptual Framework. Click here to watch the video.
Topics: Accounting Standards Update "ASU", Conceptual Framework Project, FASB Nonprofit Standard, Financial Accounting Standards Board "FASB", Hedging, Invitation to Comment, leases, Leases (Topic 842), Long-Duration Insurance, Revenue from Contracts with Customers (Topic 606), Revenue Recognition
Comment Letters Ask FASB to Limit Future Projects
Some trade groups want the Financial Accounting Standards Board (“FASB”) to provide more leeway for implementing current accounting standards before taking on new projects. In feedback to the FASB’s Invitation to Comment, Agenda Consultation, groups like the American Bankers Association (“ABA”) asked the board to consider the time and costs needed when new standards are implemented. The ABA also noted that standards involving revenue, leases, credit losses and financial instrument measurement and classification require significant undertaking that could last over several years. Other comment letters to the agenda consultation document came from the Institute of Management Accountants (“IMA”), which advised. Read More.
Topics: American Bankers Association "ABA", Credit Losses, Financial Accounting Standards Board "FASB", Financial Instruments, financial reporting, Institute of Management Accountants "IMA", leases, U.S. GAAP