Service Concession Arrangements
This is a survey to identify potential service concession arrangements (public-private or public-public partnerships) that will be submitted to external auditor, KPMG, for audit. Additional procedures or information might be needed after the survey. This is in accordance with GASB Statement No. 60 “Accounting and Financial Reporting for Service Concession Arrangements”. Please read the “flowcharts and definitions”and the “examples” document before filling out the survey. Prepare one questionnaire per potential service concession arrangement contract.
1. Please enter the contact information for the person filling out this survey.
Name: /Department and Title /
Email Address: /
Telephone Number: /
Briefly describe the nature of the arrangement and parties involved:
2. Does your department know or reasonably believe that the campus has an arrangement involving a transferor conveying an operator the right and obligation to provide a service in exchange for significant consideration (up-front payment, installment payments, a new facility or improvements to an existing facility)? Please describe your rationale in the textbox below.
Yes
No
If NO, the arrangement does not have the potential to be a service concession arrangement (SCA). Please continue to Question 8 and choose Number 3 (GASB 60 not applicable) and submit this form. If YES, describe the arrangement (i.e. nature of services and parties involved) and continue to Question 3.
3. Is thecapital asset (infrastructure or other public asset) existing or to be constructed or acquired, used in providing the services? Please describe your rationale in the textbox below.
Yes
No
If NO, the arrangement is a service, management, or service and management agreement (SMA), and existing guidance for accounting for revenues and expenses should be applied. Please continue to Question 8 and choose Number 3 (GASB 60 not applicable) and submit this form. If YES, continue to Question 4.
4. Is the operator compensated by the transferor or by users or service recipients? Please describe your rationale in the textbox below.
Transferor
Users or service recipients
If TRANSFEROR, then the arrangement is a SMA or construction contract. The service and management portion should be accounted for using existing guidance for revenues and expenses. The construction or acquisition portion should be accounted for using existing guidance for construction activities and capital assets. Please continue to Question 8 and choose Number 3 (GASB 60 not applicable) and submit this form. If USERS OR SERVICE RECIPIENTS, continue to Question 5. However, if there is an agency relationship, an arrangement in which an operator accepts payments from 3rd parties and remits those payments to the transferor for an established fee, then this is beyond the scope of GASB 60. Therefore, continue to Question 8 and choose Number 3 (GASB 60 not applicable) and submit this form.
5. Does the transferor determine or have the ability to modify or approve the services the operator can provide, to whom the operator can provide the services, and the rates that can be charged? Please describe your rationale in the textbox below.
Yes
No
If NO, the transferor does not retain control over the facility and the arrangement should be accounted for using lease accounting, if appropriate. Please continue to Question 8 and choose Number 3 (GASB 60 not applicable) and submit this form. If YES, continue to Question 6.
6. Does the transferor retain a significant residual interest in the asset? Please describe your rationale in the textbox below.
Yes
No
If NO, the arrangement is a privatization, potentially with regulatory oversight, which is accounted for as a sale/purchase of a capital asset and a regulatory arrangement. Please continue to Question 8 and choose Number 3 (GASB 60 not applicable) and submit this form. If YES, the arrangement is an SCA within the scope of GASB 60. Continue to Question 7.
7. Is the campus the operator or transferor in the arrangement?
Operator
Transferor
If the campus is the TRANSFEROR, continue to Question 8 and choose Number 1. If the campus is the OPERATOR, continue to Question 8 and choose Number 2.
8. Accounting, recognition and F/S disclosure requirement - check only 1
Note disclosures include a general description of the arrangement and information about the associated assets, liabilities, and deferred inflows, the rights granted and retained, guarantees and commitments.
Accounting, recognition and F/S disclosure requirement / Choose1. Financial Statements and Note Disclosure – Transferor
(if YES TO ALL of 2 – 6)
EXISTING CAPITAL ASSET: If the facility associated with a SCA is an existing facility, the campus should continue to report the facility as a capital asset.
NEW FACILITY: New facilities constructed or acquired by the operator or improvements to existing facilities are reported at acquisitionvalue (also referred to as “entry price per GASB No. 72) by the campus when it is placed in operation. A liability is recognized contractual obligations, along with a corresponding deferred inflows of resources (equal to the difference between the acquisitionvalue of the capital asset and the contractual obligations).
LIABILITIES: Transferor should recognize a liability for certain obligations to sacrifice financial resources under the terms of the arrangement. It should be recorded at their present value if significant and meets either of the following: a) contractual obligation directly relates to the facility, b) contractual obligation relates to a commitment made by the transferor to maintain a minimum or specific level of service in connection with the operation of the facility. Liability should be reduced as the transferor's obligations are satisfied. As obligations are satisfied, a deferred inflow of resources should be reported and the related revenue should be recognized in a systematic and rational manner over the remaining term of the arrangement.
DEPRECIATION: Capital asset is subject to depreciation, impairment, and disclosures. However, if arrangement requires the operator to return the facility to the transferor in its original or an enhanced condition, there should be NO depreciation. The corresponding deferred inflows of resources should be reduced and revenue should be recognized systematically over the term of the arrangement, beginning when the facility is placed into operation.
IMPROVEMENTS: Improvements to the facility by the operator during the term of the SCA should be capitalized as they are made and also are subject to requirements for depreciation, impairment and disclosures.
UP-FRONT OR INSTALLMENT PAYMENTS: If SCA requires up-front or installment payments from the operator, the transferor should report the following: a) up-front payment or present value of installment payments as asset, b) any contractual obligations as liabilities, c) related deferred inflow of resources equal to the difference between a) and b).
Additional accounting guidelines: If the SCA is a REVENUE SHARING AGREEMENT, a government operator that shares revenue with a transferor should report all revenue earned and expenses incurred - including the amount of revenues shared with the transferor - that are associated with the operation of the facility. The transferor should only recognize its portion of the shared revenue when earned in accordance with the arrangement. If the transferor receives unconditional arrangements regardless of revenues earned (for example, annual installments in fixed amounts), then the present value of these amounts should be reported by the transferor and governmental operator as if they were installments at the inception of the arrangement.
Disclosures:
a. A general description of the arrangement in effect during the reporting period, including management's objectives for entering into it and, if applicable, the status of the project during the construction period.
b. The nature and amounts of assets, liabilities and deferred inflows of resources related to an SCA that are recognized in the financial statements.
c. The nature and extent of rights retained by the transferor or granted to the governmental operator under the arrangement.
d. For those that include guarantees and commitments, each period in which guarantee or commitment exists, disclosures should be made about it, including identification, duration, and significant contract terms of the guarantee or commitment.
Please provide SFSR with a copy of the agreement.
2. Financial Statements and Note Disclosure - Operator
(if YES TO ALL of 2 – 6)
The campus will record an intangible asset at cost for its right to access the facility and collect third-party fees. The campus will amortize the intangible asset in a systematic and rational manner over the term of the arrangement. For existing facilities, the campus’ cost may be an up-front payment or the present value of installment payments. For new or improved facilities, the campus’ cost may be its cost of improving the existing facility or constructing or acquiring a new facility.
Intangible assets are not subject to the provision of GASB 51 and should be reported outside of the capital asset classification.
Some agreements require a facility to be returned in a specified condition. If information that is prominent indicates the facility is not in the specified condition and the cost to restore the facility to that condition is reasonably estimable, then a liability and, generally, an expense to restore the facility should be reported.
Additional accounting guidelines: If the SCA is a REVENUE SHARING AGREEMENT, a government operator that shares revenue with a transferor should report all revenue earned and expenses incurred - including the amount of revenues shared with the transferor - that are associated with the operation of the facility. The transferor should only recognize its portion of the shared revenue when earned in accordance with the arrangement. If the transferor receives unconditional arrangements regardless of revenues earned (for example, annual installments in fixed amounts), then the present value of these amounts should be reported by the transferor and governmental operator as if they were installments at the inception of the arrangement.
Disclosures:
a. A general description of the arrangement in effect during the reporting period, including management's objectives for entering into it and, if applicable, the status of the project during the construction period.
b. The nature and amounts of assets, liabilities and deferred inflows of resources related to an SCA that are recognized in the financial statements.
c. The nature and extent of rights retained by the transferor or granted to the governmental operator under the arrangement.
d. For those that include guarantees and commitments, each period in which guarantee or commitment exists, disclosures should be made about it, including identification, duration, and significant contract terms of the guarantee or commitment.
Please provide SFSR with a copy of the agreement.
3. GASB 60 not applicable.
(if NO TO ANY of 2 – 6)
1