Focus Area: Items Previously Reported as Assets and Liabilities
GASB 65 Effective for FY 2014
January 24, 2014
Update: March 14, 2014 – Appendices B, C, and D added
In March 2012, the Governmental Accounting Standards Board (GASB) issued Statement No. 65, Items Previously Reported as Assets and Liabilities (GASB 65). GASB 65 reclassifies certain items that were previously reported as assets and liabilities as deferred outflows of resources or deferred inflows of resources, and recognizes certain items that were previously reported as assets and liabilities as expenses/expenditures or revenues.
GASB 65 is effective for the fiscal year ending June 30, 2014. This new standard amends the financial statement element classification of certain items previously reported as assets and liabilities to be consistent with the definitions in the GASB’s Concepts Statement 4 Elements of Financial Statements, where deferred outflows and deferred inflows of resources are introduced and defined. Concepts Statement 4 also limits reporting of items as deferred outflows and inflows to only those instances identified by the GASB in authoritative pronouncements. GASB 65 also introduces changes that impact the determination of the major fund calculations, and limits the use of the term “deferred” in financial statement presentations.
The agencies that will be most significantly impacted by the implementation of this new standard are those with the following types of transactions:
- Deferred amounts resulting from the refunding of debt.
- Bond issuance costs.
- Resources received from grantors related to government-mandated or voluntary nonexchange transactions when a time requirement is the only eligibility requirement that has not been met.
- Revenue of a governmental fund that is not recognized solely because it is not yet available.
The key implementation issues are to ensure that transactions previously posted to asset or liability accounts impacted by GASB 65 are reclassified to the appropriate deferred outflow/ inflow of resources, expense/expenditure, or revenue accounts. Restatements may be required. [For example: Bond issuance costs will now be expensed in the year they are incurred. So in 2014, a restatement for all bond issuance costs incurred in prior years that is still being amortized will be required. Any bond issuance costs incurred in the current year would be expensed.] Governmental fund statements have been updated to include a section for deferred outflows and inflows of resources. Governmental and proprietary statements include new statement captions and amendments to certain statement captions.
To gain additional understanding of GASB 65, please refer to the following resources:
- GASB Plain-Language Articles on GASB 65 and Concepts Statement 4:
- The GASB webpage from which you may access a PDF file of GASB 65 as well as other GASB pronouncements – GASB Pronouncements
- NACUBO Website Article – GASB Issues Statement No. 65: Items Previously Reported as Assets and Liabilities
- Appendix A: List of items reclassified by GASB 65 – See Attachment below
- Appendix B: Chart of Accounts changes for GASB 65 – See Attachment below
- Appendix C: Changes to the governmental funds balance sheet – See Attachment below
- Appendix D: Changes to the proprietary funds statement of net position – See Attachment below
Thank you for your time and attention to this important change. OSC will continue to provide updates as the standard is implemented. Questions regarding this specific update should be directed to Debbie Dryer at (919) 707-0528, Debbie.Dryer@ncosc.gov or Helen Vozzo at (919) 707-0529, Helen.Vozzo@ncosc.gov.