TITLE
Title
BUDGET AMENDMENT: GASB 87 / GASB 96 YEAR END ADJUSTMENTS
end
SPONSOR
Sponsor
Donald Warn
end
BACKGROUND
Background
Over the past few years, the Governmental Accounting Standards Board (GASB) created new standards for how governments account for leases (GASB 87) and subscription-based information technology arrangements (GASB 96).
The Governmental Accounting Standards Board (GASB) issued Statement No. 87, Leases, in June 2017 and for most NC local governments and public authorities in North Carolina, this statement became effective for the fiscal year beginning July 1, 2021. Before GASB 87, operating leases were budgeted and expended annually based on the schedule of lease payments. The new standard now requires the County to report an expenditure and an offsetting revenue (other financing source) in the period the lease is initiated for the total amount of all future lease payments. Future lease payments are then budgeted and accounted for as debt service principal and interest expenditures like long-term debt rather than as an annual operating expenditure.
The Governmental Accounting Standards Board (GASB) issued Statement No. 96, Subscription Based Information Technology Agreements (SBITA), in May 2020 and for most NC local governments and public authorities in North Carolina, this statement became effective for the fiscal year beginning July 1, 2022. Before GASB 96, SBITAs were budgeted and expended annually based on the schedule of payments in the agreement. The new standard now requires the County to report an expenditure and an offsetting revenue (other financing source) in the period the agreement is initiated for the total amount of all future payments. Future payments are then budgeted and accounted for as debt service principal and interest expenditures like long-term debt rather than as an annual operating expenditure.
To account for these items, a debt and credit are posted in our accounting systems as a reporting item. ...
Click here for full text