Two New GASB Standards.

• Author: GAUTHIER, STEPHEN

In June, the Governmental Accounting Standards Board (GASB) released two new authoritative pronouncements. One of these new standards amends and clarifies various aspects of the new governmental financial reporting model. The other promulgates several new note disclosure requirements.

Reporting Model Changes

GASB Statement No. 37, Basic Financial Statements--and Management's Discussion and Analysis--for State and Local Governments: Omnibus, is designed to resolve a number of technical issues that have arisen in connection with the implementation of the new governmental financial reporting model established by GASB Statement No. 34, Basic Financial Statements--and Management's Discussion and Analysis--for State and Local Governments. The GASB already addressed many of these issues in its Implementation Guide to GASB Statement No. 34. Nonetheless, the board believed a formal statement would be useful both to highlight the relevant guidance and to make certain necessary amendments to the authoritative text of GASB Statement No. 34. The specific guidance provided by GASB Statement No. 37 is briefly summarized in the paragraphs that follow.

Scope of MD&A. Paragraph 11 of GASB Statement No. 34 provides a list of topics to be addressed in management's discussion and analysis (MD&A). GASB Statement No. 37 clarifies that the discussion in MD&A must be limited to those specific topics.

Component Units of Component Units. It was unclear to some financial statement preparers whether data for a discretely presented component unit should include the latter's own discretely presented component units (if any). GASB Statement No. 37 explains that the data to be used are those that would appear in the component unit's entity-wide total column if such a column is or were to be presented.

Interest Capitalization on General Government Capital Assets. GASB Statement No. 34 assumed that governments would capitalize interest associated with the construction of capital assets of the general government, just as they do now for proprietary fund capital assets. GASB Statement No. 37 eliminates this requirement.

Converting to the Modified Approach. GASB Statement No. 34 did not address the appropriate treatment for existing infrastructure assets if a government subsequently elects to adopt the modified approach to account for such assets. GASB Statement No. 34 indicates that the transition to the modified approach in such cases should be treated prospectively as a...