Novermber 8, 2000 - Meeting Highlights

Novermber 8, 2000 - Meeting Highlights

GASB 34 Focus Group

11/8/00 Meeting


MEETING 5: November 8, 2000

Members Present:

Rob Churchman, KPMG Peat MarwickMary Lechner, County of Northampton

Dale Craver, City of ChesapeakeTom Smith, Robinson, Farmer, Cox Assoc.

J. P. D’Amato, Department of EducationLaura Triggs, City of Alexandria

Jeff Franklin, County of ChesterfieldKim Via, APA

Staci Henshaw, APAGreg Whirley, Dept. of Transportation

John Kroll, County of RockinghamCarol White, Goodman & Co.

Walt Kucharski, Auditor of Public Accounts


Carl Green, City of Alexandria

Karen Stephenson, City of Norfolk

George Hannah, City of Richmond

Rick Walton, Office of the Attorney General

Various VDOT Department Representatives

Update on Infrastructure

Greg Whirley (VDOT) gave a presentation on VDOT’s Infrastructure Assets which included the following topics:

VDOT”S reporting responsibility under GASB 34

Assumptions used in determining infrastructure value

Valuing the Infrastructure


VDOT data available to cities and counties in computing their infrastructure value

Reporting urban construction data on completed projects to cities

VDOT’s power point presentation has been placed on the APA GASB 34 Website.

APA is reviewing VDOT’s underling assumptions for GASB 34 Infrastructure reporting. This information will be placed on either VDOT’s or APA’s internet site after final review.

VDOT projected the right of way cost per acre as $13,608. This is an average for the state. Local governments may want to use their own local acreage values especially for land purchased more recently.

VDOT does not have any records on local roads that the state does not maintain. Localities must determine the value of these roads through other methods.

Per Laura Triggs, Alexandria used its City Council minutes in order to determine when roads were constructed.

Local Governments should explain to their local officials how infrastructure assets will effect their Statement of Net Assets. They should look for cost effective ways to determine infrastructure value. The net effect for depreciated assets may be minimal. In addition, localities need to develop a capitalization policy for determining what is construction vs. maintenance.

School Board Asset/Debt Issue

The Focus Group continued to discuss the potential negative financial statement effect for local governments when the primary government records the debt for assets recorded by the School Board.

The APA discussed a letter from GASB, dated July 28, 1994, which indicated that Virginia local government “on-behalf of” debt should be reported together with the related capital assets in the discretely presented School Board column.

As an interim step, local governments should look at current debt and determine where it might be reported. They should determine what local government debt is related to the schools.

The asset/debt presentation question is not a legal issue but rather a fiscal dependency issue.

The APA is setting up a meeting with the Dept. of Education, Association of VA School Boards, and various School Finance Officers to discuss the presentation problems associated with GASB 34 implementation and the current GASB 14 interpretation.

Mary Lechner indicated that the VGFOA wants to determine the best position for all localities and formally present this position at the national level to GFOA and GASB. They want to be sure Virginia localities’ GFOA certification is not affected.

The APA hopes to determine a recommended position by April 2001. The localities that will be implementing GASB 34 for fiscal year 2002 will need a determination on this issue for their budget process.

The APA requested once again that local government representatives consult with their auditors concerning this issue and bring comments to the next meeting.

Other Issues

The Dept. of Education is currently discussing the future Annual School Report presentation. It is currently reported on a modified accrual basis. J.P. D’Amato will report back to us when this is finalized.

The AICPA has portions of their draft audit guide out for exposure. They have not finalized information on audit materiality because of differing opinions between AICPA and GASB.

Localities are currently working on system changes to account for new GASB 34 reporting. Most localities will probably program their system to report a 13th month for modified accrual and 14th month for accrual (entity wide statements). There was a consensus in the group that this method is preferred in order to not effect the day-to-day operations (cash basis)

Local governments need to continue to look at their revenue items to determine proper GASB 33 reporting. There should be legislative language for all time use restrictions. Alexandria found that GASB 33 was a bigger issue than they anticipated when they early implemented.

Per Laura Triggs, the GFOA checklist for GASB 34 statements is not currently available. However, GFOA did provide to Alexandria a listing of potential difficulties/problem areas in implementing GASB 34.

Submitted Questions
  1. Currently we are amortizing deferred bond costs over the life of the bond issue, with the unamortized amount carried as "other asset". Under GASB 34, should we continue to do this or capitalize the full amount from the beginning, thereby "depreciating" the costs over the life of the asset?

Answer: Bond costs should be amortized over the shorter of the life of the asset or the life of the bond.

  1. Do localities plan to change their current day-to-day accounting process as a result of GASB 34?

Answer: Most governments will continue to account for their day-to-day operations on a cash basis. Ideally their accounting system would allow for 13th and 14th month reporting to account for GASB 34 presentation.

Future Meeting Dates

Next meeting will be held on February 9, 2001, 10:00 a.m. - 3:00 p.m. at the J. Sargeant Reynolds Corporate Center in Innsbrook.