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A Quick Guide for Upcoming GASB Implementations

By   Eric Berman

December 12, 2017

There are a number of Governmental Accounting Standards Board (GASB) Statements that state and local governments may need to focus on during the next financial reporting cycles. Depending on a government's operations, some of the GASB Statements may be more pervasive than others.

Here's what to expect:

December 31, 2017 Year-Ends

For December 31, 2017, four GASB Statements may result in some changes to financial statements:

  • GASB Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other than Pension Plans (OPEB)
  • GASB Statement No. 80, Blending Requirements for Certain Component Units
  • GASB Statement No. 81, Irrevocable Split-Interest Agreements
  • GASB Statement No. 82, Pension Issues

Of these Statements, none rise to the magnitude of change that GASB Statement No. 68 had (Accounting and Financial Reporting for Pensions – an amendment of GASB Statement No. 27). For example, if a government does not offer retiree benefits other than pensions, GASB Statement No. 74 does not apply. 

GASB Statement No. 80, Blending Requirements for Certain Component Units
GASB Statement No. 80 applies to governments that have discretely presented component units where the government is the sole corporate member of a component unit that is organized as a not for profit corporation. Certain foundations that are currently discretely presented component units of public hospitals and public institutions of higher education are examples of entities that may be subject to the provisions of GASB Statement No. 80. If so, and the component unit was not previously presented as a blended component unit, then the primary government may need to reclassify the component unit's status.

GASB Statement No. 81, Irrevocable Split-Interest Agreements
GASB Statement No. 81 only applies in situations where a government is a beneficiary of an irrevocable split-interest agreement, or is an administrator of such an agreement. Examples of these agreements include charitable lead trusts, charitable remainder trusts and life-interests in real estate. 

GASB Statement No. 82, Pension Issues
Finally, GASB Statement No. 82 is an amendment to GASB Statement No. 68 in three areas: presentation of payroll-related measures in required supplementary information (RSI), selection of actuarial assumptions and classification of employer-paid member contributions. For many governments, the presentation of payroll-related measures in RSI may result in a reversion to the pre-GASB Statement No. 68 ratio calculation using covered payroll. The actuarial assumptions changes are primarily for actuarial valuations, which many governments have little or no influence over. Finally, if an employer pays an employee's portion of plan member contributions in addition to the employer's portion, a reclassification of pension expense may need to occur. 

Looking Ahead to June 30, 2018
For June 30, 2018, similar implementation efforts may be required to those experienced by December 31st governments. The following GASB Statements will be implemented:

  • GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other than Pensions
  • GASB Statement No. 81, Irrevocable Split-Interest Agreements
  • GASB Statement No. 85, Omnibus 2017
  • GASB Statement No. 86, Certain Debt Extinguishments

GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other than Pensions

Similarly to the issues involving GASB Statement No. 74, if a government does not offer OPEB, then GASB Statement No. 75 would not apply. If a government does offer OPEB however, GASB Statement No. 75 will have a similar implementation effort as GASB Statement No. 68. Many governments are already gearing up for these changes as they are pervasive.

GASB Statement No. 85, Omnibus 2017

GASB Statement No. 85 provides clarity to a variety of issues, including aligning OPEB reporting to similarly structured pension provisions contained in GASB Statement No. 82. Other issues include guidance on blending requirements for component units of business-type activities, certain money market investments and goodwill. 

GASB Statement No. 86, Certain Debt Extinguishments

GASB Statement No. 86 may be the most limited implementation. The Statement only applies when a government utilizes only surplus resources to defease debt instead of selling refunding bonds. Such a transaction may occur if a government sells a building that still has outstanding debt. At closing, the proceeds of the sale may need to be escrowed to retire the debt. Additional note disclosure would be required in this instance, similar to a refunding transaction.

Should you have any questions on these implementations or those occurring after June 30, 2018, please ask your Eide Bailly partner.