Wiley GAAP for Governments 2012

Interpretation and Application of Generally Accepted Accounting Principles for State and Local Governments

Warren Ruppel

• Publisher: Wiley
• Year: 2012
• ISBN:
  9781118282069
• Edition: 7
• Topic: Study Aids
• Subtopic: CPA (Certified Public Accountant) Study Guides

The most practical, authoritative guide to governmental GAAP

Wiley GAAP for Governments 2012 is a comprehensive guide to the accounting and financial reporting principles used by state and local governments as well as other governmental entities. Designed with the needs of the user in mind, this comprehensive resource presents the important developments in governmental GAAP during the past year.

• Full coverage of authoritative accounting standards
• Extremely useful and user-friendly examples, illustrations, and helpful practice hints
• A comprehensive guide to the accounting and financial reporting principles used by state and local governments as well as other governmental entities
• Provides a look ahead to the status of current and future Governmental Accounting Standards Board standards and projects
• Offers information on the very latest in standard-setting activities
• Also by Warren Ruppel: Governmental Accounting Made Easy

Wiley GAAP for Governments 2012 is a thorough, reliable reference financial professionals will consistently keep on their desks rather than on their bookshelves.

Chapter 1

NEW DEVELOPMENTS

• Introduction
• Recently Issued GASB Statements and Their Effective Dates
• Exposure Drafts
  • Exposure Draft—Technical Corrections—An Amendment of GASB Statements No. 10 and 62
  • Effective Date
  • Exposure Draft—Reporting Items Previously Recognized as Assets and Liabilities
  • Refundings of Debt
  • Nonexchange Transactions
  • Imposed nonexchange revenue transactions
  • Government-mandated nonexchange transactions and voluntary nonexchange transactions
  • Sales of Future Revenues and Intra-Entity Transfers of Future Revenues
  • Sales of future revenues
  • Intra-entity transfers of future revenues
  • Debt Issuance Costs
  • Leases
  • Initial direct costs of operating leases
  • Sale-leaseback transactions
  • Acquisition Costs Related to Insurance Activities
  • Lending Activities
  • Loan origination fees and costs
  • Commitment fees
  • Purchase of a loan or group of loans
  • Mortgage Banking Activities
  • Loan origination fees and costs
  • Fees relating to loans held for sale
  • Regulated Operations
  • General standards of accounting for the effects of regulation
  • Revenue Recognition in Government Funds
  • Effective Date and Transition
  • Exposure Draft—Accounting and Financial Reporting for Pensions—An Amendment of GASB Statement No. 25
  • Defined Benefit Pension Plans
  • Financial statements
  • Notes to financial statements
  • Required Supplementary Information
  • Measurement of the Net Pension Liability of the Employer(s)
  • Projections of benefit payments
  • Discount rate
  • Attribution method
  • Defined Contribution Pension Plans
  • Effective Date and Transition
  • Exposure Draft—Accounting and Financial Reporting for Pensions—An Amendment of GASB Statement No. 27
  • Defined Benefit Pensions
  • Single and agent employer liabilities to employees for defined benefit pensions
  • Measurement of Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions
  • Financial Statements Prepared Using the Current Financial Resources Measurement Focus and Modified Accrual Basis of Accounting
  • Notes to Financial Statements of Single and Agent Employees
  • Required Supplementary Information of Single and Agent Employers
  • Cost-Sharing Employers
  • Defined Contribution Pensions
  • Special Funding Situations
  • Effective Date and Transition
• Preliminary Views
  • Recognition of Elements of Financial Statements
  • Measurement Approaches
• GASB Project Plan
• Summary

INTRODUCTION

The 2012 Governmental GAAP Guide incorporates all of the pronouncements issued by the Governmental Accounting Standards Board (GASB) through November 2010. This chapter is designed to keep the reader up to date on all pronouncements recently issued by the GASB and their effective dates, as well as to report on the Exposure Drafts, Preliminary Views, and Invitations to Comment for proposed new statements or interpretations that are currently outstanding. This chapter also includes relevant information on the GASB’s Technical Agenda for the upcoming year to give readers information as to potential areas for future GASB requirements.

RECENTLY ISSUED GASB STATEMENTS AND THEIR EFFECTIVE DATES

GASB Statement	Effective Date	Where in this book
51 Accounting and Reporting for Intangible Assets	Periods beginning after 6/15/2009	Chapter 14
52 Land and Other Real Estate Held as Investments by Endowments	Periods beginning after 6/15/2008	Chapter 12
53 Accounting and Financial Reporting for Derivative Instruments	Periods beginning after 6/15/2009	Chapter 13
54 Fund Balance Reporting and Governmental Fund Type Definitions	Periods beginning after 6/15/2010	Chapter 4
55 The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments	Effective upon issuance	Chapter 2
56 Codification of Accounting and Financial Reporting Guidance Contained in the AICPA Statements on Auditing Standards	Effective upon Issuance	Chapter 5
57 OPEB Measurements by Agency Employers and Agent Multiple-Employer Plans	Periods beginning after 6/15/2011 (provisions related to the use and reporting of the alternative measurement method are effective immediately)	Chapter 17
58 Accounting and Financial Reporting for Chapter 9 Bankruptcies	Periods beginning after 6/15/2009	Chapter 15
59 Financial Instruments Omnibus	Periods beginning after June 30, 2010	Chapters 12, 13, 22
60 Accounting and Financial Reporting for Concession Agreements	Periods beginning after December 15, 2011	Chapter 14
61 The Financial Reporting Entity Omnibus—An Amendment of GASB Statements No. 14 and 34	Periods beginning after June 15, 2012	Chapter 11
62 Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements	Periods beginning after December 15, 2011	Chapter 2
63 Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position	Periods beginning after December 15, 2011	Chapter 9
64 Derivative Instruments: Application of Hedge Accounting Termination Provisions—An Amendment of GASB Statement No. 53	Periods beginning after June 15, 2011	Chapter 13

EXPOSURE DRAFTS

The GASB has a number of Exposure Drafts that it has issued which will affect future accounting and financial reporting requirements. The following provides a brief synopsis of what is being covered by each Exposure Draft. Readers should always be aware that the GASB often modifies Exposure Drafts based upon its continuing deliberations and consideration of comments that it receives on each Exposure Draft.

Exposure Draft—Technical Corrections—An Amendment of GASB Statements No. 10 and 62

The proposed statement resulting from this Exposure Draft would make limited technical corrections to GASB Statement No. 10, Accounting and Financial Reporting for Risk Financing and Related Insurance Issues (GASBS 10), and GASB Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements (GASBS 62).

GASBS 10, paragraph 63, would be amended to delete the requirement that an entity’s risk financing activities be accounted for either in the general fund or an internal service fund, if a single fund is used. Under GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions (GASBS 54), the definition of a special revenue fund would allow for certain risk financing activities to be reported in a special revenue fund.

GASBS 62, paragraphs 222 and 227(b), would be amended to delete the guidance that that does not allow the use of the fair value method that is permitted in paragraph 6(b) of FASB Statement No. 13.

GASBS 62, paragraph 442, would be amended to clarify that the purchase of a loan or group of loans should be reported at its purchase price.

Effective Date

The Statement resulting from this Exposure Draft is expected to be effective for financial statements for periods ending after June 15, 2012.

Exposure Draft—Reporting Items Previously Recognized as Assets and Liabilities

The purpose of this Exposure Draft is to fully implement the provisions of GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position (GASBS 63). There are currently a number of items on financial statements that are reported as assets and liabilities that would meet the definition of deferred outflows and deferred inflows of resources. In accordance with GASBS 63 only those items specifically identified in a GASB standard as a deferred outflow or inflow of resources should be reported as such. This Exposure Draft identifies all of the items currently reported as assets and liabilities that will need to be reported as deferred outflows and deferred inflows of resources.

The following are the items that would be impacted by a final statement issued as a result of this Exposure Draft.

Refundings of Debt

For current refundings and advance refundings resulting in defeasance of debt reported by governmental activities, business-type activities, and proprietary funds, the difference between the reacquisition price and the net carrying amount of the old debt should be reported as a deferred outflow of resources or a deferred inflow of resources and recognized as a component of interest expense in a systematic and rational manner over the remaining life of the old debt or the life of the new debt, whichever is shorter.

Prior to the expiration of the lease term, if a change in the provisions of a lease results from a refunding by the lessor of tax-exempt debt, including an advance refunding, in which (1) the perceived economic advantages of the refunding are passed through to the lessee and (2) the revised agreement is classified as a capital lease by the lessee, then the lessee should adjust the lease obligation to the present value of the future minimum lease payments under the revised lease. The adjustment of the lease obligation to present value should be made using the effective interest rate applicable to the revised agreement. The resulting difference should be reported as a deferred outflow of resources or a deferred inflow of resources. The deferred outflow of resources or the deferred inflow of resources should be recognized as a component of interest expense in a systematic and rational manner over the remaining life of the old debt or the life of the new debt, whichever is shorter.

Nonexchange Transactions

Imposed nonexchange revenue transactions.

Deferred inflows of resources should be recognized when resources are received or recognized as a receivable before (1) the period for which property taxes are levied or (2) the period when resources are required to be used or when use is first permitted for all other imposed nonexchange revenues in which the enabling legislation includes time requirements.

Government-mandated nonexchange transactions and voluntary nonexchange transactions.

Resources transmitted before the eligibility requirements are met (excluding time requirements) should be reported as assets by the provider and as liabilities by the recipient. Resources received or recognized as receivable before time requirements are met, but after all other eligibility requirements have been met, should be reported as a deferred outflow of resources by the provider and a deferred inflow of resources by the recipient.

Recognition of assets and revenues should not be delayed pending completion of purely routine requirements, such as the filing of claims for allowable costs under a reimbursement program or the filing of progress reports with the provider.

Sales of Future Revenues and Intra-Entity Transfers ...