1. A Global Reach with a Local Perspective
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Decosimo - GASB Update
Christopher D. Flaig – chrisflaig@decosimo.com

2. CONTACT ME
Christopher D. Flaig, CPA
Assurance Principal
chrisflaig@decosimo.com
513-579-1717
The contents and opinions contained in this article are for informational purposes only. The information is
not intended to be a substitute for professional accounting counsel. Always seek the advice of your
accountant or other financial planner with any questions you may have regarding your financial goals.
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3. GASB UPDATE – AN APPETIZER
 SUMMARY OF GASB PRONOUNCEMENTS
 EFFECTIVE FOR PERIODS BEGINNING AFTER
JUNE 15, 2011 (YEAR ENDING JUNE 30, 2012)
 GASB 57 – OPEB Measurements by Agent Employers and
Agent Multiple-Employer Plans
 GASB 64 – Derivative Instruments: Application of Hedge
Accounting Termination Provisions (an amendment to GASB
Statement No. 53)
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4. GASB UPDATE – AN APPETIZER
 SUMMARY OF GASB PRONOUNCEMENTS
 EFFECTIVE FOR PERIODS BEGINNING AFTER
DECEMBER 15, 2011 (YEAR ENDING DECEMBER 31,
2012)
 GASB 60 – Accounting and Financial Reporting for Service
Concession Arrangements
 GASB 62 – Codification of Accounting and Financial Reporting
Guidance Contained in Pre-November 30, 1989 FASB and
AICPA Pronouncements
 GASB 63 – Financial Reporting of Deferred Outflows of
Resources, Deferred Inflows of Resources, and Net Position
4

5. GASB UPDATE – AN APPETIZER
 SUMMARY OF GASB PRONOUNCEMENTS
 EFFECTIVE FOR PERIODS BEGINNING AFTER
JUNE 15, 2012 (YEAR ENDING JUNE 30, 2013)
 GASB 61 – The Financial Reporting Entity: Omnibus and
Amendment of GASB Statements No. 14 and No. 34
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6. GASB UPDATE – AN APPETIZER
 SUMMARY OF GASB PRONOUNCEMENTS
 EFFECTIVE FOR PERIODS BEGINNING AFTER
DECEMBER 15, 2012 (YEAR ENDING DECEMBER 31,
2013)
 GASB 65 – Items Previously Reported as Assets and Liabilities
 GASB 66 – Technical Corrections – 2012 (an amendment of
GASB No. 10 and GASB No. 62)
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7. GASB UPDATE – AN APPETIZER
 SUMMARY OF GASB PRONOUNCEMENTS
 Other statements:
 GASB 58 – Accounting and Financial Reporting for Chapter 9
Bankruptcies (for periods beginning after June 15, 2009)
 GASB 59 – Financial Instruments Omnibus (for periods
beginning after June 15, 2009)
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8. GASB 57 – OPEB Measurements by Agent
Employers and Agent Multiple-Employer
Plans
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9. GASB 57 – OPEB Measurements by Agent
Employers and Agent Multiple-Employer
Plans
 Background
 Addresses issues related to the use of alternative
measurement method and the frequency and timing
of measurements
 Agent Employers and Agent Multiple-Employer OPEB Plans
 FYI – OPERS, STRS, SERS are cost-sharing, multiple-
employer plans (not agent / trust plans)
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10. GASB 64 – Derivative Instruments: An
Application of Hedge Accounting
Termination Provisions
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11. GASB 64 – Derivative Instruments: An
Application of Hedge Accounting
Termination Provisions
 Background
 Clarifies whether an effective hedge exists AFTER the
replacement of a swap counterparty or a swap
counterparty’s credit support provider
 GASB 53 – Derivatives should be reported at fair
value
 Fair value should be reported as a direct change
 UNLESS – a hedge exists
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12. GASB 64 – Derivative Instruments: An
Application of Hedge Accounting
Termination Provisions
 Hedge
 To reduce risk of market volatility
 GASB 53 – Derivatives should be reported at fair
value
 Fair value should be reported as a direct change
 UNLESS – a hedge exists
 Associate the asset / liability or future cash flows with
derivatives to offset risk
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13. GASB 64 – Derivative Instruments: An
Application of Hedge Accounting
Termination Provisions
 Hedge Accounting
 If a hedge exists:
 Defer recognition (statement of activities) of change in fair
value of hedging derivative
 Hedge Terminates
 No longer effective
 End of transaction
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14. GASB 64 – Derivative Instruments: An
Application of Hedge Accounting
Termination Provisions
 But what happens when there is a default by the
counterparty?
 What is the response?
 Amend and replace the counterparty
 New agreement with a new counterparty
 In summary, continue to use hedge accounting if:
 Collectability is still probable
 Assignment / in-substance assignment represent essentially
same terms
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15. GASB 60 – Accounting and Financial
Reporting for Service Concession
Arrangements (SCA)
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16. GASB 60 – Accounting and Financial
Reporting for Service Concession
Arrangements (SCA)
 Background
 SCAs – Public/Private or Public/Public Partnerships
 More prevalent than ever before
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17. GASB 60 – Accounting and Financial
Reporting for Service Concession
Arrangements (SCA)
 SCAs
 Government (aka transferor)
 Gives right to operate an asset FOR
 Consideration
 Cash (upfront payment or installment payments)
 Asset improvements / asset construction
 Operator
 Gives up consideration (as noted above)
 Receives revenues
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18. GASB 60 – Accounting and Financial
Reporting for Service Concession
Arrangements (SCA)
 SCA include but not limited to:
 Arrangements in which OPERATOR
 Designs and builds facility
 Obtains right to collect fees from 3rd parties for usage
 Example:
 Construct municipal complex for the right to lease a portion of
the facility to a 3rd party
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19. GASB 60 – Accounting and Financial
Reporting for Service Concession
Arrangements (SCA)
 SCA include but not limited to:
 Arrangements in which OPERATOR
 Provides significant consideration in exchange for the right to
access an existing facility
 And obtains right to collect fees from 3rd parties for usage
 Example:
 Parking garage
19

20. GASB 60 – Accounting and Financial
Reporting for Service Concession
Arrangements (SCA)
 SCA include but not limited to:
 Arrangements in which OPERATOR
 Designs and builds a facility for the Government
 Finance construction costs
 Provide associated services
 Collect associated fee
 Convey facility to Government at the end of arrangement
 Example:
 Toll road
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21. GASB 60 – Accounting and Financial
Reporting for Service Concession
Arrangements (SCA)
 Required Criteria for GASB 60 (all must be present):
 The transferor conveys to the operator the right and
related obligation to use capital assets to serve the
public
 In exchange for significant consideration
 The operator is compensated by 3rd party fees
 The transferor retains control over service and rates
 The transferor is entitled to significant residual
interest in service utility
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22. GASB 60 – Accounting and Financial
Reporting for Service Concession
Arrangements (SCA)
 DOES NOT INCLUDE:
 Contracts to operate ancillary services
 Concessions / Souvenirs
 Privatized or outsourced services
 Arrangements where the operator is compensated by
the transferor (Government) versus 3rd party fees
 Summary - excludes agency relationships
 Arrangements in which operator accepts 3rd party payments
and remits to the transferor for an established fee
22

23. GASB 60 – Accounting and Financial
Reporting for Service Concession
Arrangements (SCA)
 NOT APPLICABLE TO GOVERNMENTAL FUNDS
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24. GASB 60 – Accounting and Financial
Reporting for Service Concession
Arrangements (SCA)
 Transferor Accounting and Financial Reporting
 If facility is an existing facility
 Continue to report as an asset
 If facility is NEW (purchased / constructed / improved)
 (A)Report capital asset at fair value when placed in operation
 (B)Any direct contractual obligations as liabilities
 Difference between (A) and (B) as Deferred Inflow of
Resources
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25. GASB 60 – Accounting and Financial
Reporting for Service Concession
Arrangements (SCA)
 Transferor Accounting and Financial Reporting
 Liabilities
 Obligation directly relates to the facility; or
 Obligation relates to a commitment made to maintain a
minimum level of service
 Example – providing a level of police and fire services for the
facility
 Example – providing maintenance to areas surrounding the
facility
 Record liability at present value
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26. GASB 60 – Accounting and Financial
Reporting for Service Concession
Arrangements (SCA)
 Transferor Accounting and Financial Reporting
 Depreciation
 Do not depreciate if the arrangement requires the operator to
return the asset in original or enhanced condition at the end
of the agreement
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27. GASB 60 – Accounting and Financial
Reporting for Service Concession
Arrangements (SCA)
 Transferor Accounting and Financial Reporting
 Deferred inflow needs to be recognized as revenue
 Systematic / Rational manner over the life of agreement
beginning when the facility is placed in operation
 Liability should be reduced as the obligation is satisfied
 As obligations are satisfied
 Deferred inflows should be recognized
 Then recognized as revenues in the same manner as
above
 Additional asset improvements should be recognized
27

28. GASB 60 – Accounting and Financial
Reporting for Service Concession
Arrangements (SCA)
 Transferor Accounting and Financial Reporting
 If an up-front payment is received…..
 Essentially the same accounting
 Up-front payment or present value of installment payments
posted as an asset
 Book contractual liability (as noted previously)
 Net equals deferred inflow of resources
 Amortize deferred inflow of resources (as noted previously)
in a systematic and rational manner over the life of the
agreement
28

29. GASB 60 – Accounting and Financial
Reporting for Service Concession
Arrangements (SCA)
 Public – Public Partnership….a Government as the
OPERATOR…..
 Record an “Intangible Asset” –
 Why – “right to….access facility or collect fees, etc.”
 Equates to the amount paid for the facility / upfront payments
 Improvements increase the value of the asset
 Amortize asset in a systematic and rational manner over the life
of the agreement
 Also – consider a liability if the “asset” (the facility) needs to
be returned in a certain condition
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30. GASB 60 – Accounting and Financial
Reporting for Service Concession
Arrangements (SCA)
 REVENUE SHARING ARRANGEMENT
 Government Operator
 Revenues – TOTAL amount collected
 Expense – TOTAL amount to be paid to TRANSFEROR
 Government Transferor
 Revenue – only recognize the amount due to you!
 If amounts are FIXED – then book via PV as
installment amounts
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31. GASB 60 – Accounting and Financial
Reporting for Service Concession
Arrangements (SCA)
 Key Disclosures – see disclosure checklist
 Year of implementation – changes to comply should
be treated as adjustments of prior periods
 Restate prior year (as applicable) with a cumulative
effect of the change on beginning assets if at all
possible
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32. GASB 62 – Codification of Accounting and
Financial Reporting - November 30, 1989
Guidance
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33. GASB 62 – Codification of Accounting and
Financial Reporting - November 30, 1989
Guidance
 Background
 GASB 34
 Provided (for Governmental and BTAs) should follow GASB
and FASB (pre November 30, 1989) UNLESS FASB
conflicted or contradicted GASB
 Supersedes GASB 20
 As such the ELECTION for BTAs to use FASB POST
11/30/1989 is eliminated
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34. GASB 62 – Codification of Accounting and
Financial Reporting - November 30, 1989
Guidance
 OBJECTIVE
 Incorporate FASB and AICPA pronouncements
 Practical effect:
 Same standard
 No real change expected
 No longer an “option” to elect to follow……
 May continue to follow as other accounting literature
 So what is really happening here – the codification!!
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35. GASB 63 – Financial Reporting of Deferred
Outflows of Resources, Deferred Inflows of
Resources and Net Position
35

36. GASB 63 – Financial Reporting of Deferred
Outflows of Resources, Deferred Inflows of
Resources and Net Position
 OBJECTIVE
 The current equation –
 Assets less liabilities = net assets
 GASB reviewed concepts statement #4
 What about things that are not really assets OR liabilities
 And the mezzanine was born
 Deferred outflows of resources (FKA assets / debits)
 Deferred inflows of resources (FKA liabilities /
credits)
36

37. GASB 63 – Financial Reporting of Deferred
Outflows of Resources, Deferred Inflows of
Resources and Net Position
 DEFERRED OUTFLOWS VS. ASSETS
 Deferred outflows
 Consumption applicable to future periods
 Example – Resources provided to a grantee when only the time
requirement has not been met
 Assets
 Resources with present service capacity that the government
presently controls
 Example - Prepaids
37

38. GASB 63 – Financial Reporting of Deferred
Outflows of Resources, Deferred Inflows of
Resources and Net Position
 DEFERRED INFLOWS VS. LIABILITIES
 Deferred inflows
 Acquisitions applicable to future periods
 Example – Proceeds of sale of future revenues (unavailable)
 Liabilities
 Present obligations to sacrifice resources that really cannot
be avoided
 Example – Payments received for services yet to be performed
38

39. GASB 63 – Financial Reporting of Deferred
Outflows of Resources, Deferred Inflows of
Resources and Net Position
 SOME NOTES
 Do not net inflows with outflows
 Assets should be added with outflows – subtotal
 Liabilities should be added with inflows – subtotal
 For governmental funds still a balance sheet with
subtotals…..
 For entity-wide – net assets NOW renamed as net
position
39

40. GASB 63 – Financial Reporting of Deferred
Outflows of Resources, Deferred Inflows of
Resources and Net Position
 NEW – STATEMENT OF NET POSITION (NO LONGER
NET ASSETS)
 Net Investment in Capital Assets – New title!
 Unrestricted
 Restricted
40

41. GASB 63 – Financial Reporting of Deferred
Outflows of Resources, Deferred Inflows of
Resources and Net Position
 Implementation Guidance
 Retrospective application
 No increase in “equity” – but how things are classified
from the prior year will change
 See the illustrative GFOA CAFR statements
attached
41

42. GASB 65 – Items Previously Reported as
Assets and Liabilities
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43. GASB 65 – Items Previously Reported as
Assets and Liabilities
 Background – jump ahead from GASB 63
 Required for years ended 12/31/2013
 Early implementation encouraged
 Provides detailed information
 Provides guidance on placement of various accounts
43

44. GASB 65 – Items Previously Reported as
Assets and Liabilities
 Background
 Report and continue to keep as asset / liability
 Report as a Deferred Inflow / Outflow (still on balance
sheet – just a new section)
 Report as inflow/outflow (to the P&L – never to the
balance sheet)
44

45. GASB 65 – Items Previously Reported as
Assets and Liabilities
 For each account – the approach to be used:
 Is the account an asset or liability
 Yes – stay as is
 Or is it a Deferred Outflow / Inflow
 Yes – a new place on the balance sheet (SONP)
 Fall back plan - report as inflow/outflow (to the P&L)
45

46. GASB 65 – Items Previously Reported as
Assets and Liabilities
 What I once knew to be true, AKA what were once
assets are now deferred outflows (some examples)
 Refunded debt – the excess of the price over the
original carrying amount
 Resources provided to a grantee when only the time
requirement has not been met
46

47. GASB 65 – Items Previously Reported as
Assets and Liabilities
 What I once knew to be true, AKA what were once
assets are now P&L outflows (some examples)
 Debt issuance costs (except prepaid insurance)
 Initial direct costs of operating leases
47

48. GASB 65 – Items Previously Reported as
Assets and Liabilities
 What I once knew to be true, AKA what were once
liabilities are now Deferred Inflows (some examples)
 Revenue of a governmental fund not yet recognized
because it is not yet AVAILABLE
 Refunded debt – the excess of the price over the
original carrying amount
 Property taxes – received or recognized as a
receivable prior to the period they were INTENDED to
finance
48

49. GASB 65 – Items Previously Reported as
Assets and Liabilities
 What I once knew to be true, AKA what were once
liabilities are now Deferred Inflows (some examples)
 Resources received from a grantor when only the
time requirement has not been met
 Other imposed non-exchange revenues received or
recognized as receivables prior to the period when
the use of the resource is required or first permitted
49

50. GASB 65 – Items Previously Reported as
Assets and Liabilities
 What I once knew to be true, AKA what were once
Liabilities are now P&L Inflows (some examples)
 Loan origination fees
50

51. Things to remember…..
 Private – Public Partnership – GASB 60
 Component Units – get ready to re-evaluate for
GASB 61 (but not until 6/30/2013 and after)
 FASB Codification – no longer GASB 20 - GASB 62
 GASB 64 – If you have derivatives
 GASB 63 & 65 – some changes in classification!!
 GASB 66 – Mess-ups getting cleaned up!
 For next time – Pensions….Pensions…Pensions!!
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52. Thank you!
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