Spring 2011 issue of Horizons

Public Sector – continued

• For organizations that previously were required to be included as component units by meeting the fiscal dependency criterion, a financial benefit or burden relationship also would need to be present between the primary government and the organization for it to be included as a component unit. • For organizations that should be included because the primary government’s management determines that it would be misleading to exclude them, GASB Statement No. 61 clarifies the manner in which that determination should be made and the types of relationships that generally should be considered in making the determination. • GASB Statement No. 61 also modifies the criteria for determining when a component unit should be blended (as opposed to discretely presented). • Finally, GASB Statement No. 61 requires primary governments that own an equity interest in a legally separate organization (generally, a for-profit business) to report this equity interest as an asset. GASB Statement No. 62 Codification of Accounting and Financial Reporting Guidance Contained in Pre- November 30, 1989 FASB and AICPA Pronouncements GASB Statement No. 62 incorporates into the GASB’s authoritative literature certain FASB and AICPA pronouncements issued prior to November 30, 1989. Governments, specifically those that have business- type or enterprise activities, have always been required to implement these pronouncements to the extent they do not contradict GASB guidance. GASB Statement No. 61 is effective for periods beginning after June 15, 2012.

should be reported and the related revenue should be recognized in a systematic and rational manner over the remaining term of the arrangement. Operators under service concession arrangements should report an intangible asset for the right to access the facility and collect third-party fees from its operation at cost (for example, the amount of an up front payment or the cost of construction of or improvements to the facility). The cost of improvements to the facility made by the governmental operator during the term of the arrangement should increase the governmental operator’s intangible asset if the improvements increase the capacity or efficiency of the facility. The intangible asset should be amortized over the term of the arrangement in a systematic and rational manner. GASB Statement No. 60 is effective for periods beginning after December 15, 2011. GASB Statement No. 61 The Financial Reporting Entity: Omnibus GASB Statement No. 61 modifies the requirements for including component units within the financial statements of governmental entities. The key modifications are as follows:

Raise Your Expectations

37