As expert Tribal advisors with more than four decades serving Sovereign Tribal Nations and tribal entities, REDW’s Audit and Assurance team is providing critical financial reporting updates for Tribal governments and enterprises. Our clients benefit from our keen perspective about federal regulations, as well as other important operational processes that affect Tribal governments and businesses.
Our in-depth understanding of key finance, accounting and business issues will help you manage the rest of 2023 and plan for the future, whether you are a tribal CFO, CIO, HR Director, Investment Committee member, or other professional in a tribal or tribal enterprise leadership position.
Coronavirus Relief Fund (CRF) Awards
https://www.redw.com/insights/insight-in-indian-country-the-ever-evolving-world-of-accounting-standards-gasb/The Consolidated Appropriations Act 2023, which includes the State, Local, Tribal, and Territorial Fiscal Recovery, Infrastructure, and Disaster Relief Flexibility Act, extended the period to December 31, 2022, for which Tribal government recipients may incur eligible costs using payments from their CRF awards. Recipients are expected to have completed all expenditures of CRF awards by March 31, 2023. Closeout of CRF awards is due no later than July 10, 2023. All Tribal governments are required to submit reports to Treasury about the use of such funds.
Listen to our podcast on this topic, The Ever-Evolving World of Accounting Standards
GASB Pronouncements
Several Governmental Accounting Standards Board (GASB) Statements have implications for tribal governments this year and in the future.
GASB 87 Leases must be adopted for fiscal years ending in 2022, after a deferred start date due to the coronavirus pandemic. This establishes a single model for lease accounting based on the principle that leases are financings of the right to use an asset. There is no longer an operating versus capital classification, and lessees will recognize an intangible right-to-use asset and a lease liability.
For fiscal years beginning after June 15, 2021, GASB 88 Certain Disclosures Related to Debt, requires disclosure of essential debt-related information for all types of debt, including:
- amounts of unused lines of credit.
- assets pledged as collateral for debt.
- terms specified in debt agreements related to significant events of default with finance-related consequences, termination events with finance-related consequences, and subjective acceleration clauses.
GASB 89 Accounting for Interest Cost Incurred before the End of a Construction Period, for fiscal years beginning after 12/15/2020, specifies that the interest may no longer be capitalized, and will be incurred as an expenditure (governmental funds/current resource measured funds) or expense (business-type/economic resource measured funds).
GASB 90, Majority Equity Interest, states that for fiscal years beginning after 12/15/2019, when a government has a majority equity interest in a separate legally entity, and such equity interest meets the GASB definition of an investment, the investment shall be accounted for on an equity basis, with these exceptions:
- a special-purpose government engaged only in fiduciary activities.
- a fiduciary fund.
- an endowment fund.
These exceptions continue to be fair market valued. If the entity does not meet the definition of investment, it should be accounted for as a component unit.
GASB 91, Conduit Debt Obligations, for fiscal year beginning after 12/15/2021, requires dated accounting and disclosure guidance for conduit debt with three separate parties involved.
GASB 93, Replacement of Interbank Offered Rates, paragraphs 13 and 14, for fiscal years beginning after 6/15/2021, speaks to debt and related derivatives/hedges and related accounting LIBOR requirement debt instruments, as changed or replaced. The Interbank Offered Rates, notably LIBOR rates, are under global reform, with LIBOR expected to cease.
GASB 94, Public-Private and Public Partnerships and Availability Payment Arrangements, for fiscal years beginning after June 15, 2022, addresses issues related to public-private and public-public partnership arrangements (PPPs). As used in this Statement, a PPP is an arrangement in which a government (the transferor) contracts with an operator (a governmental or nongovernmental entity) to provide public services by conveying control of the right to operate or use a nonfinancial asset, such as infrastructure or other capital asset (the underlying PPP asset), for a period of time in an exchange or exchange-like transaction.
GASB 96, Subscription-based information technology arrangements (SBITA), fiscal years beginning after June 15, 2022, does four things:
- defines a SBITA.
- establishes that a SBITA results in a right-to-use subscription asset—an intangible asset—and a corresponding subscription liability.
- provides the capitalization criteria for outlays other than subscription payments, including implementation costs of a SBITA.
- requires note disclosures regarding a SBITA.
To the extent relevant, the standards for SBITAs are based on the standards established in Statement No. 87, Leases, as amended.
GASB 97, Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans, amends GASB 14 and 84, and supersedes GASB 32, for reporting periods beginning after June 15, 2021. This clarifies the case when a legally separate organization does not have a governing board, the primary government must determine whether it is financially accountable for the potential component unit.
GASB 98, Annual Comprehensive Financial Report, for fiscal years ending after December 15, 2021, defines the term annual comprehensive financial report and its acronym ACFR. The new term and acronym replace instances of comprehensive annual financial report and its acronym in generally accepted accounting principles for tribal governments.
GASB 99, Omnibus 2022, effective upon issuance, addresses practice issues that have been identified during implementation and application of certain GASB Statements and accounting and financial reporting for financial guarantees. except for the following:
- requirements related to leases, PPPs, and SBITAs are effective for fiscal years beginning after June 15, 2022, and all reporting periods thereafter.
- requirements related to financial guarantees and the classification and reporting of derivative instruments within the scope of GASB 53, are effective for fiscal years beginning after June 15, 2023, and all reporting periods thereafter.
GASB 100, Accounting Changes and Error Corrections, fiscal years beginning after June 15, 2023, and all reporting periods thereafter, enhances accounting and financial reporting requirements for accounting changes and error corrections to provide more understandable, reliable, relevant, consistent, and comparable information for making decisions or assessing accountability.
GASB 101, Compensated Absences, fiscal years beginning after December 15, 2023, and all reporting periods thereafter, replaces GASB 16, Accounting Compensated Absences. The goal is to create a more consistent model for accounting for compensated absences that can be applied to all types of compensated absence arrangements.
