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Government Accounting Rules Receive Updates

State and local governments will have to shift some of their accounting method

The Governmental Accounting Standards Board recently issued new Statements to clarify financial reporting issues relevant to state and local governments.

In its concepts statement No. 4, GASB addressed how government bodies recognize deferred outflows and inflows, noting that they should only be used when applying to instances "specifically identified in authoritative GASB pronouncements."

To clarify that, GASB issued statement 65, which "reclassifies and recognizes certain items currently being reported as assets and liabilities as one of four financial statement elements: deferred outflows of resources, outflows of resources, deferred inflows of resources or inflows of resources."

The second statement, No. 66, serves as an amendment to Nos. 10 and 62. As the Journal of Accountancy explains, No. 66 serves to do away with the limit on fund-based reporting for risk financing activities. Now, government bodies will have to follow Statement No. 54 - Fund Balance Reporting and Governmental Fund Type Definitions - and observe that provision when deciding to use a governmental fund type for their risk financing.

Both statements will go into effect on December 15, 2012.