GASB Statements Effective for the Year Ended December 31, 2019March 26, 2020
By: Philip Marciano, CPA
The following is a list of Governmental Accounting Standards Board (GASB) Statements effective for the year ended December 31, 2019, that you should be aware of.
GASB STATEMENT NO. 83—CERTAIN ASSET RETIREMENT OBLIGATIONS
Asset retirement obligations is a legally enforceable liability associated with the retirement of a tangible capital asset. State and local governments must recognize the liability when it is both incurred and reasonably estimable. Upon the retirement of tangible capital assets, a government may be required to perform certain actions by laws, regulations or other requirements. The liability should be recognized at the time of an obligating event, which may include placing the asset into operation (by constructing or acquiring), contamination of an asset or abandoning the asset before it is placed into service. The value of the liability is based on the government’s best estimate of costs when incurred. Annual adjustments are required for inflation or deflation. This statement is effective for reporting periods beginning after June 15, 2018.
GASB STATEMENT NO. 84—FIDUCIARY ACTIVITIES
This statement establishes criteria for identifying fiduciary activities of all state and local governments. The criteria consider whether the government is controlling assets of fiduciary activities and who benefits from those assets. The statement also includes criteria for determining fiduciary component units and post-employment benefit activities that are fiduciary activities, and identifies four fiduciary funds that could be reported in state and local government financial statements:
- pension (and other employee benefits) trust funds
- investment trust funds
- private-purpose trust funds
- custodial funds
Governments with activities meeting the fiduciary activity criteria should generally be reported in the basic financial statements and present a statement of fiduciary net position and a statement of changes in fiduciary net position. The first three fund types shown above are existing fund types. This statement creates a new fund category called custodial funds, which have characteristics that are different from those of its predecessor, “agency funds.” The result is that some funds that were reported as agency funds will no longer qualify as fiduciary activities. This statement is effective for reporting periods beginning after December 15, 2018.
GASB STATEMENT NO. 88—CERTAIN DISCLOSURES RELATED TO DEBT, INCLUDING BORROWINGS AND DIRECT PLACEMENTS
This statement was designed to improve the information that is disclosed in the notes to state and local government financial statements for debt, including direct borrowings or direct placements. The statement also clarifies the scope of which liabilities should be included in the debt information disclosures. Additional information to be disclosed includes unused lines of credit, assets pledged as collateral, events of default or termination that have finance-related consequences, and subjective acceleration clauses. Disclosures related to direct borrowings and direct placements are to be separate from other debt disclosures. This statement is effective for reporting periods beginning after June 15, 2018.
GASB STATEMENT NO. 90—MAJORITY EQUITY INTERESTS: AN AMENDMENT OF GASB STATEMENTS NO. 14 AND NO. 61
This statement focuses on the reporting of state and local government majority equity interests in a legally separate organization. The statement defines a majority equity interest and requires a majority equity interest to be reported as an investment if it meets the definition of an investment (as defined by GASB Statement No. 72). Unless held by a special purpose government engaged only in fiduciary activities, a fiduciary fund or an endowment or permanent fund, the majority equity interest should be measured using the equity method. For majority equity interests in a legally separate organization that do not meet the criteria of an investment, a government should report it as a component unit. In addition, the government or fund holding the majority equity interest should report an asset related to the majority equity interest using the equity method of accounting. This statement is effective for reporting periods beginning after December 15, 2018.