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Other Exposure Documents - Invitation to Comment 2022-002 —Accounting for Government Grants by Business Entities —Potential Incorporation of IAS 20, Accounting for Government Grants and Disclosure of Government Assistance, into Generally Accepted Accounting Principles

GASB Pronouncements –GASB Issues 2022 Omnibus on Practice Issues

Error Corrections –GASB Issues Statement No. 100 on Accounting Standards and Error Corrections

Risks – GASB Issues Exposure Draft on Disclosures about Certain Governmental Risks

Omnibus 2022 –OMB Issues 2022 Compliance Supplement

GAO –GAO Issues Professional Standards Update No. 84

Governmental Audit –GAQC Alert No 439 Published

Auditing –GAQC Publishes Practice Aids for Auditing For-Profit Entities with Provider Relief Fund

Governmental Audit –GAQC 437 Published 

Government Professional Standards – GAO Issues Professional Standards Update No. 83

FASB Accounting Standards Updates - Accounting Standards Update No. 2021-10 —Government Assistance (Topic 832) —Disclosures by Business Entities about Government Assistance

Financial Statements –GASB Changes Name of Report to “Annual Comprehensive Financial Report.” 

Note Disclosures – GASB Publishes Fact Sheet on Note Disclosures 

Governmental Audit – GAQC 431 Published 

GASB Practice Issues –GASB Releases Omnibus 20XX Proposal on Practice Issues 

Financial Statements –GASB Issues Revised Proposed Concepts Statement for Notes to Financial Statements 

Annual Financial Reports –GASB Proposes Renaming the Comprehensive Annual Financial Report 

Yellow Book –GAO Publishes Technical Updates to the 2018 Revision of the Yellow Book 

GAO Professional Standards –GAO Issues Professional Standards Update No. 80 

GAQC –GAQC Alert No. 426 Published 

Financial Reporting Model Improvements – GASB Fact Sheet Published  

GAQC – GAQC Alert No. 422 Published 

Compensated Balances – GASB Proposes Enhanced Guidance on Compensated Absences 

Covid-19 – GAQC Publishes Summary of Uniform Guidance (UG) Applicability for New COVID-19-Related Federal Programs  

Covid-19 – GAQC Publishes Guidance on the Reporting of Certain COVID-19 Awards on an Accrual Basis SEFA 

GAQC – GAQC Alert No. 423 Published 

GAO Professional Standards – GAO Issues Professional Standards Update No. 79 

Circular A-133 – OMB Issues 2020 Compliance Supplement to Circular A-133 

Public-Private Partnerships – New Edition of Governmental GAAP Update Service Summarizes GASB 94 

Leases – New Edition of Governmental GAAP Update Service Discusses GASB Extension of Lease Model 

Financial Reporting Model – GASB Issues Exposure Draft on Financial Reporting Model Improvements 

Governmental GAAP Guide – 2021 Edition of Governmental GAAP Guide Published 

Deferred Compensation – GASB Issues New Statement on Certain Component Unit Criteria and Deferred Compensation Plans

Revenues and Expenses – GASB Issues Preliminary Views on Revenue and Expense Recognition Models

Cloud Computing – GASB Issues Statement No. 96 on Cloud Computing and Subscription-Based Information Technology Arrangements 

GASB Standards – GASB Issues Implementation Guide 2020-1 

Public-Private Arrangements – GASB Issues Statement No. 94 on P3s

GAO – GAO Publishes Professional Standards Update

GASB Standards – GASB Publishes New Statement No. 92: Omnibus 2020

Articles 

Other Exposure Documents - Invitation to Comment 2022-002 —Accounting for Government Grants by Business Entities —Potential Incorporation of IAS 20, Accounting for Government Grants and Disclosure of Government Assistance, into Generally Accepted Accounting Principles

Summary - The FASB has published an Invitation to Comment (ITC), Accounting for Government Grants by Business Entities: Potential Incorporation of IAS 20, Accounting for Government Grants and Disclosure of Government Assistance, into Generally Accepted Accounting Principles. The ITC gives stakeholders the opportunity to provide feedback on whether IAS 20 represents a workable solution for improving GAAP in the U.S. financial reporting environment for business entities as it relates to the accounting for government grants.

Stakeholders are encouraged to review and provide comment on the ITC by September 12, 2022.

In response to previous feedback, the FASB Chair Richard R. Jones added a project, “Accounting for Government Grants, Invitation to Comment,” to the research agenda last December. Published as part of that research project, the government grants ITC solicits additional feedback from stakeholders on relevant requirements in IAS 20 that should apply to US GAAP and includes specific questions for investors about the importance and utility of government grants information to their analysis of a company’s financial performance.

For more information, click here.

© 2022 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

GASB Pronouncements –GASB Issues 2022 Omnibus on Practice Issues

Summary - The Governmental Accounting Standards Board (GASB) has issued GASB Statement No. 99, Omnibus 2022, which provides guidance addressing various accounting and financial reporting issues identified during the implementation and application of certain GASB pronouncements or during the due process on other pronouncements.

GASB No. 99 covers practice issues that include:

  • Accounting and financial reporting for exchange or exchange-like financial guarantees;-Certain derivative instruments that are neither hedging derivative instruments nor investment derivative instruments;
  • Clarification of certain provisions of: (a) Statement No. 34, Basic Financial Statements—and Management’s Discussion and Analysis—for State and Local Governments, (b) Statement No. 87, Leases, (c) Statement No. 94, Public-Private and Public-Public Partnership and Availability Payment Arrangements (PPPs), and (d) Statement No. 96, Subscription-Based Information Technology Arrangements (SBITAs);
  • Replacing the original deadline for using the London Interbank Offered Rate (LIBOR) as a benchmark interest rate for hedges of interest rate risk of taxable debt, with a deadline of when LIBOR ceases to be determined by the ICE Benchmark Administration using the methodology in place as of December 31, 2021;
  • Accounting for the distribution of benefits as part of the Supplemental Nutrition Assistance Program (SNAP);
  • Disclosures related to nonmonetary transactions;
  • Pledges of future revenues when resources are not received by the pledging government; and
  • Updating certain terminology for consistency with existing authoritative standards.

Effective Dates: The requirements of Statement No. 99 that relate to the extension of the use of LIBOR, accounting for SNAP distributions, disclosures for nonmonetary transactions, pledges of future revenues by pledging governments, clarifications of certain provisions in Statement No. 34, and terminology updates are effective upon issuance. The requirements related to leases, PPPs, and SBITAs are effective for fiscal years beginning after June 15, 2022, and all reporting periods thereafter. The requirements related to financial guarantees and the other requirements related to derivative instruments are effective for fiscal years beginning after June 15, 2023, and all reporting periods thereafter. Earlier application is encouraged and is permitted by individual topic to the extent that all requirements associated with an individual topic are implemented simultaneously. 

For more information, click here.

© 2022 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Error Corrections –GASB Issues Statement No. 100 on Accounting Standards and Error Corrections

Summary - The Governmental Accounting Standards Board (GASB) issued GASB Statement No. 100, Accounting Changes and Error Corrections, which is intended to improve the accounting and financial reporting requirements for accounting changes and error corrections. The GASB believes that Statement No. 100 provides more straightforward guidance designed to lead to information that is easier to understand and more reliable, relevant, consistent, and comparable across governments for making decisions and assessing accountability. The GASB’s previous standards on accounting changes and error corrections, in GASB Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements, were based on guidance established in the 1970s. The GASB’s pre-agenda research identified diversity in applying the existing standards in practice, including issues with selecting the appropriate category of accounting change or error correction. Statement 100 defines the following categories:

  • Changes in accounting principles;
  • Changes in accounting estimates;
  • Changes to or within the financial reporting entity; and
  • Corrections of errors in previously issued financial statements.

Statement 100 prescribes accounting and financial reporting for (1) each category of accounting change and (2) error corrections. It requires that:

  • Changes in accounting principle and error corrections be reported retroactively by restating prior periods;
  • Changes in accounting estimate be reported prospectively by recognizing the change in the current period; and
  • Changes to and within the financial reporting entity be reported by adjusting beginning balances of the current period.

The Statement also addresses how accounting changes and error corrections should be displayed in financial statements, disclosed in notes, and presented in required supplementary information and supplementary information.Statement 100 carries forward some of the requirements of Statement 62 but with clearer explanations. Regarding classification, a notable change relates to changes to or within the financial reporting entity, which previously did not encompass changes within the reporting entity, such as a change from discrete presentation of a component unit to blended presentation or vice versa. Regarding note disclosures, Statement 100 requires that governments disclose the effects of each accounting change and error correction on beginning balances in a tabular format.“Governments and other stakeholders should find many of the requirements of Statement 100 familiar,” said GASB Chair Joel Black. “But they should find the understandability of the guidance greatly improved, and financial statement users should benefit from the new tabular disclosure.”Effective DateThe requirements of Statement 100 are effective for accounting changes and error corrections made in fiscal years beginning after June 15, 2023, and all reporting periods thereafter. The GASB encourages earlier application. 

For more information, click here.

© 2022 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Risks – GASB Issues Exposure Draft on Disclosures about Certain Governmental Risks

Summary - The Governmental Accounting Standards Board (GASB) has issued the Exposure Draft, Certain Risk Disclosures, which proposes requirements that governments disclose information about certain risks they face that could affect the level of services they are able to provide or their ability to meet obligations as they come due. The comment deadline is September 30, 2022.

Although governments are required to disclose information about their exposure to some risks, essential information about certain other risks that are prevalent among state and local governments is not routinely disclosed because it is not explicitly required. The proposed Statement would provide financial statement users with an early warning that governments are susceptible to the financial effects of those risks.

The Exposure Draft would require governments to disclose essential information about risks related to a government’s current vulnerabilities due to:

  • Certain concentrations; and
  • Certain constraints common in the governmental environment.

The proposed Statement defines a concentration as a lack of sufficient diversity related to an aspect of a significant revenue source or expense, for example, a small number of companies that represent a majority of employment in a government’s jurisdiction, or a government that relies on one revenue source for most of its revenue. It defines a constraint as a limitation imposed on a government by an external party or by formal action of the government’s highest level of decision-making authority, such as a voter-approved property tax cap or a state-imposed debt limit. Concentrations and constraints may limit a government’s ability to acquire resources or control spending.

Disclosure Criteria

This proposal would require a government to disclose information about a concentration or constraint if all of the following criteria are met:

  • It is known to the government prior to issuing the financial statements;
  • An associated event either has occurred or is more likely than not to occur or begin to occur within 12 months of the financial
  • statement date or shortly thereafter; and
  • It is at least reasonably possible that within three years of the financial statement date the event will cause a substantial effect on the government’s ability to (a) continue to provide services at the level provided in the current reporting period, or (b) meet its obligations as they come due.

Note Disclosures

If a government determines that those criteria have been met, it would disclose information in notes to financial statements in sufficient detail to allow users of financial statements to understand the general nature of the circumstances disclosed and their potential effect on the government’s ability to provide services or meet its obligations.

The GASB has requested that comments be submitted either in writing or through an electronic input form. 

For more information, click here.

© 2022 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Omnibus 2022 –OMB Issues 2022 Compliance Supplement

Summary - The White House Office of Management and Budget (OMB) has issued the 2022 Compliance Supplement.

This 2022 Supplement is effective for audits of fiscal years beginning after June 30, 2021, and supersedes the 2021 Compliance Supplement (dated August 2021) and its Addenda (dated December 2021 and January 2022).

The 2022 Compliance Supplement, like previous annual Compliance Supplements, identifies existing, important compliance requirements that the federal government expects to be considered as part of an audit required by the 1996 Amendments to the Single Audit Act. It adds, deletes, and modifies prior Supplement sections.

In addition, the 2022 Compliance Supplement follows the OMB mandate adopted in the 2019 Compliance Supplement that requires each federal agency to limit the number of compliance requirements subject to the audit to six, with the exception of the Research and Development cluster.

The Research and Development cluster is permitted to identify seven compliance requirements as subject to the audit. For this purpose, the requirements relating to A. Activities Allowed and Unallowed and B. Allowable Costs and Cost Principles are treated as one requirement. The Part 2 matrix and the related program sections in parts 4 and 5 reflect this OMB mandate. Additionally, this six-requirement mandate does not apply to programs not included in this Supplement.

Appendix V provides a list of changes from the 2021 Compliance Supplement. However, changes in the Matrix of Compliance Requirements are reflected in Part 2 of the 2022 Compliance Supplement. 

For more information, click here.

© 2022 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

GAO –GAO Issues Professional Standards Update No. 84

Summary - The Government Accountability Office (GAO) has published Professional Standards Update (PSU) No. 84 covering standards published from January through March 2022. Specifically, this PSU has two sections:

  • Section I identifies select standards and guidance with their respective effective dates. Section I contains standards effective for:
  • audits of financial statements for periods ending after December 31, 2021;
  • attestation reports dated after December 31, 2021; and
  • accounting for reporting periods beginning after October 15, 2020.
  • Section II identifies select standards and guidance that were issued from January 2022 through March 2022.

For more information, click here.

© 2022 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Governmental Audit –GAQC Alert No 439 Published

Summary - The AICPA’s Governmental Audit Quality Center (GAQC) has published Alert No. 439. This GAQC Alert discusses a Federal Register technical updated published that announces a compliance examination attestation engagement option for certain recipients of funding from the Coronavirus State and Local Fiscal Recovery Fund (CSLFRF), as well as a reminder from the GAQC to register for an April 21, 2022, GAQC Web event on the CSLFRF program. 

For more information, click here.

© 2022 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Auditing –GAQC Publishes Practice Aids for Auditing For-Profit Entities with Provider Relief Fund

Summary - The Government Audit Quality Center (GAQC) today published several practice aids for auditing for-profit entities with Provider Relief Fund (PRF) and other HHS Program funding, and for organizations undergoing first-time single audits. The GAQC has published these practice aids in response to the large increase in entities requiring a single audit based on having received federal funding in response to the COVID-19 pandemic.

PRF funding is subject to single audit requirements which require the auditor to determine and report on whether the Schedule of Expenditures of Federal Awards (SEFA), presented as supplementary information (SI), is fairly stated in all material respects, in relation to the financial statements as a whole.

The GAQC developed the practice aid, Auditing For-Profit Entities with PRF and Other HHS Program Funding, to “assist auditors and for-profit entities subject to the HHS for-profit audit requirements when the PRF program is among the HHS awards subject to audit. The practice aid “includes, among other items, frequently asked questions (FAQs) and illustrative schedules, notes, and auditors’ reports. This practice aid provides nonauthoritative guidance on accounting and auditing matters as developed by AICPA staff.”

Many organizations that have never had a single audit received federal funding in response to the pandemic and through various federal legislation are now required to undergo one. These GAQC practice aids are chciecklist tools to assist auditors and organizations in considerations relating to single audits, including knowing whether a single audit is necessary. 

For more information, click here.

© 2022 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Governmental Audit –GAQC 437 Published

Summary - The AICPA’s Governmental Audit Quality Center (GAQC) has published Alert No. 437. This GAQC Alert discusses the following:

  • A GAQC practice aid related to the Provider Relief Fund (PRF) program, HHS Audit Requirements for For-Profit Entities with Awards for the Provider Relief Fund Program and Other HHS Programs;
  • A GAQC practice aid related to the PRF program, Audit Scope Considerations for Provider Relief Fund General and Targeted Distributions in Parent-Subsidiary Relationships;
  • A GAQC checklist tool, Tips for Auditors Taking on Single Audits; and
  • A GAQC checklist tool, Tips for Organizations Subject to Single Audit Requirements. 

For more information, click here.

© 2022 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Government Professional Standards – GAO Issues Professional Standards Update No. 83

Summary - The Government Accountability Office (GAO) has published Professional Standards Update (PSU) No. 83 covering standards published from through December 2021. This PSU has two sections:

  • Section I identifies select standards and guidance with their respective effective dates. Section I contains standards effective for: (1) audits of financial statements for periods ending after September 30, 2021; (2) attestation reports dated after September 30, 2021; and (3) accounting for reporting periods beginning after July 15, 2020.
  • Section II identifies select standards and guidance that were issued from October 2021 through December 2021.

For more information, click here.

© 2022 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

FASB Accounting Standards Updates - Accounting Standards Update No. 2021-10 —Government Assistance (Topic 832) —Disclosures by Business Entities about Government Assistance

Summary - The FASB issued Accounting Standards Update (ASU) No. 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance, which is expected to increase transparency in financial reporting by requiring business entities to disclose, in notes to their financial statements, information about certain types of government assistance they receive. Examples of such government assistance include cash grants and grants of other assets.

The amendments in the ASU require the following annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy to other accounting guidance such as a grant model within FASB Accounting Standards Codification® Topic 958, Not-for-Profit Entities, or International Accounting Standards (IAS) 20, Accounting for Government Grants and Disclosure of Government Assistance:

Information about the nature of the transactions and the related accounting policy used to account for the transactions;
The line items on the balance sheet and income statement that are affected by the transactions, and the amounts applicable to each financial statement line item; and
Significant terms and conditions of the transactions, including commitments and contingencies.

The amendments are effective for all entities within their scope, which excludes not-for-profit entities and employee benefit plans, for financial statements issued for annual periods beginning after December 15, 2021. Early application is permitted.

For more information, click here.

© 2022 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Financial Statements –GASB Changes Name of Report to “Annual Comprehensive Financial Report.”

Summary - The GASB has issued Statement No. 98, The Annual Comprehensive Financial Report. GASB 98 changes the name of the most extensive report prepared following its standards to the annual comprehensive financial report or ACFR. Until now, the name applied to those reports was the comprehensive annual financial report.

The name change was prompted by GASB stakeholders raising concerns that the acronym of the prior name of the report sounds like a profoundly offensive term when spoken. The changes in the name and acronym were widely supported by individuals and stakeholder groups that responded to the April 2021 Exposure Draft proposing the changes.

GASB 98 establishes the annual comprehensive financial report and ACFR in generally accepted accounting principles (GAAP) for state and local governments and eliminates the prior name and acronym. Otherwise, no changes were made to the report’s structure or content.

Financial reports prepared following GAAP are required to contain basic financial statements (including notes to financial statements) and required supplementary information (such as management’s discussion and analysis). Governments may voluntarily present those required components in an ACFR, which also contains more background and explanatory information from management, additional financial statements disaggregating certain columns in the basic financial statements, and a “statistical section” of 10-year trends in financial, economic, demographic, and operating information.

The requirements of Statement 98 are effective for fiscal years ending after December 15, 2021. The GASB encourages earlier application. 

For more information, click here.

© 2021 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Note Disclosures – GASB Publishes Fact Sheet on Note Disclosures

Summary - The Governmental Accounting Standards Board (GASB) has published its Fact Sheet on the Proposed Note Disclosure Concepts Statement (Fact Sheet). This Fact Sheet includes information on the proposed Note Disclosure Concepts Statement titled Revised Exposure Draft, Communication Methods in General Purpose External Financial Reports That Contain Basic Financial Statements - Notes to Financial Statements — an amendment of GASB Concepts Statement No. 3. The GASB issued the Revised Exposure Draft in July 2021. The purpose of the revised proposal is to guide the GASB when establishing note disclosure requirements for state and local governments. The proposed concepts primarily are intended to provide the GASB with criteria to consistently evaluate notes to financial statements in the standards-setting process. The Revised Exposure Draft would establish that notes to financial statements are essential to making economic, social, or political decisions or assessing accountability. They also may help stakeholders to understand the fundamental concepts underlying future GASB pronouncements.

  • The proposed concepts include, for example:
  • The purpose of notes to financial statements;
  • The intended users of note disclosures;
  • The types of information that should be disclosed in notes; and
  • The types of information that are not appropriate for note disclosures.

The Fact Sheet explains these concepts in more detail but also makes clear that if the proposal becomes a Concepts Statement, “no changes would be made to any note disclosures without the GASB engaging fully in its due process activities. . . .”

The Fact Sheet provides information on significant issues related to the proposal, including, among others: 

  • The overall purposes of Concepts Statements;
  • The criteria the GASB is proposing for notes, the target audience for notes, the criteria for determining whether information is essential, and the types of information that are and are not appropriate for notes;
  • The effect the proposal would have, if adopted, on the purpose of notes;
  • The criteria the GASB believes are essential for users;
  • The types of criteria the GASB will require governments to disclose in its notes, assuming information meets the criteria for essentiality; and
  • The changes in information the GASB is proposing to make in what is and is not appropriate for disclosure in notes.

For more information, click here.

© 2021 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Governmental Audit – GAQC 431 Published

Summary - The AICPA’s Governmental Audit Quality Center (GAQC) has published Alert No. 431. This GAQC Alert discusses the following:

  • The Office of Management and Budget (OMB) has issued a correction to the 2021 OMB Compliance Supplement;
  • The 2021 Supplement is now posted to the GAQC Web site by individual section;
  • The release of the 2021 AICPA Audit and Accounting Guides, State and Local Governments and Not-For-Profit Entities, and the status of the 2021 AICPA Audit Guide, Government Auditing Standards and Single Audits;
  •  Information about updated U.S. Department of Housing and Urban Development (HUD) agreed upon procedures reports and plans for updates to other illustrative reports included in the HUD Consolidated Audit Guide; and
  • Department of Education (ED) guidance on how ED programs that use alpha characters to identify subprograms such as the Education Stabilization Fund are to be reported on the Data Collection Form. 

For more information, click here.

© 2021 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

GASB Practice Issues –GASB Releases Omnibus 20XX Proposal on Practice Issues

Summary - The GASB has issued the Exposure Draft, Omnibus 20XX, which includes proposed guidance addressing various accounting and financial reporting issues identified during the implementation and application of certain GASB pronouncements or during the due process on other pronouncements. The comment deadline is September 17, 2021.

The issues covered by the Exposure Draft, Omnibus 20xx, include:

  • Accounting and financial reporting for exchange or exchange-like financial guarantees;
  • Classification and reporting of certain derivative instruments that are neither hedging derivative instruments nor investment derivative instruments;
  • Clarification of certain provisions of: (a) Statement No. 87, Leases, (b) Statement No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements, and (c) Statement No. 96, Subscription-Based Information Technology Arrangements;
  • Extending the period during which the London Interbank Offered Rate (LIBOR) is considered an appropriate benchmark interest rate for the qualitative evaluation of the effectiveness of certain interest rate swaps;
  • Accounting for the distribution of benefits as part of the Supplemental Nutrition Assistance Program (SNAP);
  • Disclosures related to nonmonetary transactions;
  • Pledges of future revenues when resources are not received by the pledging government; and
  • Updating certain terminology for consistency with existing authoritative standards.

For more information, clickhere.

© 2021 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Financial Statements –GASB Issues Revised Proposed Concepts Statement for Notes to Financial Statements

Summary - The GASB has issued a proposed Concepts Statement and Revised Exposure Draft, Communication Methods in General Purpose External Financial Reports That Contain Basic Financial Statements: Notes to Financial Statements. The comment deadline is October 15, 2021.

The GASB issued an Exposure Draft on this topic in early 2020. The GASB revised the Exposure Draft and issued the revision to incorporate feedback received from stakeholders on the previous proposal and to seek feedback on the resulting proposed revisions. The GASB believes the proposed revisions will improve the final concepts.
The purpose of the proposed Concepts Statement is to guide the GASB when establishing note disclosure requirements for state and local governments. The document is part of the GASB’s response to the results of its research reexamining existing note disclosure requirements.

The proposed concepts primarily are intended to provide the GASB with criteria to consistently evaluate notes to financial statements in the standards-setting process. They also may help stakeholders to understand the fundamental concepts underlying future GASB pronouncements. The proposed concepts include, for example the:

  • Purpose of notes to financial statements;
  • Intended users of note disclosures;
  • Types of information that should be disclosed in notes; and
  • Types of information that are not appropriate for note disclosures.

A key element of the proposed Concepts Statement is the concept of essentiality. The Revised Exposure Draft would establish that notes to financial statements are essential to making economic, social, or political decisions or assessing accountability. The revised proposal also identifies the characteristics that indicate information is essential to users:

  • Users utilize the information in their analyses for making decisions or assessing accountability or would modify those analyses to incorporate the information if it were made available.
  • The information has or would have a meaningful effect on users’ analyses for making decisions or assessing accountability.
  • A breadth or depth of users utilize or would utilize the information in their analyses for making decisions or assessing accountability.

For more information, click here.

© 2021 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Annual Financial Reports –GASB Proposes Renaming the Comprehensive Annual Financial Report

Summary - The Governmental Accounting Standards Board (GASB) has proposed to change the title of the “comprehensive annual financial report” to the “annual comprehensive financial report.” The comment deadline is July 9, 2021.

The proposed name change was prompted by GASB stakeholders raising concerns that the existing acronym for the report, when spoken, sounds like a profoundly offensive term. After seeking input from various stakeholder groups, the GASB added a project to its current technical agenda in December 2020 to address those concerns.

The Exposure Draft (ED), TheAnnual Comprehensive Financial Report, proposes to eliminate both the financial report name and the offensive acronym from the GASB’s standards, though it is important to note that no changes have been proposed to the structure or content of the report.

Regarding the issuance of the ED, GASB Chair Joel Black said, “When you pronounce the acronym, it is a highly offensive racial slur directed toward Black South Africans. As we and our stakeholders are part of a global community, we do not wish to be offensive to anyone, so we have undertaken the project to address this.”

For more information, click here.

© 2021 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

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Yellow Book –GAO Publishes Technical Updates to the 2018 Revision of the Yellow Book

Summary - The U.S. Government Accountability Office (GAO) has issued technical updates to the 2018 Revision of Generally Accepted Government Auditing Standards (GAGAS), also known as the “Yellow Book.”

The Yellow Book provides standards and guidance for auditors and audit organizations. It outlines the requirements for audit reports, professional qualifications for auditors, and audit organization quality control. Auditors of federal, state, and local government programs use these standards to perform their audits and produce their reports.

The GAO first issued the Yellow Book in 1972. The GAO issued a major revision of the Yellow Book in 2018. The 2018 amendments modernized GAGAS and covered developments in the auditing, accountability, and financial management professions since the previous Revision made in 2011.

The GAO set out the 2021 technical updates and the original 2018 Revision in a side by side comparison table on pages i. and ii. in front of the Contents page of the Yellow Book.

In addition to the Technical Update April 2021, the GAO issued accessible text of the same document.

Revision Process

Yellow Book revisions undergo an extensive process, including public comments and input from the Comptroller General's Advisory Council on Government Auditing Standards. GAO considers these comments and input in finalizing revisions to the standards.

Effective Date

The 2018 revision of the Yellow Book is effective for financial audits, attestation engagements, and reviews of financial statements for periods ending on or after June 30, 2020, and for performance audits beginning on or after July 1, 2019. Early implementation is not permitted.

The amendments included in the 2018 Revision of the Yellow Book, Technical Update April 2021, are effective upon issuance.

For more information, click here.

© 2021 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

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GAO Professional Standards –GAO Issues Professional Standards Update No. 80

Summary - The Government Accountability Office (GAO) has published Professional Standards Update (PSU) No. 80 covering standards published from January through March 2021.

PSUs provide brief summaries of recently issued standards of major auditing and accounting standard setting bodies, including, among others, the GAO, the FASB, GASB, AICPA, and PCAOB. These updates alert users to changes in professional standards. Auditors may use the GAO’s Generally Accepted Governmental Auditing Standards (Yellow Book) in connection with professional standards issued by the GAO and other authoritative bodies.

PSUs inform Yellow Book users of important changes to professional requirements and highlight some key points of recent standards. They do not establish new professional standards, reflect GAO official views on these requirements, nor provide a complete summary of the standards.

The content in PSU 80 is divided into three sections:

  • Section I, which identifies selected standards and guidance coming into effect for the following periods for: (a) audits of financial statements for periods ending on or after January 1, 2021, through December 31, 2021; (b) attestation reports dated on or after January 1, 2021, through December 31, 2021; and (c) accounting standards for reporting periods beginning on or after October 15, 2019, through April 1, 2021;
  • Section II, which identifies selected standards and guidance that would have been in effect for the period covered by PSU No. 80 but were deferred, including standards and guidance that would have been relevant for: (a) audits of financial statements for periods ending January 1, 2021, through December 31,2021, and (b) attest engagements with reports dated on or after January 1, 2021, through December 31,2021; and
  • Section III, which identifies selected standards and guidance that were issued from January 2021 through March 2021.

Users should refer to the original, authoritative standards for details on those standards and for purposes of implementing them.

For more information, click here.

© 2021 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

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GAQC –GAQC Alert No. 426 Published

Summary - The AICPA’s Governmental Audit Quality Center (GAQC) has published Alert No. 426. Topics discussed in this alert include:

A new guide issued by the U.S. Department of Education (ED) containing requirements and guidance for compliance attestation engagements of proprietary schools expending Higher Education Emergency Relief Fund (HEERF) grants;

  • A recent report issued by the Government Accountability Office (GAO) related to COVID-19 funding that addresses single audits and federal agency shortfalls;
  • An update made by GAO to Government Auditing Standards (also referred to as the Yellow Book); and
  • Updated frequently asked questions (FAQs) for the Provider Relief Fund (PRF) released by the U.S. Department of Health and Human Services (HHS) and updated FAQs issued by the U.S. Department of the Treasury (Treasury) for the Emergency Rental Assistance (ERA) Program.

For more information, click here.

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Financial Reporting Model Improvements – GASB Fact Sheet Published

Summary - The GASB has published a Fact Sheet: Financial Reporting Model Improvements and Fact Sheet Executive Summary - Financial Reporting Model Improvements. This document discusses the GASB’s financial reporting model which is the blueprint for a government’s audited annual financial report. It is the part of generally accepted accounting principles that describes the layout and contents of the report—a government’s financial statements, notes to financial statements, and required supplementary information. 

For more information, click here.

© 2021 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

GAQC – GAQC Alert No. 422 Published

Summary - The AICPA’s Governmental Audit Quality Center (GAQC) has published Alert No. 422. Topics discussed in this alert include:

  • Registration information for the new GAQC Web event on February 17, 2021, covering the fundamentals of Government Auditing Standards;
  • Registration information for the GAQC Web event on March 11, 2021, on the new Uniform Guidance regulation that is effective and will have implications for both auditees and auditors;
  • Registration information for an event hosted by the AICPA Health Care Expert Panel on February 8, 2021, covering the latest financial accounting and reporting implications of the Provider Relief Fund (PRF);
  • The availability of a no-CPE archive of the most recent GAQC Web event that was comprised entirely of questions and answers surrounding single audit COVID-19 implications; and
  • A reminder about the required GAQC membership compliance questionnaire, which is due March 1, 2021, along with an early opportunity to register for the 2021 GAQC’s annual required Webcast. 

For more information, click here.

© 2021 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Compensated Balances – GASB Proposes Enhanced Guidance on Compensated Absences

Summary - The Governmental Accounting Standards Board (GASB) has issued the Exposure Draft, Compensated Absences, to enhance the recognition and measurement guidance for compensated absences and refine related disclosure requirements. The comment deadline is June 4, 2021.

The proposed Statement would supersede the guidance issued by the GASB in Statement No. 16, Accounting for Compensated Absences, which GASB issued in 1992.

State and local governments often provide paid leave benefits to their employees, such as vacation leave and sick leave. Some benefits have evolved, such as with the use of a paid time off (PTO) model that may have characteristics of both vacation and sick leave. The Exposure Draft proposes to align recognition and measurement guidance for all types of compensated absences under a unified model.

The Exposure Draft details the circumstances under which governments would be required to recognize a liability for compensated absences and proposes guidance for measuring that liability. The general approach for measurement would be accumulated leave multiplied by an employee’s pay rate as of the financial reporting date.

The proposed model would result in governments recognizing a liability that more appropriately reflects when they incur an obligation for compensated absences. The GASB believes the model also would lead to greater consistency in application and improved comparability across governments.

The proposal would amend certain disclosures that are required at present. For example, the proposed Statement would provide an alternative to the existing requirement to disclose the gross increases and decreases in a compensated absences liability, such that governments would have an option to disclose only the net change in the liability. 

For more information, click here.

© 2021 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Covid-19 – GAQC Publishes Summary of Uniform Guidance (UG) Applicability for New COVID-19-Related Federal Programs

Summary - The GAQC published a summary of information about federal programs that have been established as a result of COVID-19 pandemic. The Notes column of this publication includes any other pertinent information the GAQC is aware of regarding the program. GAQC is providing this summary to assist members with gathering initial information to help in the audit planning process and for purposes of discussions with clients. 

For more information, click here.

© 2021 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Covid-19 – GAQC Publishes Guidance on the Reporting of Certain COVID-19 Awards on an Accrual Basis SEFA

Summary - The GAQC has published the Nonauthoritative Guidance on the Reporting of Certain COVID-19 Awards on an Accrual Basis SEFA. This document has been prepared to assist auditees and auditors as they consider the complexities involved with funding provided under the Coronavirus Aid, Relief, and Economic Security (CARES) Act and the timing of when that funding should be included on the Schedule of Expenditures of Federal Awards for single audit purposes. 

For more information, click here.

© 2021 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

GAQC – GAQC Alert No. 423 Published

Summary - The AICPA’s Governmental Audit Quality Center (GAQC) has published Alert No. 423. Topics discussed in this alert include:

  • A newly issued practice aid, GAQC Nonauthoritative Guidance on the Reporting of Certain COVID-19 Awards on an Accrual Basis SEFA, that walks members through the nuances of determining when COVID-19 funding goes on an entity’s Schedule of Expenditures of Federal Awards (SEFA);
  • An update to the GAQC’s nonauthoritative summary of information about federal programs established as a result of the COVID-19 pandemic;
  • The latest information we have on the Provider Relief Fund (PRF) program;
  • A conclusion by the Department of Health and Human Services (HHS) about the applicability of single audit and other for-profit audit requirements to COVID-19 vaccines;
  • The latest information we have on certain other COVID-19 funding;
  • A recent technical revision by the Office of Management and Budget (OMB) to the Uniform Guidance and a reminder about the March 11th GAQC Web event on the Uniform Guidance; and
  • The status of the development of the 2021 OMB Compliance Supplement. 

For more information, click here.

© 2021 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

GAO Professional Standards – GAO Issues Professional Standards Update No. 79

Summary - The Government Accountability Office (GAO) has published Professional Standards Update (PSU) No. 79, covering standards published from July through December 2020.

PSUs provide brief summaries of recently issued standards of major auditing and accounting standard setting bodies, including, among others, the GAO, the FASB, GASB, AICPA, and PCAOB. These updates alert users to changes in professional standards. Auditors may use the GAO’s Generally Accepted Governmental Auditing Standards (Yellow Book) in connection with professional standards issued by the GAO and other authoritative bodies.

PSUs inform Yellow Book users of important changes to professional requirements and highlight some key points of recent standards. They do not establish new professional standards, reflect GAO official views on these requirements, nor provide a complete summary of the standards.

The content in PSU 79 is divided into three sections:
Section I, which identifies selected standards and guidance relevant for audits of financial statements for periods that ended in June 2020 through December 2020 that are coming into effect for the first time;
Section II, which identifies selected standards and guidance that have been deferred but would have been relevant for financial audits with periods ending June 2020 through December 2020; and
Section III, which identifies selected standards and guidance that were issued from July 2020 through December 2020 to the extent that such materials were publicly available as of December 31, 2020.

Users should refer to the original, authoritative standards for details on those standards and for purposes of implementing them. 

For more information, click here.

© 2021 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Circular A-133 – OMB Issues 2020 Compliance Supplement to Circular A-133

Summary - The White House Office of Management and Budget (OMB) has issued the 2020 Compliance Supplement.

The 2020 Supplement is effective for audits of fiscal years beginning after June 30, 2019 and supersedes the 2019 Compliance Supplement dated August 2019.

The 2020 Compliance Supplement, like previous annual Compliance Supplements, adds, deletes, and modifies prior Supplement sections. In addition, it follows the OMB mandate adopted in the 2019 Compliance Supplement that requires each federal agency to limit the number of compliance requirements subject to the audit to six, with the exception of the Research and Development cluster.

The Research and Development cluster is permitted to identify seven compliance requirements as subject to the audit. For this purpose, the requirements relating to A. Activities Allowed and Unallowed and B. Allowable Costs and Cost Principles are treated as one requirement. The Part 2 matrix and the related program sections in parts 4 and 5 reflect this OMB mandate. Additionally, this six-requirement mandate does not apply to programs not included in this Supplement.

Appendix V provides a list of changes from the 2019 Compliance Supplement. However, changes in the Matrix of Compliance Requirements are reflected in Part 2 of the 2020 Compliance Supplement and not in Appendix V.

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Public-Private Partnerships – New Edition of Governmental GAAP Update Service Summarizes GASB 94

We have published a new edition of the Governmental GAAP Update Service that summarizes the provisions of GASB 94, Accounting for Public-Private and Public-Public Partnerships and Availability Payment Arrangements. GASB 94 will become effective for fiscal years beginning after June 15, 2022. However, many P3s contain complex structures that require lengthy negotiations. For contracts currently being contemplated, governments may want to review the provisions of GASB 94 to align the future structure of the contracts to GAAP.

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Leases – New Edition of Governmental GAAP Update Service Discusses GASB Extension of Lease Model

We have published a new edition of the Governmental GAAP Update Service that summarizes the provisions of GASB No. 96, Subscription-Based Information Technology Arrangements (SBITA). Like GASB 94, GASB 96 will become effective for fiscal years beginning after June 15, 2022.

SBITAs run the gamut from subscriptions to portals all the way to enterprise resource planning (ERP) systems. The subscriptions may contain very obtuse language that may need to be analyzed closely to determine proper accounting and financial reporting in accordance with GASB-96.

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Financial Reporting Model – GASB Issues Exposure Draft on Financial Reporting Model Improvements

The GASB has issued an Exposure Draft of a proposed Statement, Financial Reporting Model Improvements. The comment due date is February 26, 2021.

The GASB expects the proposal, if adopted as proposed, to improve to key components of the blueprint for state and local government annual financial reports. The Exposure Draft includes proposals to improve the effectiveness of financial reports in providing information essential for making decisions and assess government’s accountability and addressing certain application issues.

The proposals would establish or modify existing accounting and financial reporting requirements related to:

  • Application of the short-term financial resources measurement focus and accrual basis of accounting in governmental funds (replacing the existing current financial resources measurement focus and modified accrual basis of accounting);
  • Management’s discussion and analysis;
  • Presentation of governmental fund financial statements;
  • Presentation of the proprietary fund statement of revenues, expenses, and changes in fund net position;
  • Unusual or infrequent items; and
  • Budgetary comparison information.

The GASB indicates that the proposed changes would improve financial reporting in a variety of ways. For example, the proposed short-term financial resources measurement focus and accrual basis of accounting would improve the consistency of the information in governmental fund financial statements. The proposed changes to the presentation of governmental fund financial statements would (1) make the short-term nature of their information more evident and understandable, and (2) more clearly differentiate them from the long-term perspective of the government-wide financial statements.

The GASB plans to hold a series of public hearings and user forums on the Exposure Draft to further enable stakeholders to share their views. These public hearings are tentatively scheduled for March and April 2021. The Exposure Draft includes more information about commenting on the Exposure Draft and participating in the public hearings and users’ forums.

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Governmental GAAP Guide – 2021 Edition of Governmental GAAP Guide Published

We have published the 2021 edition of the Governmental GAAP Guide. This publication is written with the recognition that financial professionals who work with state and local governments must stay current with emerging governmental standards or face unfortunate consequences.

This edition of the publication has been updated throughout with the very latest information on the following GASB standards either recently implemented or in the process of being implemented as of the date of this publication:

  • GASB-97 (Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans);
  • GASB-96 (Subscription-Based Information Technology Arrangements);
  • GASB-94 (Public-Private and Public-Public Partnerships and Availability Payment Arrangements);
  • GASB-93 (Replacement of Interbank Offered Rates);
  • GASB-92 (Omnibus 2020);
  • GASB-91 (Conduit Debt Obligations);
  • GASB-90 (Majority Equity Interests—an amendment of GASB Statement No. 14 and No. 61);
  • GASB-89 (Accounting for Interest Cost Incurred before the End of a Construction Period);
  • GASB-88 (Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements);
  • GASB-87 (Leases);
  • GASB-83 (Certain Asset Retirement Obligations); and
  • Implementation issues continuing to be encountered for GASB-84 (Fiduciary Activities).

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Deferred Compensation – GASB Issues New Statement on Certain Component Unit Criteria and Deferred Compensation Plans

Summary - The Governmental Accounting Standards Board (GASB) has issued Statement No. 97, Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans. This new guidance is designed to reduce costs and increase the consistency and comparability of reporting state and local governments’ fiduciary component units.

A primary goal of Statement 97 is to mitigate costs associated with reporting certain defined contribution pension plans, defined contribution other postemployment benefit (OPEB) plans, and other employee benefit plans, such as certain Section 457 plans. Another important goal of the Statement is to improve the reporting of Section 457 deferred compensation plans that meet the definition of a pension plan and for benefits provided through those plans.

Statement 97 requires that, for purposes of determining whether a primary government is financially accountable for a potential component unit (except for a potential component unit that is a defined contribution pension plan, a defined contribution OPEB plan, or other employee benefit plan), the absence of a governing board should be treated the same as the appointment of a voting majority of a governing board if the primary government performs the duties that a governing board typically performs. Appointment of a voting majority is a criterion in existing standards used to determine whether a legally separate entity should be incorporated into the government’s financial statements.

Under certain circumstances, a financial burden on a government also is a criterion in existing standards used to determine whether a legally separate entity should be incorporated into the government’s financial statements. After further considering the perceived costs associated with applying existing standards (specifically, paragraph 7 of Statement No. 84, Fiduciary Activities), the GASB, in Statement 97, decided to limit the application of the financial burden criterion regarding contributions to postemployment benefit plans to only defined benefit pension plans and defined benefit OPEB plans that are administered through trusts.

Prior standards presumed that all Section 457 plans were not pension plans and, therefore, were not subject to pension plan reporting requirements; similarly, benefits provided through Section 457 plans were not reported as pension benefits. Under Statement 97, however, Section 457 plans should be classified as either a pension plan or other employee benefit plan, depending on whether the plan meets the definition of a pension plan. It also clarifies that Statement 84, as amended, should be applied to all arrangements organized under IRC Section 457 to determine whether those arrangements should be reported as fiduciary activities.

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Revenues and Expenses – GASB Issues Preliminary Views on Revenue and Expense Recognition Models

Summary - The Governmental Accounting Standards Board (GASB) issued for public feedback the Preliminary Views, Revenue and Expense Recognition. Comments are due by February 26, 2021.

The GASB has added this project to its technical agenda to:

  • Develop guidance applicable to topics for which existing guidance is limited;
  • Improve existing guidance that has been identified as challenging to apply;
  • Consider inclusion of a performance obligation approach in the GASB’s authoritative literature; and
  • Assess existing and proposed guidance based on the conceptual framework.

The GASB intends this Preliminary Views to present its current thinking about the development of a comprehensive, principles-based model that establishes categorization, recognition, and measurement guidance applicable to a wide range of revenue and expense transactions, which, if adopted as standards, is expected to enhance the usefulness of information governments report on their revenues and expenses.

The GASB introduced in the Preliminary Views a new methodology for categorizing transactions, which is then used as a basis for applying recognition proposals. Determining the transaction category would be based on the assessment of specific characteristics that a binding arrangement may or may not contain. This categorization methodology is intended to identify transactions with performance obligations.

If a transaction is determined to have a performance obligation based on the categorization characteristics, the associated revenue or expense would be recognized based on the satisfaction of the performance obligation. For transactions that are determined not to have a performance obligation, the GASB proposed specific recognition guidance based on the various subcategories of transactions (for example, derived taxes, such as income and sales taxes and imposed taxes, such as property taxes).

The GASB has tentatively scheduled a series of public hearings and user forums on the Preliminary to enable stakeholders to share their views with the GASB.

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

 

Cloud Computing – GASB Issues Statement No. 96 on Cloud Computing and Subscription-Based Information Technology Arrangements

Summary - The GASB has issued Statement No. 96, Subscription-Based Information Technology Arrangements. Statement 96 providesnew accounting and financial reporting guidance for subscription-based information technology arrangements (SBITAs), which have become increasingly common among state and local governments in recent years.

Statement 96 is based on the standards established in Statement 87, Leases. Statement 96. It:

  • Defines a SBITA as a contract that conveys control of the right to use a SBITA vendor’s IT software, alone or in combination with tangible capital assets (the underlying IT assets), as specified in the contract for a period of time in an exchange or exchange-like transaction.
  • Requires governments with SBITAs to recognize a right-to-use subscription asset, an intangible asset, and a corresponding subscription liability (with an exception for short-term SBITAs, those with a maximum possible term of 12 months).
  • Provides guidance related to outlays other than subscription payments, including implementation costs, and requirements for note disclosures related to a SBITA.

Although existing GASB literature addresses computer software that is internally developed or commercially purchased through perpetual licensing agreements, stakeholders have raised questions regarding cloud computing and other subscription-based forms of software applications and data storage. The new guidance should remedy existing inconsistencies in accounting and financial reporting for SBITAs.

The Statement is effective for fiscal years beginning after June 15, 2022, and all reporting periods thereafter. Early application is encouraged. In order to give state and local governments and other stakeholders additional time to deal with circumstances arising from the COVID-19 pandemic, this date is one year later than what the GASB proposed in the Exposure Draft.

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

GASB Standards – GASB Issues Implementation Guide 2020-1

Summary - The Governmental Accounting Standards Board (GASB) issued Implementation Guide 2020-1, Implementation Guidance Update—2020. Implementation Guide 2020-1 includes questions and answers intended to clarify, explain, or elaborate on the implementation and application of certain GASB pronouncements.

Questions Addressed by Implementation Guide 2020-1

Implementation Guide 2020-1 addresses new questions about application of the GASB’s standards on multiple topics, including but not limited to:

  • The financial reporting entity;
  • Fiduciary activities;
  • Leases;
  • Conduit debt obligations;
  • Asset retirement obligations; and
  • External investment pools.

Implementation Guide 2020-1 also includes amendments to previously issued implementation guidance. In addition, it delays the effective date of certain questions and answers that were originally published in Implementation Guide No. 2019-2, Fiduciary Activities, pending the completion of the GASB’s project on Certain Component Unit Criteria and Accounting and Financial Reporting for Section 457 Plans.

Effective Dates

The requirements of Implementation Guide 2020-1 are primarily effective for reporting periods beginning after either June 15, 2021 or December 15, 2021. Those effective dates are one year later than is typical for an Implementation Guidance Update, consistent with the GASB’s proposed Statement, Postponement of the Effective Dates of Certain Authoritative Guidance. Early application is encouraged for guidance related to standards that already have been implemented. Please see the guide’s Effective Date and Transition section for additional details.

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Public-Private Arrangements – GASB Issues Statement No. 94 on P3s

Summary - The Governmental Accounting Standards Board (GASB) has issued new Statement No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements. Statement No. 94 includes guidance to improve accounting and financial reporting for public-private and public-public partnership arrangements (commonly referred to as P3s) and availability payment arrangements (APAs).

Statement 94 includes guidance for P3 arrangements, including those that are outside of the scope of the GASB’s existing literature for those transactions, namely Statement No. 60, Accounting and Financial Reporting for Service Concession Arrangements, and Statement No. 87, Leases. The Statement also makes certain improvements to the guidance previously included in Statement 60 and provides accounting and financial reporting guidance for APAs.

P3s

Statement 94 defines a P3 as an arrangement in which a government transferor contracts with a governmental or nongovernmental operator to provide public services by conveying control of the right to operate or use a nonfinancial asset, such as infrastructure or other capital asset, the underlying P3 asset, for a period of time in an exchange or exchange-like transaction.

Some P3s meet the definition of a service concession arrangement (SCA). The Statement carries forward the financial reporting requirements for SCAs that were included in Statement 60, with modifications to apply the more extensive requirements related to recognition and measurement of leases to SCAs.

P3s that meet the definition of a lease should apply the guidance in Statement 87, if existing assets of the transferor that are not required to be improved by the operator as part of the P3 arrangement are the only underlying P3 assets and the P3s do not meet the definition of an SCA.

This Statement provides specific guidance for all other P3s from the perspective of both a government that transfers rights to another party and governmental operators that receive those rights.

APAs

Statement 94 defines an APA as an arrangement in which a government compensates an operator for services that may include designing, constructing, financing, maintaining, or operating an underlying infrastructure or other nonfinancial asset for a period of time in an exchange or exchange-like transaction.

The Statement requires governments to account for APAs related to those activities and in which ownership of the asset transfers by the end of the contract as a financed purchase of the underlying infrastructure or other nonfinancial asset. It also requires a government to report an APA that is related to operating or maintaining a nonfinancial asset as an outflow of resources (for example, expense) in the period to which payments relate.

Effective Date

The Statement is effective for fiscal years beginning after June 15, 2022, and all reporting periods thereafter. Earlier application is encouraged. In light of the ongoing COVID-19 pandemic and the GASB’s newly added project to consider postponing the effective dates of certain pronouncements, the GASB extended the effective date for Statement 94 by one year from the date proposed in the Exposure Draft.

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

GAO – GAO Publishes Professional Standards Update

Summary - The GAO has published Professional Standard Update (PSU) No. 76 which discusses changes in professional standards. The purpose of these updates is to “highlight the issuance and some key points of recent standards. PSUs do not contain a complete summary of the standards. Those affected by a new standard should refer to that standard for details. This PSU highlights the effective dates of selected standards reported previously that are expected to affect auditors at the time of or shortly after issuance of the most recent update.”

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

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GASB Standards – GASB Publishes New Statement No. 92: Omnibus 2020

Summary - The Governmental Accounting Standards Board (GASB) has issued new Statement No. 92, Omnibus 2020. Statement 92 includes guidance addressing various accounting and financial reporting issues identified during the implementation and application of certain GASB pronouncements.

Omnibus 2020
The issues covered by GASB Statement No. 92, Omnibus 2020, include:

  • Modification of the effective date of Statement No. 87, Leases, as well as associated implementation guidance, to fiscal years beginning after December 15, 2019, to address concerns regarding interim financial reports;
  • Reporting intra-entity transfers of assets between a primary government employer and a component unit defined benefit pension plan or defined benefit other postemployment benefit (OPEB) plan;
  • The applicability of Statement No. 73, Accounting and Financial Reporting for Pensions and Related Assets That Are Not within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statements 67 and 68, as amended, and Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, as amended, to reporting assets accumulated for pensions and OPEB;
  • The applicability of certain requirements of Statement No. 84, Fiduciary Activities, to pension and OPEB arrangements; and
  • Measurement of liabilities and assets, if any, related to asset retirement obligations in a government acquisition.

Effective Dates:
The effective dates of the amendments made by Statement 92 vary, as follows:

  • The requirements of Statement 92 that relate to the effective date of Statement 87 and its associated implementation guidance are effective upon issuance.
  • The provisions related to the application of Statement 84 are effective for periods beginning after June 15, 2020.
  • The amendments related to intra-entity transfers of assets and applicability of Statements 73 and 74 are effective for fiscal years beginning after June 15, 2020.
  • The remaining requirements related to asset retirement obligations are effective for government acquisitions occurring in reporting periods beginning after June 15, 2020.

Earlier application is encouraged and is permitted by topic.

For more information, click here.

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