Statement No. 3
Deposits with Financial Institutions, Investments (including Repurchase Agreements), and Reverse Repurchase Agreements
(Issued 4/86)
Summary
This Statement requires certain note disclosures about governmental entities' deposits with financial institutions, investments (including repurchase agreements), and reverse repurchase agreements. The required disclosures should generally be made for the entity as a whole, but additional or separate disclosures for component units, pension trust funds, or other funds or fund types should be made in certain circumstances. This Statement also provides guidance on accounting for repurchase and reverse repurchase agreements.
Disclosure of the types of investments authorized by legal or contractual provisions is required, as well as disclosure of significant violations during the period of legal or contractual provisions related to deposits and investments.
Disclosures required for the deposit and investment portfolio as of the balance sheet date will provide users with information about credit and market risks. These disclosures include the carrying amounts and market values of investments by investment type and in total and information about the level of credit risk associated with deposits and investments. Credit risk is affected by insurance coverage and registration of securities in the name of the governmental entity and, in the absence of insurance coverage or registration, by the custodial arrangements for investments, securities underlying repurchase agreements, and collateral on deposits. Entities are also required to disclose situations that resulted in significantly greater credit risk during the period than that existing as of the balance sheet date.
For reverse repurchase agreements, this Statement requires disclosure of the source of authorization for their use, significant violations during the period of legal or contractual provisions related to the agreements, and summary information about the credit risk associated with the agreements as of the balance sheet date.
Liabilities resulting from reverse repurchase and fixed coupon reverse repurchase agreements are required to be shown as "Obligations under reverse repurchase agreements" and should not be netted with the related assets on the balance sheet. Interest costs associated with reverse repurchase and fixed coupon reverse repurchase agreements are required to be shown as interest expenditure/expense and are not to be netted with the interest income from the related investments. Income from repurchase and fixed coupon repurchase agreements is required to be shown as interest income. Yield maintenance repurchase and reverse repurchase agreements are required to be accounted for as purchases and sales of investments, with gains or losses on those investments recognized.
Unless otherwise specified, pronouncements of the GASB apply to financial reports of all state and local governmental entities, including public benefit corporations and authorities, public employee retirement systems, and governmental utilities, hospitals, colleges, and universities.