News Release 07-01-09b


GASB Proposes Statements on Service Concession Arrangements and Financial Instruments

Norwalk, CT, July 1, 2009—The Governmental Accounting Standards Board (GASB) has issued two Exposure Drafts (EDs) of proposed Statements, Accounting and Financial Reporting for Service Concession Arrangements, and Financial Instruments Omnibus. The proposed Statements are intended to increase transparency in these financial activities.

The proposed Statement on service concession arrangements (SCAs) would establish accounting and financial reporting requirements for these types of partnership arrangements between governments and private entities and between multiple governmental entities.   An SCA is an arrangement between a government (the transferor) and an operator in which (a) the transferor conveys to an operator the right and related obligation to provide services through the use of infrastructure or another public asset (a “facility”) and (b) the operator collects fees from third parties.   Recent examples of SCAs include long-term arrangements associated with toll roads.   The proposal provides guidance on determining whether the transferor should report the facility subject to the SCA as its capital asset, and reporting guidance for addressing upfront or installment payments related to the SCA.   It also provides reporting guidance for governments acting as operators in an SCA.

“As governments increasingly partner with private and other public entities to provide services to citizens, taxpayers and other financial statement users need clear, understandable, and comparable information about the costs, revenues, and obligations associated with these partnerships,” said Robert Attmore, chairman of the GASB.  

The proposed Statement on financial instruments is intended to update and improve existing standards regarding financial reporting and disclosure requirements of some financial instruments for which significant issues have been identified in practice.   The amendments would:

  • Extend the use of fair value measurement to unallocated insurance contracts to improve the consistency of reporting by pension and OPEB plans
  • Emphasize the applicability of SEC requirements to certain external investment pools—known as 2a7-like pools—to provide practitioners with improved guidance
  • Limit interest rate risk disclosures for investments in mutual funds to bond mutual funds to eliminate disclosures that may not provide decision-useful information
  • Address the applicability of Statement No. 53, Accounting and Financial Reporting for Derivative Instruments, to certain financial instruments to clarify which financial instruments are within the scope of that standard and provide greater consistency in financial reporting.

Mr. Attmore stated, “We encourage our constituents to review both EDs and provide feedback on whether or not they think they would indeed lead to improved reporting in these areas.”

The EDs, and instructions on submitting written comments, can be downloaded free of charge at The deadline for submitting written comments on Accounting and Financial Reporting for Service Concession Arrangements is September 30, 2009, and a public hearing on the proposal is scheduled for October 6, 2009.   Written comments on the Financial Instruments Omnibus ED are due by October 30, 2009.

About the Governmental Accounting Standards Board

The GASB is the independent, not-for-profit organization formed in 1984 that establishes and improves financial accounting and reporting standards for state and local governments. Its seven members are drawn from the Board’s diverse constituency, including preparers and auditors of government financial statements, users of those statements, and members of the academic community. More information about the GASB can be found at its website,