Agenda - Council - 06/23/1998 - Laserfiche WebLink

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I I I I I I I I I I I I I I I I I I I ACCOUNTING AND AUDITING UPDATES GASB REPORTING MODEL PROJECT For a number of years, the Governmental Accounting Standards Board (GASB) has been working on developing a new financial reporting model for state and local governments. The project is still not complete, and will have an implementation period of several years once it has been finalized. However, due to the magnitude of changes this project may bring about, and the potential record keeping consequences to local govemmental units, we want to keep our clients informed of the most recent developments. Early in 1997, the GASB issued an exposure draft of their proposed revisions to the basic financial statements. Some of the key aspects of this proposal include: Mandatory inclusion of a "Management's Discussion and Analysis" section in the financial statements, to include key financial information and analysis from management of the current year operating results. o Dual perspective reporting, where financial information would be presented on both the traditional fund perspective and from an "entity-wide" perspective. An additional layer of reporting added on top of the traditional fund level reporting. These entity-wide statements would present financial information for all activities of the government on a full accrual basis, aggregated by governmental and business-type activities. At the entity-wide level, capital assets (including infrastructure assets) are required to be reported, along with a provision for depreciation. This would require governmental units to establish fixed asset records. o All long-term liabilities would be reported within the funds at the entity-wide level. Currently, implementation for the reporting model is projected to be effective for years beginning after June 15, 2000, with the reporting provisions for infrastructure assets effective for periods beginning after June 15, 2003. These are just a few of the changes. The GASB is working on a number of other projects in conjunction with the reporting model that will also make significant changes, including a study of all footnote disclosures. INVESTMENT VALUATION The Governmental Accounting Standards Board also issued Statement No. 31, "Accounting and Financial Reporting for Certain Investments and for External Investment Pools." The statement establishes fair value standards for governmental entities investments in interest-earning investment contracts, external investment pools, open-end mutual funds, debt securities, and equity or equity-related securities with readily determinable fair values. Governmental entities will be required to report investments at fair (market) value on their financial statements, except for certain money market investments purchased with a remaining maturity of one year or less. The statement also changes revenue recognition, as all investment income, including changes in the fair value of investments, will be reported as revenue in the operating statement. The provisions of this statement are effective for fiscal years beginning after June 15, 1997. -14-