WASHINGTON, Jan 8 (Reuters) - The U.S. board that sets accounting standards for state and local governments on Tuesday approved new protocols on reporting mergers and transfers of operations that are specifically tailored to the public sector.
The new rules “will improve accounting for mergers and acquisitions among state and local governments by providing guidance specific to the situations and circumstances encountered within the governmental environment,” Robert Attmore, chairman of the Governmental Accounting Standards Board, said in a statement.
Historically, governments have used “guidance intended for the private-sector business environment, which proved problematic because those standards focus on stock arrangements and ownership interests not present in the governmental setting,” he added.
Unlike in the private sector, government mergers can occur “without the exchange of significant consideration” such as a payment, said GASB, an independent and not-for-profit board made up of those who prepare, audit and use government financial statements.
The text of the new standards will be available on the board’s website next month.
They are intended to help define whether a government combining with another is a merger, acquisition or transfer of operations. They also provide methods to measure the assets, resources and liabilities involved in the combinations and how to report government operations that have been transferred.