GASB STORY by Thomas
J. Hennen Jr.
A web sidebar and FAQ
GASB 34 (pronounced to rhyme with The
Great Gatsby) is a new set of accounting rules, considered by
accountants to be the most monumental change in government financial reporting
in American history. The new rules may prove
hazardous or helpful to public libraries—depending on the knowledge base that
library planners bring to the table.
to the new rules, when auditors prepare the annual audit (Comprehensive Annual
Financial Report) according to Generally Accepted Accounting Principles, they
will be required to capitalize and depreciate library book and materials
collections. The author is developing a spreadsheet program for
implementing the initial and ongoing capitalization and depreciation of library
collections. For further information, contact him at: firstname.lastname@example.org
Accounting Standards Board (GASB) is not a government agency, but rather a
nonprofit agency. It issued its first concept statement regarding this issue in
1987 and unanimously adopted this new financial reporting model on June 10,
1999, after 10 years of development. The organization operates with donated
funds collected on its behalf by the Financial Accounting Foundation (FAF) and
supplemented with proceeds from sales of its documents. There official web site
is at: http://www.accounting.rutgers.edu/raw/gasb/index.html
The Governmental Accounting Standards Board says that library materials collections must be capitalized and depreciated.
National Association of State Auditors, Comptrollers and Treasurers (NASACT)
site indicates that library collections should be completely capitalized.
other hand, Carole
Keeton Rylander, Texas Comptroller of Public Accounts, says “The
state's methodology for library books and materials will be to classify them as
inexhaustible assets that should not be depreciated. Library books and materials
have an economic benefit or service potential that is used up slowly and their
estimated useful lives are extraordinarily long.”
new standard will take effect in three phases depending on the size of state and
Phase 1, beginning in fiscal years
after June 15, 2001, affects states and cities with budgets with $100 million or
more in annual revenue;
Phase 2, beginning in fiscal years
after June 15, 2002,1 affects states and cities with at least $10 million but
less than $100 million in revenues; and
Phase 3, beginning in fiscal years
after June 15, 2003, affects municipalities with less than $10 million in
The GASB staff has developed a series of guides to financial statements designed especially for financial information users. Three guides focus on specific governmental entities (local governments, state governments, public school districts) and are aimed at a wide range of readers, from the average citizen to the experienced, non-financial public manager. A fourth guide covering all three types of governments is intended for analysts and other regular users. All four guides are posted at http://www.accounting.rutgers.edu/raw/gasb/pub/index.html
and other agencies, including libraries, must provide an “easy to read”
assessment of the financial results for the entity for the previous year. This
section will be subject to review by auditors, providing assurance that you are
telling the truth about your financial condition. This may be the spot to make
the case for a new building or automation upgrade. It could also be where
library foes plant the doubts about the need for that new building or server. Information
about GASB Statement No. 34, Basic Financial Statements—and Management's
Discussion and Analysis—for State and Local Governments is at:
Nationally it appears that library buildings cost $150 to $200 per square foot (including equipment and technology). National data for building size are unavailable at present. (Source: most current LJ architectural issue?)
For those states with data, the norm for size appears to be somewhere between 0.8 and 1.9 square feet per capita. A reasonable cost per square foot, amortized over a 20 to 40-year period would yield a target sum.
A ten-year trend analysis on Wisconsin libraries by the author indicates that roughly 16 cents was expended on declared capital costs for every one operating dollar.
The author’s analysis of 1998 Federal State Cooperative Service data indicates the following:
The GFOA Listserv on GASB 34 is published by the Government Financial Officers Association.
Last revised August 2002