The Governmental Accounting Standards Board (GASB) is soliciting comments on proposals about accounting and financial reporting on infrastructure assets.
The request for comments, or what GASB calls Preliminary Views—Infrastructure Assets—seeks input on its current thinking at the project’s initial stages.
Aside from reexamining accounting and financial reporting issues for infrastructure assets, its objective is to review existing guidance improvements. The improvements contemplated pertain to recognition and measurement, note disclosures and required supplementary information.
Research showed that financial statement users want to be better informed about the condition of infrastructure assets. They also want to know how the government maintains those assets instead of what is currently on financial statements.
According to GASB’s initial views, infrastructure assets would be defined as individual assets that may consist of multiple components. These assets are part of a network of long-lived capital assets that are used to offer a specific type of public service, are stationary and can be maintained for many years. The usual examples include roads, bridges and tunnels.
GASB proposes to proceed with existing recognition and measurement requirements for infrastructure assets. These requirements let governments measure infrastructure using historical cost net of accumulated depreciation unless the government chooses to use the modified approach.
Governments that report infrastructure assets measured at historical cost this way must review estimated useful lives and salvage value periodically. GASB also proposes that governments separately depreciate each component of an infrastructure asset that is significant to the total cost of the asset if the useful lives of these components are different.
Another proposal is that governments choosing to report infrastructure assets under the modified approach have processes to document that the assets’ condition is being preserved at a government-established level.
GASB is also proposing to remove some of the existing note disclosures on infrastructure assets while adding four new note disclosures, such as a disclosure of maintenance or preservation expenses. It also proposes another disclosure of assets reported using historical cost net of accumulated depreciation that have gone over 80% of their estimated useful lives. A related schedule of maintenance expenses in the last ten fiscal years is also proposed to be included in the required supplementary information.
Public hearings and user forums on the proposal have been scheduled for stakeholders to share their views with the GASB. The document provides additional information on these events.