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CITY OF SAN LEANDRO <br />MEMORANDUM ON INTERNAL CONTROL <br />SCHEDULE OF OTHER MATTERS <br />NEW GASB PRONOUNCEMENTS OR PRONOUNCEMENTS NOT YET EFFECTIVE <br />The following comment represents new pronouncements taking affect in the next few years. We cite <br />them here to keep you informed of developments: <br />Effective in fiscal year 2018-19: <br />GASB 83 – Certain Asset Retirement Obligations <br />This Statement addresses accounting and financial reporting for certain asset retirement obligations <br />(AROs). An ARO is a legally enforceable liability associated with the retirement of a tangible capital <br />asset. A government that has legal obligations to perform future asset retirement activities related to its <br />tangible capital assets should recognize a liability based on the guidance in this Statement. <br />GASB 88 – Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements <br />This Statement defines debt for purposes of disclosure in notes to financial statements as a liability that <br />arises from a contractual obligation to pay cash (or other assets that may be used in lieu of cash) in one or <br />more payments to settle an amount that is fixed at the date the contractual obligation is established. This <br />Statement requires that additional essential information related to debt be disclosed in notes to financial <br />statements, including unused lines of credit; assets pledged as collateral for the debt; and terms specified <br />in debt agreements related to significant events of default with finance-related consequences, significant <br />termination events with finance-related consequences, and significant subjective acceleration clauses. <br />Effective in fiscal year 2019-20: <br />GASB 84 – Fiduciary Activities <br />This Statement establishes criteria for identifying fiduciary activities of all state and local governments. <br />The focus of the criteria generally is on (1) whether a government is controlling the assets of the fiduciary <br />activity and (2) the beneficiaries with whom a fiduciary relationship exists. Separate criteria are included <br />to identify fiduciary component units and postemployment benefit arrangements that are fiduciary <br />activities. <br />GASB 90 – Majority Equity Interests—an amendment of GASB Statements No. 14 and No. 61) <br />This Statement defines a majority equity interest and specifies that a majority equity interest in a legally <br />separate organization should be reported as an investment if a government’s holding of the equity interest <br />meets the definition of an investment. A majority equity interest that meets the definition of an investment <br />should be measured using the equity method, unless it is held by a special-purpose government engaged <br />only in fiduciary activities, a fiduciary fund, or an endowment (including permanent and term <br />endowments) or permanent fund. Those governments and funds should measure the majority equity <br />interest at fair value. For all other holdings of a majority equity interest in a legally separate organization, <br />a government should report the legally separate organization as a component unit, and the government or <br />fund that holds the equity interest should report an asset related to the majority equity interest using the <br />equity method. This Statement establishes that ownership of a majority equity interest in a legally <br />separate organization results in the government being financially accountable for the legally separate <br />organization and, therefore, the government should report that organization as a component unit. <br />5493