Stay on top of upcoming GASB pronouncements

July 24, 2017|Susan Pable

Managing compliance with governmental standards and requirements can be complex. Don’t lose sight of these upcoming Governmental Accounting Standards Board (GASB) pronouncements that may apply to your government organization.

The GASB has kept government finance officials busy this past year reviewing and implementing new standards relating to fair value measurement, pensions and other postemployment benefits. If you’ve focused on these three areas, you may have missed the other guidance on the horizon that may affect your government. Keep an eye on these upcoming pronouncements issued by GASB, summarized below:

No. 81 – Irrevocable Split-Interest Agreements

Split-interest agreements are a type of giving agreement used by donors to provide resources to two or more beneficiaries. A government that receives resources pursuant to an irrevocable split-interest agreement must recognize assets, liabilities and deferred inflows of resources at the inception of the agreement. This statement also addresses when a government should recognize assets of irrevocable split-interest agreements that are administered by a third party. This statement is effective for periods beginning after December 15, 2016.

No. 83 – Certain Asset Retirement Obligations

GASB defines an asset retirement obligation (ARO) as “a legally enforceable liability associated with the retirement of a tangible capital asset.” The capital asset must be permanently removed from service through its sale, abandonment or disposal. The most common ARO relates to municipal solid waste landfill closures, which is covered by GASB Statement No. 18. This statement applies to the retirement of other capital assets, including sewage treatment facilities. The measurement of an ARO must be based on the best estimate of the current value of expected outlays. The statement also requires disclosure of information about the government’s AROs, the methods and assumptions used for the estimates of the liabilities, and the estimated remaining useful life of the associated capital assets. This statement is effective for periods beginning after June 15, 2018.

No. 84 – Fiduciary Activities

This statement establishes criteria to identify whether an activity is fiduciary, how fiduciary activities should be reported in the financial statements, and when liabilities to beneficiaries should be noted. The use of agency funds has been eliminated and replaced with custodial funds. While agency funds reported only assets and liabilities, custodial funds also report net position and present a statement of changes in fiduciary net position. This statement will affect the financial reporting of many local governments. GASB No. 84 is effective for reporting periods beginning after December 15, 2018.

No. 85 – Omnibus 2017

This statement addresses issues that were identified during the implementation of other GASB statements. Among issues addressed are those related to fair value measurement and application, pensions and other postemployment benefits. This statement is effective for reporting periods beginning after June 15, 2017.

No. 86 – Certain Debt Extinguishment Issues

GASB Statement No. 7 requires that debt be considered defeased in substance when the debtor irrevocably places cash or other monetary assets acquired with refunding bond proceeds in a trust to be used solely for the scheduled payments of principal and interest of the defeased debt. This statement establishes the same requirements for when a government places cash and other monetary assets acquired with other existing resources in an irrevocable trust to extinguish the debt. GASB No. 86 is effective for reporting periods beginning after June 15, 2017.

No. 87 - Leases

The GASB recently issued a new pronouncement on lease accounting. Many governments routinely enter into leases for vehicles and other equipment. The standard would eliminate the current distinction between operating and capital leases and would require the recording of a lease liability and an intangible asset to represent the right to use the asset. The leased asset would be amortized over the term of lease and recognize interest expense related to the lease liability. Government lessors would recognize a receivable for the right to receive payments and a deferred inflow of resources, with lease revenue recognized over the term of the lease. GASB No. 87 is effective for reporting periods beginning after December 15, 2019.

Future articles will provide more detailed information on these standards. Stay tuned!

For assistance interpreting and implementing the GASB guidance, contact Susan Pable at 920-455-4305 or another member of Schenck’s Government team at 800-236-2246.


Sue Pable, CPA, shareholder, has more than 20 years of experience in governmental accounting and auditing and is a member of Schenck’s Government team. She is responsible for the technical review of audited financial statements of the firm’s governmental clients and the implementation of new accounting pronouncements.