The Governmental Accounting Standards Board has approved a new standard intended to improve accounting and financial reporting for state and local governments’ combinations and disposals of government operations.
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. The standard also offers guidance on 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 .
In addition, the new standard provides guidance on measuring acquired assets, deferred outflows of resources, liabilities, and deferred inflows of resources based upon their acquisition values in a government acquisition. It also offers guidance on 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 the statement are effective for periods beginning after Dec. 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 GASB’s Web site in February. Printed copies will be available for distribution soon thereafter. A plain-language description of the new requirements also will be available on the GASB Web site.