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by Linda Devlin

The Government Accounting Standards Board (GASB) has issued an Exposure Draft of a proposed Implementation Guide (the “Guide”) for public comment entitled “Implementation Guidance Update – 2019”.  Written comments on the proposed guide ended January 31, 2019.  The effective date of the Guide will be for reporting periods beginning after June 15, 2019. 

The proposed Guide includes questions and responses for statement of cash flows reporting and reporting for irrevocable split-interest agreements,  postemployment benefits for plan and employer accounting and reporting, mostly discussing the index rates of tax exempt general obligation municipal bonds with relation to reporting using an average of index rates at different dates and the implicit rate subsidy being included in the deferred outflow of resources if it is not being reimbursed.

The Guide also includes a question with respect to accounting for termination of an interest rate swap. Other questions include:  accounting and financial reporting for nonexchange transactions, impairment of capital assets and insurance recoveries, pledges of receivables and future revenues and intra-entity transfer of assets and future revenues, whether or not the long-term portion of notes receivable from revenue transactions unrecognized as revenue being included in fund balance.

Tax abatement disclosures such as a state government offering an economic development incentive for local property taxes to invest in new businesses along with irrevocable split-interest agreements and whether or not a remainder interest should be recognized at inception of the agreement and recording of a fund liability for the remainder interest in a gift to a governmental entity where the entity is the lead beneficiary of the resources for ten years.

This proposed guide also includes further questions and answers on previous implementation guides with respect to financial accountability, changes in fiduciary net position as a result of movement of members in one department to another in a state government and expenses paid to an investment pool for operating expenses of the pool as it applies to both pension and other postemployment benefit plans.  Included is also accounting and financial reporting for derivative instruments where the changing interest rates arising from variable-rate debt where the government enters into a pay-fixed interest rate swap and the disclosure of the rate in effect at the financial statement date being the variable-rate of expected future rates.

The requirements of this Guide will apply to all state and local governments upon adoption.