Wiley GAAP for governments 2019: interpretation and application of generally accepted accounting principles for state and local governments

Cover......Page 1
Title Page......Page 5
Copyright Page......Page 6
Contents......Page 7
Preface......Page 9
About the Author......Page 11
 Recently Issued GASB Statements and Their Effective Dates......Page 13
  Exposure Drafts—Implementation Guide......Page 14
 GASB Project Plan......Page 15
 Summary......Page 16
 Introduction......Page 17
  Distinguishing a Governmental Entity from a Not-for-Profit Organization......Page 18
 Overview of the History of Governmental Accounting Standards Setting......Page 20
  GASB Concepts Statement 1......Page 21
  Control Characteristics Resulting from a Government’s Structure......Page 22
 Objectives of Financial Reporting......Page 29
  Concepts Statement 3—Communication Methods in General‐Purpose External Financial Reports that Contain Basic Financial Statements......Page 31
 Elements of Financial Statements......Page 32
 Hierarchy of Governmental Accounting Standards......Page 33
  GAAP Hierarchy for Governments......Page 34
 Codification of Certain FASB and AICPA Accounting and Financial Reporting Guidance......Page 35
 Summary......Page 37
 Introduction......Page 39
 Definition of Fund and the Purpose of Fund Accounting......Page 40
  How Is the Number of Funds to Be Established Determined?......Page 41
 A Synopsis of the Various Types of Funds Used by Governments for Accounting and Financial Reporting......Page 42
  Governmental Funds......Page 43
  Proprietary (Business-Type) Funds......Page 45
  Fiduciary Funds......Page 47
  Major Funds......Page 48
 A Definition of Basis of Accounting and Measurement Focus......Page 49
  Basis of Accounting......Page 50
 Recognition and Measurement of Certain Fund Liabilities and Expenditures......Page 52
  Measurement Focus......Page 53
 A Synopsis of Basis of Accounting and Measurement Focus Used by Each Type of Fund......Page 57
 Summary......Page 58
 Basis of Accounting and Measurement Focus......Page 59
 Nature and Use of the General Fund......Page 60
 Nature and Use of Special Revenue Funds......Page 61
 Accounting for Certain Revenue and Expenditures of General and Special Revenue Funds......Page 64
  Special Assessments......Page 65
  Expenditures......Page 66
  Inventories and Prepaids......Page 67
 Summary......Page 69
 Basis of Accounting......Page 71
 When Are Capital Projects Funds Used?......Page 72
  Proceeds from Debt Issuance......Page 73
  Bond Anticipation Notes......Page 74
  Demand Bonds......Page 78
  Special Assessment Debt......Page 79
  Arbitrage Rebate Accounting......Page 81
 Summary......Page 82
 Situations When a Debt Service Fund Is Required or Desirable......Page 83
 Basis of Accounting and Measurement Focus......Page 84
 Expenditure Recognition for Debt Service Payments......Page 85
 Accounting for the Advance Refunding of Long-Term Debt......Page 88
 Summary......Page 90
 Introduction......Page 91
 Basis of Accounting and Measurement Focus for Proprietary Funds......Page 92
  Accounting Requirements under GASBS 62......Page 93
  Background and Uses......Page 94
  Specific Accounting Issues......Page 96
  Background and Uses......Page 100
  Specific Accounting Issues......Page 101
 Summary......Page 103
 Agency Funds......Page 105
  Pass-Through Grants......Page 106
 Pension (and Other Employee Benefit) Trust Funds......Page 107
  Deferred Compensation Plans......Page 108
 Private-Purpose Trust Funds......Page 109
  Fiduciary Component Units......Page 110
  Other Fiduciary Activities......Page 111
  Reporting Fiduciary Activities in Fiduciary Funds......Page 112
  Statement of Fiduciary Net Position......Page 113
  Effective Date......Page 114
 Summary......Page 115
Chapter 9 Financial Statements Prepared by Governments......Page 117
  Management’s Discussion and Analysis......Page 118
  Government-Wide Financial Statements......Page 121
  Statement of Net Position......Page 122
  Expense Presentation......Page 126
  Revenue Presentation......Page 130
  Fund Financial Statements......Page 131
  Nonspendable Fund Balance......Page 134
  Committed Fund Balance......Page 135
  Assigned Fund Balance......Page 136
  Fund Balance Classifications......Page 137
  Disclosures......Page 138
  Budgetary Comparison Schedules......Page 147
  Notes and Other Disclosures......Page 148
  Disclosure Requirements for Tax Abatements......Page 155
  Reimbursements......Page 158
 Interfund Transactions—Fund Financial Statements......Page 159
  Statement of Net Position......Page 160
  Display Requirements......Page 161
  Financial Reporting for Governmental Funds......Page 162
  Nonexchange Transactions......Page 163
  Debt Issuance Costs......Page 164
  Mortgage Banking Activities......Page 165
  Regulated Operations......Page 166
 Comprehensive Annual Financial Report......Page 167
  CAFR Requirements......Page 168
 Cash Flow Statement Preparation and Reporting......Page 174
  Cash and Cash Equivalents Definitions......Page 175
  Classification of Cash Receipts and Cash Disbursements......Page 176
  Direct Method of Reporting Cash Flows from Operating Activities......Page 180
  Format of the Statement of Cash Flows......Page 181
 Summary......Page 182
 Introduction......Page 183
  Nonappropriated Budget......Page 184
  Budgetary Execution and Management......Page 185
  Budgetary Reporting......Page 186
  Capital Projects Funds......Page 187
  Basis of Accounting Differences......Page 188
  Entity Differences......Page 189
 Budgetary Control......Page 190
 Summary......Page 193
 Introduction......Page 195
 Background......Page 196
 Accountability Focus......Page 197
  Primary Government......Page 198
 GASB Statement No. 61 (GASBS 61), The Financial Reporting Entity—An Amendment of ASB Statements No. 14 and No. 34......Page 206
 Determining Whether Certain Fundraising Organizations Are Component Units—Amendment of GASB Statement No. 14......Page 207
  Other Organizations That Are Included in the Reporting Entity......Page 208
 GASB Statement No. 90 (GASBS 90), Majority Equity Interests—An Amendment of GASB StatementsNo. 14 and No. 61......Page 209
  Effective Date......Page 210
 GASB Technical Bulletin 2004-1 (GASBTB 2004-1), Tobacco Settlement Recognition and Financial Reporting Entity Issues......Page 211
  Overview of Reporting Component Units......Page 212
  Blended Component Units......Page 213
  Types of Government Combinations......Page 226
  New Governments......Page 227
  Recognition and Measurement of Government Acquisitions......Page 230
  Consideration......Page 231
  Reporting Government Acquisitions on a Provisional Basis......Page 232
  Transfers of Operations......Page 233
  Disposals of Government Operations......Page 234
  Notes to the Financial Statements......Page 235
 Summary......Page 236
Chapter 12 Cash and Investments—Valuation and Disclosures......Page 241
 Introduction......Page 242
 Valuation of Investments......Page 244
  Specific Application of the Requirements of GASBS 31......Page 247
  Compliance with Amortized Cost Criteria......Page 250
  Portfolio Maturity Requirements......Page 251
  Portfolio Quality Requirements......Page 252
  Portfolio Diversification Requirements......Page 254
  Portfolio Liquidity Requirements......Page 255
  Shadow Pricing Requirements......Page 256
 Financial Reporting Requirements......Page 257
 Required Disclosures......Page 258
  Accounting and Financial Reporting Standards for External Investment Pools and Individual Investment Accounts......Page 259
  Level of Detail......Page 261
  Custodial Credit Risk......Page 262
  Interest Rate Risk......Page 263
 New Fair Value Measurement and Application Standard......Page 264
  Markets......Page 265
  Price and Transaction Costs......Page 266
  Valuation Techniques......Page 267
  Valuation Approaches......Page 268
  Fair Value Hierarchy......Page 269
  Measuring Fair Value If the Volume or Level of Market Activity for an Asset or a Liability Has Significantly Decreased......Page 273
 Identifying Transactions That Are Not Orderly......Page 274
 Using Quoted Prices Provided by Third Parties......Page 275
  Nonfinancial Assets......Page 276
  Basic Principles......Page 277
  Liabilities Held by Other Parties as Assets......Page 278
  Application of Fair Value to Investments......Page 279
  Readily Determinable Fair Value......Page 281
  Disclosures......Page 283
  Additional Disclosures for Fair Value Measurements of Investments in Certain Entities That Calculate the Net Asset Value per Share (or Its Equivalent)......Page 285
 Nature of Securities Lending Transactions......Page 286
 Previous Accounting Treatment......Page 287
 GASBS 28’s Effect on the Operating Statement......Page 288
 Pooled Securities......Page 289
 Disclosure Requirements......Page 290
  Split-Interest Agreements......Page 292
  A Government Is the Intermediary......Page 293
  Life Interests in Real Estate......Page 295
  A Third Party Is the Intermediary......Page 296
 Summary......Page 297
  Scope......Page 299
  Recognition and Measurement of Derivative Instruments......Page 302
  Hedging Derivative Instruments......Page 303
  Evaluating the Effectiveness of a Hedge......Page 304
  Methods for Determining the Effectiveness of a Hedge......Page 305
  Consistent Critical Terms Method......Page 306
  Quantitative Methods......Page 308
  Synthetic Instrument Method......Page 309
  Regression Analysis Method......Page 310
  The Hedgeable Item Is an Existing or Expected Commodity Transaction......Page 311
  Consistent Critical Terms Method......Page 312
  Dollar-Offset Method......Page 313
  Regression Analysis Method......Page 314
  Hybrid Instruments......Page 315
  Synthetic Guaranteed Investment Contracts......Page 318
  Hedging Derivative Instruments......Page 319
  Investment Derivative Instruments......Page 321
  Synthetic Guaranteed Investment Contracts......Page 322
 Summary......Page 323
Chapter 14 Capital Assets......Page 325
 Introduction......Page 326
  Capitalization Policy......Page 327
 Valuation of Assets Recorded......Page 328
  Capital Asset Accounting......Page 329
 Depreciation of Capital Assets......Page 330
  Modified Approach......Page 332
  Definition......Page 333
  Internally Generated Intangible Assets......Page 334
  Accounting and Financial Reporting for Intangible Assets Using the Current Financial Resources Measurement Focus......Page 336
  Determining Whether a Capital Asset Is Impaired......Page 337
  Measuring Impairment......Page 338
  Insurance Recoveries......Page 339
 Disclosures Relating to Capital Assets......Page 340
  Service Concession Arrangements within the Scope of GASBS 60......Page 342
  Transferor Accounting and Financial Reporting for Facilities and Related Payments Received from an Operator......Page 343
  Accounting for Revenue Sharing Arrangements......Page 344
 Capitalization of Interest......Page 345
  Background......Page 346
  Amount of Interest to Be Capitalized......Page 347
  Capitalization Period......Page 348
  Disclosures......Page 349
  Asset Retirement Obligations......Page 350
  Recognition of an ARO......Page 351
  Initial ARO Measurement Exception for a Minority Owner......Page 352
  Subsequent Measurement and Recognition of an ARO......Page 353
  Subsequent Measurement and Recognition of a Deferred Outflow of Resources......Page 354
  Notes to Financial Statements......Page 355
 Summary......Page 356
Chapter 15 Debt and Other Obligations......Page 357
 Overview of the Accounting for Debt and Other Obligations......Page 358
 Demand Bonds......Page 361
 Advance Refundings......Page 364
  GASB Statement No. 86—Certain Debt Extinguishment Issues (GASBS 86)......Page 369
 Bond, Revenue, and Tax Anticipation Notes......Page 370
 Special Assessment Debt......Page 372
 Pollution Remediation Obligations......Page 374
  Recognition Benchmarks......Page 376
  Capitalization of Pollution Remediation Outlays......Page 377
 Accounting for Contingencies......Page 378
  Probability Classifications for Loss Contingencies......Page 379
  Disclosure of Loss Contingencies......Page 380
 GASB Statement No. 70—Accounting and Financial Reporting for Nonexchange Financial Guarantee Transactions (GASBS 70)......Page 381
  Recognition and Measurement in Current Financial Resources Financial Statements......Page 382
  Disclosures......Page 383
 GASB Statement No. 58—Accounting and Financial Reporting for Chapter 9 Bankruptcies (GASBS 58)......Page 384
  Accounts Payable, Notes, and Debt Obligations......Page 385
  Other Liabilities......Page 386
 Sales and Pledges of Receivables and Future Revenues......Page 387
  Residual Interest......Page 391
 GASB Statement No. 47—Accounting for Termination Benefits (GASBS 47)......Page 393
  Recognition of Termination Liabilities and Expense in Accrual Basis Financial Statements......Page 394
  Disclosures......Page 395
 Summary......Page 396
 Applicability......Page 397
  Estimated Total Current Cost of Closure and Postclosure Care......Page 398
  Recording Closure and Postclosure Care Costs—Proprietary Funds and Government‐Wide Financial Statements......Page 400
  Reporting Changes in Estimates......Page 402
 Responsibility for Landfill Closure and Postclosure Care Assumed by Another Entity......Page 403
 Disclosures......Page 404
 Summary......Page 405
Chapter 17 Postemployment Benefits—Pension and Other......Page 407
 Scope and Applicability......Page 409
  Financial Reporting for Benefits by Employers......Page 411
  Types of Defined Benefit Pension and OPEB Plans and Employers......Page 412
  Special Funding Situations......Page 413
  Net Pension and OPEB Liability......Page 414
  Notes to Financial Statements—All Single and Agent Employers......Page 419
  Information about the Net OPEB Liability......Page 420
  Required Supplementary Information—All Single and Agent Employers......Page 423
  Proportionate Share of the Collective Net Pension or OPEB Liability......Page 425
  Employer Contributions Subsequent to the Measurement Date......Page 427
  Plan Description......Page 432
  Required Supplementary Information—All Cost-sharing Employers......Page 435
 Defined Contribution Pension and OPEB Plans......Page 437
 GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date—An Amendment of GASB Statement No. 68 (GASBS 71)......Page 438
 GASB Statement No. 73, Accounting and Financial Reporting for Pensions and Related Assets That Are Not within the Scope of GASB Statement 68, and Amendments to Certain Provisions ofGASB Statements No. 67 and No. 68 (GASBS 73)......Page 439
  Payables to Defined Benefit Pension Plans......Page 440
  Classification of Employer‐Paid Member Contributions......Page 442
  Recognition and Measurement of On-Behalf Payments for Pensions or OPEBs in Employer Financial Statements......Page 443
  Alternative Measurement Method for OPEB Plans......Page 444
  Notes to Financial Statements......Page 445
  Effective Date......Page 446
 Summary......Page 447
 Scope of GASBS 16......Page 449
  Vacation Leave (and Other Compensated Absences with Similar Characteristics)......Page 450
  Sick Leave (and Other Compensated Absences with Similar Characteristics)......Page 452
  Sabbatical Leave......Page 455
  Other Factors Affecting the Liability Calculation......Page 456
 Financial Reporting Considerations......Page 457
 Summary......Page 458
 Accounting Basis......Page 459
  Lessee Accounting......Page 461
  Lessor Accounting......Page 466
 Other Leasing Issues for Governmental Entities......Page 474
  Operating Leases with Scheduled Rent Increases......Page 475
  Fiscal Funding and Cancellation Clauses......Page 476
  GASB Statement No. 87—Leases......Page 477
 Summary......Page 480
Chapter 20 Nonexchange Transactions......Page 481
 Introduction......Page 495
 Risk Financing and Insurance Activities of State and Local Governments (Other Than Public Entity Risk Pools)......Page 496
  Disclosure of Loss Contingencies......Page 497
  Risk Retention by Entities Other than Pools......Page 499
  Governmental Entities That Participate in Risk Pools......Page 501
  Entities Participating in Public Entity Risk Pools with Transfer or Pooling of Risk......Page 502
  Insurance-related transactions......Page 503
  Disclosure Requirements......Page 505
  What Is a Public Entity Risk Pool?......Page 506
  Specific Accounting and Financial Reporting Requirements......Page 508
  Disclosure Requirements and Required Supplementary Information......Page 515
 Summary......Page 519
Chapter 22 Pension and OPEB Plan Financial Statements......Page 521
  GASB Statement No. 67 (GASBS 67), Accounting and Financial Reporting for Pensions—An Amendment of GASB Statement No. 25......Page 522
  Types of Defined Benefit Pension Plans......Page 524
  Financial Statements......Page 525
  Statement of Changes in Fiduciary Net Position......Page 527
  Notes to Financial Statements......Page 528
  Disclosures Specific to Single‐Employer and Cost-Sharing Pension Plans......Page 530
  Required Supplementary Information......Page 531
  Notes to the Required Schedules......Page 532
  Total Pension Liability......Page 533
  Effective Date and Transition......Page 536
  Types of OPEB and OPEB Plans......Page 537
  Types of Defined Benefit OPEB Plans......Page 538
  Financial Statements......Page 539
  Fiduciary Net Position......Page 540
  Net Increase (Decrease) in Fiduciary Net Position......Page 541
  Notes to Financial Statements......Page 542
  Required Supplementary Information......Page 543
  Notes to the Required Schedules......Page 545
  Selection of Assumptions......Page 546
  Projection of Benefit Payments......Page 547
  Discount Rate......Page 548
 Summary......Page 554
 School Districts......Page 555
  Reporting Entity......Page 556
 Governmental Colleges and Universities......Page 557
  Costs of Activities That Include Fundraising......Page 560
  Allocation Methods......Page 562
  Special-Purpose Governments......Page 563
  Reporting Entity Considerations......Page 564
 Other Public Benefit Corporations......Page 565
  Utilities......Page 566
 Summary......Page 567
Appendix: Disclosure Checklist......Page 569
Index......Page 611
EULA......Page 640