By Jim DeLuccia, PICPA communications manager
I recently chatted with Christopher Turtell, CPA, and David Nester, CPA, both of whom spoke about GASB updates at PICPA’s 2019 School District Conference in late May. Turtell, a partner of accounting and auditing services with Herbein + Company Inc. in Reading, Pa., and Nester, business administrator of Pottsgrove School District, recap their discussion on recently implemented standards and their potential effects on school districts.
Can you both provide a few highlights of your GASB presentation?
Turtell: GASB continues to be active in issuing new standards. With the implementation of the pension and other postemployment benefits standards not far in the rearview mirror, there are two new standards that will have an impact on financial reporting. The first is GASB 84, which relates to the definition and presentation of fiduciary funds. The standard introduces new terminology, such as custodial funds and direct administrative involvement. The second is GASB 87, which relates to the accounting of lease transactions. This standard streamlines accounting for leases into one classification while changing the reporting for leases of the statement of net position.
Nester: GASB also is working on a new reporting model that would impact all governments. The most significant change in the proposed model is the change from the current financial resources measurement focus for governmental funds to the short-term financial resources measurement focus. This change is designed to improve comparability between governmental organizations, but it will have significant impact on many governments’ financial statements. It is important for these governments to understand the impact of this change and plan for its implementation.
What are a few new (or existing) regulations CPAs could find challenging when implementing?
Turtell: Auditors continue to wade through ever more complex standards. Educating clients is paramount to implementation success. Related to the new fiduciary activity standard, understanding administrative involvement could prove to be challenging and lead to further questions of fund classification. In speaking with our clients about the new lease standard, we are realizing the amount of lessee and lessor transactions is greater than first thought. It is proving the importance of working with your client to help capture all the leasing transactions that are occurring. Only after the population is gathered can implementation decisions be made.
What was some of the feedback or questions you received from the audience during your session, and how were they addressed?
Nester: The session really allowed for the brainstorming of potential challenges to stay compliant with the new GASB standards. Throughout, there was good discussion on the proper treatment of elementary student activities and possible challenges related to scholarship funds under GASB 84. Some concerns were also discussed about the complexity of the lease standard and how to account for some inter-entity government leases. Like many questions, specific answers can vary by the agreements in place. One major takeaway from the session was the need to be proactive. The more prepared you are, the smoother the implementation will go.
Turtell’s and Nester's presentation is available in its entirety in PICPA's On-Demand CPE library.
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