Reclassified: GASB Statement No. 65 Makes Changes in How Some Items are Reported.

• Author: Caporicci, Gary M.
• Position: Standardsupdate - Governmental Accounting Standards Board

GASB Statement No. 65, Items Furiously Reported as Assets and Liabilities, is a related or companion standard to GASB Statement No. 63 (see California CPA, "GASB Financial Statements: A New Look," October 2013).

Certain items, previously reported as assets and liabilities, are reclassified as deferred outflows of resources, deferred inflows of resources or current-period outflows and inflows, under GASB No. 65. Deferrals are reported in a statement of financial position that result from outflows and inllows of resources dial have already taken place, but are not recognized in the financial statements as revenues and expenses/expenditures because they relate to a future period.

Background

Financial statements have long presented the basic elements of assets, liabilities and equity. This is the case for all business and non-business entities, including public companies, for-profit entities, not-for-profit entities and governments. These three elements are intended to present what the entity owns (assets), owes liabilities] and iis residual or net assets equity. This information, as we know, is used by outside parties, such as banks, creditors and investors to assess the value of the entity for the purpose of conducting business, making loans, issuing credit, buying stocks or bonds, etc.

Standard-setting organizations were formed to keep these financial statements in order and consistent. These include the Financial Accounting Standards Board for public companies, for-profit entities and nol-for-profit entities; and the Governmental Accounting Standards Board for governments.

The accounting of these entities is quite different, with FASB addressing business and not-for profit entities and GASB addressing only governments. Business accounting stresses profitability or losses and not-for profit accounting follows Lite same accounting principles. However, governments stress budget, transparency, compliance with laws and regulations, and management id citizens' kinds.Accordingly, the financial statements are similar, but have differing objectives.

With the establishment of deferred outflows of resources and deferred inflows of resources by GASB No. 63, certain assets and liabilities were not so classified. According to GASB No. 65, the following accounts and transactions need to be reclassified and accounted for in the future:

* Refunding of debt:

* Non-exchange transactions:

* Sales of future revenues and intra-entity transfers of future...