NEWS RELEASE 10/10/11
GASB Proposes Technical CorrectionsNorwalk, CT, October 10, 2011—The Governmental Accounting Standards Board (GASB) today issued an Exposure Draft intended to improve accounting and financial reporting for governmental financial reporting entities by resolving conflicting guidance that resulted from the issuance of two recent pronouncements. The pronouncements are Statements No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, and No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements.
This proposed Statement would amend Statement No. 10, Accounting and Financial Reporting for Risk Financing and Related Insurance Issues, by removing the provision that limits fund-based reporting of an entity’s risk financing activities to the general fund and the internal service fund type. As a result, governments would base their decisions about governmental fund type usage for risk financing activities on the definitions in Statement 54.
This proposed Statement also would amend Statement 62 by modifying the specific guidance on accounting for (1) operating lease payments that vary from a straight-line basis and (2) the difference between the initial investment (purchase price) and the principal amount of a purchased loan or group of loans. These changes would eliminate any uncertainty regarding the application of Statement No. 13, Accounting for Operating Leases with Scheduled Rent Increases, and result in guidance that is consistent with the requirements in Statement No. 48, Sales and Pledges of Receivables and Future Revenues and Intra-Entity Transfers of Assets and Future Revenues, respectively.
The provisions of this proposed Statement would be effective for periods ending after June 15, 2012. Earlier application would be encouraged. Copies of the Exposure Draft, including instructions on how to provide written comments to the GASB, may be downloaded free of charge from www.gasb.org. The comment deadline is December 16, 2011.
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 www.gasb.org.