GASB proposes implementation guidance

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The Governmental Accounting Standards Board is proposing new guidance for implementation of several new standards in a document intended to answer frequently asked questions.

Implementation Guidance 2020 covers leases, fiduciary activities, asset retirement obligations, conduit debt obligations and amendment to parts of implementation guides issued in 2015 and 2017.

The guidance is important to large cities, states and government agencies that are followed by credit agencies.

Almost two thirds of the nation’s 90,000 local governments, states another other governmental taxing units that use Generally Accepted Accounting Principles promulgated by GASB.

GASB spokesman Kip Betz said the document is “kind of frequently asked questions about new standards and practices.”

“Once a standard is in practice, people say you answered all those other questions but what about this?” Betz said. “And it kind of fills in all those gaps.”

The guide discusses whether certain contracts legally constitutes a lease.

One example of a valid lease involves a utility and a telecommunications company that allows the company to install an antenna on one of the utility’s transmission poles.

Another section covers the definition of fiduciary activity by using examples such as the seizure of cash and other assets by a county sheriff or a school district that holds onto the money raised by a ski club for a ski trip.

“Asset seizures are not the property of the government until the court concludes that the assets were used in the commission of a crime,” the draft document advises.

In the example of a ski club, the GASB document advises: “Because the ski club does not participate in other activities during the year that the resources otherwise could be spent on, restricting through policy that the resources be spent for the ski trip is considered to be establishing specific guidelines on how the resources can be spent,” the document says.

In the section covering pensions the document discusses a defined benefit pension plan that sets a contribution amount through an actuarial valuation while the government that is the only employer contributing to the plan has the ability to change the contribution amount. In that instance, that ability creates a fiscal dependency.

"The ability of the primary government to change the contribution amount is equivalent to approving rates of the defined benefit pension plan," the document says. "The primary government holds the power to set the plan’s rates; therefore, the defined benefit pension plan would be fiscally dependent on the primary government."

Deadline for submitting written comments is Jan. 31, 2020.

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