1GASB UpdateImplementation Issues and a Look to the FutureThe views expressed in this presentation are those of Dr. Smith. Material for this presentation was provided by the GASB Staff; however, I am s till responsible for it.Effective Dates—June 30• June 30, 2009 –What happened last year– Statement 43—Phase III –OPEB plans– Statement 45—Phase II –OPEB for employers– Statement 49 – pollution remediation– Statement 52 –land held as investment by PFs– Statement 55 – GAAP hierarchy– Statement 56 –rules in 3 areas • June 30, 2010– Statement 45—Phase III –final OPEB implementers– Statement 51 –intangibles– Statement 53 – derivatives– Statement 57 –more OPEB for certain types of plans– Statement 58 – government bankruptcies• June 30, 2011– Statement 54 – Fund Balance reporting and definitions– June 30, 2012– Statement 57 –other provisions2Statement 54Fund Balance Reporting and Governmental Fund Type DefinitionsFund BalanceReporting and DisclosuresChanges in GASBS 54:Fund Balance Reporting• What is gone?– Reserved and Unreserved Fund Balance– Reporting designations• What is new –5 classifications of Fund Balance–Nonspendable– Restricted– Committed– Assigned– UnassignedNonspendable Fund Balance Represents amounts that cannot be spent because they are either: Not in spendable formInventory and prepaid itemsInventory and prepaid items Long‐term receivables and loans  Property acquired for sale (unless proceeds are restricted, committed, or assigned)  Legally or contractually required to be maintained intact –as in the principal of a Permanent Fund2Nonspendable Fund Balance Calculating Fund Balance classifications Amount in this classification should be determined before other classificationsMay limit reporting in other classificationsMay limit reporting in other classificationsRestricted Fund BalanceConstraints placed on the use of amounts are either:• Externally imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governmentsg g• Imposed by law through constitutional provisions or enabling legislationCommitted Fund Balance• Amounts that can only be used for specific purposes pursuant to constraints imposed by formal action of the government’s highest level of decision‐go e e t s gesteeo dec s omaking authority should be reported as committed fund balance.Committed Fund Balance [continued]• Amounts classified as “committed” are not subject to legal enforceability like restricted resources; however, they cannot be used for any other purpose ca ot be used o ayot e pu poseunless the government removes or changes the commitment by taking the same action it employed to impose the commitment.Committed Fund Balance [continued]• The authorization specifying the purposes for which amounts can be used should have the consent of both the legislative and executive branches of the eg s at e adeecut eba c eso tegovernment, if applicable.Assigned Fund Balance• Amounts that are intended by the government to be used for a particular purpose, but are neither restricted nor committed, should be reported as assigned fund balance.• Intent should be expressed by:–the governing body itself or– a subordinate high‐level body or official possessing the authority to assign resources to be used for specific purposes in accordance with policy established by the governing body. 3Assigned Fund Balance• Residual category of Fund Balance for classification for any governmental fund other than the General Fund.• Use in the General Fund indicates intent to use resources in manner that is narrower than l f hgeneral purposes of the government –cannot cause a deficit in the Unassigned categoryUnassigned Fund Balance• Residual classification of the General Fund.• Positive amounts should only be reported in the General Fundi b d i h• Negative amounts can be reported in other funds, but only after assigned amounts have been eliminated.Where Classifications Are FoundGeneralFundSpecial Revenue FundsCapitalProjects FundsDebtServiceFundsPermanentFundsNonspendable – Cannot Be NegativeRestricted – Cannot Be NegativeCommitted – Cannot Be NegativeAssigned Assigned – Residual Category – Cannot Be NegativeUnassignedMay be positive or negativeUnassigned – Used Only If NegativeAssigned must be eliminated before useWhere are amounts going in the City of Chattanooga?Reserves for NonspendableLibrary endowmentInventories/PrepaidsCapital Improvements RestrictedNotes ReceivableNotes ReceivableDebt Service EscrowEncumbrances CommittedDesignated for Debt ServiceSub year’s expenditures AssignedUnreserved in GFUnreserved in Others UnassignedFund Balance Reporting in Tennessee (at least for counties)Nonexpendable• Endowments• Invent ory• Long‐term Notes Receivable• Prepaid ExpensesFund Balance Reporting in Tennessee (at least for counties)General Government EducationFinance InstructionAdministration of Justice Support ServicesPublic Safety Capital OutlayPublic Health and Welfare Debt ServiceSocial, Cultural, & RecreationalServicesOperation of Non‐InstructionalServicesAgriculture & Natural Resources Capital ProjectsOther Operations Other PurposesHighways/Public Works4Stabilization (or Rainy Day) Arrangements• For the purposes of reporting fund balance, stabilization is considered a specific purpose. If criteria is met:–Restricted–Restricted– Committed• If criteria is not met—unassig ned (General Fund)• Rarely reported in a special revenue fund Displaying Fund Balance Categories and Classifications • Restricted fund balance may be displayed in a manner that distinguishes between the major restricted purposes, or it may be displayed in the aggregate • Committed and assigned fund balances may be displayed in sufficient detail so that the purposes of the major limitations d i id h lifii band assignments are evident, or each classification may be displayed in the aggregate • If aggregate disclosure made in financial statements, details must be reported in the notes. Other Disclosures• Committed Fund Balance– Government’s highest level of decision‐making authority– Formal action required to be taken to establish, modify or rescind a commitmentmodify, or rescind a commitment• Assigned Fund Balance– Body or official authorized to assign amounts to a specific purpose– Policy