Accounting and Financial Reporting

Are We There Yet? Implementing GASB 87 for Existing Lease Contracts

Page from October 2021 GFR

Sometimes anticipation is the worst part of a dreaded event, and perhaps this will be the case with the implementation of the Governmental Accounting Standards Board Statement No. 87, Leases (GASB 87). GASB 87 is first due to be implemented by governments for their earliest fiscal years beginning after June 15, 2021, but it might seem to you that we’ve been talking about this statement for a long time. We started out with a generous implementation period for GASB 87, which was originally scheduled to become effective for periods two and a half years after issuance. Then, due to COVID-19, GASB granted an 18-month postponement for GASB 87—based on pleas for mercy from governments—even while permitting only a one-year deferral for other pronouncements. This resulted in an unusually long total lead time between the promulgation of the standard and its required implementation. The good news is that during this extended period, GASB provided lots of implementation guidance to help, and GFOA has discussed the new accounting for leases in many articles, conference sessions, and webinars.

Many governments are now well into the fiscal years for which they will first issue GASB 87-compliant financial statements. Having completed (or nearly so) the process of identifying contracts that are or include leases, many governments are now facing the devil in the details of implementation.