Lease accounting changes are coming soon

Close-up of a hand filling out lease agreement formIn June 2017, the Governmental Accounting Standards Board (GASB) issued Statement No. 87, a new accounting and reporting standard regarding leases. Under the prior approach, governments applied a somewhat subjective test to determine if a lease should be classified as “operating” or “capital.” Under the new approach, GASB assumes all leases (with a few stated exceptions) are just leases, eliminating “operating” leases. The primary goal of the new standard is to increase comparability across governments and provide financial statement users with better, more complete information by establishing a single model for lease accounting. The new standard will take effect for reporting periods beginning after December 15, 2019, and apply retroactively as if the standard was in place at the beginning of the implementation period. Early implementation is encouraged. To review the standard, see GASB Statement No. 87. Continue reading

Tax receivable: Are you reporting it correctly?

A pile of money and the word tax written on tiles.Are you reporting property, sales and other taxes in the correct period? Our Office recently found that some local governments were reporting these taxes when the cash was received, causing errors on the financial statements. Governmental Accounting Standards Board (GASB) Statement 33 – Accounting and Financial Reporting for Nonexchange Transactions provides guidance on reporting these revenue streams in the correct period.

Continue reading

Employer reporting requirements for other post-employment benefits (OPEB) have taken effect

Social Man Drawing Social Security BenefitsGovernmental Accounting Standards Board (GASB) Statement 75, Accounting and Reporting for OPEB is effective for the Reporting Year 2018 (this year!). OPEB, or post-employment benefits other than pension, includes benefits such as healthcare provided through a pension plan or separately (medical, dental, vision, hearing, etc.) and other benefits when provided separately from a pension plan, such as: life insurance, long-term care, disability, and more. Continue reading

Changes to fiduciary reporting take effect soon

Last fall, we posted an article strongly encouraging governments to start evaluating activities that might be classified as fiduciary activities under the Governmental Accounting Standards Board’s (GASB) recently issued Statement No. 84. The changes to fiduciary activity reporting are right around the corner – effective for reporting periods beginning after December 15, 2018 – and affect not only governments that report under generally accepted accounting principles, but those that report using the cash-basis accounting model as well.

It might be tempting to put off consideration of this new standard until all the guidance and examples are issued, especially for cash-basis governments that follow the Budgeting, Accounting and Reporting System (BARS) Manual. However, dedicating the time now to understand where fiduciary activities exist within your organization will put you in the best position to effectively implement these changes.

To help in your evaluation, we recommend using our Best Practices for Implementing New GASB Standards along with the specific suggestions below for getting started. Continue reading

OPEB reporting update (GASB 45 to 75) serves as a reminder: Don’t forget about previous statements

Plenty of attention surrounds a new ReminderGovernmental Accounting Standards Board (GASB) statement in the year it is implemented. Then we tend to forget about them in subsequent years. Not all GASB statements are relevant or material for all governments in the year they are implemented, but all governments should continue to monitor them.

A timely example is GASB Statement No. 45, Accounting and Financial Reporting by Employers for OPEB. When preparing for the 2018 implementation of GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, which updates GASB 45, we asked questions such as “Who uses the State Actuary’s online tools for calculating OPEB liability under GASB 45?” and “How material are those governments’ Other Post-Employment Benefits (OPEB) liabilities?” Continue reading

Auditor McCarthy: Financial reporting should be easy to read and understand

Since the original issuance of Governmental Accounting Standards Board (GASB) Statement 34 in 1999, the Office of the Washington State Auditor has found the resulting financial statement presentations to be unnecessarily complex, less timely and more costly for state and local governments to prepare and have audited. These presentations are also more challenging to understand.

Financial statements prepared by state and local government entities in the United States are longer than those prepared by other organizations in the United States and around the world, due to the use of different accounting methods (e.g. modified-accrual and full-accrual) within the presentation.GASBlettergraphic

 

 

 

 

 

 

 

Continue reading

GASB reporting model re-examination project

GASB_microphone_124632551.jpgThe Government Accounting Standards Board issued an invitation to comment on January 4 about potential changes to reporting of government funds, which GASB Chair Dave Vaudt recently described in a short video. The Board is seeking input on these ideas from local governments and other users during the preliminary stage of its project to re-evaluate the financial statement reporting model. Generally Accepted Accounting Principles (GAAP) for all state and local governments nationwide is set by GASB in accordance with an open, due process.

The State Auditor’s Office encourages local governments to follow the Board’s activities and provide input on potential accounting standards they will eventually need to follow.

(Stock photo)