New and emerging GASB guidance.

• Author: Gathier, Stephen
• Position: Governmental Accounting Standards Board

In the past few months, the Governmental Accounting Standards Board (GASB) has issued several new pronouncements and exposure drafts (EDs).

Final Pronouncements

The GASB has addressed securities lending transactions, the use of not-for-profit standards, and conduit debt in its most recent final pronouncements.

Securities Lending Transactions. GASB Statement No. 28, Accounting and Financial Reporting for Securities Lending Transactions, provides both accounting and disclosure guidance for securities lending transactions-*The GASB believes that the appropriate accounting for securities lending transactions depends upon the type of collateral received by the government lending the securities.

* If cash is received as collateral (or securities that may be pledged or sold even without a default), the transaction would be treated as a collateralized loan, much like most reverse repurchase agreements. Accordingly, the government lending the securities would report both an asset (i.e., the collateral received) and a liability (i.e., the obligation to return the collateral) on its balance sheet/statement of net assets. In the case of governments using intragovernmental cash and investment pools, this asset and liability would need to be allocated among the individual funds. The netting of revenues and expenditures/ expenses related to these transactions would not be permitted.

* If the transaction is secured by a letter of credit rather than by cash collateral (or if securities are received as collateral, but cannot be pledged or sold absent a default by the borrower) neither an asset nor a liability would be reported on the balance sheet/statement of net assets of the government lending the securities.

In either case, the lent securities would continue to be reported on the balance sheet/statement of net assets of the government lending them.

GASB Statement No. 28 also mandates a number of disclosures for securities lending transactions patterned closely on the disclosures already required for reverse repurchase agreements. In addition, the GASB will require that the lending government disclose whether the maturities of the investments made with the cash collateral generally match the maturities of securities loans and the extent of such matching as of the date of the balance sheet. The effective date for GASB Statement No. 28 is fiscal years beginning after December 15,1995.

Use of Not-for-profit Standards. GASB Statement No. 29, The Use of...