GASB issues guidance on derivatives.The Governmental Accounting Standards Board The Governmental Accounting Standards Board (GASB) is currently the source of generally accepted accounting principles (GAAP) used by State and Local governments in the United States of America. released Technical Bulletin no. 94-1, Disclosures about Derivatives and Similar Debt and Investment Transactions. The bulletin clarifies disclosure requirements for state and local governments that directly or indirectly use, hold or sell derivatives. Last year, Orange County, California Orange County is a county in Southern California, United States. Its county seat is Santa Ana. According to the 2000 Census, its population was 2,846,289, making it the second most populous county in the state of California, and the fifth most populous in the United States. , filed for bankruptcy; it ultimately suffered a $1.69 billion loss in the value of its investment fund because of a heavily leveraged, interest-rate-sensitive investment strategy that included derivatives (see "The Question of Derivatives," and "Be Skeptical, Dig for Facts, Orange County CPA (Computer Press Association, Landing, NJ) An earlier membership organization founded in 1983 that promoted excellence in computer journalism. Its annual awards honored outstanding examples in print, broadcast and electronic media. The CPA disbanded in 2000. Urges,"). Thomas B. Strayer, assistant project manager at GASB GASB Governmental Accounting Standards Board , said this technical bulletin had been available as an exposure draft before Orange County was news. "One of the reasons for this bulletin," said Strayer, "was the concern that existing accounting standards did not specifically address derivative disclosures." The bulletin is based on the existing requirement that governments need to make all disclosures necessary to prevent misleading financial statements. "There already are standards that specifically require certain types of disclosures," said Strayer. "We pointed them towards derivatives." The bulletin says governments should discuss the nature and reasonings of their derivative transactions. Governments should reveal if they have violated legal, regulatory or contractual provisions by using derivatives, and they also should divulge their exposure to credit, market and legal risks. Also, governments with indirect derivatives holdings--such as a mutual fund or investment pool that is invested in derivatives--should disclose the risks when information on the indirect holdings is available. Edward P. Chait, director in the Price Waterhouse national office in Falls Church, Virginia Falls Church is an independent city in Virginia, United States. The population was 10,377 at the 2000 census. This city is a part of the Washington Metropolitan Area. A much larger number of people reside in Greater Falls Church , and a member of the AICPA AICPA See American Institute of Certified Public Accountants (AICPA). government accounting and auditing committee, said, "The technical bulletin is intentionally broad to give governments the flexibility to meet the requirements for informative disclosure." The bulletin also contains illustrations that give users a sense of the types of disclosures GASB looks for. Copies of the technical bulletin (product no. GTB GTB Global Transaction Banking GTB General Terms of Business GTB Global Trust Bank GTB Go To Bed GTB Grand Traverse Band (of Ottawa and Chippewa Indians; Michigan) GTB Ghana Tourist Board GTB Gay Teen Boys 94-1) are available for $5.75 by calling (203) 847-0700, ext.555. |
|
||||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion