By Eric Berman
March 24, 2017
As part of our effort to make you feel understood, connected and confident, Eide Bailly is proud to actively participate in the standard setting process. Eide Bailly Partner Eric Berman attended the last few GASB meetings on our clients’ behalf in order to keep you ahead of changes coming in the future.
Over the past few months, you probably have seen a lot of new GASB Standards coming from Norwalk, Conn.! Luckily, they are not immediately effective and some may not have an impact on your government. Other projects are in the works for the future.
The “Big 3” is the Big Focus
Eide Bailly conducted a national webinar on the GASB’s Invitation to Comment – Financial Reporting Model Improvements – Governmental Funds (ITC) in February. The financial reporting model is only one of what GASB calls “The Big 3.” They are also researching potential changes in the future to the revenue and expense model and finally, changes to potentially streamline note disclosures, focusing on existing disclosures that have been implemented for more than three years.
The financial reporting model project has many aspects to it. Currently, comments to the GASB are welcome from preparers, auditors and users on the ITC, which are due by March 31. Public hearings are scheduled during April and May nationwide. The GASB’s closest public hearings for many of our clients will be held on:
On the morning of May 12, 2017, also at the Embassy Suites, will be a user forum on the ITC, meant specifically for those charged with governance and other users and hosted by the GASB.
The ITC represents your opportunity to be part of the process before the Board has made any tentative conclusions. Governmental funds are important to many decision-makers. Yet, the content and accounting policies are not uniform nationally. A prime example is on the period of accruals. Many governments declare a liability for services rendered prior to a fiscal year end, but paid within 60 days after year-end (commonly known as the ’60 day accrual’.) Others use different periods. Your input is crucial to the future of how funds are reported. Eide Bailly Partner Eric Berman is on the Financial Reporting Model Task force on your behalf.
The Revenue and Expense Recognition Project is also important. Many of us wonder why revenues and expenses are not accrued and recognized symmetrically. Expenses are recognized immediately upon goods or services being delivered, while revenues utilize a number of different recognition patterns, mostly focusing on whether they have been earned. The FASB recently announced a sweeping change of the model of revenue and expense recognition for not-for-profit and for-profit entities occurring over the next few years. The GASB’s model may or may not be as pervasive. Eide Bailly Partner Lealan Miller serves on the Revenue and Expense Task Force.
Finally, the Note Disclosures Reexamination Project is also undergoing initial research to determine whether the notes are sufficiently providing information to the users of your reports. Roundtables have occurred and surveys may be sent. If you are in receipt of a survey, we encourage you to respond to the GASB on this vital project. After all, many complain about the length and depth of the notes and this is our opportunity to make changes in the future.
The timeline of “The Big 3” is currently estimated in the figure to the right. The timeline for the Note Disclosure Reexamination is estimated until the Board approves the research to escalate to a full project. The approval is expected to occur later this year. Implementation is unclear for any of the projects. However, if the pattern of implementation used for GASB Statement No. 34 is any indication, a staggered implementation from 2022 to 2024 based on the size of revenues may occur.
Other Projects at the GASB
Since last fall, the GASB issued three new Standards: GASB Statement No. 83, Certain Asset Retirement Obligations, Statement No. 84, Fiduciary Activities and most recently GASB Statement No. 85, Omnibus 2017. Before June 30th, GASB Statement No. 86, Leases and Statement No. 87, Certain Debt Extinguishment Issues are expected to be released. The GASB is also in the final stages of issuing an Implementation Guide to GASB Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other than Pension Plans and finally the annual Implementation Guide Update.
Many of the Statements issued are more narrowly focused than others. GASB Statement No. 84 and GASB Statement No. 86 have (or will have) lengthy implementation periods to afford preparers and our audit teams enough time to adjust policies and procedures to conform to their provisions. Implementation dates for each of these are as follows:
Future articles will be posted on www.eidebailly.com/industries/government/discussing GASB Statement No. 84 through GASB Statement No. 87 in detail. Both GASB Statement No. 84 and GASB Statement No. 86 may cause changes to policies and procedures, which necessitated the lengthy implementation periods.
GASB Update Dates for Spring / Summer 2017
Please feel free to sign up for training for you and your staff at the following locations on the following dates and times:
The training will be a comprehensive review of all the pending standards and GASB projects.Please contact your Eide Bailly government professional for further details on these and any other issues facing your government.