Marcy Twyman

Marcy Twyman, Managing Shareholder Crawford & Associates, P.C.

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GASB Updates

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A “lot of water has gone under the bridge”, so to speak, since we last talked about GASB pronouncements.  In case you didn’t know, I’m a huge Thunder fan.  And my last blog post is dated May 13, 2016.  At that time, we had just won the Western Conference semi-finals and were getting ready to face the Golden State Warriors in the Western Conference Finals.  And we all know what happened in the infamous Game 6 of that series.  Even though we were up 3-1 in the series and led most of Game 6, we lost not only that game, but the next one as well.  And then the most awful July 4th when the unthinkable happened—Kevin Durant leaves the Thunder to go play with the enemy.  Yep, our beloved KD is playing with the Golden State Warriors who are now up 3-1 against the Cleveland Cavaliers in the NBA Finals.  You can guess who I’m rooting for.

Anyway, I say all that to say, there’s been a lot of activity for GASB since that time as well.  So let’s get caught up.  We have four additional standards to implement in the near future.

Statement No. 83, Certain Asset Retirement Obligations – Some of you (like me) may be asking:  “What’s an Asset Retirement Obligation (ARO)?”  While it’s not anticipated that this will have a significant impact on most governments, we still need to be aware of what it pertains to, in case something like this ever comes up in your government or governmental client. 

There are GASB standards already in existence that address some types of AROs.  For example, Statement No. 18 related to accounting for landfill closure and postclosure care costs.  That’s a form of ARO.  Also Statement No. 49 that addresses pollution remediation activities also relates to ARO. 

But this standard addresses different kinds of AROs.  Here are some examples:  1) retirement of sewage treatment plants; 2) retirement of x-ray machines; 3) retirement of magnetic resonance imaging machines; 4) retirement of research facilities owned by public universities like nuclear research reactors.  These kinds of assets may have to be disposed in a certain way due to radioactive material or waste generated by equipment regulated by federal, state or local laws and regulations.  So while these transactions may not occur very frequently or at several governments, be aware there is now a standard that addresses accounting for these types of liabilities when they occur.

The technical definition of an ARO is:   “a legally enforceable liability associated with the retirement of a tangible capital asset”.  If your government has a legal obligation to perform future asset retirement activities related to a tangible capital asset, it should recognize a liability based on the guidance in this statement.

This statement must be implemented for periods beginning after June 15, 2018.  If you have a June 30 year end, that would be effective as of June 30, 2019.

Statement No. 84, Fiduciary ActivitiesThis new standard, unlike the previous one, will likely affect many governments.  That’s probably the reason for the extended required implementation date.  To allow governments plenty of time to identify and classify their fiduciary activities, the board permits governments to wait until periods beginning after December 15, 2018, to implement this standard.  For June 30 year ends, that would be effective June 30, 2020.

So here are the highlights of this standard:

  1. Criteria is established for identifying fiduciary activities of governments.
    1. Focus is on whether a government is controlling the assets of the fiduciary activity, AND
    2. The beneficiaries with whom a fiduciary relationship exists
  2. There are now additional considerations for classification as a component unit for fiduciary activities that are postemployment benefits—whether that be pension or OPEB.
  3. There are also criteria to be used to classify non-postemployment benefit component units as a fiduciary activity.
  4. If an activity is classified as fiduciary, then it should be reported in a fiduciary fund in the basic financial statements.
    1. A statement of fiduciary net position should be prepared AND
    2. A statement of changes in fiduciary net position should be prepared (for ALL fiduciary funds). You’ll recall under current standards, an agency fund is not required to present a statement of changes in fiduciary net position.
    3. There are 4 types of fiduciary funds
      1. Pension and OPEB trust funds
      2. Investment trust funds
  • Private-purpose trust funds, AND
  1. Custodial funds (no longer will there be agency funds) Basically this category should be used to report fiduciary activities that are not held in a trust or equivalent arrangement that meets specific criteria
  1. For fiduciary component units reported in the fiduciary fund financial statements of a primary government, it should combine its information with its component units that are also fiduciary component units and aggregate that combined information with the primary government’s fiduciary funds.
  2. Also provides for the recognition of a liability to beneficiaries and details when that liability should be recognized.


Statement No. 85, Omnibus 2017And no, we’re not talking about a bus that takes you to the Omniplex (grin).  We’re talking about a collection of practice issues that are clarified or corrected from previous statements.  So this one covers a myriad of topics.  And some of these may have already been implemented by some governments.  Here’s the list.  It’s rather long.

  1. Blending a component unit in circumstances in which the primary government is a business-type activity that reports in a single column for financial statement presentation
  2. Reporting amounts previously reported as goodwill and “negative” goodwill.
  3. Classifying real estate held by insurance entities.
  4. Measuring certain money market investments and participating inter-earning investment contracts at amortized cost
  5. Timing of the measurement of pension or OPEB liabilities and expenditures recognized in financial statements prepared using the current financial resources measurement focus
  6. Recognizing on-behalf payments for pensions or OPEB in employer financial statements
  7. Presenting payroll-related measures in required supplementary information for purposes of reporting by OPEB plans and employers that provide OPEB
  8. Classifying employer-paid member contributions for OPEB
  9. Simplifying certain aspects of the alternative measurement method for OPEB
  10. And finally, (whew!), accounting and financial reporting for OPEB provided through certain multiple-employer defined benefit OPEB plans

So if any of these items apply to your government, read more in Statement 85.  This one is effective for reporting periods beginning after June 15, 2017.  That’s June 30, 2018 for June 30 fiscal year ends.  But as previously mentioned, some of these have already been implemented.   And that’s okay because earlier application is encouraged.


Statement No. 86, Certain Debt Extinguishment IssuesIf you’re one of those lucky governments that has cash available to pay off existing indebtedness and you place that cash in an irrevocable trust to extinguish that debt, then this statement is for you.  Current guidance for in substance defeasance of debt only applies when using refunding debt proceeds to defease the debt.  Now we have similar guidance in Statement 86 for defeasing debt with existing resources.  One big difference, though, is that in financial statements using the economic resources measurement focus, governments should recognize any difference between the reacquisition price (the amount required to be placed in the trust) and the net carrying amount of the debt defeased in substance using only existing resources as a gain or loss in the period of the defeasance.  This is recognized immediately and not amortized over a longer period.  There are also provisions for note disclosures related to these types of debt defeasance.

And there’s more in this statement that applies to all debt extinguishments, whether through a legal extinguishment or through an in-substance defeasance.  If you have any remaining prepaid insurance related to these extinguished debt, that should be included in the net carrying amount of debt for purpose of calculating the difference between the reacquisition price and the net carrying amount of the debt.

Another additional disclosure is required for all in-substance defeasance transactions.  One of the criteria for determining an in-substance defeasance is that the trust hold only monetary assets that are essentially risk-free.  If the substitution of essentially risk-free monetary assets with monetary assets that are not essentially risk-free is not prohibited, governments should disclose that fact in the period in which the debt is defeased in substance.  In subsequent periods, governments should disclose the amount of debt defeased in substance that remains outstanding for which that risk of substitution exists.

This Statement is effective for periods beginning after June 15, 2017.  That’s June 30, 2018 for those June 30 fiscal year ends.


Marcy Twyman is a Certified Public Accountant that joined Crawford & Associates in March 2002 and became a shareholder in 2004. Before coming to the firm, Marcy was Finance Director at the City of Guymon, Oklahoma for 11 years. Marcy was key in the City of Guymon being recognized as the first city in the United States to implement GASB 34. She was recognized as the 2000 Outstanding CPA in Business and Industry by the Oklahoma Society of CPAs.

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