Governments beginning GASB accounting standards implementation

In May 2020, the Governmental Accounting Standards Board (GASB) issued Statement No. 95, which delayed the required implementation of several previously issued standards. While this action was appreciated by governments currently adapting and responding to the ongoing COVID-19 pandemic, it is not an indefinite delay. In addition, GASB has continued to issue new standards and work on other projects. As a result, it is imperative that governments continue to monitor GASB activity and prepare for the implementation of future accounting changes.

If your organization didn’t implement GASB Statement Nos. 83, 84 or 88 prior to the issuance of GASB 95, you will need to prepare for the implementation of these standards promptly. Further, GASB Statement No. 87, Leases (GASB 87), will be effective starting with periods ending June 30, 2022. While that may seem like a lot of time, preparation for the new lease accounting standard may take significant effort and should start now. In order to properly implement this standard, a government should complete the following:

  • Identify whom within your organization needs to be involved in the implementation process and create an implementation plan
  • Gather existing leases and contracts for a complete population of potential transactions subject to GASB 87
  • Depending upon the size of your lease population, consider if purchasing software, outsourcing lease management or manual calculations is appropriate
    - Based on early implementation experience, consider a software solution if your organization has more than 30 leases
  • Evaluate each lease or contract to determine if it meets the definition of a lease in GASB 87
  • For those that meet the definition of a lease, abstract the appropriate details from the lease to calculate the lease liability and right to use asset (lessee) or the lease receivable and deferred inflow (lessor) and related amortization schedules
  • Enter data into lease software or perform lease calculations, review output and ensure all required information for footnote disclosures is summarized
  • Develop a policy for identification, evaluation and abstraction of future leases as well as changes in current leases that would require a change in accounting

In addition to the lease standard, GASB has issued Statement No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements (GASB 94), effective beginning with June 30, 2022 year end reporting and Statement No. 96, Subscription-Based Information Technology Arrangements (GASB 96), effective beginning with June 30, 2023 year end reporting. These standards may change the accounting for existing contracts/agreements or may require governments to implement new policies to identify future transactions that meet these definitions. GASB Statement No. 97 (GASB 97) was issued to clarify questions related to defined contribution pension plans and 457 deferred compensation plans, which were identified during the implementation of GASB 84.  This standard should be evaluated with the implementation of GASB 84 or immediately if implementation has already occurred.

Finally, GASB continues to work on projects related to financial reporting model improvements, elements of financial statements, revenue and expense recognition and disclosure frameworks. We encourage you to continue to monitor this activity to allow you to plan for future changes in governmental financial reporting.

For more information, or to learn how Baker Tilly’s state and local government specialists can help, contact our team.

Jodi Dobson
2020 Financial Ratios & Trend Analysis of CARF-accredited Continuing Care Retirement Communities
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2020 Financial Ratios & Trend Analysis of CARF-accredited Continuing Care Retirement Communities: a joint project of CARF, Ziegler and Baker Tilly