Governmental Accounting and Auditing Update

Melisa F. Galasso

• Publisher: Wiley
• Year: 2020
• ISBN:
  9781119747345
• Edition: 1
• Topic: Negocios y empresa
• Subtopic: Contabilidad gubernamental

Be prepared for change by ensuring that you are current in accounting and auditing developments affecting government. Learn the latest accounting and auditing developments affecting governments by covering these hot topics:

• Risk assessment
• Documentation
• Leases
• Yellow Book
• Major program determination
• New GASB pronouncements

Chapter 1
GASB Activities

Learning objectives

• Identify recently issued and newly effective accounting standards affecting state and local governments.
• Recognize potential issues and challenges in implementing recently issued and newly effective accounting standards applicable to state and local governments.

Recent GASB standards

The following GASB statements issued before January 2020 are summarized in this chapter:

• Effective for reporting periods beginning after December 15, 2018
  • GASB Statement No. 84, Fiduciary Activities
  • GASB Statement No. 90, Majority Equity Interests—an amendment of GASB Statements No. 14 and No. 61
• Effective for reporting periods beginning after December 15, 2019
  • GASB Statement No. 87, Leases
  • GASB Statement No. 89, Accounting for Interest Cost Incurred before the End of a Construction Period
• Effective for reporting periods beginning after December 15, 2020
  • GASB Statement No. 91, Conduit Debt Obligations

In addition to the specific standards indicated here, Appendix A to this chapter discusses other GASB projects and their status.

Knowledge check

1. GASB Statement No. 84, Fiduciary Activities, is effective for which reporting periods?
   1. Beginning after June 15, 2017.
   2. Beginning after December 15, 2016.
   3. Beginning after June 15, 2018.
   4. Beginning after December 15, 2018.

GASB Statement No. 84

Why was this statement issued?

In January 2017, GASB issued GASB Statement No. 84, Fiduciary Activities, to enhance the consistency and comparability of fiduciary activity reporting by state and local governments. This statement provides guidance regarding what constitutes fiduciary activities for accounting and reporting purposes and how they should be reported by establishing criteria for identifying and reporting fiduciary activities of all state and local governments.

Who is affected by this statement?

A primary government or its component units may be engaged in fiduciary activities.

What are the main provisions of this statement?

Fiduciary component units

An organization that meets the component unit criteria in GASB Statement No. 14, as amended, is a fiduciary activity if it is one of the following:

• A pension plan that is administered through a trust (See the criteria in paragraph 3 of GASB Statement No. 67.)
• An Other Postemployement Benefit (OPEB) plan that is administered through a trust (See the criteria in paragraph 3 of GASB Statement No. 74.)
• A circumstance in which assets from entities that are not part of the reporting entity are accumulated for pensions (See paragraph 116 of GASB Statement No. 73.)
• A circumstance in which assets from entities that are not part of the reporting entity are accumulated for OPEB (See paragraph 59 of GASB Statement No. 74.)

A component unit that is not a pension or OPEB plan is a fiduciary activity if the assets associated with the activity have one or more of the following characteristics:

• The assets are administered through a trust where the government is not a beneficiary, dedicated to providing benefits to recipients in accordance with the benefit terms, and legally protected from the creditors of the government.
• The assets are for the benefit of individuals and the government does not have administrative involvement with the assets or direct financial involvement with the assets.¹ The assets are not derived from the government’s delivery of goods or services to those individuals.
• The assets are for the benefit of organizations or other governments that are not part of the financial reporting entity. The assets are not derived from the government’s delivery of goods or services to those organizations or other governments.

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Note: In determining whether a component unit is a fiduciary component unit, control of the assets of the component unit by the primary government is not a factor to be considered.

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Not a component unit

Pension and OPEB arrangements are fiduciary activities if the government controls² the assets of the arrangement.

Otherwise, the activity is a fiduciary activity if all the following criteria are met according to paragraph 11 of the statement:

• The assets associated with the activity are controlled by the government
• The assets associated with the activity are not derived either
  • solely from the government’s own-source revenues, or
  • from government-mandated nonexchange transactions or voluntary nonexchange transactions. There is an exception for pass-through grants for which the government does not have administrative involvement or direct financial involvement.³
• The assets associated with the activity have one or more of the following characteristics:
  • The assets are administered through a trust in which the government itself is not a beneficiary, dedicated to providing benefits to recipients in accordance with the benefit terms, and legally protected from the creditors of the government.
  • The assets are for the benefit of individuals and the government does not have administrative involvement with the assets or direct financial involvement with the assets. In addition, the assets are not derived from the government’s delivery of goods or services to those individuals.
  • – The assets are for the benefit of organizations or other governments that are not part of the financial reporting entity. In addition, the assets are not derived from the government’s delivery of goods or services to those organizations or other governments.

Reporting fiduciary activities in fiduciary funds

Governments should report fiduciary activities in the fiduciary fund financial statements of the basic financial statements.

Pension (and other employee benefit) trust funds are used to report fiduciary activities for the pension plans and OPEB plans that are held in a ...