UPDATED Discussion Draft: Governmental Accounting Standards Board (GASB) Statement 63 (GASB 63), Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position
Summary: GASB 63 was issued in June 2011 and provides guidance for presenting deferred outflows of resources, deferred inflows of resources, and net position in the statement of net position. The provisions of GASB 63 will require some changes to the SACS financial reporting forms and LEA financial statements. GASB 63 is effective 2012–13.
Background: Traditionally, the statement of financial position has comprised three elements – assets, liabilities, and the difference between the two. In 2007, the GASB issued Concepts Statement 4, Elements of Financial Statements, in which two additional financial statement elements were established – deferred outflows of resources and deferred inflows of resources.
- Deferred outflows of resources – consumption of net assets that is applicable to a future reporting period
- Deferred inflows of resources – acquisition of net assets that is applicable to a future reporting period
These new financial statement elements reflect the GASB’s conclusion that certain transactions subject to deferred recognition do not meet the definition of assets or liabilities. In addition, the introduction of these two new financial statement elements makes the traditional description of the difference between assets and liabilities, defined in GASB 34 as “net assets,” inaccurate. Consequently, Concepts Statement 4 describes the residual of all elements presented in the statement of financial position as “net position,” rather than “net assets.”
Implications for LEAs: As noted previously, GASB 63 provides guidance for presenting the financial statement elements discussed above. Deferred outflows of resources will be reported as a separate section following assets, and deferred inflows of resources will be reported as a separate section following liabilities. The CDE will modify SACS fund forms and government-wide reports and the charter school alternative reporting form accordingly, including:
- Adding deferred outflows of resources and deferred inflows of resources as separate sections/line items in the balance sheet/net assets sections of fund forms and in the Statement of Net Assets government-wide report
- Replacing “net assets” with “net position” where referenced in various fund forms and the government-wide reports (e.g., Statement of Net Assets will be renamed Statement of Net Position)
Note that GASB 63 does not define transactions that that should be identified as deferred outflows of resources or deferred inflows of resources. This guidance is provided in GASB 65, Items Previously Reported as Assets and Liabilities, which was issued in March 2012.