In the current economic environment and even before the COVID-19 pandemic, local governments have been looking for ways to reduce costs through the consolidation of services or governments. The Governmental Accounting Standards Board (GASB) has defined accounting rules for the combinations and disposals of government operations, including mergers, acquisitions and transfers of operations. The statement includes when and how to record the transaction on the transferee and transferor government as well as required disclosures.
If your answer to either of these questions is “yes,” you may need to account for the transaction in accordance with GASBS 69 — Government Combinations and Disposals of Government Operations. The accounting rules and disclosures vary depending on the circumstances surrounding the transaction, so early preparation is a must to ensure the impacted governing boards understand the financial reporting implications as well as the potential cost savings from consolidating operations.
For more information on this topic, or to learn how Baker Tilly public sector specialists can help, contact our team.