Printer Friendly

Three new statements issued by GASB.

The Governmental Accounting Standards Board issued three new standards for accounting by state and local government entities.

Accrual basis. GASB Statement no. 11, Measurement Focus and Basis of Accounting--Governmental Fund Operating Statements, requires state and local government entities to use an accrual basis of accounting in order to recognize government fund revenues and expenditures.

The statement also provides general and specific criteria for recognizing tax revenues on an accrual basis and standards for certain government fund operating expenditures, including prepaid items, supplies inventories and compensated absence other than earned sick leave.

Statement no. 11 is effective for periods beginning after June 15, 1994.

OPEB. GASB Statement no. 12, Disclosure of Information on Post-employment Benefits Other Than Pension Benefits by State and Local Governmental Employers, requires state and local government entities to provide disclosure about employees' postemployment benefits other than pensions (OPEB).

The statement requires all state and local government employers to disclose

* A description of the benefits provided, the employee groups covered and employer and employee obligations to contribute.

* A description of the statutory, contractual or other type of authority under which benefit provisions and obligations to contribute are established.

* A description of the accounting and financial or funding policies followed for those benefits.

* The expenditures/expenses for those benefits recognized for the period.

"Until the GASB's agenda project on recognition and measurement issues related to OPEB is complete--which may take several years--users of government financial statements should be able to have some information about the benefits being provided," said GASB Chairman James F. Antonio. The statement also says government entities are not required to change their accounting and reporting for OPEB until the GASB's project is complete.

Statement no. 12 is effective for fiscal years beginning after June 15, 1990.

Leases. GASB Statement no. 13, Accounting for Operating Leases with Scheduled Rent Increases, establishes standards for accounting and financial reporting of operating leases with scheculed rent increases. It requires state and local government entities to account for such leases by using the terms of the lease contract when the pattern of lease payments is systematic and rational. An example would be when the lease agreement calls for increases intended to cover, and reasonably associated with, the anticipated effects of inflation.

However, if rent increases are meant to compensate for artificially low initial lease payments, the lease should not follow the contract terms. Instead, it should be accounted for either on a straight-line basis over the lease term or based on the estimated fair value of the leased property.

Antonio said Statement no. 13 requires entities to recognize the effect of operating lease transactions using an accrual basis of accounting. "However," he added, "until GASB Statement no. 11 on measurement focus and basis of accounting becomes effective, Statement no. 13 requires entities that report lease transactions in government and similar trust funds to use a modified accrual basis of accounting."

Statement no. 13 is effective for leases with terms beginning after June 30, 1990, with retroactive application permitted.

Copies of these statements are available for $5.50 each, prepaid, from the GASB Order Department, 401 Merrit 7, P.O. Box 5116, Norwalk, Connecticut 06856-5116.
COPYRIGHT 1990 American Institute of CPA's
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1990, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

Article Details
Printer friendly Cite/link Email Feedback
Publication:Journal of Accountancy
Date:Jul 1, 1990
Previous Article:Seasonal workload increases for small practitioners.
Next Article:Employers shift more health costs to employees.

Related Articles
GASB after the five-year structure review.
GASB proposal on grants too narrow, says AICPA committee.
GASB releases implementation guide.
SEC seeks closer regulatory relationship with GASB.
GASB is graded by its constituents.
GASB looks at investment securities valuation.
Which GAAP should NPOs apply?
GASB information available electronically.
Allen calls for a restructured GASB.
Despite opposition, GASB will issue reporting model ED.

Terms of use | Copyright © 2017 Farlex, Inc. | Feedback | For webmasters