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Governmental EntitiesIn recent years, the volume and number of derivative contracts entered into by governmental entities has grown substantially. With this growth there has also been an increase in the complexity and types of derivative transactions. For these reasons, the Government Accounting Standards Board (“GASB”) has issued Statement No. 53 (“GASB 53”) that requires that the fair value of derivatives be reported in the financial statements of state and local governments.The GASB 53 Statement on Accounting and Financial Reporting for Derivative Instruments requires that public entities provide additional disclosure and implement hedge accounting methods to measure the effectiveness of each outstanding derivative transaction. GASB 53 states that if a derivative effectively hedges an identified risk of increasing or decreasing cash flows or fair values, then the periodic changes in the fair value of the derivative can be deferred until the derivative ceases to be effective or the hedged transaction terminates. If the derivative fails to effectively hedge the identified risk, then the change in fair value is reported immediately as investment income or loss. In past years, GASB 53 reporting was voluntary. Now, reporting entities that report after June 15, 2010 must complete a GASB 53 report if their portfolios contain derivatives. It is no longer an option to report, but a requirement. DerivActiv has received a SAS 70 Type II certification by an independent advisor. For more information on GASB 53 reporting, call us at (866) 200-9012 or click here to request more information. |
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GASB 53 Derivatives GASB 53 Disclosure Requirments GASB 53 Effective Date GASB 53 Fair Value GASB 53 Guidance GASB 53 Hedging Derivatives GASB 53 Overview GASB 53 Quantitative Methods GASB 53 Reporting GASB 53 Services |
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