1. National Association of State Auditors, Comptrollers and Treasurers GASB Update The views expressed in this presentation are those of Chairman Vaudt and Mr. Bean. Official positions of the GASB are determined only after extensive due process and deliberation. © Copyright 2014 by Financial Accounting Foundation, Norwalk, CT 1

2. A Look Back, A Look Forward 2

3. What Has Been Accomplished and What Remains To Be Done  Improving relationships  Enhancing communications and implementation tools  Identifying hot button financial reporting issues  Focusing on the big issues 3

4. Improving Relationships 4

5. Relationships—Looking Out and Looking In  External -Meetings with over 30 organization executives and congressional leaders in the past year  Strengthening already strong relations (for example, NASACT)  Reintroducing GASB to some (for example, NGA, NCSL, CSG, ASHTO)  Establishing relations with others (for example, National School Board Association) -Not a one-time drive by -Great standards are built on trust  Internal -Breaking down silos to increase efficiency  Both Boards can leverage off the other -Still need to always recognize why the GASB exists  Board and staff expertise in the public sector 5

6. Enhancing Communications 6

7. Introducing New Forms of Communication and Improving Others  GASB Outlook -A new form of communication directed at the “C” suite -Detailed communications are still available for the techies  Webcasts focused on due process documents -Fair value -Other postemployment benefits -Many more to come  New website -Timely information on projects -Technical inquiry portal -Implementation tools 7

8. Enhanced Implementation Tools  Pension Implementation Tool Kit -Fact sheets -Plain-language articles -Podcasts and video discussions of specific provisions -Statements and Implementation Guides  More to come 8

9. Identifying the Hot Button Issues 9

10. What is Hot?  2a7-like pools -Accessing the impact of the new Securities and Exchange Commission Regulations -Board will decide whether this topic should be added to the pre-agenda research activities on August 22 - A decision to add a topic to conduct pre-agenda research is not intended to signal a change to the current standards  Direct lending (bank loans versus bonds) -Primarily a local government issue -Determining whether current note disclosure and management discussion and analysis requirements are adequate 10

11. Focusing On the Big Issues 11

12. Major Technical Agenda and Pre-Agenda Research Topics  Financial reporting model reexamination  Other postemployment benefits  Fair value measurement and application  Leases  Fiduciary responsibilities 12

13. Reporting Model—Where Have We Been  Statement 34—released in 1999  Everything on the table, but no predetermined outcomes  Research to date -Literature review -Archival research -Research roundtables -Preparer and auditor surveys 13

14. Reporting Model—Where Are We Going  Modified approach survey  Financial statement user survey  Interviews  Final research report  Board decision—does it move to the current technical agenda? 14

15. OPEB—Where Have We Been  Due process -Exposure drafts approved in June 2014  Built on the new pension standards -Arrangements that do not meet the definition of a trust -Healthcare inflation rate -Discount rate 15

16. OPEB—Where Are We Going  Due process -Public hearings will be held in September  Release and effective dates -Final Statements expected in June 2015 -Effective dates  Plans—June 2017  Employers—June 2018  Will complete the suite of new postemployment benefit standards 16

17. Fair Value—Where Have We Been  How fair value is defined and measured -FASB standards highly leveraged -Definition is exactly the same as the FASB and IASB  Based on an exit value notion  Application -Limited in this proposed Statement to investments -Investment is specifically defined  When is fair value no longer appropriate -Acquisition value  Note disclosures—how is fair value determined 17

18. Fair Value—Fundamental Definitions  Fair Value Definition -The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  Investment Definition -A security or other asset that a government holds primarily for the purpose of income or profit and its present service capacity is based solely on its ability to generate cash or to be sold to generate cash 18

19. Fair Value—Where Are We Going  Final Statement scheduled to be approved in February 2015  Effective date—June 2016 19

20. Leases—Where Have We Been  Single approach—right of use -No classification of leases into operating/capital or other categories -Underlying assumption that leases are financings  Practicality exception—short-term lease -Lease that, at the beginning of the lease, has maximum possible term under the contract, including any options to extend, of 12 months or less  Lessor—symmetry with lessee accounting 20

21. Leases—Where Are We Going  Issues still to be deliberated -Small items exemption  Due process -Preliminary views expected to be released in November 2014 -Field test -Public hearings—April 2015 21

22. Fiduciary Responsibilities—Where Have We Been  Fiduciary definition  Custodial funds—A new fund type that includes any fiduciary arrangement that is not governed by a formal trust agreement or equivalent arrangement  Fiduciary activities continue to be reported as basic financial statements 22

23. Fiduciary Responsibilities—Definition  A government that controls assets: - (1) in accordance with a trust agreement or equivalent arrangement in which the beneficiaries are  (a) employees of the financial reporting entity, or  (b) organizations or other governments that are not part of the financial reporting entity, or -(2) outside of a trust agreement or equivalent arrangement and  (a) the beneficiaries are individuals, or private organizations or other governments that are not part of the financial reporting entity, or  (b) the resources are from a pass-through grant for which it does not have administrative or direct financial involvement.  No administrative or direct financial involvement 23

24. Fiduciary Funds—Where Are We Going  Due process -Preliminary views expected to be released in November 2014 -Field test -Public hearings—April 2015 24

25. Questions? 25 Web site—www.gasb.org