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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.  

According 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: thennen@haplr-index.com


What’s GASB?

What should be included as assets in a library according to GASB 34?

Should library collections be counted as capital in the annual audit?  

Is there a sample depreciation schedule for library materials collections?

Is there an example of a small city that has documented library related GASB 34 issues?

What are the implementation deadlines?

Where can I find more written information on GASB 34?

How is the MD&A – Management Discussion and Analysis changed under GASB 34?  And what IS an MDA anyway?

What is the cost for library buildings and spending on library capital costs nationally?

Where can a listserv on GASB be found?

What is the position of the American Library Association, state associations?  


 

 

What’s GASB?

Governmental 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

 

What should be included as assets in a library according to GASB 34?

The building, the land it is on, shelving, and major equipment, for sure.  Computer and other equipment with a useful life of less than a year or a unit cost of over $5,000 need not be included.  

 

Should library collections be counted as capital in the annual audit?

The Governmental Accounting Standards Board says that library materials collections must be capitalized and depreciated. 

The National Association of State Auditors, Comptrollers and Treasurers (NASACT) site indicates that library collections should be completely capitalized.  http://www.sso.org/nasact/Comptrollers/NASC_Roundtable/tx_guide.pdf

 On the 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.”

http://www.window.state.tx.us/comptrol/san/gasb/gasb34_qai11.html  

   

Is there an example of a small city that has documented library related GASB 34 issues?

Oak Park Michigan.  For an example of a smaller municipality that has done its current CAFR using GASB 34 see the web site for Oak Park, Michigan at: http://www.oakpark-mi.com/download.htm

http://www.oakpark-mi.com/gas34log.htm

 

 

What are the implementation deadlines?

The new standard will take effect in three phases depending on the size of state and local budgets:

·        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 revenue.

 

Where can I find more written information on GASB 34?

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

 

How is the MD&A – Management Discussion and Analysis changed under GASB 34?  And what IS an MDA anyway?

Cities 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:

http://accounting.rutgers.edu/raw/gasb/repmodel/index.html

 

What is the cost for library buildings and spending on library capital costs nationally?

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:

  • Annual capital spending nationwide in 1998 amounted to 13 cents for every operating dollar reported.

  • In 1998, on average nationwide, $3 per capita was spent on capital assets and $24 per capita on operating cost.

 

Is there a listserv on GASB?

The GFOA Listserv on GASB 34 is published by the Government Financial Officers Association.  

http://www.gfoa.org/gfoa2000/gasbfrum.htm

 

What is the position of the American Library Association, state associations?

  It is not known at this time.

 

 

 

Last revised August  2002

 

 

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