Is Your Government Ready for This Fiscal Year-End and Beyond?

May 3, 2019 | Article

GASB has issued numerous delays on a number of statements in the wake of COVID-19.

Some state and local governments have just come up for air from implementing Governmental Accounting Standards Board (GASB) Statement No. 75, (Accounting and Financial Reporting for Postemployment Benefits Other than Pensions) and before you know it, it’s time for June 30 year-end. Or, if your government is a Dec. 31, Sept. 30 or other year-end, implementing this year’s standards is already in process.

Time to turn the page and focus on this year and the next few years of implementations from the GASB. The following are GASB Standards that your government may need to address:


GASB-83, Certain Asset Retirement Obligations. [Effective for reporting periods beginning after June 15, 2018 (July 1, 2018, Oct. 1, 2018 or Jan. 1, 2019]).
For governments that are subject to asset retirement obligations (AROs) due to a law, regulation, contract, past practice or ownership stake in a for-profit or nonprofit entity that is subject to AROs, GASB-83 contains guidance for the accounting, financial reporting and disclosure related to such obligations. Governments must have a legal, regulatory, contractual or practical obligation to perform such activities, in addition to an internal obligating event resulting from normal operations related to tangible capital assets. If applicable, GASB-83 requires a beginning balance adjustment.

GASB-88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements. [Effective for reporting periods beginning after June 15, 2018 (July 1, 2018, Oct. 1, 2018 or Jan. 1, 2019(].
GASB-88 defines debt for purposes of disclosure in notes to financial statements as a liability that arises from a contractual obligation to pay cash (or other assets that may be used in lieu of cash) in one or more payments to settle an amount that is fixed at the date the contractual obligation is established.

Due to the new definition of “debt,” GASB-88 clarifies which liabilities governments should include in their note disclosures related to long-term liabilities and debt. GASB-88 requires that all debt disclosures present direct borrowings and direct placements of debt separately from other types of debt. Additional (as applicable,) disclosure is now required as part of debt disclosure, including:

  • Amounts of unused lines of credit
  • Assets pledged as collateral for debt
  • Terms specified in debt agreements related to significant:
    • Events of default with finance-related consequences
    • Termination events with finance-related consequences
    • Subjective acceleration clauses


GASB-84, Fiduciary Activities [Effective for reporting periods beginning after Dec. 15, 2018 (July 1, 2019, Oct. 1, 2019 or Jan. 1, 2019)]. Governments that are December year-ends should already be implementing this standard.
GASB-84 contains the criteria for identifying fiduciary activities of all state and local governments and clarifies whether and how business-type activities should report their fiduciary activities. Governments should report activities meeting certain criteria in a fiduciary fund in the basic financial statements and present a statement of fiduciary net position and a statement of changes in fiduciary net position. A major change occurs to the former agency fund type. Agency funds will primarily become custodial funds with certain exceptions. Other fiduciary fund types and component units that are fiduciary in nature are largely unchanged. GASB-84’s implementation will be especially pervasive for student activity funds and other activities that were classified as fiduciary activities previously to GASB-84 or vice versa.

GASB-90, Majority Equity Interests Effective for reporting periods beginning after Dec. 15, 2018 (July 1, 2019, Oct.1, 2019 or Jan.1, 2019)].
Governments that are December year-ends should already be implementing this standard. GASB-90 clarifies the accounting and financial reporting requirements for a state or local government’s majority equity interest in an organization that remains legally separate after acquisition. Such a situation could occur with tribal gaming, economic development, healthcare and other entities. If applicable, a government entity should report its majority equity interest in a legally separate organization as an investment if that equity interest meets the GASB’s definition of an investment. If the interest does not meet the definition of an investment, GASB-90 requires a government to report the legally separate entity as a component unit. GASB-90 contains guidance for remeasuring assets and liabilities of wholly acquired governmental organizations that remain legally separate.


GASB-87, Leases [Effective for reporting periods beginning after Dec. 15, 2019 (July 1, 2020, Oct. 1, 2020 or Jan. 1, 2020)].
Nearly every government’s leasing activity will change due to this standard. GASB-87 requires that government lessees recognize the following:

  • A lease liability
  • An intangible asset representing the lessee’s right to use the leased asset
  • Report in its financial statements:
    • Amortization expense for using the lease asset over the shorter of the term of the lease or the useful life of the underlying asset
    • Interest expense on the lease liability
    • Note disclosures about the lease

Government lessors must recognize:

  • A lease receivable
  • A deferred inflow of resources and continue to report the leased asset in its financial statements
  • Report in its financial statements:
    • Lease revenue, recognized over the term of the lease, corresponding with the reduction of the deferred inflow
    • Interest income on the receivable
    • Note disclosures about the lease

Nearly all operating leases will become leases like today’s capital leases. Sale-leaseback, lease-leaseback, intra-entity leases, related party leases, and leases subject to regulatory accounting will all have changed GAAP.

GASB-89, Accounting for Interest Cost Incurred Before the End of a Construction Period. [Effective for reporting periods beginning after Dec. 15, 2019 (July 1, 2020, Oct. 1, 2020 or Jan. 1, 2020)]
This one paragraph standard may be pervasive for governments that incur interest cost during construction. Upon implementation, the capitalization of interest will no longer occur. It will be expensed. However, entities that include capitalized interest as part of their rate-setting process will need to seek an adjustment (or waiver) on the amounts related to such interest.

On the Horizon
The accounting world (unfortunately) never stops! Watch for releases from the GASB over the spring and summer relating to:

  • GASB-91, Conduit Debt Obligations (New – Effective for Reporting Periods beginning after Dec. 15, 2020).
  • Implementation Guides – Annual Update, Fiduciary Activities, Leases (May – June releases)
  • Exposure Drafts on:
    • Deferred Compensation Plans
    • Omnibus 201X
    • Subscription-Based Information Technology Arrangements
    • Public-Private and Public-Public Partnerships and Availability Payment Arrangements
    • Secured Overnight Financing Rate.

Be sure to reach out to your Eide Bailly audit team for more information on these or other GASB activities you may be interested in

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