The GASB Releases Three New Exposure Drafts

Friday, July 10, 2015

The Governmental Accounting Standards Board (GASB) voted in June to approve the release of three Exposure Drafts (ED):

  • Accounting and Financial Reporting for Irrevocable Split-Interest Agreements
  • Accounting and Financial Reporting for Certain External Investment Pools
  • Blending Requirements for Certain Component Units—an amendment of GASB Statement No. 14

The first ED addresses financial reporting for split-interest agreements (situations where a donor transfers resources to a trustee that manages their disbursement to the government and at least one other beneficiary). Examples include charitable lead trusts, charitable remainder trusts, charitable annuity gifts, and life interests in real estate. The GASB has set a comment deadline of September 18, 2015. If approved, the proposed new standard would take effect no later than the fiscal year that ends December 31, 2017.

The second ED proposes new criteria for when an external investment pool (and its participants) can report all of the pool investments at amortized cost rather than fair value. Currently, such reporting is possible only for investment pools that meet the criteria of SEC Rule 2a7. The GASB is proposing in the ED to replace the use of SEC Rule 2a7 with its own criteria. The GASB has set a comment deadline of August 31, 2015. If approved, most of the provisions of the proposed new guidance would take effect no later than the fiscal year that ends June 30, 2016, with the remainder taking effect no later than the fiscal year that ends December 31, 2016.

The third ED proposes to require the blending of not-for-profit component units when the primary government is the sole corporate member (officer) of the corporation. This guidance would not apply to component units that have been included pursuant to GASB Statement No. 39, Determining Whether Certain Organizations Are Component Units. The GASB has set a comment deadline of October 2, 2015. If approved, the new guidance would take effect no later than the fiscal year that ends June 30, 2017.