GASB issued a Preliminary Views document, Pension Accounting and Financial Reporting by Employers, listing what it believes are the most fundamental issues related to recognition and measurement of pension obligations by state and local government employers. The approach presented would move governmental pension accounting and reporting away from the current funding approach, and introduce recognition and measurement standards that would be based on GASB’s conceptual framework, including information that would help financial statement users better assess the degree to which interperiod equity has been achieved. In the context of GASB’s interperiod reporting concepts, interperiod equity refers to the state in which current-period inflows of resources (or acquisitions of net assets) equal current- period costs of services.


GASB is seeking comments on those views before developing more-detailed proposals for changes to existing accounting and financial reporting standards. Comments are due Sept. 17. The board said it will begin deliberations in July on pension note disclosures and supporting information for government employers and pension plan reporting issues.


The Preliminary Views document is part of the board’s overall project to consider improvements to the existing standards of accounting and financial reporting for postemployment benefits. GASB periodically reviews its standards to determine whether they continue to effectively meet their objectives.


GASB said most of the issues in the Preliminary Views benefited from constituent feedback received in response to the board’s March 2009 Invitation to Comment, Pension Accounting and Financial Reporting. The board received written comments from nearly 120 individuals and organizations and held two days of public hearings. The board addressed the feedback it received in developing its Preliminary Views.


The Preliminary Views document is available at GASB also released a plain-language supplement, which is available at, to assist users of financial statements in commenting on the Preliminary Views.


GASB will host public hearings on the Preliminary Views on Oct. 13, 8:30 a.m. CDT at the Hyatt Regency Dallas-Fort Worth Airport in Dallas; Oct. 14, 8:30 a.m. PDT at the offices of KPMG in San Francisco; and Oct. 27, 8:30 a.m. EDT at the Crowne Plaza LaGuardia in New York City. Go to for details and instructions for registering to participate in the hearings.



  GASB also issued a revised exposure draft, Accounting and Financial Reporting for Service Concession Arrangements. The revised ED was unanimously approved for re-exposure after the board considered written comments received in response to the original proposal, which was issued in June 2009. Comments were due Aug. 17.


Under the revised ED: (1) Arrangements in which control is transferred to the operator are not subject to the requirements of the proposal; and (2) consideration from an operator will be reported by the transferor as a deferred inflow of resources, reduced by any liabilities incurred by the transferor in the arrangement.


The project’s objective is to provide accounting and financial reporting guidance for service concession arrangements (SCAs), which are a subset of public-private partnerships. This involves determining whether existing authoritative guidance is sufficient to address accounting and financial reporting issues resulting from SCAs, or whether new standards are necessary.


An SCA is an arrangement between a transferor (a government) and an operator (governmental or nongovernmental) in which (1) the transferor conveys to an operator the right and related obligation to provide services through the use of infrastructure or another public asset (a “facility”) and (2) the operator collects and is compensated from fees from third parties. Recent examples of SCAs include long-term arrangements associated with toll roads, hospitals and student housing.


The original ED included arrangements in which the transferor did not retain control of the facility subject to an SCA, and used the control criteria to determine what the accounting should be, distinguishing between arrangements in which control was retained or transferred. In the revised ED the control criteria (determination of services, clientele, and prices and entitlement to a significant residual interest in the facility) are now included as a scope criterion. As a result, arrangements in which control is transferred to the operator would not be subject to the requirements of the proposed statement.


The original ED also proposed that transferors report a liability upon commencement of an SCA for consideration received (such as upfront payments, or installment payments received from an operator or an operator-provided facility). After considering feedback and further discussions of the definitions in Concepts Statement no. 4, Elements of Financial Statements, the board concluded that the consideration from an operator would be more appropriately reported by the transferor as a deferred inflow of resources, reduced by any liabilities incurred by the transferor in the arrangement.


The revised ED is available at



  GASB issued Statement no. 59, Financial Instruments Omnibus, which updates and improves existing standards regarding financial reporting of certain financial instruments and external investment pools. The new standard is effective for financial statements prepared by state and local governments for periods beginning after June 15, 2010. Earlier application is encouraged.


Statement no. 59 includes the following guidance:


  • It emphasizes the applicability of SEC requirements to certain external investment pools—known as 2a7-like pools—to provide users more consistent information on qualifying pools.
  • It addresses the applicability of Statement no. 53, Accounting and Financial Reporting for Derivative Instruments, to certain financial instruments to clarify which financial instruments are within the scope of that pronouncement and to provide greater consistency in financial reporting.
  • It applies the reporting provisions for interest-earning investment contracts of Statement no. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools, to unallocated insurance contracts to improve the consistency of reporting by pension and OPEB plans.


GASB Statement no. 59 can be purchased at


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