2009 Audit Management Letter - Laserfiche WebLink

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City of Centerville May 19, 2010 Page 20 Future Accounting Standard Changes The following Governmental Accounting Standards Board (GASB) Statements have been issued and may have an impact on future City financial statements: GASB Statement No. 51 - Accounting and Financial Reporting for Intangible Assets This statement was issued in June 2007 and is effective for periods beginning after June 15, 2009. The new standard characterizes an intangible asset as an asset that lacks physical substance, is nonfinancial in nature, and has an initial useful life extending beyond a single reporting period. Examples of intangible assets include easements, computer software, water rights, timber rights, patents, and trademarks. This statement requires that intangible assets be classified as capital assets (except for those explicitly excluded from the scope of the new standard, such as capital leases). Relevant authoritative guidance for capital assets should be applied to these intangible assets. The statement provides additional guidance that specifically addresses the unique nature of intangible assets, including: Requiring that an intangible asset be recognized in the statement of net assets only if it is considered identifiable Establishing a specified-conditions approach to recognizing intangible assets that are internally generated (for example, patents and copyrights) Providing guidance on recognizing internally generated computer software Establishing specific guidance for the amortization of intangible assets. GASB Statement No. 54 - Fund Balance This statement was issued in March of 2009 and is effective for periods beginning after June 15, 2010.This new standard is intended to improve the usefulness of information provided to financial report users about fund balance by providing clearer, more structured fund balance classifications, and clarifying the definitions of existing governmental fund types. GASB No. 54 distinguishes fund balance between amounts that are considered non-spendable, such as fund balance associated with inventories, and other amounts that are classified based on the relative strength of the constraints that control the purposes for which specific amounts can be spent.The following classifications and definitions will be used: Restricted - amounts constrained by external parties, constitutional provision, or enabling legislation Committed - amounts constrained by a government using its highest level of decision-making authority Assignedintends - amounts a government to use for a particular purpose Unassigned - amounts that are not constrained at all will be reported in the general fund. In addition to the classifications of fund balance, the standard clarified the definitions of individual governmental fund types, for example, special revenue funds, debt service funds, and capital project funds.