WFOA - Professional Standards Updates

Professional Standards Updates

The goal for the Professional Standards Committee is to provide accountants in Washington State quick and easy access to accounting standards that affect state and local governments. This committee does not have regularly scheduled meetings and most of the correspondence will be through email.

Recent News:

GASB's Scope of Authority: Proposed Changes to Agenda-Setting Process

WFOA provided a response to the Financial Accounting Foundation's request for comment on a change in the GASB agenda development process. This proposal defined three groups of financial information for GASB's scope. Group 1 - information that is clearly within their standard-setting authority (e.g. basic financial statements and notes). Group 2 - information that GASB believes is within its standard-setting authority, but not clearly in Group 1 (e.g. economic forecasting). Group 3 - Information clearly recognized as being outside their standard-setting authority (e.g. SEA reporting suggested guidelines). WFOA's response is that economic forecasting or financial projections should be removed from Group 2 information and defined as Group 3 information, thereby removing GASB's authority to issue standards regarding projections.
GASB Statement 70 � Accounting and Financial Reporting for Nonexchange Financial Guarantees

GASB just announced the release of GASB 70. A nonexchange financial guarantee is when the guarantor agrees to pay an obligation holder in the event that the issuer of the obligation is not able to make its required payments to the obligation holder. If one government guarantees the bonds of another government and the secondary government is having financial difficulties, the guaranteeing government may have to report a liability on their statements.

New Certificate of Conformance Program for Small Government Financial Reports GFOA has launched an alternative to the CAFR program for smaller governments on a modified cash basis. They are hoping to encourage quality and consistency among governments that report less than $25 million in government-wide revenues. For more information, go to GFOA's Small Government Annual Financial Reports Program, or pick up the February issue of GFOA's Government Finance Review publication.

GASB pronouncements effective for fiscal year 2012 financial statements:

GASB Statement 57 � OPEB Measurements by Agent Employers and Agent Multiple-Employer Plans

This statement is only applicable to entities that run an agent employer or agent multiple employer OPEB plans with fewer than 100 members. It appears most WA State local government OPEB plans are not "agent" plans, and most local governments with fewer than 100 OPEB members use the State Actuary's LEOFF 1 OPEB tool. Hopefully most local governments won't need to actively make changes for this standard.

GASB Statement 60 � Service Concession Arrangements

A service concession arrangement is when a private entity provides cash up front to a government for the right to operate public assets or services. The private entity collects fees from the users, but the government still has control of the service and fees. One example may be an outsourced toll bridge. Most local governments are not going to run into these arrangements, but if you think you might have one, look into this statement!

GASB Statement 62� Codification of AICPA and FASB

This codifies the previous non-GASB standards that we were supposedly following anyway. From what we heard at the GASB Update these changes are mostly academic and will not affect the majority of local governments.

GASB Statement 63 � Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position

If you don't have derivatives or service concession arrangements (see GASB 60) then you won't have deferred outflows of resources or deferred inflows of resources and all you'll need to worry about is a couple terminology changes in the proprietary and government-wide financial statements. "Net Assets" will now be "Net Position," and "Invested in Capital Assets, net of related debt," will now be "Investment in Capital Assets." Just a few minor terminology changes for most entities!

GASB Statement 64 � Derivative Terminations

Local governments in Washington State generally cannot invest in derivatives, so unless you are one of the few, this statement is typically not applicable.

GASB pronouncements effective for fiscal year 2013 financial statements:

GASB Statement 61 � The Financial Reporting Entity: Omnibus-an amendment of GASB 14 and 34

The statement modifies some requirement s for the determining when to consider certain component units as part of the reporting entity.

GASB Statement 66 � Technical Corrections-2012-an amendment of GASB 10 and 62

Technical updates to resolve conflicting guidance for risk financing, operating lease payments, and loans. Hopefully this "clean-up" statement will not have any major effects for most members.

GASB pronouncements effective for fiscal year 2014 financial statements:

GASB Statement 67 � Financial Reporting for Pension Plans�an amendment of GASB 25

Most of the changes from this statement will probably be administered by DRS and provided through the notes in the BARS manual.

GASB Statement 69 � Government Combinations and Disposals of Government Operations

Per the Journal of Accountancy, this standard provides guidance for determining whether a combination is a merger, acquisition, or transfer of operations and how to value assets. Also provides guidance for reporting the disposal of government operations that have been transferred or sold.

GASB Statement 70 � Accounting and Financial Reporting for Nonexchange Financial Guarantees

A nonexchange financial guarantee is when the guarantor agrees to pay an obligation holder in the event that the issuer of the obligation is not able to make its required payments to the obligation holder. If one government guarantees the bonds of another government and the secondary government is having financial difficulties, the guaranteeing government may have to report a liability on their statements.

GASB pronouncements effective for fiscal year 2015 financial statements:

GASB Statement 68 � Accounting and Financial Reporting for Pensions�an amendment of GASB 27

Most of the changes from this statement will probably be administered by DRS and provided through the notes in the BARS manual.

If you are interested in getting involved in the Professional Standards Committee please contact brad.posenjak@co.chelan.wa.us.