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National Association of State Auditors, Comptrollers

and Treasurers

GASB UpdateThe views expressed in this presentation are those of Chairman

Vaudt and Mr. Bean. Official positions of the GASB are determined

only after extensive due process and deliberation.

© Copyright 2014 by Financial Accounting Foundation, Norwalk,

CT

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A Look Back, A Look Forward

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What Has Been Accomplished and What Remains To Be Done

Improving relationships Enhancing communications and implementation tools Identifying hot button financial reporting issues Focusing on the big issues

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Improving Relationships

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Relationships—Looking Out and Looking In

External- Meetings with over 30 organization executives and

congressional leaders in the past year Strengthening already strong relations (for example, NASACT) Reintroducing GASB to some (for example, NGA, NCSL, CSG, ASHTO) Establishing relations with others (for example, National School Board

Association) - Not a one-time drive by- Great standards are built on trust

Internal- Breaking down silos to increase efficiency

Both Boards can leverage off the other- Still need to always recognize why the GASB exists

Board and staff expertise in the public sector

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Enhancing Communications

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Introducing New Forms of Communication and Improving Others

GASB Outlook- A new form of communication directed at the “C” suite- Detailed communications are still available for the techies

Webcasts focused on due process documents- Fair value- Other postemployment benefits- Many more to come

New website- Timely information on projects- Technical inquiry portal - Implementation tools

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Enhanced Implementation Tools

Pension Implementation Tool Kit- Fact sheets- Plain-language articles- Podcasts and video discussions of specific provisions- Statements and Implementation Guides

More to come

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Identifying the Hot Button Issues

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What is Hot?

2a7-like pools- Accessing the impact of the new Securities and Exchange

Commission Regulations- Board will decide whether this topic should be added to the

pre-agenda research activities on August 22- A decision to add a topic to conduct pre-agenda research is

not intended to signal a change to the current standards

Direct lending (bank loans versus bonds)- Primarily a local government issue- Determining whether current note disclosure and management

discussion and analysis requirements are adequate

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Focusing On the Big Issues

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Major Technical Agenda and Pre-Agenda Research Topics

Financial reporting model reexamination Other postemployment benefits Fair value measurement and application Leases Fiduciary responsibilities

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Reporting Model—Where Have We Been

Statement 34—released in 1999 Everything on the table, but no predetermined outcomes Research to date- Literature review- Archival research- Research roundtables- Preparer and auditor surveys

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Reporting Model—Where Are We Going

Modified approach survey Financial statement user survey Interviews Final research report Board decision—does it move to the current technical

agenda?

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OPEB—Where Have We Been

Due process- Exposure drafts approved in June 2014

Built on the new pension standards- Arrangements that do not meet the definition of a trust- Healthcare inflation rate- Discount rate

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OPEB—Where Are We Going

Due process- Public hearings will be held in September

Release and effective dates- Final Statements expected in June 2015- Effective dates

Plans—June 2017 Employers—June 2018

Will complete the suite of new postemployment benefit standards

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Fair Value—Where Have We Been

How fair value is defined and measured- FASB standards highly leveraged- Definition is exactly the same as the FASB and IASB

Based on an exit value notion

Application- Limited in this proposed Statement to investments- Investment is specifically defined

When is fair value no longer appropriate- Acquisition value

Note disclosures—how is fair value determined

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Fair Value—Fundamental Definitions

Fair Value Definition- The price that would be received to sell an asset or paid to

transfer a liability in an orderly transaction between market participants at the measurement date.

Investment Definition- A security or other asset that a government holds primarily for

the purpose of income or profit and its present service capacity is based solely on its ability to generate cash or to be sold to generate cash

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Fair Value—Where Are We Going

Final Statement scheduled to be approved in February 2015

Effective date—June 2016

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Leases—Where Have We Been

Single approach—right of use- No classification of leases into operating/capital or other

categories- Underlying assumption that leases are financings

Practicality exception—short-term lease- Lease that, at the beginning of the lease, has maximum

possible term under the contract, including any options to extend, of 12 months or less

Lessor—symmetry with lessee accounting

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Leases—Where Are We Going

Issues still to be deliberated- Small items exemption

Due process- Preliminary views expected to be released in November 2014- Field test - Public hearings—April 2015

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Fiduciary Responsibilities—Where Have We Been

Fiduciary definition Custodial funds—A new fund type that includes any

fiduciary arrangement that is not governed by a formal trust agreement or equivalent arrangement

Fiduciary activities continue to be reported as basic financial statements

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Fiduciary Responsibilities—Definition

A government that controls assets:- (1) in accordance with a trust agreement or equivalent

arrangement in which the beneficiaries are (a) employees of the financial reporting entity, or (b) organizations or other governments that are not part of the financial

reporting entity, or - (2) outside of a trust agreement or equivalent arrangement and

(a) the beneficiaries are individuals, or private organizations or other governments that are not part of the financial reporting entity, or

(b) the resources are from a pass-through grant for which it does not have administrative or direct financial involvement.

No administrative or direct financial involvement

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Fiduciary Funds—Where Are We Going

Due process- Preliminary views expected to be released in November 2014- Field test- Public hearings—April 2015

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Questions?

Web site—www.gasb.org