NEWS RELEASE 01/08/13
GASB Improves Reporting for Government Combinations
and Disposals of Government Operations
Norwalk, CT, January 8,
2013—The Governmental Accounting Standards Board (GASB) today approved
a new standard intended to improve accounting and financial reporting for U.S.
state and local governments´ combinations and disposals of government
operations. Government combinations include mergers, acquisitions, and transfers
of operations. A disposal of government operations can occur through a transfer
to another government or a sale.
Government mergers include combinations
of legally separate governments or governmental operations without the exchange
of significant consideration (such as a payment). Government acquisitions are
transactions in which a government acquires another government, or its
operations, in exchange for significant consideration. Disposal of a
government´s operations results in the removal of specific activities of that
government.
GASB Statement No. 69, Government Combinations and
Disposals of Government Operations, provides guidance for:
- Determining whether a specific government combination is a government
merger, a government acquisition, or a transfer of operations
- Using carrying values (generally, the amounts recognized in the
pre-combination financial statements of the combining governments or
operations) to measure the assets, deferred outflows of resources,
liabilities, and deferred inflows of resources combined in a government merger
or transfer of operations
- Measuring acquired assets, deferred outflows of resources, liabilities,
and deferred inflows of resources based upon their acquisition values in a
government acquisition, and
- Reporting the disposal of government operations that have been transferred
or sold.
"This Statement will improve accounting for mergers and
acquisitions among state and local governments by providing guidance specific to
the situations and circumstances encountered within the governmental
environment," said GASB Chairman Robert H. Attmore. "Historically, governments
have accounted for their mergers and acquisitions by analogizing to guidance
intended for the private-sector business environment, which proved problematic
because those standards focus on stock arrangements and ownership interests not
present in the governmental setting."
The requirements of this Statement
are effective for periods beginning after December 15, 2013, and should be
applied on a prospective basis. Early application of the standard is
encouraged.
Statement 69 will be available for download at no cost from
the GASB website in
February. Printed copies of the Statement will be available for distribution
soon thereafter. A plain-language description of the new requirements also will
be available on the GASB
website.
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.