Summary of Statement No. 6

Statement No. 6
Accounting and Financial Reporting for Special Assessments
(Issued 1/87)


This Statement establishes accounting and financial reporting standards for capital improvements and services financed by special assessments. The special assessment fund type as identified in NCGA Statement 1, Governmental Accounting and Financial Reporting Principles, is eliminated for financial reporting purposes.

Transactions of a service-type special assessment should be reported in the fund type that best reflects the nature of the transactions, usually the general fund, a special revenue fund, or an enterprise fund, giving consideration to the "number of funds" principle. Service-type special assessment revenues should be treated like user fees. Assessment revenues and expenditures (expenses) for which the assessments were levied should be recognized on the same basis of accounting as that normally used for that fund type.

If the government is obligated in some manner to assume payments on special assessment debt in the event of default by the property owners, all transactions related to capital improvements financed by special assessments should be reported in the same fund types and on the same basis as any other capital improvement and financing transactions. The fixed assets constructed or acquired should be reported in the general fixed assets account group or in an enterprise fund, as appropriate.

For financial reporting purposes, a government is obligated in some manner for special assessment debt if (a) it is legally obligated to assume all or part of the debt in the event of default or (b) the government may take certain actions to assume secondary liability for all or part of the debt-and the government takes, or has given indications that it will take, those actions.

This Statement also provides guidance for reporting capital improvement assessment projects for which (a) initial financing is provided by existing resources and no debt is issued, (b) the assets constructed or acquired will benefit an enterprise fund, and (c) the government is not obligated in any manner for the related debt.

The provisions of this Statement are effective for periods beginning after June 15, 1987.

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. Paragraph 26 discusses the applicability of this Statement.