Statement No. 63

THEWONDERFUL WORLDOF GASBStatement No. 63andStatement No. 652014 Municipal Clerk’s InstitutePresented by;Magda Nelson, Lead Fiscal Accounting OfficerLOCAL GOVERNMENT SERVICES BUREAU

Statement No. 63Financial Reporting ofDeferred Outflows ofResources, Deferred Inflowsof Resources, and NetPositionIssued June 2011Effective for periods beginning after December 15, 2011(fiscal year ending 6/30/13)

Statement No. 63GASBS 63 amends the net asset reportingrequirement of Statement 34, issued June 1999, andlines up the reporting requirement with GASBConcepts Statement 4, Elements of a FinancialStatement, issued June 2007.GASBCS 4 defined seven elements of historicallybased financial statements of state and localgovernments.

7 Elements of Financial StatementsOne Assets are resources with present service capacity thatthe government presently controls.Two A deferred outflow of resources is a consumption ofnet assets by the government that is applicable to afuture reporting period.Three Liabilities are present obligations to sacrificeresources that the government has little or nodiscretion to avoid.Four A deferred inflow of resources is an acquisition of netassets by the government that is applicable to afuture reporting period.

7 Elements of Financial StatementsFiveSixSeven Net position is the residual of all other elementspresented in a statement of financial position. An inflow of resources is an acquisition of netassets by the government that is applicable to thereporting period. An outflow of resources is a consumption of netassets by the government that is applicable to thereporting period.

Deferredoutflows/inflows ofresources, as applicable, willbe reported on bothgovernment-wide and allfund level financialstatements. All full accrual financialstatements replace term“Net Assets” with “NetPosition”andReplace term “Invested incapital assets net of relateddebt” with “Net investmentin capital assets”. Governmental fund levelfinancial statements,modified accrual, continueto use “Fund Balance”.

OLD FINANCIALSTATEMENTPRESENTATIONNEW FINANCIALSTATEMENTPRESENTATIONGASBS 34GASBS 63 Assets Assets– Liabilities Deferred Outflows ofResources– Liabilities– Deferred Inflows ofResources Net Position/Fund Balance Net Assets /Fund Balance

Deferred Outflows ofResources andDeferred Inflows ofResources shouldonly be reported asspecifically requiredin; GASBS 53 –DerivativeInstruments GASBS 60 –Service ConcessionArrangements

Statement No. 65Items Previously Reported asAssets and LiabilitiesIssued March 2012Effective for periods beginning after December 15, 2012(fiscal year ending 6/30/14)

Statement No. 65GASBS 65 specifies whether certain transactionspreviously reported as assets and liabilities shouldcontinue to be reported as suchorbe reclassified as: A deferred outflow of resources, orAn outflow of resources (expense/expenditure), orA deferred inflow of resources, orAn inflow of resources (revenue)

Issues important tonote; Use of the termdeferred should belimited to itemsreported as deferredoutflows of resourcesand deferred inflows ofresources. Change in major fundcriteria (governmentaland proprietary fundsonly) -assets should becombined withdeferred outflows ofresources and liabilitiesshould be combinedwith deferred inflows ofresources.

GASBS 65 ¶30.revenues and othergovernmental fundfinancial resources shouldbe recognized in theaccounting period in whichthey become bothmeasurable and available.When an asset is recordedin governmental fundfinancial statements butthe revenue is notavailable, the governmentshould report a deferredinflow of resources untilsuch time as the revenuebecomes available.

Financial StatementPresentation ofDeferredOutflows/Inflows ofResources GASBS 65 ¶117 .order of liquidity, as itrelates to deferredoutflows of resources anddeferred inflows ofresources, should not beaddressed. GASBS 65 ¶119 .a distinction betweencurrent and noncurrent isnot applicable.

Nonexchange Transaction Classes(GASBS 33, as amended by GASBS 65)Derived TaxRevenues Corporate orpersonal incometaxes Sales and Usetax Tax on gas,tobacco, andalcoholImposedNonexchangeRevenues Ad valoremproperty tax Fines andpenalties Propertyforfeitures suchas seizures ns Federalfundedmandates onstates State fundedmandates onlocal gov’tVoluntaryNonexchangetransactions Certaingrants Certainentitlements Nongovernmentalor privatedonations

Eligibility RequirementsTimeRequirements Specified byenablinglegislation orprovider Time period theresources arerequired to beused, sold,disbursed, orconsumedRequiredCharacteristics ofRecipients,includingsecondaryrecipients, ifapplicable Example:recipientsrequired to beStates andsecondaryrecipientsrequired to bemunicipalitiesReimbursements Provider offersreimbursementsto recipient forincurredallowable costs.Contingencies Applies only tovoluntarynonexchangetransactions Receipt ofresources fromprovider iscontingent upona specified actionof recipient andthe action hasoccurred.

65Derived Tax RevenueReporting requirementsApplies to all full accrual & modified accrualfinancial statementsNo time requirements:Resources received in advance until period of exchangeDR-Asset & CR-liability (revenues collected in advance acct #’s216000-216199)Time requirements (rare):Resources received after period of exchange and until such timeuse is required or first permitted.DR-Asset & CR-Deferred Inflow of Resources (acct #’s 222000 &223800 to 223899)

65Imposed Nonexchange RevenueReporting requirementsApplies to full accrual financial statementsChange from a Liability (deferred revenue) to aDeferred Inflow of ResourcesApplies to; Property (ad valorem) taxes – paid in advance of levy. (acct # 221000) Imposed nonexchange transactions received or reported as areceivable in advance of meeting time requirements imposed byenabling legislation until such time use is required or first permitted.(acct #’s 222000 or 223800 to 223899)DR-Asset & CR- Deferred Inflows of Resources

65Imposed Nonexchange RevenueReporting requirementsApplies to modified accrual financial statements(governmental fund level)Change from a Liability (deferred revenue) to aDeferred Inflow of ResourcesApplies to; Property (ad valorem) taxes – paid in advance of levy. (acct # 221000) Property (ad valorem) taxes – levied but not paid. (acct #’s 223100,223200, 223400, & 223700) Imposed nonexchange transactions received or reported as areceivable in advance of meeting time requirements imposed byenabling legislation until such time use is required or first permitted.(acct #’s 222000 or 223800 to 223899)DR-Asset & CR- Deferred Inflows of Resources

65Government-Mandated and Voluntary NonexchangeResourcesReporting requirementsApplies to all financial statementsResources disbursed before eligibility requirements are met, excluding timerequirements. (GASBS 65 did not affect)ProvidersDR-Asset (grants, entitlements, donations paid in advance acct #’s 135000 to135099) & CR-AssetRecipientsDR-Asset & CR-Liability (revenues collected in advance acct #’s 216000 to 216199 )**Recipients - Recognition of assets (due from other government) and revenuesshould not be delayed pending purely routine requirements such as filingreimbursement and/or progress reports.

65Government-Mandated and Voluntary NonexchangeResourcesReporting requirements (cont.)Applies to all financial statementsResources disbursed before time requirements, but after eligibilityrequirements have been met, until use of resource is required or first permitted.ProvidersDR-Deferred outflow of resources (acct #’s 199900 to 199999) & CR-AssetRecipientsDR-Asset & CR-Deferred inflow of resources (acct #’s 222000 or 223800 to223899)

65Items Continued to be Reported as an Asset(Classification was not changed)Rights to futurerevenues acquiredfrom outside thereporting entity(GASBS 48 ¶ 14, Sales andPledges ofReceivables and FutureRevenues and Intra-EntityTransfers of Assets andFuture Revenues)PrepaidExpensesCapitalizedincurred costsrelated toregulatedactivities(GASBS 62 ¶ 480).

65Deferred Outflow of Resources(debit balances)Deferred amountsfrom refunding ofdebt (debits)Cost to acquirerights to futurerevenues (intraentity)(GASBS 23) Transfereeshould recognizeover the durationof the saleagreementDeferred lossfrom saleleaseback

65Items Continued to be Reported as a Liability(Classification Was Not Changed)Premium revenuesfor insuranceentities and publicentity risk pools(GASBS 10 ¶ 19-21, andGASBS 62 ¶ 405-406)Commitment FeesReceived until commitment is exercised,or unless exercise of commitmentis remote,or until commitment has expired

65Deferred Inflows of Resources(credit balances)Deferredamountsfromrefunding ofdebt(credits)(GASBS 23)Proceedsfrom sales offuturerevenues Transferorshould recognizeresource overduration of salesagreement(GASBS 48 exceptGASBS 48 ¶14)Deferredgain typeactivities) noncapitalexpenditures forenergy efficiencyPrograms low-incomesubsidies technologyresearch anddevelopment.

65Inflows of Resources(Revenues)(credit balances)Loan origination feesreceived, other than portionsrelated to points.Commitment FeesReceived after commitment isexercised, if exercise of commitmentis remote,or after commitment hasexpired

65Outflows of Resources(Expense/Expenditure)(debit balances)Debtissuancecosts(other thanprepaidinsurance whichis reported as anasset)Initial directcostsincurred bylessor in anoperatinglease(GASBS 62 ¶271)Acquisitioncosts forrisk poolsLoanoriginationcosts

65Footnote Disclosures – Governments should provide details of different types of deferredamounts in the notes to the financial statements if the deferredinflow/outflow consists of multiple components on the face of the financialstatements. If the amount reported for a component of net position is significantlyaffected by the difference between deferred inflows or outflows and theirrelated assets or liabilities – provide an explanation in the notes.

Completing the FY2015 Determination of TaxRevenue and Mill Levy Limitation(Levy Comp)Requires the following; Prior year (FY2014) completed levy comp form 2014 Certified Taxable Values (issued by Department of Revenue) Estimate of Reimbursable Tax Amount Per SB96 Fiscal Year 2015 - Class 8 andClass 12 Property available on Department of Revenue website;http://revenue.mt.gov/Portals/9/local government/entitlementshare payments/EstClassEight ement%20for%20Web 1.pdf FY2015 Determination of Tax Revenue and Mill Levy Limitation form availableon Local Government Services temsProgram/2 BudgetReports/default.mcpx

2014 Certified Taxable Valuation Information (issued by Department of Revenue)ABC CountyCounty Wide Levies1. 2014 Total Market Value . 1,840,500,0002. 2014 Total Taxable Value . 37,500,0003. 2014 Taxable Value of Newly Taxable Property . . 800,0004. 2014 Taxable Value less Incremental Taxable Value* . . 37,399,0005. 2014 Taxable Value of Net and Gross Proceeds**(Class 1 and Class 2) . . . 1,600,0006. TIF DistrictsTax IncrementDistrict NameCurrent TaxableValueBase TaxableValueIncrementalValueABC Industrial TIFABC Rivers TIF400,0002,000300,0001,000100,0001,000Total Incremental Value 101,000*This value is the taxing jurisdiction’s taxable value less total incremental value of all tax increment financingdistrict.** The taxable value of class 1 and class 2 is included in the taxable value totals.