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Technical Update Presented by: Mark Thomas, KPMG LLP AUDIT

Technical Update Presented by: Mark Thomas, KPMG LLP AUDIT. Technical Update - Agenda. 1. Recent GASB Pronouncements 2. Exposure Drafts 3. Current GASB Projects. Recent GASB Pronouncements. GASB 51 – Intangible Assets (2010) GASB 52 – Real Estate Held By Endowments (2009)

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Technical Update Presented by: Mark Thomas, KPMG LLP AUDIT

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  1. Technical UpdatePresented by: Mark Thomas, KPMG LLPAUDIT

  2. Technical Update- Agenda 1. Recent GASB Pronouncements 2. Exposure Drafts 3. Current GASB Projects Year-End GAAP Training

  3. Recent GASB Pronouncements GASB 51 – Intangible Assets (2010) GASB 52 – Real Estate Held By Endowments (2009) GASB 53 – Derivatives (2010) GASB 54 – Fund Balance Reporting (2011) GASB 55 – GAAP Hierarchy GASB 56 – Codification of AICPA SAS’s GASB 57 – OPEB (2012) GASB 58 – Reporting for Bankruptcies (2010) FASB: FSP 117-1 and SFAS 157 (2009) Year-End GAAP Training

  4. Knowledge Check #1 True or False: Under GASB pronouncements, real estate investments held by endowments are required to be reported at fair value. Year-End GAAP Training

  5. Knowledge Check Answer #1 Answer: True – GASB 52 now requires land and other real estate investments to be reported at Fair Value. Also, additional note disclosures are required to communicate the method of determination of fair value. Year-End GAAP Training

  6. GASB Statement No. 51, Accounting and Financial Reporting for Intangible Assets Effective for fiscal year ending 2010 for CSU • This Statement requires that intangible assets be classified as capital assets.   • This Statement requires that an intangible asset be recognized in the statement of net assets only if it is considered identifiable. • This Statement establishes a specified-conditions approach to recognizing intangible assets that are internally generated. Year-End GAAP Training

  7. GASB Statement No. 51, Accounting and Financial Reporting for Intangible Assets (con’t) • This Statement also establishes guidance specific to intangible assets related to amortization – similar to fixed assets. • This Statement provides guidance on determining the useful life of intangible assets. • If there are no factors that limit the useful life of an intangible asset, the Statement provides that the intangible asset may be considered to have an indefinite useful life. Year-End GAAP Training

  8. Knowledge Check #2 True or False: GASB 51 is effective for this fiscal year (June 30, 2010). Year-End GAAP Training

  9. Knowledge Check Answer #2 Answer: True – All of the requirements of GASB 51 are effective this year and should be reflected in the June 30, 2010 financial statements, as applicable. Year-End GAAP Training

  10. GASB Statement No. 53, Accounting and Financial Reporting for Derivative Instruments • This Statement addresses the recognition, measurement, and disclosure of derivative instruments. • A key provision is that derivative instruments covered in its scope are reported at fair value. Year-End GAAP Training

  11. GASB Statement No. 53, Accounting and Financial Reporting for Derivative Instruments • Introduces the concept of Hedging to governmental accounting • Determining the “effectiveness” of the hedge drives the accounting treatment • Much of this Statement describes the methods of evaluating effectiveness - considering the correlation of the hedging derivative instrument and the hedged item. Year-End GAAP Training

  12. Knowledge Check #3 The effectiveness of a hedge is referring to: • The profitability of the hedge instrument • The closeness of the correlation of the hedge instrument to the hedged item • The timing of the hedge instrument • The specific contract provisions of the hedge Year-End GAAP Training

  13. Knowledge Check Answer #3 Answer: b. The closeness of the correlation of the hedge instrument to the hedged item. Again, if an effective hedge is attained, gains or losses are deferred are recorded on the statement of financial position. Year-End GAAP Training

  14. GASB Exposure Drafts • Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements • The Financial Reporting Entity, an amendment to GASB Statements No. 14 and No. 34 Year-End GAAP Training

  15. Exposure Draft: Pre-1989 Codification Project • Background – the FASB Codification project • Proposal would bring together authoritative accounting and financial reporting literature for state and local governments in a single publication • Allows those who prepare and audit financial statements to access applicable guidance with greater ease and certainty. No new GAAP. • The significance of 1989 • Practical implications of the FASB’s Codification Year-End GAAP Training

  16. Exposure Draft: Pre-1989 Codification Project • Addresses more than 120 FASB and AICPA previous pronouncements • Example topics include: • Accounting changes/correction of errors • Capitalization of interest • Contingencies • Extinguishment of debt • Equity method accounting • Regulated enterprises • Extraordinary items • Classification of the Statement of Net Assets Year-End GAAP Training

  17. Knowledge Check #4 True or False: The FASB Codification Project will have a significant impact on the availability of financial reporting guidance for state and local governments. Year-End GAAP Training

  18. Knowledge Check Answer #4 The answer is False. The FASB Codification project does not include governmental financial reporting standards. The GASB Codification Project will have a significant impact on the accessibility of accounting and financial reporting guidance. Year-End GAAP Training

  19. Exposure Draft: The Financial Reporting Entity • Intended to amend GASB Nos. 14 and 39 • In effect, would raise the bar for including component units in the reporting entity – introducing the concept of a financial benefit/burden measure • Re-focuses and clarifies the requirements for blending certain component units • Expands how ownership interest in a separate entity should be reported (equity method). • Expected to be effective June 30, 2013 Year-End GAAP Training

  20. Six Current GASB Projects • Recognition and Measurement Attributes • Economic Condition Reporting: Fiscal Sustainability • Financial Instruments Omnibus • Post Employment Benefits and Financial Reporting • Service Concession Arrangements (PPP’s) • Service Efforts and Accomplishments Year-End GAAP Training

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