Best Practices & Advisories
- Control Over Items That Are Not Capitalized - GFOA recommends that every government undertake a systematic effort to identify all of its controlled capital-type items.
- Indirect Cost Allocation - GFOA encourages governments to allocate their indirect costs.
- Municipal Solid Waste Management and Full-Cost Accounting - In this best practice GFOA makes several recommendations concerning the application of full cost accounting (FCA) to municipal solid waste management activities.
- Full Cost Accounting for Government Services - GFOA recommends that governments calculate the full cost of the different services they provide.
- Disaster Recovery for Technology - GFOA recommends that every government formally establish written policies and procedures for minimizing disruptions resulting from failures in computers or other advanced technologies following a disaster. These written policies and procedures should be evaluated annually and updated periodically, no less than once every three years.
- Disaster Recovery Cost Documentation - GFOA urges state and local government financial managers to take all necessary steps to ensure that they will be able to collect and maintain adequate documentation of disaster-related costs to support maximum reimbursement from all levels of government that offer such assistance.
- Grants Administration - GFOA recommends that governments establish processes to promote awareness throughout the government that grants normally come with significant requirements.
- OMB Uniform Guidance - GFOA recommends that governments take steps to ensure they fully comply with the provisions of the OMB's Uniform Guidance.
Additional GFOA Resources
- GFOA Leases Tool* - GASB Statement Number 87, Leases, is effective for fiscal years beginning after December 15, 2019. GASB 87 eliminates operating leases, all contracts that meet the definition of lease are to be accounted for as assets and liabilities by lessees, similar in some ways to capital leases. Governments need to evaluate contracts in which the government pays another entity to use an asset (government as a lessee) or another entity pays the government to use the government’s asset (government as a lessor) to determine if those contracts meet the definition of a GASB 87 lease. GFOA has prepared an advisory to help governments prepare for the implementation of GASB 87.
For governments that are a lessee or lessor in accordance with GASB 87, there are journal entries that have to be made when the lease begins and throughout the lease term. GFOA has prepared an example of the entries needed from both the lessee and lessor perspective. In order to prepare the journal entries, present value calculations of the lease payments are required to made (lessees and lessors), lease repayment schedules need to be prepared (lessees and lessors), and amortization schedules of the intangible right-to-use asset (lessees) and the deferred inflows of resources (lessors) need to be prepared. This tool provides the calculations needed to prepare the necessary entries for the government as a lessee and as a lessor at the beginning of the lease term and throughout the life of the lease.
This tool is an example of a government entering into one lease, it does not include adjustments for lease modifications, full or partial terminations or other situations that could affect the amounts reported for leases that are described in GASB 87. The intent of this tool is to 1) demonstrate how governments can perform the basic calculations needed for applying the lease standard with existing technology and 2) understand the data that is being produced. Of course, governments will have to adjust the appropriate tabs based on their own facts and circumstances.
- Capitalization Thresholds for Capital Assets
- Estimated Useful Lives of Capital Assets
- Inventories of Tangible Capital Assets
- Modified Approach for Infrastructure Reporting
* GFOA makes no warranty, guaranty, or representation regarding the accuracy, content, completeness, reliability, operability, or legality of information contained within this tool including, without limitation, the warranties of merchantability, or fitness for a particular use. The information, calculations, and recommendations presented within the tool are intended to provide finance officers with an approximating and example of lease accounting calculations. If users have any questions related to the accuracy of the information presented within this tool, GFOA recommends that users contact GFOA or their audit professionals for further clarification.