Wiley GAAP for Governments 2019 : Interpretation and Application of Generally Accepted Accounting Principles for State and Local Governments

The authoritative guide to governmental GAAP compliance, fully updated for 2019 Wiley GAAP for Governments 2019 is the definitive resource for accurate information on the latest pronouncements and guidelines applicable to state and local governments and entities. Designed as a practical application guide for professional users, this comprehensive resource provides expert coverage of all significant developments to governmental accounting principles over the previous year. Focusing on practical application, this essential guide provides detailed information on all relevant areas of GAAP including general and special revenue funds, capital project funds and debt service funds, derivative instruments, and many more. This book incorporates all of the pronouncements issued by the Governmental Accounting Standards Board (GASB) as well as proposed new statements or interpretations currently outstanding and relevant information on the GASB agenda for the upcoming year. Governmental accounting standards are continuously evolving, and practitioners must stay up to date with the latest changes if compliance is to be maintained. This invaluable guide offers in-depth guidance on GAAP standards, interpretation, applications, and procedures to help you: Keep pace with the latest accounting pronouncements Ensure compliance with all GAAP-required disclosure guidelines Understand how GAAP applies to school districts, public institutions, and individual pension plans Strengthen understanding of material with flowcharts, diagrams, and charts This efficiently organized guide enables users to locate, understand, and apply relevant information with ease. Wiley GAAP for Governments 2019 provides financial reporters with expert guidance and up-to-date information required to ensure compliance and lighten the workload. Highly regarded for its efficient and accurate coverage of material, this book is the definitive reference for financial professionals. 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