Technical Update Presented by Chris Ray Partner - KPMG LLP KPMG LLP

May 2008 GAAP Reporting Workshop © 2008 KPMG LLP, the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. Printed in U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International. 2 GASB Statement No. 45 Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions Effective: Fiscal Year 2008 Establishes standards for the measurement, recognition, and display of other postemployment benefits (OPEB) expense/expenditures and related liabilities (assets), note disclosures, and, if applicable, required supplementary information (RSI) Required to measure and disclose an amount for annual OPEB cost on the accrual basis of accounting

May 2008 GAAP Reporting Workshop © 2008 KPMG LLP, the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. Printed in U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International. 3 GASB Statement No. 47 Accounting for Termination Benefits Effective: Fiscal Year 2006 / 2008 Establishes accounting standards for termination benefits Distinguishes between voluntary and involuntary termination benefits Voluntary termination benefits: Inducements to hasten the termination of services For example, early retirement incentives Involuntary termination benefits: Benefits provided as a consequence of the early termination of services For example, severance pay

May 2008 GAAP Reporting Workshop © 2008 KPMG LLP, the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. Printed in U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International. 4 GASB Statement No continued Recognition – Accrual Based Statements Voluntary termination benefits: Recognize liability and expense when the employees accept the offer and amounts can be estimated Measurement of the liability should be updated, and any incremental liability should be recognized as of the end of each subsequent reporting period

May 2008 GAAP Reporting Workshop © 2008 KPMG LLP, the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. Printed in U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International. 5 GASB Statement No continued Recognition – Accrual Based Statements Involuntary termination benefits: Recognize liability and expense when: Plan of termination has been approved by those with the authority to commit the employer to the plan The plan has been communicated to the employees Amounts can be estimated Measurement of the liability should be updated, and any incremental liability should be recognized as of the end of each subsequent reporting period If employee must render future service to receive termination benefit, recognize benefit over future service period

May 2008 GAAP Reporting Workshop © 2008 KPMG LLP, the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. Printed in U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International. 6 GASB Statement No. 48 Sales and Pledges of Receivables and Future Revenues and Intra-Entity Transfers of Assets and Future Revenues Effective: Fiscal Year 2008 Transaction is presumed to be a collateralized borrowing unless the specified criteria is met (¶ 6-9) Provides guidance for transfers of assets or future revenues within the same reporting entity Provides guidance on pledges of future revenues when resources are not received by the pledging government Guidance provided on recording transactions for entities outside the government’s reporting entity and for entities that re part of the government’s reporting entity

May 2008 GAAP Reporting Workshop © 2008 KPMG LLP, the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. Printed in U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International. 7 GASB Statement No. 49 Accounting and Financial Reporting for Pollution Remediation Obligations Effective: Fiscal Year 2009 Statement 49 requires recognition of a pollution remediation obligation when one of five specified obligating events occurs Obligations should be measured using the expected cash flow technique Obligation may be measured and recognized in components Certain outlays may be capitalized in accrual- based financial statements Guidance is provided on accounting for expected recoveries

May 2008 GAAP Reporting Workshop © 2008 KPMG LLP, the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. Printed in U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International. 8 GASB Statement No. 50 Pension Disclosures Effective: Fiscal Year 2008 Amends GASB 25 and 27 Defined benefit plans and sole and agent employers to disclose the following: Funded status of the plan, actuarial methods and assumptions; If the aggregate actuarial cost method is used to determine the ARC, disclose the funded status of the plan (Notes) and a schedule of funding progress (RSI); Notes should include a reference linking the funded status to the schedule of funding progress; Legal or contractual maximum contribution rates, if applicable, and whether maximum contributions rates have been considered in the projection of future benefits; and If an actuarial assumption is different in successive years, disclose the initial and ultimate rates.

May 2008 GAAP Reporting Workshop © 2008 KPMG LLP, the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. Printed in U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International. 9 GASB Statement No continued Amends GASB 25 to require defined benefit pension plans and defined contribution plans to disclose in the notes to the financial statements the methods and assumptions used to determine the fair value of investments, if based on other than quoted market prices. Amends GASB 27 as follows: Require cost sharing employers to include how the contractually required contributions rate is determined; and If a cost-sharing plan does not issue a publicly available stand-alone financial report prepare in compliance with GASB 25, and the plan is not included in that of another entity, each employer in that plan should present as RSI the schedules of funding progress and employer contributions for the plan; as well as information relating to the cost-sharing plan as a whole, and information enabling the reader to understand the relative share of the employer to the plan.

May 2008 GAAP Reporting Workshop © 2008 KPMG LLP, the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. Printed in U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International. 10 GASB Statement No. 51 Accounting and Financial Reporting for Intangible Assets Effective: Fiscal Year 2010 Examples of Intangible Assets Easements Water Rights Timber rights Patents Trademarks Computer Software Requires all intangible assets not specifically excluded by its scope provisions to be classified as capital assets Addresses the nature of these intangible assets Recognition and amortization Retroactive application is required for phase 1 or 2 governments

May 2008 GAAP Reporting Workshop © 2008 KPMG LLP, the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. Printed in U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International. 11 GASB Statement No. 52 Land and Other Real Estate held as Investments by Endowments Effective: Fiscal Year 2009 Requires permanent and term endowments to report land and other real estate held as investments at fair value Recognize changes in fair value as investment income Land and other real estate held as investment by quasi-endowments requires the use of historical cost accounting

May 2008 GAAP Reporting Workshop © 2008 KPMG LLP, the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. Printed in U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International. 12 GASB Concept Statement No. 4 Elements of Financial Statements Issued: June 2007 Intended to provide a conceptual framework of interrelated objectives and fundamental concepts that can be used as a basis for establishing consistent financial reporting standards Establishes definitions of seven elements of historically based financial statements: Assets Liabilities Deferred outflows (prepaid expenses and other assets) Deferred inflows (deferred revenues) Net position (net assets) Outflow of resources (expenditures) Inflow of resources (revenues)

May 2008 GAAP Reporting Workshop © 2008 KPMG LLP, the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. Printed in U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International. 13 Other Projects Statements expected to be issued in 2008: Derivatives and Hedging Fund Balance Reporting and Governmental Fund Definitions

May 2008 GAAP Reporting Workshop © 2008 KPMG LLP, the U.S. member firm of KPMG International, a Swiss cooperative. All rights reserved. Printed in U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International. 14 Questions?