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Future Accounting Standard Changes - Continued <br />Fair Value Application <br />This Statement generally requires investments to be measured at fair value. An investment is defined as a security or other asset <br />that (a) a government holds primarily for the purpose of income or profit and (b) has a present service capacity based solely on its <br />ability to generate cash or to be sold to generate cash. Investments not measured at fair value continue to include, for example, <br />money market investments, 2a7 -like external investment pools, investments in life insurance contracts, common stock meeting <br />the criteria for applying the equity method, unallocated insurance contracts, and synthetic guaranteed investment contracts. A <br />government is permitted in certain circumstances to establish the fair value of an investment that does not have a readily <br />determinable fair value by using the net asset value per share (or its equivalent) of the investment. <br />This Statement requires measurement at acquisition value (an entry price) for donated capital assets, donated works of art, <br />historical treasures, and similar assets and capital assets received in a service concession arrangement. These assets were <br />previously required to be measured at fair value. <br />Fair Value Disclosures <br />This Statement requires disclosures to be made about fair value measurements, the level of fair value hierarchy, and valuation <br />techniques. Governments should organize these disclosures by type of asset or liability reported at fair value. It also requires <br />additional disclosures regarding investments in certain entities that calculate net asset value per share (or its equivalent). <br />The requirements of this Statement are effective for financial statements for periods beginning after June 15, 2015. Earlier <br />application is encouraged. <br />How the Changes in This Statement Will Improve Financial Reporting <br />The requirements of this Statement will enhance comparability of financial statements among governments by requiring <br />measurement of certain assets and liabilities at fair value using a consistent and more detailed definition of fair value and accepted <br />valuation techniques. This Statement also will enhance fair value application guidance and related disclosures in order to provide <br />information to financial statement users about the impact of fair value measurements on a government's financial position. <br />a) Note. From GASB Pronouncements Summaries. Copyright 2014 by the Financial Accounting Foundation, 401 Merritt 7, Norwalk, <br />CT 06856, USA, and is reproduced with permission. <br />This communication is intended solely for the information and use of City Council, management, and the Minnesota Office of the <br />State Auditor and is not intended and should not be used by anyone other than those specified parties. <br />Our audit would not necessarily disclose all weaknesses in the system because it was based on selected tests of the accounting records <br />and related data. The comments and recommendations in the report are purely constructive in nature, and should be read in this <br />context. <br />If you have any questions or wish to discuss any of the items contained in this letter, please feel free to contact us at your convenience. <br />We wish to thank you for the continued opportunity to be of service and for the courtesy and cooperation extended to us by your staff. <br />&k,or <br />ABDO, EICK & MEYERS, LLP <br />Minneapolis, Minnesota <br />May 7, 2015 <br />-19- <br />People <br />+Process® <br />Going <br />Beyondthe <br />Numbers <br />