GASB clarifies reporting for repurchase agreements.

The Governmental Accounting Standards Board has published an interpretation that clarifies the reporting requirements for reverse repurchase agreements. The interpretation reconciles differences between GASB Statement no. 3, Deposits with Financial Institutions, Investments (including Repurchase Agreements), and Reverse Repurchase Agreements, issued in April 1986, which provides accounting and financial reporting guidance for reverse repurchase and fixed-coupon reverse repurchase agreements, and GASB Statement no. 28, Accounting and Financial Reporting for Securities Lending Transactions, issued in May 1995, which provides accounting and financial reporting guidance for securities lending transactions.

"Although there are many similarities between the two reporting requirements, when we finalized Statement no. 28 we made minor changes to what we originally exposed for comment that put Statement nos. 3 and 28 out of synch," said GASB project manager Venita M. Wood. "The interpretation reconciles the two statements."

Wood said one way the disparity was resolved was by requiring governments to disclose whether the maturities of investments made with the proceeds of agreements are matched to the maturities of the agreements. The interpretation clarifies financial reporting for governments that pool money for investments when the pools have reverse repurchase agreements and says governments should report all assets and liabilities arising from agreements in the balance sheets of the funds that have the risk of loss on those assets.

The interpretation is effective for periods beginning after December 15, 1995. Early application is encouraged. Copies (product code GI03) are available for $8.50 from the GASB Order Department, 401 Merritt 7, P.O. Box 5116, Norwalk, Connecticut 06856- 5116; [phone], ext. 555.