NEWS RELEASE 03/16/12
GASB Proposal Addresses Government Combinations and
Disposals of Government Operations
Norwalk, CT, March 16,
2012—The Governmental Accounting Standards Board (GASB) today issued
for public comment a proposed Statement that would provide U.S. state and local
governments with standards for financial reporting regarding government
combinations (mergers, acquisitions, and transfers of operations) and disposals
(sales and transfers) of government operations. The GASB is seeking public
comment on its proposals, which are contained in its Exposure Draft,
Government Combinations and Disposals of Government Operations.
The proposed Statement is intended to improve accounting and
financial reporting by providing standards for combinations in the governmental
environment. Specifically, it would require state and local governments
to:
- Identify whether a government combination is a government merger,
government acquisition, or a transfer of operations
- Use carrying values to measure the assets and liabilities combined in a
government merger or transfer of operations
- Measure acquired assets and liabilities based upon their acquisition
values in a government acquisition, and
- Provide guidance for government operations that have been transferred or
sold.
The proposed Statement would also require disclosures to be made
about government combinations and disposals of government operations to enable
users of financial statements to evaluate the nature and financial effects of
those transactions.
"Until now, state and local governments have
accounted for mergers and acquisitions by referring to accounting and financial
reporting guidance intended for the business environment," said Robert Attmore,
GASB chairman. "Based on our research and feedback from stakeholders, the GASB
decided to propose new guidance tailored to governmental situations and
circumstances, to enable financial statement users, preparers, and auditors to
evaluate the specific nature and financial effects of those transactions."
The amendments in this proposal would be effective for periods beginning
after December 15, 2013, and would be applied on a prospective basis. Early
application of the standards would be encouraged.
The Exposure Draft is
open for comment until June 15, 2012, and is available for review and download
at www.gasb.org.
Comments
should be addressed to the Director of Research and Technical Activities,
Project No. 3-17 and emailed to director@gasb.org
or mailed to the following address:
Governmental Accounting Standards
Board
401 Merritt 7
PO Box 5116
Norwalk, CT
06856
About the Governmental Accounting Standards Board
The GASB is the independent, not-for-profit organization formed in 1984 that
establishes and improves financial accounting and reporting standards for state
and local governments. Its seven members are drawn from the Board's diverse
constituency, including preparers and auditors of government financial
statements, users of those statements, and members of the academic community.
More information about the GASB can be found at its website, www.gasb.org.