GASB PROPOSES ENHANCED GUIDANCE ON
IRREVOCABLE SPLIT-INTEREST AGREEMENTS
Norwalk, CT, June 12, 2015—The Governmental Accounting
Standards Board (GASB) today issued an Exposure Draft proposing
recognition and measurement guidance for governments that benefit from
irrevocable split-interest agreements.
Irrevocable split-interest agreements are arrangements in which a donor
transfers assets for the shared benefit of at least two beneficiaries: a
government—typically a public college or university or public
healthcare provider—and another beneficiary designated by the donor. The
donor transfers the assets to either the government or to a separate
third party, such as a bank.
The Exposure Draft, Accounting and Financial Reporting for Irrevocable Split-Interest Agreements,
addresses when these types of arrangements constitute an asset for
accounting and financial reporting purposes in cases where the resources
are administered by a third party. The proposal also seeks input on
expanded guidance for irrevocable split-interest agreements in which the
government holds the assets.
“Irrevocable split-interest agreements can represent a meaningful source
of resources for public colleges, universities, and hospitals,� said
GASB Chairman David A. Vaudt. “The Board believes that the proposed
guidance will lead to more consistent accounting for these arrangements,
which will make the information users have access to more comparable.�
The proposed Statement would require a government that receives
resources under an irrevocable split-interest agreement to recognize the
assets, as well as a liability related to the other designated
beneficiary’s portion of those assets and a deferred inflow of resources
related to the government’s portion of those assets. If the agreement
is administered by a third party, a government would recognize an asset
for its beneficial interest. Revenue would be recognized when a
government receives a disbursement under the agreement.
The full text of the Exposure Draft is available on the GASB website, www.gasb.org. Stakeholders are encouraged to review the proposal and provide comments by September 18, 2015.