Statement 20 Guidance
GASB Statement 20 and New FASB and AICPA Pronouncements
GASB Statement No. 20, Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entities That Use Proprietary Fund Accounting, as amended, provides guidance on the applicability of Financial Accounting Standards Board (FASB) pronouncements to those funds and entities—called "proprietary activities." It provides that all proprietary activities should apply FASB pronouncements (and ARBS and APB Opinions) issued on or before November 30, 1989, provided that they do not conflict with or contradict GASB pronouncements. Statement 20, paragraph 7, also provides that enterprise funds may elect to apply all FASB pronouncements issued after November 30, 1989, except for those that conflict with or contradict GASB pronouncements. The following charts list FASB and AICPA pronouncements issued since November 30, 1989 and provides nonauthoritative guidance regarding the applicability of their accounting and reporting requirements to enterprise funds and business-type activities that apply paragraph 7 of Statement 20. The lists includes recently issued FASB Statement No. 159.
Paragraph 26 in the Basis-for-Conclusions of GASB Statement 20 states the following:
From time to time new FASB pronouncements are issued to amend or supersede existing pronouncements that were issued on or before November 30, 1989. Unless the GASB specifically adopts the FASB Statement or Interpretation that amends a pronouncement issued on or before November 30, 1989, the FASB pronouncement should be applied only by those proprietary activities that elect, under paragraph 7, to apply all FASB pronouncements issued after November 30, 1989.
Transition Provisions of FASB and AICPA Pronouncements
All changes in accounting principles should be reported as restatements of beginning net assets as provided in footnote 13 of GASB Statement No. 34, Basic Financial Statements—and Management’s Discussion and Analysis—for State and Local Governments, which codifies this approach historically used in GASB Statements.
FASB Pronouncements—Applicability under
GASB Statement 20, paragraph 7
| FASB Statements | ||
|
103 |
Accounting for Income Taxes—Deferral of the Effective Date of FASB Statement No. 96 | N/A |
| 104 | Statement of Cash Flows—Net Reporting of Certain Cash Receipts and Cash Payments and Classification of Cash Flows from Hedging Transactions |
Yes—See paragraph 74 of GASBS 9. |
| 105 | Disclosure of Information about Financial Instruments with Off-Balance-Sheet Risk and Financial Instruments with Concentrations of Credit Risk | No—Superseded by FASBS 133. |
| 106 | Employers' Accounting for Postretirement Benefits Other Than Pensions | No—Apply GASBS 45. |
| 107 | Disclosures about Fair Value of Financial Instruments | In Part—TB 2003-1 requires disclosure of fair value for derivatives not reported at fair value. GASBS 31 requires many investments to be reported at fair value and provides related disclosures for investments within its scope. |
| 108 | (Income taxes) | N/A |
| 109 | (Income taxes) | N/A |
| 110 | Reporting by Defined Benefit Pension Plans of Investment Contracts | No—Apply GASBS 25. |
| 111 | Rescission of FASB Statement No. 32 and Technical Corrections | Yes, except for corrections of standards that conflict with GASB standards (FASBS 14 and FASBS 76) |
| 112 | Employers' Accounting for Postemployment Benefits | No—Apply GASBS 45. |
| 113 | Accounting and Reporting for Reinsurance of Short-Duration and Long-Duration Contracts | No—Apply GASBS 10 as amended. |
| 114 | Accounting by Creditors for Impairment of a Loan | Yes |
| 115 | Accounting for Certain Investments in Debt and Equity Securities | No—Apply GASBS 31. |
| 116 | Accounting for Contributions Received and Contributions Made | No1—Apply GASBS 33. |
| 117 | Financial Statements of Not-for-Profit Organizations | No2 |
| 118 | Accounting for Creditors for Impairment of a Loan—Income Recognition and Disclosures | Yes |
| 119 | Disclosures about Derivative Financial Instruments and Fair Value of Financial Instruments | No—Superseded by FASBS 133. |
| 120 | Accounting and Reporting by Mutual Life Insurance Enterprises and by Insurance Enterprises for Certain Long-Duration Participating Contracts | No—Apply GASBS 10 as amended. |
| 121 | Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of | No—Superseded by FASBS 144. |
| 122 | Accounting for Mortgage Servicing Rights | No—Superseded by FASBS 125 and FASBS 140. |
| 123 | Accounting for Stock-Based Compensation | N/A |
| 123R | Share-Based Payment | N/A |
| 124 | Accounting for Certain Investments Held by Not-for-Profit Organizations | No3 |
| 125 | Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities | No— Superseded by FASBS 140. |
| 126 | Exemption from Certain Required Disclosures about Financial Instruments for Certain Nonpublic Entities (an amendment of FASB Statement No. 107) | In Part—See FASBS 107 above. Decision on whether to discontinue application of FASBS 107 should be based on the prevalent practice in the reporting entity’s industry (e.g. healthcare and so forth). |
| 127 | Deferral of the Effective Date of Certain Provisions of FASB Statement No. 125 | No— Superseded by FASBS 140. |
| 128 | Earnings per Share | N/A |
| 129 | Disclosure of Information about Capital Structure | Yes—Paragraph 4 applies to debt issued. |
| 130 | Reporting Comprehensive Income | No—Separately reporting other comprehensive income conflicts with the reporting requirements of GASBS 34. |
| 131 | Financial Reporting for Segments of a Business Enterprise | No—GASBS 34 establishes segment reporting requirements for governmental entities. |
| 132 | Employers’ Disclosures about Pensions and Other Postretirement Benefits | No—Superseded by FASBS 132(R). |
| 132(R) | Employers’ Disclosures about Pensions and Other Postretirement Benefits (revised 2003) | No—Apply GASBS 27 and GASBS 45. |
| 133 | Accounting for Derivative Instruments and Hedging Activities | In Part—Reporting gains and losses in other comprehensive income conflicts (see FASBS 130 above). Because the guidance in GASBS 31 for investments is similar to the not-for-profit guidance investment standards in FASBS 124, the guidance in paragraph 43 of FASBS 133 applies to the extent it does not conflict with GASB pronouncements. GASBS 31 requires all investment income, including changes in fair value of investments, to be recognized as revenue in the statement of changes (and statement of activities). GASBS 34 requires investment income to be reported with nonoperating revenue (or operating revenue if appropriate [footnote 42]). |
| 134 | Accounting for Mortgage-Backed Securities Retained after the Securitization of Mortgage Loans Held for Sale by a Mortgage Banking Enterprise | No—relates to classifications of securities under FASBS 115. See FASBS 115 above. |
| 135 | Rescission of FASB Statement No. 75 and Technical Corrections | Yes—to the extent that it corrects currently applicable FASB pronouncements issued after November 30, 1989 that do not conflict with GASB standards and amends FASBS 35 and rescinds FASBS 75. For example, corrections to FASBS 87 and to the standards noted in this table as conflicting would not apply. |
| 136 | Transfers of Assets to a Not-for-Profit Organization or Charitable Trust That Raises or Holds Contributions for Others | No4 |
| 137 | Accounting for Derivative Instruments and Hedging Activities—Deferral of the Effective Date of FASB Statement No. 133 | Yes—see FASBS 133 above. |
| 138 | Accounting for Certain Derivative Instruments and Certain Hedging Activities | Yes—see FASBS 133 above. |
| 139 | Rescission of FASB Statement No. 53 and amendments to FASB Statements No. 63, 89, and 121 | Yes |
| 140 | Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities | No—Apply GASBS 7, 23, and 48. |
| 141 | Business Combinations |
In Part—Applicable GASB Statements should be used in assigning amounts to assets acquired and liabilities assumed (for example, GASBS 13 for operating leases with scheduled rent increases, GASBS 16 for compensated absences, GASBS 27 for pension liabilities, GASBS 31 for investments within its scope, and GASBS 45 for OPEB liabilities) FASBS 141 applies to only business combinations (paragraph 6 of EITF 98-3 discusses the term business). It does not apply to combinations of or acquisitions by not-for-profit organizations, or to combinations of mutual enterprises (see glossary). Many governmental enterprises have similar characteristics. |
| 142 | Goodwill and Other Intangible Assets | In Part—Apply GASBS 42, as amended by GASBS 51, to impairment of tangible and intangible capital assets. Does not apply to intangibles acquired in combinations between mutual enterprises (see glossary), between not-for-profit organizations, or arising from acquisition of a for-profit business by a not-for-profit. Many governmental enterprises have similar characteristics. |
| 143 | Accounting for Asset Retirement Obligations | In Part—Does not apply to municipal solid waste closure and post-closure care costs (see GASBS 18). Does not apply to asset retirement obligations involving pollution remediation obligations within the scope of GASBS 49, such as asbestos removal obligations. Does not apply to other conditional obligations unless probable of occurrence. (NCGAS 4, paragraphs 9 and 14, as amended by GASBS 10 and GASBS 34, paragraph 69, requires application of FASBS 5.) |
| 144 | Accounting for the Impairment or Dispoal of Long-Lived Assets | In Part—Apply GASBS 42, as amended by GASBS 51, to impairment of tangible and intangible capital assets. Separate display of net gain or loss from discontinued operations conflicts with GASBS 34. |
| 145 | Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections | Yes—to the extent that it amends currently applicable FASB pronouncements, except that subparagraph 9b conflicts with paragraph 56 of GASBS 34 and subparagraphs f and g conflict with GASBS 9 and GASBS 31. FASBS 4 conflicted with paragraph 55 of GASBS 34. |
| 146 | Accounting for Costs Associated with Exit or Disposal Activities | In Part—accounting for termination benefits should follow GASBS 47. The requirement in paragraph 18 for separate reporting of discontinued operations conflicts with the format required by GASBS 34. |
| 147 | Acquisitions of Certain Financial Institutions |
Yes—Does not apply to transactions between mutual enterprises. Many governmental enterprises have similar characteristics. Apply GASBS 42, as amended by GASBS 51, to impairment of tangible and intangible capital assets. |
| 148 | Accounting for Stock-Based Compensation—Transactions and Disclosures | N/A |
| 149 | Amendment of Statement 133 on Derivative Instruments and Hedging Activities | In Part—the discussion of the applicability of FASBS 133 applies to the amendments to FASBS 133. |
| 150 | Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity | Yes |
| 151 | Inventory Costs—an amendment of ARB No. 43, Chapter 4 | Yes |
| 152 | Accounting for Real Estate Time-Sharing Transactions—an amendment of FASB Statements No. 66 and 67 | N/A |
| 153 | Exchanges of Nonmonetary Assets—an amendment of APB Opinion No. 29 | In Part—FASBS 153 includes amendments to, or related to, other FASB pronouncements listed in this applicability table. Those amendments are applicable only to the extent that the related FASB pronouncement is applicable, as provided in this table. |
| 154 | Accounting Changes and Error Corrections—a replacement of APB Opinion No. 20 and FASB Statement No. 3 | No. |
| 155 | Accounting for Certain Hybrid Financial Instruments | No—GASBS 31 applies to debt securities, including interest-only and principal-only strips and other securitized financial assets. GASBS 48 governs recognition of securitization events. |
| 156 | Accounting for Servicing of Financial Assets | No—Apply GASBS 48. |
| 157 | Fair Value Measurements | In Part—Applies only when another applicable pronouncement requires measurement at fair value. GASBS 31, paragraphs 7, 10, and 11, provides the primary guidance for measuring fair value for investments within its scope. |
| 158 | Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans | No—Apply GASBS 45. |
| 159 | The Fair Value Option for Financial Assets and Financial Liabilities | No |
| FASB Interpretations | ||
| Interp. 39 | Offsetting of Amounts Related to Certain Contracts | Yes5 |
| Interp. 40 | Applicability of Generally Accepted Accounting Principles to Mutual Life Insurance and Other Enterprises | Yes |
| Interp. 41 | Offsetting of Amounts Related to Certain Repurchase and Reverse Repurchase Agreements | No—provisions of GASBS 3, paragraph 81, as amended, apply. |
| Interp. 42 | Accounting for Transfers of Assets In Which a Not-for-Profit Organization is Granted Variance Power | No6 |
| Interp. 43 | Real Estate Sales | Yes |
| Interp. 44 | Accounting for Certain Transactions involving Stock Compensation | N/A |
| Interp. 45 | Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others | No—NCGAS 4, paragraphs 9 and 14, as amended by GASBS 10 and GASBS 34, paragraph 69, requires application of FASBS 5. |
| Interp. 46 | Consolidation of Variable Interest Entities | No—provisions of GASBS 14, paragraph 81, apply. |
| Interp. 46(R) | Consolidation of Variable Interest Entities (revised December 2003) | No—provisions of GASBS 14, paragraph 81, apply. |
| Interp. 47 | Accounting for Conditional Asset Retirement Obligations—an interpretation of FASB Statement No. 143 | No—NCGAS 4, paragraphs 9 and 14, as amended by GASBS 10 and GASBS 34, paragraph 69, requires application of FASBS 5. |
| Interp. 48 | Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109 | N/A |
| FASB Technical Bulletins7 | ||
| FASB TB 94-1 | Application of Statement 115 to Debt Securities Restructured in a Troubled Debt Restructuring | No—See FASB Statement 115. |
| FASB TB 97-1 | Accounting Under Statement 123 for Certain Employee Stock Purchase Plans with a Look-Back Option | No—See FASB Statement 123. |
| FASB TB 01-1 | Effective Date for Certain Financial Institutions of Certain Provisions of Statement 140 Related to the Isolation of Transferred Financial Assets | To the extent that FASBS 140 applies. |
AICPA Pronouncements
The Audit and Accounting Guides, Audits of Property and Liability Insurance Companies and Health Care Organizations, and Statement of Position 98-2, Accounting for Costs of Activities of Not-for-Profit Organizations and State and Local Governmental Entities That Include Fund Raising, were reviewed by the GASB before issuance and include governmental entities in their scope. For this reason, these Guides constitute level b guidance in the hierarchy of generally accepted accounting principles for all business-type activities regardless of the provisions of Statement 20.
Paragraph 33 in the Basis for Conclusions of Statement 20 also provided that American Institute of Certified Public Accountants (AICPA) pronouncements issued after November 30, 1989, and not specifically made applicable to governmental entities should be applied using the same logic used in the application of FASB Standards. Many of the AICPA pronouncements issued after November 30, 1989, provide guidance on specialized industries. However, preparers should note these AICPA pronouncements in particular:
- Audit and Accounting Guide, Depository and Lending Institutions: Banks and Savings Institutions, Credit Unions, Finance Companies and Mortgage Companies
- Statement of Position (SOP) 93-7, Reporting on Advertising Costs
- SOP 94-6, Disclosure of Certain Risks and Uncertainties
- SOP 97-1, Accounting by Participating Mortgage Loan Borrowers
- SOP 97-3, Accounting by Insurance and Other Enterprises for Insurance-Related Assessments.
- SOP 98-5, Reporting on the Costs of Start-Up Activities
_________________
1GASB Statement No. 29, The Use of Not-for-Profit Accounting and Financial Reporting Principles by Governmental Entities, provides that proprietary activities should apply only those FASB Statements and Interpretations issued after November 30, 1989, that are developed for business enterprises. They should not apply FASB Statements and Interpretations whose provisions are limited to not-for-profit organizations, such as FASB Statements 117 and 124, or address issues concerning primarily such organizations, such as FASB Statement 116.
2See note 1.
3See note 1.
4See note 1.
5This Interpretation does not apply to reinsurance transactions of public entity risk pools, however, which are addressed in GASB Statement No. 10, Accounting and Financial Reporting for Risk Financing and Related Insurance Issues.
6See note 1.
7GASB and FASB Technical Bulletins are issued by the GASB and FASB staff. In the hierarchy of generally accepted accounting principles (GAAP), Technical Bulletins constitute level b GAAP guidance, after Statements and Interpretations. Technical Bulletins may be issued if a majority of the Board does not object to their issuance.