What To Know About GASB Changes Taking Effect in 2023

What To Know About GASB Changes Taking Effect in 2023

Last updated on December 9th, 2022

As you start your 2023 planning, make sure Governmental Accounting Standards Board (GASB) changes taking effect next year are on your radar. Following are some highlights…

GASB Statement No. 96 (Subscription Based IT Arrangement or SBITA). A SBITA is a contract that gives one the right to use another party’s IT software for a defined period in an exchange or exchange-like transaction. Examples include cloud computing arrangements; Enterprise Resource Planning systems; online conferencing or payment tools; as well as email, calendar, and office tools. The standard is similar to 2022 implementation for leases and takes effect for fiscal year 2023 reporting.

GASB Statement No. 94 (Public-Private and Public-Public Partnerships and Availability Payment Arrangements). GASB No. 94 defines PPP as an arrangement where a government (the transferor) contracts with an operator for public services by giving the right to operate or use a non-financial asset (i.e., infrastructure) for a period in an exchange or exchange-like transaction. The transferor can change and approve which services the operator provides, to whom, and prices that can be charged. What’s more, the transferor is entitled to residual interest in the service utility of the PPP asset at the end of the arrangement. There are other special arrangements for SCAs and APAs. GASB No. 94 takes effect for fiscal year 2023 reporting.

GASB Statement No. 100 (Accounting Changes and Error Corrections). This amendment of No. 62 takes effect fiscal years starting June 15, 2023. (Earlier adoption is encouraged.) GASB No. 100 defines accounting changes as changes in accounting principles, changes in estimates, and/or changes to or within the financial reporting entity. Implementation of changes/corrections must be identified as prospective or retrospective. Prior period financial statements must be restated. Financial statements must display the aggregate amount of adjustments to and restatements of beginning net position, fund balance, or fund net position by reporting unit.

Required supplementary information (RSI) – like Management’s Discussion and Analysis (MD&A) for earlier periods than those included in basic financial statements – should be restated for error corrections – but is not required for changes in accounting principles.

Financial reporting entity changes should be reported by adjusting the current period’s beginning balances. Estimated changes should be recognized in the current period and reported prospectively.

Finally, financial statements should reflect the organization has adopted Statement No. 100 provisions; note disclosures detailing changes, errors, impacts on starting balances; and highlight why the new methods are preferable (i.e., understandability, reliability, relevance, timeliness, consistency, and/or comparability). Financial statements must note consideration of Statement 100, as well as the date of adoption.

GASB Statement No. 101 Enhancements to compensated absence recognition, measurement and disclosure requirements take effect fiscal years starting December 15, 2023. (Earlier adoption is encouraged).

Statement No. 16 (Accounting for Compensated Absences) is being replaced by Statement No. 101 (Compensated Absences) to reflect paid time off practices (including vacation and sick time) in today’s workplace. The enhanced standards focus on recognition, measurement, and reporting.

Under Statement No. 101, an unused leave liability (including sick leave) will be recognized if the leave is attributed to services rendered; accumulates; and is likely to be used for time off or paid/settled. This applies even if the leave hasn’t been used or has been used but hasn’t been paid/settled. One exception: for parental and military leaves, as well as jury duty, liability is recognized at the start of the leaves/duty.

Measurement will be based on an employee’s pay rate in effect on the financial reporting date, unless a compensated absence arrangement calls for a different pay rate at the time of payment (for example, sick pay based on 50% of the employee’s pay rate). As is the case under GASB 16, salary related payments – including the employer’s share of payroll related taxes, defined pension contributions, and other post-employment benefit plans – should be part of the compensated absence liability calculation.

Finally, certain requirements are being eliminated or made optional for financial disclosures. The government funds used to liquidate liability for compensated absences will not have to be disclosed. Also, governments can choose how to identify increases and decreases in long-term liability change, as either gross or net amounts. Financial statements must note consideration of Statement 101, as well as the date of adoption.

For complete details, visit the GASB website at www.gasb.org or give RBT CPAs a call. We’re a leading accounting, tax, and audit firm in the Hudson Valley and beyond. We pride ourselves on our knowledge and application of accounting rules for government organizations. 2023 is going to be a big year in terms of GASB changes and compliance. Get peace of mind that your municipality complies by partnering with a firm you can trust. Give RBT CPAs a call today.