Nonprofit and Government Accounting Research Article
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GASBS-09.pdf
NO. 063 SEPTEMBER 1989
Governmental Accounting Standards Series
Statement No. 9 of the Governmental Accounting
Standards Board
Reporting Cash Flows
of Proprietary and Nonexpendable Trust Funds
and Governmental Entities That Use Proprietary
Fund Accounting
Governmental Accounting Standards Board of the Financial Accounting Foundation
For additional copies of this Statement and information on applicable prices and discount
rates, contact:
Order Department
Governmental Accounting Standards Board
401 Merritt 7
PO Box 5116
Norwalk, CT 06856-5116
Telephone Orders: 1-800-748-0659
Please ask for our Product Code No. GS09.
The GASB website can be accessed at www.gasb.org.
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Summary
This Statement establishes standards for cash flow reporting. It requires a statement
of cash flows (instead of a statement of changes in financial position) as part of a full set
of financial statements for all proprietary and nonexpendable trust funds and
governmental entities that use proprietary fund accounting. It exempts public employee
retirement systems and pension trust funds from the requirement to present either a
statement of cash flows or a statement of changes in financial position.
This Statement requires that a statement of cash flows classify cash receipts and
payments according to whether they stem from operating, noncapital financing, capital
and related financing, or investing activities, and it provides definitions of each category.
Governmental enterprises are encouraged to report cash flows from operating
activities directly by showing major classes of operating cash receipts and payments (the
direct method), although the indirect or reconciliation method may be used. If the direct
method is used, a reconciliation of operating income to net cash flow from operating
activities is required to be provided.
Information about investing, capital, and financing activities not resulting in cash
receipts or payments in the period is required to be provided separately.
This Statement is effective for annual financial statements for fiscal years beginning
after December 15, 1989. Restatement of financial statements for earlier years provided
for comparative purposes is encouraged but not required.
Unless otherwise specified, pronouncements of the GASB apply to financial reports of all
state and local governmental entities, including public benefit corporations and
authorities, public employee retirement systems, and governmental utilities, hospitals,
colleges, and universities. Paragraph 5 discusses the applicability of this Statement.
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Statement No. 9 of the Governmental Accounting
Standards Board
Reporting Cash Flows of Proprietary and
Nonexpendable Trust Funds and Governmental Entities
That Use Proprietary Fund Accounting
September 1989
Governmental Accounting Standards Board of the Financial Accounting Foundation
401 Merritt 7, PO Box 5116, Norwalk, Connecticut 06856-5116
iii
Copyright © 1989 by Financial Accounting Foundation. All rights reserved. Content
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photocopying, recording, or otherwise, without the prior written permission of the
Financial Accounting Foundation.
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Statement No. 9 of the Governmental Accounting Standards Board
Reporting Cash Flows of Proprietary and Nonexpendable Trust Funds and
Governmental Entities That Use Proprietary Fund Accounting
September 1989
CONTENTS
Paragraph
Numbers
Introduction and Background Information ......................................................................1–4
Scope of This Statement ................................................................................................1
Background ................................................................................................................2–4
Standards of Governmental Accounting and Financial Reporting ................................5–37
Applicability of This Statement .....................................................................................5
Financial Reporting of Cash Flows................................................................................6
Purpose of a Statement of Cash Flows ..........................................................................7
Focus on Cash and Cash Equivalents ......................................................................8–11
Gross and Net Cash Flows .....................................................................................12–14
Classification of Cash Receipts and Cash Payments .............................................15–28
Distinguishing between Capital and Noncapital Financing .......................................29
Content and Form of a Statement of Cash Flows ..................................................30–36
Information about Noncash Investing, Capital, and Financing Activities ...................37
Effective Date and Transition ............................................................................................38
Appendix A: Basis for Conclusions .............................................................................39–74
Appendix B: Illustrative Statement of Cash Flows......................................................75–77
Appendix C: Codification Instructions ..............................................................................78
1
Statement No. 9 of the Governmental Accounting Standards Board
Reporting Cash Flows of Proprietary and Nonexpendable Trust Funds and
Governmental Entities That Use Proprietary Fund Accounting
September 1989
INTRODUCTION AND BACKGROUND INFORMATION
Scope of This Statement
1. This Statement establishes standards for reporting cash flows of proprietary and
nonexpendable trust funds and governmental entities that use proprietary fund
accounting. 1
This Statement also eliminates the requirements for public employee
retirement systems (PERS) and pension trust funds to provide a statement of changes in
financial position. It supersedes the June 15, 1987 GASB Codification of Governmental
Accounting and Financial Reporting Standards Section 2200, ―Comprehensive Annual
Financial Report,‖ paragraph .106, and related requirements in that section, in Section
2600, ―Reporting Entity and Component Unit Presentation and Disclosure,‖ and in
Section Pe5, ―Pension Funds—Accounting.‖ 2
1
GASB Codification Section 1300, ―Fund Accounting,‖ paragraph .102b, states that proprietary fund types
―are used to account for a government’s ongoing organizations and activities that are similar to those often
found in the private sector (enterprise and internal service funds). All assets, liabilities, equities, revenues,
expenses, and transfers relating to the government’s business and quasi-business activities—where net
income and capital maintenance are measured—are accounted for through proprietary funds‖ (footnote
reference omitted). Also, as stated in Codification Section 2200, paragraph .106b(3), nonexpendable trust
funds are similar to proprietary funds and should be reported similarly. 2
Further references to the Codification are abbreviated. For example, Section 2200, paragraph .106, is
referred to as Cod. Sec. 2200.106.
2
Background
2. In November 1987, the Financial Accounting Standards Board (FASB) issued
Statement No. 95, Statement of Cash Flows. That Statement establishes standards for cash
flow reporting for all business enterprises. It supersedes Accounting Principles Board
(APB) Opinion No. 19, Reporting Changes in Financial Position, and requires a
statement of cash flows in place of a statement of changes in financial position as part of a
full set of financial statements.
3. FASB Statement 95 points out that since Opinion 19 was issued, cash flow
information has gained significance. Paragraph 13 of FASB Concepts Statement No. 5,
Recognition and Measurement in Financial Statements of Business Enterprises, states that
―a full set of financial statements for a period should show: . . . [c]ash flows during the
period.‖ Paragraph 78 of GASB Concepts Statement No. 1, Objectives of Financial
Reporting, also focuses on the need for, and importance of, cash flow information (Cod.
Sec. 100.178b). It states that an objective of financial reporting is to ―provide information
about how the governmental entity financed its activities and met its cash requirements.‖
4. To provide guidance on cash flow reporting by proprietary and nonexpendable trust
funds and governmental entities that use proprietary fund accounting, the Board
concluded that the provisions of FASB Statement 95 could be adapted to reflect more
closely the nature of governmental operations. The major differences between this
Statement and FASB Statement 95 are that (a) four categories are used for classifying
cash transactions instead of the three required by FASB Statement 95 and (b) the
―operating‖ category is more narrowly focused. The categories were redefined
accordingly.
3
STANDARDS OF GOVERNMENTAL ACCOUNTING AND FINANCIAL
REPORTING
Applicability of This Statement
5. The provisions of this Statement are applicable to proprietary funds, nonexpendable
trust funds, and governmental entities that use proprietary fund accounting, 3
including
public benefit corporations and authorities, governmental utilities, and governmental
hospitals. 4
PERS and pension trust funds are exempt from the requirement to present a
statement of cash flows. In addition, PERS that report in accordance with NCGA
Statement 6, Pension Accounting and Financial Reporting: Public Employee Retirement
Systems and State and Local Government Employers, and pension trust funds are not
required to present a statement of changes in financial position. However, PERS and
pension trust funds are not precluded from presenting a statement of cash flows if the
information provided is considered useful.
Financial Reporting of Cash Flows
6. Governmental enterprises should present a statement of cash flows for each period
for which results of operations are reported.
Purpose of a Statement of Cash Flows
7. The primary purpose of a statement of cash flows is to provide relevant information
about the cash receipts and cash payments of an entity during a period. When used with
related disclosures and information in the other financial statements, the information a
statement of cash flows provides should help financial report users assess (a) an entity’s
ability to generate future net cash flows, (b) its ability to meet its obligations as they come
3
Unless otherwise noted, future references in this Statement to affected funds and entities will simply be to
―governmental enterprises.‖ 4
Some governmental colleges and universities report their transactions and balances within the
governmental model using National Council on Governmental Accounting (NCGA) Statement 1,
Governmental Accounting and Financial Reporting Principles. This Statement applies to the proprietary and
nonexpendable trust funds of those governmental colleges and universities. However, this Statement is not
required to be applied to those governmental colleges and universities that follow the specialized industry
accounting and reporting principles contained in the American Institute of Certified Public Accountants
(AICPA) Industry Audit Guide, Audits of Colleges and Universities (1975).
4
due, (c) its needs for external financing, (d) the reasons for differences between operating
income (or net income if operating income is not separately identified on the operating
statement) and associated cash receipts and payments, and (e) the effects on the entity’s
financial position of both its cash and its noncash investing, capital, and financing
transactions during the period. To do this, a statement of cash flows should report the cash
effects during the reported period of an entity’s operations, its noncapital financing
transactions, its capital and related financing transactions, and its investing transactions.
Related information should report the investing, capital, and financing transactions that
affect an entity’s financial position but do not directly affect cash flows during the period.
A reconciliation of operating income (or net income if operating income is not separately
identified on the operating statement) to net cash flow from operating activities also
should be provided. This reconciliation generally will provide information about the net
effects of operating transactions and other events that affect operating income and
operating cash flows in different periods.
Focus on Cash and Cash Equivalents
8. A statement of cash flows should explain the change during the period in cash 5
and
cash equivalents regardless of whether there are restrictions on their use. The statement
should use a descriptive term such as cash or cash and cash equivalents rather than the
term funds, which has several different meanings in governmental accounting. The total
amounts of cash and cash equivalents at the beginning and end of the period shown in the
statement of cash flows should be easily traceable to similarly titled line items or subtotals
shown in the statements of financial position as of those dates.
9. For purposes of this Statement, cash equivalents are defined as short-term, highly
liquid investments that are both
5
Consistent with common usage, cash includes not only currency on hand, but also demand deposits with
banks or other financial institutions. Cash also includes deposits in other kinds of accounts or cash
management pools that have the general characteristics of demand deposit accounts in that the governmental
enterprise may deposit additional cash at any time and also effectively may withdraw cash at any time
without prior notice or penalty.
5
a. Readily convertible to known amounts of cash.
b. So near their maturity that they present insignificant risk of changes in value because
of changes in interest rates.
Generally, only investments with original maturities 6
of three months or less meet this
definition.
10. Examples of items commonly considered to be cash equivalents are Treasury bills,
commercial paper, certificates of deposit, money market funds, and cash management
pools. Cash purchases and sales of those types of investments generally are part of the
entity’s cash management activities rather than part of its operating, capital, investing, and
financing activities, and details of those transactions should not be reported in a statement
of cash flows.
11. Not all investments that qualify are required to be treated as cash equivalents. An
entity should establish a policy concerning which short-term, highly liquid investments
(that satisfy the definition of cash equivalents in paragraph 9) it will treat as cash
equivalents. An entity should disclose its policy for determining which of those items are
treated as cash equivalents. Any change in that policy is a change in accounting principle
that should be reported by restating financial statements for earlier years presented for
comparative purposes.
Gross and Net Cash Flows
12. Generally, information about the gross amounts of cash receipts and cash payments
during a period is more relevant than information about the net amount of cash receipts
and payments. However, the net amount of related receipts and payments provides
sufficient information not only for cash equivalents, as noted in paragraph 10, but also for
certain other classes of cash flows specified in paragraphs 13, 14, and 32.
6
Original maturity means the original maturity to the entity holding the investment. For example, both a
three-month U.S. Treasury bill and a three-year Treasury note purchased three months from maturity qualify
as cash equivalents. However, a Treasury note purchased three years ago does not become a cash equivalent
when its remaining term is three months.
6
13. Items that qualify for net reporting because their turnover is quick, their amounts are
large, and their maturities are short are cash receipts and payments pertaining to (a)
investments (other than cash equivalents), (b) loans receivable, and (c) debt, provided that
the original maturity of the asset or liability is three months or less. 7
14. In addition, in certain circumstances governmental enterprises may report net the
purchases and sales of their highly liquid investments rather than report the gross
amounts. Net reporting is allowed if (a) during the period, substantially all of the
governmental enterprise’s assets were highly liquid investments (for example, marketable
securities and other assets for which a market is readily available) and (b) the
governmental enterprise had little or no debt, based on average debt outstanding during
the period, in relation to average total assets.
Classification of Cash Receipts and Cash Payments
15. A statement of cash flows should classify cash receipts and cash payments as
resulting from operating, noncapital financing, capital and related financing, or investing
activities.
Cash Flows from Operating Activities
16. Operating activities generally result from providing services and producing and
delivering goods, and include all transactions and other events that are not defined as
capital and related financing, noncapital financing, or investing activities. Cash flows
from operating activities generally are the cash effects of transactions and other events
that enter into the determination of operating income. 8
7
For this purpose, amounts due on demand are considered to have maturities of three months or less.
Examples of items that could be reported ―net‖ based on the criteria in paragraph 13 are most repurchase
agreements (assuming the entity chooses not to include them as cash equivalents) and loans to and from
other funds to cover temporary (three months or less) cash needs. 8
Although operating income is not defined in authoritative governmental accounting literature, the term has
become widely used. A nonauthoritative illustration of the calculation of operating income (operating
revenues less operating expenses) is provided in Cod. Sec. 2200.606.
7
17. Cash inflows from operating activities include
a. Cash inflows from sales of goods or services, including receipts from collection of
accounts receivable and both short- and long-term notes receivable from customers
arising from those sales.
b. Cash receipts from quasi-external operating transactions with other funds.
c. Cash receipts from grants for specific activities that are considered to be operating
activities of the grantor government. (A grant arrangement of this type is essentially
the same as a contract for services.)
d. Cash receipts from other funds for reimbursement of operating transactions.
e. All other cash receipts that do not result from transactions defined as capital and
related financing, noncapital financing, or investing activities.
18. Cash outflows for operating activities include
a. Cash payments to acquire materials for providing services and manufacturing goods
for resale, including principal payments on accounts payable and both short- and
long-term notes payable to suppliers for those materials or goods.
b. Cash payments to other suppliers for other goods or services.
c. Cash payments to employees for services.
d. Cash payments for grants to other governments or organizations for specific activities
that are considered to be operating activities of the grantor government.
e. Cash payments for taxes, duties, fines, and other fees or penalties.
f. Cash payments for quasi-external operating transactions with other funds, including
payments in lieu of taxes.
g. All other cash payments that do not result from transactions defined as capital and
related financing, noncapital financing, or investing activities.
19. Cash flows from operating activities also include transactions of certain loan
programs. Even though loan activities are usually classified as investing activities, certain
loan programs are not intended to be investments, but are undertaken instead to fulfill a
governmental responsibility. These ―program loans‖ are made and collected as part of a
governmental program, for example, low-income housing mortgages or student loans. For
cash flow reporting purposes, these loan activities are the operating activities of the
governmental enterprise; therefore, the related cash flows should be classified as operating
activities. All loans made and collected (including interest) should be considered
operating cash outflows and inflows, respectively. Any proceeds from bonds issued to
finance the loan program and subsequent debt service payments (principal and interest)
should be classified as noncapital financing activities.
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Cash Flows from Noncapital Financing Activities
20. Noncapital financing activities include borrowing money for purposes other than to
acquire, construct, or improve capital assets and repaying those amounts borrowed,
including interest. This category includes proceeds from all borrowings (such as revenue
anticipation notes) not clearly attributable to acquisition, construction, or improvement of
capital assets, regardless of the form of the borrowing. Also included are certain other
interfund and intergovernmental receipts and payments.
21. Cash inflows from noncapital financing activities include
a. Proceeds from issuing bonds, notes, and other short- or long-term borrowing not
clearly attributable to acquisition, construction, or improvement of capital assets.
b. Cash receipts from grants or subsidies 9
except (1) those specifically restricted for
capital purposes (paragraph 24b) and (2) those for specific activities that are
considered to be operating activities of the grantor government (paragraph 17c).
c. Cash received from other funds except (1) those amounts that are clearly attributable
to acquisition, construction, or improvement of capital assets (paragraph 24c), (2)
quasi-external operating transactions (paragraph 17b), and (3) reimbursement for
operating transactions (paragraph 17d).
d. Cash received from property and other taxes collected for the governmental enterprise
and not specifically restricted for capital purposes.
22. Cash outflows for noncapital financing activities include
a. Repayments of amounts borrowed for purposes other than acquiring, constructing, or
improving capital assets.
b. Interest payments to lenders and other creditors on amounts borrowed or credit
extended for purposes other than acquiring, constructing, or improving capital assets.
c. Cash paid as grants or subsidies to other governments or organizations, except those
for specific activities that are considered to be operating activities of the grantor
government (paragraph 18d). 10
d. Cash paid to other funds, except for quasi-external operating transactions (paragraph
18f).
9
For example, grants or subsidies provided to finance operating deficits would be classified as noncapital
financing activities. 10
For grantor classification purposes, it is irrelevant whether the grantee uses the grant as an operating
subsidy or for capital purposes. The grantor should classify all grants, except for those addressed in
paragraph 18d, as noncapital financing activities.
9
Cash Flows from Capital and Related Financing Activities
23. Capital and related financing activities include (a) acquiring and disposing of capital
assets used in providing services or producing goods, (b) borrowing money for acquiring,
constructing, or improving capital assets and repaying the amounts borrowed, including
interest, and (c) paying for capital assets obtained from vendors on credit.
24. Cash inflows from capital and related financing activities include
a. Proceeds from issuing or refunding bonds, mortgages, notes, and other short- or
long-term borrowing clearly attributable to the acquisition, construction, or
improvement of capital assets.
b. Receipts from capital grants awarded to the governmental enterprise.
c. Receipts from contributions made by other funds, other governments, and other
organizations or individuals for the specific purpose of defraying the cost of acquiring,
constructing, or improving capital assets.
d. Receipts from sales of capital assets; also, proceeds from insurance on capital assets
that are stolen or destroyed.
e. Receipts from special assessments or property and other taxes levied specifically to
finance the construction, acquisition, or improvement of capital assets.
25. Cash outflows for capital and related financing activities include
a. Payments to acquire, construct, or improve capital assets.
b. Repayments or refundings of amounts borrowed specifically to acquire, construct, or
improve capital assets.
c. Other principal payments to vendors who have extended credit to the governmental
enterprise directly for purposes of acquiring, constructing, or improving capital assets.
d. Cash payments to lenders and other creditors for interest directly related to acquiring,
constructing, or improving capital assets.
Cash Flows from Investing Activities
26. Investing activities include making and collecting loans (except program loans, as
discussed in paragraph 19) and acquiring and disposing of debt or equity instruments.
27. Cash inflows from investing activities include
a. Receipts from collections of loans (except program loans) made by the governmental
enterprise and sales of other entities’ debt instruments (other than cash equivalents)
that were purchased by the governmental enterprise.
b. Receipts from sales of equity instruments and from returns of investment in those
instruments.
10
c. Interest and dividends received as returns on loans (except program loans), debt
instruments of other entities, equity securities, and cash management or investment
pools. 11
d. Withdrawals from investment pools that the governmental enterprise is not using as
demand accounts.
28. Cash outflows for investing activities include
a. Disbursements for loans (except program loans) made by the governmental enterprise
and payments to acquire debt instruments of other entities (other than cash
equivalents).
b. Payments to acquire equity instruments.
c. Deposits into investment pools that the governmental enterprise is not using as
demand accounts.
Distinguishing between Capital and Noncapital Financing
29. Borrowings for capital purposes generally are readily distinguishable from
borrowings for other purposes. For example, mortgages, capital improvement bonds, and
time-pay arrangements for purchasing equipment are clearly for capital purposes.
Sometimes, however, determining whether debt proceeds and repayments should be
classified as ―capital and related financing‖ or ―noncapital financing‖ may be more
difficult. In general, any debt that is clearly attributable to capital construction,
acquisition, or improvement should be considered capital debt, and the debt proceeds and
subsequent payments of principal and interest should be classified as ―capital and related
financing.‖ The following provides guidance for other situations:
a. Debt that is not clearly attributable to capital construction, acquisition, or
improvement should be considered noncapital debt, and the debt proceeds and
subsequent payments of principal and interest should be classified as noncapital
financing.
b. Principal and interest payments on debt that was issued to acquire, construct, or
improve capital assets that have been sold or otherwise disposed of should remain
classified as capital and related financing.
c. In a defeasance of debt, the proceeds of a refunding debt issue used to refund capital
debt should be reported as a cash inflow in the capital and related financing category
and the payment to defease the existing capital debt should be reported as an outflow
in that category. Similarly, subsequent principal and interest payments on the
refunding debt should also be reported as cash outflows in the capital category. If the
refunding issue is in excess of the amount needed to refund the existing capital debt,
11
Interest credited directly to a deposit account that has the general characteristics described in footnote 5 is
a cash outflow of the payor and a cash inflow to the payee when the entry is made.
11
the total proceeds and the subsequent principal and interest payments should be
allocated between the capital category and the noncapital financing category based on
the amounts used for capital and noncapital purposes.
Content and Form of a Statement of Cash Flows
30. A statement of cash flows for the period should report net cash provided or used in
each of the four categories, as well as the net effect of those flows on cash and cash
equivalents during the period in a manner that reconciles beginning and ending cash and
cash equivalents.
31. In reporting cash flows from operating activities, governmental enterprises are
encouraged to report major classes of gross cash receipts and gross cash payments and
their arithmetic sum—the net cash flow from operating activities (the direct method).
Governmental enterprises that do so should, at a minimum, separately report these classes
of operating cash receipts and payments:
a. Cash receipts from customers.
b. Cash receipts from quasi-external operating transactions with other funds.
c. Other operating cash receipts, if any.
d. Cash payments to other suppliers of goods or services.
e. Cash payments to employees for services.
f. Cash payments for quasi-external operating transactions with other funds, including
payments in lieu of taxes.
g. Other operating cash payments, if any.
Governmental enterprises are encouraged to provide further detail of operating cash
receipts and payments if the detail is considered useful.
32. Governmental enterprises that choose not to provide information about major classes
of operating cash receipts and payments by the direct method as encouraged in paragraph
31 should determine and report the same amount for net cash flow from operating
activities indirectly by adjusting operating income (or net income if operating income is
not separately identified on the operating statement) to reconcile it to net cash flow from
operating activities (the indirect or reconciliation method). This method requires adjusting
operating income to remove the effects of depreciation, amortization, and other deferrals
of past operating cash receipts and payments, such as changes during the period in
inventory, deferred revenue, and the like, and all accruals of expected future operating
12
cash receipts and payments, such as changes during the period in receivables and
payables. If the reconciliation is to net income rather than operating income, the effects of
all items whose cash effects are capital and related financing, noncapital financing, or
investing cash flows must also be removed.
33. The reconciliation of operating income (or net income if operating income is not
separately identified on the operating statement) to net cash flow from operating activities
described in paragraph 32 should be provided regardless of whether the direct or indirect
method of reporting net cash flow from operating activities is used. That reconciliation
should separately report all major classes of reconciling items. For example, at a
minimum, changes during the period in receivables pertaining to operating activities, in
inventory, and in payables pertaining to operating activities should be separately reported.
Governmental enterprises are encouraged to provide further detail of those categories if
the detail is considered useful.
34. If the direct method of reporting net cash flow from operating activities is used, the
reconciliation of operating income (or net income if operating income is not separately
identified on the operating statement) to net cash flow from operating activities should be
provided in a separate schedule. If the indirect method is used, the reconciliation should
be reported within the operating activities section of the statement of cash flows or
provided in a separate schedule. If the reconciliation is presented within the operating
activities section of the statement of cash flows, all adjustments to operating income (or
net income if operating income is not separately identified on the operating statement) to
determine net cash flow from operating activities should be clearly identified as
reconciling items. If the reconciliation is presented in a separate schedule, it may be
presented on the same page as the statement of cash flows, if space permits.
35. Except for the items described in paragraphs 13 and 14, cash inflows and outflows in
the other categories should be reported separately in a statement of cash flows--for
example, outlays for acquisitions of capital assets should be reported separately from the
proceeds from sales of capital assets, and proceeds of borrowing should be reported
separately from repayments.
13
36. On the statements of cash flows of individual funds, the gross amounts of interfund
transfers should be presented in the appropriate categories. However, interfund cash
transfers may be eliminated in the combined and combining statements of cash flows for
all proprietary funds if interfund transfers are also eliminated in the combining process for
other financial statements. 12
In addition, only one method (direct or indirect) should be
used in a combined or combining statement of cash flows.
Information about Noncash Investing, Capital, and Financing Activities
37. Information about all investing, capital, and financing activities of a governmental
enterprise during a period that affect recognized assets or liabilities but do not result in
cash receipts or cash payments in the period should be reported. This information should
be presented in a separate schedule, which may be in either a narrative or a tabular format,
and it should clearly describe the cash and noncash aspects of transactions involving
similar items. The schedule may be presented, if space permits, on the same page as the
statement of cash flows. Examples of noncash transactions are acquiring assets by
assuming directly related liabilities, such as purchasing a building by incurring a mortgage
to the seller; obtaining an asset by entering into a capital lease; and exchanging noncash
assets or liabilities for other noncash assets or liabilities. Some transactions are part cash
and part noncash; only the cash portion should be reported in the statement of cash flows.
EFFECTIVE DATE AND TRANSITION
38. The provisions of this Statement are effective for annual financial statements for
fiscal years beginning after December 15, 1989. Earlier application is encouraged.
Restatement of comparative annual financial statements for earlier years is encouraged but
not required.
The provisions of this Statement need
not be applied to immaterial items.
12
The subject of interfund eliminations is addressed in Cod. Sec. 2200.108 through .112. Each reference
notes that each of the combined or combining basic financial statements ―may contain a total column, with
or without interfund and similar eliminations.‖
14
This Statement was adopted by the affirmative votes of four members of the
Governmental Accounting Standards Board. Mr. Defliese dissented.
Although he is in general agreement with the thrust and conclusions of this
Statement, Mr. Defliese dissents because of the failure to exempt from the requirement to
present a statement of cash flows those governmental enterprises that are effectively
investment companies or similar entities and that meet the criteria specified in paragraph
14. (He notes that the FASB has wisely granted this exemption to such entities.) Instead,
the Statement requires a cash flow statement but permits the use of net purchases and sales
of highly liquid investments instead of gross amounts.
Mr. Defliese believes that cash flow statements of such operations add nothing to the
achievement of the Board’s objective to ―provide information about how the
governmental entity financed its activities and met its cash requirements‖ (GASB
Concepts Statement No. 1, Objectives of Financial Reporting). He thinks that, being
entirely liquid, such governmental enterprises need no statements beyond balance sheets
and operating statements to demonstrate liquidity, and, having no debts, they have no need
to demonstrate their ability to pay debts. Mr. Defliese believes that governmental financial
reporting presently is excessively cluttered and that he requirement to provide an
additional statement with what he considers useless net-change information (generally
available by subtraction) is disclosure overkill.
Members of the Governmental Accounting Standards Board:
James F. Antonio, Chairman
Martin Ives, Vice-Chairman
Philip L. Defliese
W. Gary Harmer
Elmer B. Staats
15
Appendix A
BASIS FOR CONCLUSIONS
Introduction
39. This appendix discusses factors considered significant by Board members in
reaching the conclusions in this Statement. Individual Board members gave greater weight
to some factors than to others.
40. An Exposure Draft (ED), Reporting Cash Flows of Proprietary and Nonexpendable
Trust Funds and Governmental Entities That Use Proprietary Fund Accounting, was
issued for public comment on November 21, 1988. Prior to issuance, advance copies of
the ED were sent to organizations (the Healthcare Financial Management Association and
the American Public Power Association) and certain individuals (including state
comptrollers with oversight over governmental enterprises in their state and CPAs
involved in governmental accounting and auditing) along with a letter asking for help in
notifying affected parties of the upcoming ED. Various organizations publicized the ED in
their newsletters. The Board received seventy-nine letters of comment in response to the
ED. Most of the respondents supported the proposal.
Relationship with FASB Statement 95
41. The release of FASB Statement 95 in November 1987 caused some people to
question whether its existence invalidated the GASB Codification reference to Opinion
19. At its January 1988 meeting, the Board discussed the applicability of FASB Statement
95 to proprietary and similar trust funds and agreed that the existing requirements to
prepare a statement of changes in financial position in accordance with Opinion 19 did not
change, even though that Opinion was superseded by FASB Statement 95 in the
private-sector accounting literature. The Board determined that if it took no action with
regard to FASB Statement 95, Opinion 19 would continue to apply to proprietary and
similar trust funds. However, the Board noted that except for the manner of reporting
noncash investing and financing activities, statements of cash flows prepared in
conformity with FASB Statement 95 were also in conformity with Opinion 19. The Board
16
encouraged preparers of state and local governmental financial statements to apply FASB
Statement 95 subject to compliance with the requirements of Opinion 19. Nevertheless,
some preparers continued to believe that proprietary funds were required to present a
statement of cash flows in accordance with FASB Statement 95 because Cod. Sec.
1300.102b states that ―the generally accepted accounting principles here [for proprietary
funds] are those applicable to similar businesses in the private sector. . . .‖
42. To avoid further confusion over the applicability of FASB Statement 95, the Board
reconsidered the need to address cash flow reporting and formally added a cash flow
reporting project to its agenda. The Board concluded that the best approach to the project
was to provide prompt, interim guidance for proprietary and similar trust funds and, after
completion of the measurement focus and basis of accounting project, to evaluate the need
for cash flow reporting by governmental funds. This evaluation will be made as part of the
overall reexamination of the governmental financial reporting model.
43. Pending further study, the Board believes it would be desirable to prescribe a cash
flow format that is appropriate for both governmental and proprietary funds. Although the
format prescribed in this Statement for proprietary funds may also be appropriate for
governmental funds, the Board notes that further study for governmental funds may
indicate that a somewhat different format may provide the optimal approach for both
governmental and proprietary funds. As a result, readers should be aware that the overall
reexamination of the governmental financial reporting model will also include a
reexamination of the requirements of this Statement.
44. In developing its statement of cash flows, the FASB pointed out that a weakness of
Opinion 19 is that it permits presentation of a statement of changes in financial position on
either a cash or a working capital basis. Paragraph 2 of FASB Statement 95 notes that
certain problems were identified in the use of Opinion 19, ―including the ambiguity of
terms such as funds, lack of comparability arising from diversity in the focus of the
statement (cash, cash and short-term investments, quick assets, or working capital) and the
resulting differences in definitions of funds flows from operating activities (cash or
working capital), differences in the format of the statement (sources and uses format or
17
activity format), variations in classifications of specific items in an activity format, and the
reporting of net changes in amounts of assets and liabilities rather than gross inflows and
outflows.‖
45. Paragraphs 45 through 50 of FASB Statement 95 set forth the reasoning underlying
the FASB’s decision to replace the statement of changes in financial position (required by
Opinion 19) with a statement of cash flows. Those paragraphs include excerpts from the
FASB concepts Statements that document the need for, and desirability of, cash flow data
and the complementary role that a statement of cash flows plays with other basic financial
statements.
46. The GASB also acknowledges the importance of cash flow reporting and refers to
cash flow information in GASB Concepts Statement 1 (Cod. Sec. 100). For example, Cod.
Sec. 100.178b states, as one of the financial reporting objectives, that ―financial reporting
should provide information about how the governmental entity financed its activities and
met its cash requirements.‖ Cod. Sec. 100.135 points out that to assess financial
condition, investors and creditors use cash flow data ―to look for trends that may indicate
strengths and weaknesses in the ability of the government to repay debt.‖
Applicability to PERS and Pension Trust Funds
47. The Board discussed whether PERS and pension trust funds should be required to
provide a statement of cash flows as a basic financial statement. Cod. Sec. Pe5.102 lists
three sources of acceptable accounting and reporting principles for PERS: NCGA
Statement 1, NCGA Statement 6, and FASB Statement 35. 13
A PERS that reports in
accordance with FASB Statement 35 is not required to include a statement of changes in
financial position as a basic financial statement, nor is it required to present a statement of
13
NCGA Statement 1, Governmental Accounting and Financial Reporting Principles (1979); NCGA
Statement 6, Pension Accounting and Financial Reporting: Public Employee Retirement Systems and State
and Local Governmental Employers (1983); FASB Statement No. 35, Accounting and Reporting by Defined
Benefit Pension Plans (1980).
18
cash flows. Research indicates that only one-half of all PERS currently prepare statements
of changes in financial position. 14
Cod. Sec. 2200.112 had required pension trust funds to
provide a statement of changes in financial position in accordance with Opinion 19.
48. The Board evaluated the pros and cons of including PERS and pension trust funds in
the scope of this Statement and concluded that they should be exempted from the
requirements of this Statement; however, a statement of cash flows may be presented if it
is believed the information provided would be useful. The Board’s decision was based, in
part, on the fact that accounting and reporting by PERS is the subject of a separate GASB
project and that including PERS in the scope of this Statement is tantamount to a
piecemeal approach to establishing financial reporting standards for PERS. The Board
questions whether the cash flow reporting format in this Statement will provide the most
useful information regarding the cash flows of a PERS. In addition, the Board does not
support the notion of requiring all PERS to provide a statement of cash flows when there
is no single set of standards for the other basic financial statements that apply to all PERS.
The decision to also exempt pension trust funds from the requirement to provide a
statement of cash flows is a practical extension of the exemption granted to PERS. For
essentially the same reasons, the Board decided to eliminate the requirement for PERS
and pension trust funds to provide a statement of changes in financial position.
Definition of Cash and Cash Equivalents
49. In its ED, the GASB used the same definition of cash equivalents as the FASB did in
Statement 95. Some respondents object to the proposed definition because it is
inconsistent with the cash management practices of their particular governmental
enterprises. These respondents suggested various alternatives, including a focus on pure
cash, cash plus cash equivalents maturing in one year, and cash plus all investments. The
14
Paul Zorn and Michael Hanus, Public Pension Accounting and Reporting: A Survey of Current Practices
(Chicago: Public Pension and Benefits Consortium, Government Finance Research Center of the
Government Finance Officers Association, 1987), p. 114.
19
FASB acknowledges in paragraph 53 of Statement 95 that the definition of cash
equivalents is based on a somewhat arbitrarily determined limit to the maturity of items
that can qualify as cash equivalents, but the three-month limit should result in treating as
cash equivalents only those items that are so near cash that it is appropriate to refer to
them as the ―equivalent‖ of cash. The Board considered the various alternatives suggested
by the respondents and concluded that they would also be arbitrary. It was not persuaded
to modify the definition of cash equivalents as provided in the ED.
Cash Management and Investment Pools
50. Some respondents suggested that deposits in a cash management or investment pool
should be considered cash equivalents rather than investments. The ED required that the
cash flows of the pools be allocated to the participants. Respondents commented that it
would be difficult to accumulate that information. In addition, they suggested that the
result would often be an arbitrary allocation that, for cash flow reporting purposes, is
relatively meaningless because cash does not necessarily flow immediately into or out of
the enterprise as a result of the pool’s activities. The Board decided that participants’
transactions with entity-wide cash management pools are similar to those with external
investment pools, such as mutual funds or money market accounts; therefore, the cash
flows should be reported as though they were external cash flows. FASB Statement 95
specifies that cash includes ―accounts that have the general characteristics of demand
deposits in that the customer may deposit additional funds at any time and also effectively
may withdraw funds at any time without prior notice or penalty‖ (footnote 1). The GASB,
after considering the issues, concluded that cash management pools that are used
essentially as demand deposit accounts should be treated the same as any other demand
deposit account. Those pools that are not used as demand deposit accounts (for example,
revenue bond reserve investment pools) should not be considered cash; therefore, transfers
into and out of them should be reported as investing activities.
Restricted Assets
51. An important characteristic, common to governmental enterprises, that is not
addressed in FASB Statement 95 is the existence of restricted asset accounts. These
20
accounts (or portions of them) may meet the definitions of cash and cash equivalents in
paragraphs 8 and 9 of this Statement. Accounting Research Bulletin (ARB) No. 43,
Restatement and Revision of Accounting Research Bulletins, defines current assets to
exclude ―cash and claims to cash which are restricted as to withdrawal or use for other
than current operations, are designated for expenditure in the acquisition or construction
of noncurrent assets, or are segregated for the liquidation of long-term debts‖ (Chapter
3A, paragraph 6; footnote reference omitted). Some believe that it follows that items not
qualifying as current assets likewise should not be considered cash or cash equivalents for
purposes of a statement of cash flows. The Board believes, however, that the guidance in
ARB 43 is intended to apply only to the manner of presentation in a classified balance
sheet and is not intended to be a factor in determining what should be included in the
definition of cash and cash equivalents. Also, the Board believes that separately
identifying the flows of restricted cash as separate line items within the statement of cash
flows may be informative but should not be required.
52. The Board believes that restricted cash and cash equivalents should be included with
unrestricted cash and cash equivalents for cash flow reporting purposes. The only
exception is one that applies equally to restricted and unrestricted cash equivalents.
Subject to the provisions of paragraph 11, governmental enterprises may choose to treat
their restricted cash equivalents or unrestricted cash equivalents as investments. However,
if they do so, they must disclose in the notes their policy for defining cash equivalents.
Categories for Classifying Cash Receipts and Payments
53. Despite the acknowledged usefulness of cash flow reporting for both business and
governmental enterprises and the numerous other similarities between some governmental
enterprises and their private-sector counterparts, there are differences that many believe
cause the categories provided in FASB Statement 95 to be less than optimal for
governmental enterprises. Perhaps the most obvious difference is the absence of
transactions with ―owners‖ in governmental enterprises. Governmental enterprises do not
sell stock, pay dividends, or engage in other transactions with owners; consequently, the
significance of the ―financing‖ category as defined in FASB Statement 95 is diminished.
The absence of ownership interests and infusion of owners’ capital, however, does not
21
mean that governmental enterprises do not engage in financing activities. On the contrary,
governmental enterprises can obtain ―financing‖ from a wide variety of sources, and cash
flow information about the sources and uses of financing is needed.
54. Many governmental enterprise funds and public authorities finance their operations
and manage their cash flow activities in a manner that makes a clear distinction between
―operating‖ and ―capital.‖ Capital budgeting and long-range capital planning are
common, and may even be required by law in some jurisdictions. Information about the
cash inflows and outflows of a capital program is useful for identifying the level of capital
spending and the nature and adequacy of the sources of funding for the projects.
Therefore, the Board believes an additional category for ―capital and related financing‖
activities will provide useful information about the capital activities of governmental
enterprises.
55. Funding for governmental capital improvements comes from a wide range of
sources, many of which are not available to private-sector enterprises. For example, a
typical water and sewer enterprise may obtain cash to finance capital improvements from
capital improvement bonds secured by the revenues of the enterprise, capital improvement
general obligation bonds secured by the general taxing power of the related government,
special assessments levied against specific property owners, ad valorum taxes arising from
the creation of a special taxing district, capital contributed from other funds of the
government, contributions-in-aid of construction from property owners and developers,
loans from other funds of the government, and capital grants awarded by the federal or a
state government.
56. In creating the capital category, the Board is also attempting to provide categories
and a format that may be appropriate for reporting the cash flows of governmental funds.
The coexistence of different measurement focuses for governmental and proprietary fund
types may present conflicts in categorizing certain cash transactions common to both fund
types using the three categories in FASB Statement 95: Capital outlay might be an
investing transaction for proprietary funds in the FASB format and an operating activity in
the governmental funds; debt service principal payments might be a financing activity in
22
proprietary funds in the FASB format and an operating activity in governmental funds.
The availability of the capital and related financing category helps resolve these conflicts
so that, if appropriate, a single cash flow format eventually can be developed for all fund
types of a governmental entity.
57. Creating the capital and related financing category, of course, results in changes to
the contents of the three categories established by FASB Statement 95. Specifically, it
results in these modifications:
a. Construction and acquisition of capital assets are not classified as investing as
specified in FASB Statement 95; instead, they are major elements in the capital and
related financing category.
b. The financing category in FASB Statement 95 includes cash inflows and outflows
related to both capital and noncapital borrowing. Capital borrowing activity is another
major element of the capital and related financing category.
c. To show the complete picture of all cash inflows and outflows from financing,
acquiring, and disposing of capital assets, it is necessary to include interest payments
in this category rather than in the operating category.
d. Similarly, interest on noncapital debt is classified as noncapital financing so that it is
treated consistently with capital interest and gives a more complete picture of all
inflows and outflows arising from noncapital debt transactions.
e. The nature of investing activity in the governmental environment is focused on the
acquisition and disposition of debt and equity instruments of other entities rather than
on the investment of ownership capital in capital assets. Therefore, it is more useful to
reclassify investment earnings (interest and dividends) as inflows from investing
rather than from operating activities. This presents a clearer picture of all the cash
flows from investing activities and is consistent with the reclassification of interest
expense discussed earlier.
Operating Activities
58. As indicated in the standards section of this Statement, the Board decided to classify
interest payments as either capital or noncapital financing activity outflows, interest
receipts as investing activity inflows, and subsidies received to finance operating deficits
as noncapital financing activity inflows. In operating statements that distinguish between
operating and nonoperating revenue/expense, these items are generally classified as
nonoperating items. Therefore, the Board concluded that the items classified as operating
activities would generally represent the cash effects of transactions affecting operating
income when operating statements have an ―operating income‖ classification (operating
revenues less operating expenses). Although the term operating income is not defined in
23
authoritative governmental accounting literature, there are nonauthoritative references to it
in the GASB Codification (see Cod. Sec. 2200.606, example 4), and its use has evolved in
practice.
59. Because operating income is not authoritatively defined, there is no assurance that
its usage is standardized. Some governmental enterprises may not distinguish between
operating income and nonoperating income on their operating statements, and others may
use it to refer to something other than what is commonly thought of as operating income.
For example, some enterprises may include interest income in operating income rather
than nonoperating income, which is contrary to the Codification illustration of operating
income. Regardless of what an enterprise includes in operating income, cash flows
identified as belonging in one of the three other categories should not be included in the
operating activities category. Therefore, even if an enterprise includes interest income in
operating income, the cash flows generated from the interest income should be included in
the investing activities category and not in operating activities, except that interest from
program loans should be classified as operating activities (paragraph 19). (If interest is
included in the enterprise’s calculation of operating income, the reconciliation of
operating income to net cash flow from operating activities would show interest as a
reconciling item.) Even if operating income is not designated on the operating statement,
the definitions of the categories still apply. All cash flows not falling into the capital and
related financing category, noncapital financing category, or investing activities category
should be classified as operating activities.
60. In the ED, the Board had expanded the operating activities category to include
certain activities that would otherwise be included in one of the three other categories.
That expansion of the operating activities category occurred when the activity (financing
or investing) was the primary operating activity of the governmental enterprise. Some
respondents disagreed with that proposal and were concerned that it would be difficult to
identify when it should be applied. The Board reevaluated the provision and decided to
limit it specifically to the cash flow reporting of certain loan activities of state and local
governments, for example, student loan programs and low-interest mortgage programs.
According to the general definition of the investment activities category, these loans
24
would be considered investments. The Board concluded that these loans, however, are not
investments in the ordinary sense of the term because they are made not for purposes of
earning income or profits, but rather in fulfillment of governmental social programs. An
example of a student loan program’s transactions is provided to illustrate the classification
of its cash flows.
Cash Flow Category
Proceeds from financing to start up loan program Noncapital financing
Disbursement of loan funds to students Operating activities
Routine operating expenses Operating activities
Collection of loans (principal and interest) Operating activities
Debt service payments (principal and interest) Noncapital financing
61. The Board considered comments received from some respondents regarding
―program‖ grants. The ED did not distinguish between grants intended as operating
subsidies (to finance general operating deficits) and grants provided to finance specific
programs or to purchase specific services. Some respondents noted that some
governmental enterprises undertake a particular activity or ―program‖ solely because
another government or organization has agreed to reimburse the costs, and the activity is
inherently part of the operations of the grantor. The substance of the arrangement is a
purchase of services. It would be misleading to report the revenues as noncapital financing
activities—as if they were a general operating subsidy—on the statement of cash flows of
the grantee. As a result, the Board decided to require ―program‖ grant cash inflows and
outflows to be classified as operating activities.
62. The Board reevaluated its ED proposal to require governmental enterprises to
identify whether amounts they transferred to other funds or granted to other governments
or organizations were used for capital purposes. Some respondents commented that this
determination might be difficult to make; in addition, the distinction is irrelevant to the
grantor because any capital item acquired, constructed, or improved would not be
capitalized by the grantor. The GASB decided to require that all cash outflows for grants
and transfers be classified as noncapital financing activities, except for program grants,
discussed in the previous paragraph.
25
Capital and Related Financing Activities
63. Some respondents commented that it may be difficult to determine which activities
qualify as ―capital.‖ Although the Board reiterated its position that any cash flow that is
clearly attributable to a capital asset is a capital and related financing activity and any cash
flow that is not clearly attributable to a capital asset is not, the comments raised a related
question--What is a capital asset? The Board decided that the determination of what is
capitalizable is an accounting issue. The reporting of cash flow information is intended to
complement the reporting of other accounting-generated financial information and is not
intended to mirror the other financial statements. However, in making a capital/noncapital
determination, it is appropriate to be guided by the accounting treatment. For cash flow
reporting purposes, both tangible and intangible assets that are capitalized for accounting
purposes should be considered capital items; for example, if capital improvements, water
rights, or assets acquired subject to a capital lease are capitalized for accounting purposes,
the related cash flows should be classified as capital and related financing activities.
Investing Activities
64. As stated in paragraph 60, program loans should be classified as operating activities
rather than investing activities. All other loan activities should be considered investing
activities for cash flow reporting purposes.
65. In the ED, investment activities that occurred as a result of temporary investment of
capital debt proceeds were required to be classified as capital and related financing
activities. The Board’s decision was influenced by the accounting treatment of interest
required by FASB Statement No. 62, Capitalization of Interest Cost in Situations
Involving Certain Tax-Exempt Borrowings and Certain Gifts and Grants. Some
respondents pointed out potential difficulties associated with this treatment. Examples
include classifying debt proceeds that are used to fund bond reserves and changing the
classification of certain investments that might still exist at the time the capital asset is
ready for its intended use. (The Board’s original proposal would have required some type
of allocation.) After weighing the costs and the benefits of the proposal, the Board
decided to delete the provision and to require that all cash flows resulting from temporary
investment of capital bond proceeds be classified as investing activities.
26
Reconciliation of Net Cash Flow from Operating Activities
66. As stated in paragraph 58, the Board believes the reconciliation of net cash flow
from operating activities is simpler and more useful if it is a reconciliation to operating
income (loss) rather than to net income (loss) for the year; however, it realizes that,
because operating income is not authoritatively defined, governmental enterprises may not
use the designation on their operating statements. Therefore, the reconciliation may be to
net income (loss) instead. A reconciliation to operating income would be superior to a
reconciliation to net income because the operating statements of governmental enterprises
often include items that are categorized as ―nonoperating‖ revenue (expense) or are
reported as other changes in fund equity. Interest income, interest expense, gain or loss on
sales of capital assets, grants to or from other governments, operating transfers to or from
other funds, and residual equity transfers are examples of transactions that are reported in
this manner. Furthermore, most of these kinds of transactions are classified in the
statement of cash flows in categories other than operating activities. The Board believes
that net cash provided by operating activities in governmental enterprises articulates better
with the operating income (loss) than with the net income (loss) for the year and that a
reconciliation based on that relationship is easier to understand and generally will include
fewer reconciling items.
67. In the ED, the requirement for the location of the reconciliation of net cash flow
from operations to operating income (or net income) depended on whether the direct or
the indirect method had been used. If the direct method had been used, the reconciliation
was required to be presented either in a separate schedule or in the notes to the financial
statements. If the indirect method had been used, the reconciliation was required either to
be presented within the statement of cash flows or to be provided in a separate schedule. It
could not be presented in the notes because the reconciliation is, essentially, the indirect
method and therefore a significant part of the statement itself. After considering
respondents’ comments, the Board decided to eliminate the option of presenting the
reconciliation in the notes to the financial statements even when the direct method is used.
27
Location of Noncash Information
68. The ED allowed noncash investing, capital, and financing activities to be disclosed
either in narrative or in tabular form and to be presented in a schedule or in the notes to
the financial statements. The Board agreed with respondents’ comments that the
information was too important to be separated from the statement of cash flows. The
Board therefore eliminated the option to present the information in the notes to the
financial statements.
Amendments to FASB Statement 95
69. In February 1989, the FASB issued Statement No. 102, Statement of Cash
Flows—Exemption of Certain Enterprises and Classification of Cash Flows from Certain
Securities Acquired for Resale. The GASB adapted the Statement to the governmental
environment, where applicable.
70. The first issue addressed in FASB Statement 102 is an exemption of defined benefit
pension plans and certain other employee benefit plans from the requirement to present a
statement of cash flows. The GASB had addressed this issue in its ED and similarly
exempted PERS and pension trust funds.
71. FASB Statement 102 also exempts certain highly liquid investment companies and
certain other enterprises from the requirement to present a statement of cash flows. In
order for investment companies to be exempt, they must be subject to the registration and
regulatory requirements of the Investment Company Act of 1940 and they must meet four
discriminating criteria: (a) substantially all investments must be highly liquid, (b)
substantially all investments must be carried at market value, (c) the enterprise must have
little or no debt, and (d) a statement of changes in net assets must be provided. In addition,
FASB Statement 102 exempts investment enterprises that are essentially the same as the
previously mentioned companies except that they are not subject to the Investment
Company Act of 1940, as long as they meet the four criteria. The GASB studied the issues
to determine whether these exempted organizations have governmental counterparts. The
GASB determined that one possible governmental equivalent is an investment pool. Many
28
governmental investment pools, however, are accounted for as agency funds rather than
proprietary or nonexpendable trust funds; therefore, this Statement would not apply to
them. Any governmental investment pools that are accounted for as proprietary or
nonexpendable trust funds would be within the scope of this Statement and should present
a statement of cash flows as required by this Statement. Alternatively, there are other
governmental investment pools that are organized as private-sector investment companies
and report in a manner similar to investment companies. These pools, which look to the
AICPA Audit and Accounting Guide, Audits of Investment Companies, for accounting and
reporting guidance, should be guided by FASB Statements 95 and 102.
72. The FASB’s exemption from the requirement to present a statement of cash flows
also extends to common trust funds, variable annuity accounts, or similar funds
maintained by a bank, insurance company, or other enterprise in its capacity as a trustee,
administrator, or guardian for the collective investment and reinvestment of monies, but
only if the previously mentioned four conditions are met. After studying the issues, the
GASB concluded that certain governmental enterprises would, in many respects, meet the
description of a common trust fund qualifying for exemption under FASB Statement 102.
In fact, one respondent sought an exemption for its nonexpendable trust fund and referred
to FASB Statement 102 as justification. Although certain governmental enterprises are
similar to the enterprises exempted by FASB Statement 102, they generally do not provide
a statement of changes in net assets as required by the AICPA Guide on audits of
investment companies. FASB Statement 102 states that ―although the purpose and format
of a statement of changes in net assets are different from those of a statement of cash
flows, much of the information contained in those statements is similar‖ (paragraph 21).
Rather than allow certain proprietary and nonexpendable trust funds to adopt a separate
basic financial statement (statement of changes in net assets), the GASB decided (see
paragraph 14) to allow those governmental enterprises to net the purchase and sale activity
of their highly liquid investments. The GASB believes the information provided net in a
statement of cash flows is more useful than the information that would be provided in a
statement of changes in net assets adapted to the governmental environment.
29
73. FASB Statement 102 also addresses the classification of cash flows associated with
securities and other assets in trading accounts and certain loans originated or purchased
specifically for resale. The FASB concluded that these assets are similar to inventory in
that they generally are acquired for resale and are turned over very rapidly; therefore, the
related cash flows should be classified as operating activities. The GASB is aware of no
precise counterpart in government; consequently, no similar provision was made.
However, a related issue is addressed by the Board in this Statement. Paragraph 19
provides for classifying certain program loan activities as operating activities when the
program is a fulfillment of a governmental function and is the ―operation‖ of the
governmental enterprise.
Other Provisions of FASB Statement 95
74. Except for the modifications to the categories in FASB Statement 95 (including the
expansion of the categories from three to four and the related redefinition of the
categories) and the change in the focus of the reconciliation of net cash flow from
operating activities, all other applicable provisions of FASB Statement 95 are present in
this Statement. For example, the focus on cash and cash equivalents and the definitions of
those terms, the general requirement to report gross amounts of cash receipts and
payments rather than net amounts, the optional use of the indirect method to report net
cash flow from operations, and the required disclosure of noncash investing, financing,
and capital transactions are all incorporated in this Statement. To reduce the potential for
other departures from FASB Statement 95, which might result from interpretation, the
Board decided that, generally, the language in FASB Statement 95 should be repeated,
where appropriate, in this Statement. As a result, the requirements and language in this
Statement closely follow, and sometimes are identical to, the requirements and language
in FASB Statement 95. However, in some instances, the FASB addresses cash flow issues
(in FASB Statement 95 and subsequent amendments) that are largely irrelevant to
governmental enterprises, and the GASB does not deal with them in this Statement.
Certain governmental enterprises may need guidance in these few areas (for example,
foreign currency cash flows) and may look to FASB Statement 95 and its amendments.
30
Appendix B
ILLUSTRATIVE STATEMENT OF CASH FLOWS
75. This appendix provides sample financial statements to illustrate the preparation of a
statement of cash flows for a hypothetical water and sewer enterprise fund. The
illustrative statement of cash flows and supplemental information are prepared using the
direct method and reconciling to operating income rather than net income. The indirect
method could be illustrated by either substituting the data in the ―Reconciliation of
operating income to net cash provided by operating activities‖ for the data in the ―Cash
flows from operating activities‖ section of the statement of cash flows or by presenting
―Net cash provided by operating activities‖ as a single line on the statement of cash flows
and the detail (the reconciliation) as a separate schedule. Also included in this appendix
are a comparative balance sheet for the water and sewer fund; a statement of revenues,
expenses, and changes in retained earnings; and two paragraphs with explanatory details
coded for easy reference. The changes in the balance sheet amounts for the year are
explained and coded 15
in paragraph 76 to provide a crosswalk to the statement of cash
flows. Paragraph 77 reconciles certain operating statement amounts with corresponding
amounts in the statement of cash flows. These illustrative statements are intended as
examples only and may provide more or less detail than is most useful for a particular
governmental enterprise.
15
The letters (A–N) correspond to the coding on the statement of cash flows and the reconciliation of
operating income to net cash provided by operating activities; the numbers (1–14) correspond to the coding
on the balance sheets.
31
Water and Sewer Fund
Statement of Cash Flows for the Year Ended June 30, 19X2
Increase (Decrease) in Cash and Cash Equivalents
Cash flows from operating activities:
Cash received from customers $912,000
Cash payments to suppliers for goods and services (450,000)
Cash payments to employees for services (300,575)
Payment in lieu of taxes (50,000)
Other operating revenues 15,075
Net cash provided by operating activities $126,500
Cash flows from noncapital financing activities:
Net borrowings (repayments) under revolving
loan arrangement $(20,000)J
Interest paid on revolving loan (1,500)I
Operating grants received 100,000
Operating transfers-out to other funds (75,000)
Net cash provided by noncapital financing
activities 3,500
Cash flows from capital and related financing activities:
Proceeds from sale of revenue bonds $250,000 L
Acquisition and construction of capital assets (350,000)F
Principal paid on revenue bond maturities
and equipment contracts (75,000)K,M
Interest paid on revenue bonds and
equipment contracts (33,500)H
Proceeds from sale of equipment 10,000
Capital contributed by subdividers 60,000 N
Net cash used for capital and related financing
activities (138,500)
Cash flows from investing activities:
Purchase of investment securities $(125,000)C
Proceeds from sale and maturities of
investment securities 75,000 D
Interest and dividends on investments 9,000 E
Net cash used in investing activities (41,000)
Net decrease in cash and cash equivalents (49,500)
Cash and cash equivalents at beginning of year 175,600
Cash and cash equivalents at end of year $126,100
32
Reconciliation of operating income to net cash provided by operating activities:
Operating income (loss) $(110,500)
Adjustments to reconcile operating income to
net cash provided by operating activities:
Depreciation $245,000
Provision for uncollectible accounts 2,000 B
Change in assets and liabilities:
Increase in accounts receivable (15,000)A
Decrease in inventory 2,000
Decrease in prepaid expenses 500
Increase in accounts payable 2,500
Total adjustments 237,000
Net cash provided by operating activities $ 126,500
Noncash investing, capital, and financing activities:
Shortly before the balance sheet date, the Water and Sewer Fund entered into a
time-pay agreement to purchase office equipment costing $7,500. There was no down
payment and no monthly installments were made before year-end.
Disclosure of accounting policy:
For purposes of the statement of cash flows, the Water and Sewer Fund considers all
highly liquid investments (including restricted assets) with a maturity of three months or
less when purchased to be cash equivalents. (Note: This disclosure should be included in
the summary of significant accounting policies.)
33
Water and Sewer Fund
Balance Sheets
6/30/X2 6/30/X1 Change Assets:
Cash and cash equivalents $ 125,100 $ 173,100 $(48,000)1
Customer accounts receivable (net of
allowance for uncollectibles of
$7,500 and $5,500) 96,500 83,500 13,0002
Inventory 46,000 48,000 (2,000)3
Prepaid expenses 600 1,100 (500)3
Restricted assets:
Cash and cash equivalents 1,000 2,500 (1,500)1
Investments 110,000 60,000 50,0004
Interest receivable 1,000 1,500 (500)5
Property, plant, and equipment, at cost 7,066,200 6,714,200 352,0006
Accumulated depreciation (3,238,000) (2,995,000) (243,000)7
Property, plant, and equipment, net 3,828,200 3,719,200 109,000
Total assets $4,208,400 $4,088,900 $119,500
Liabilities:
Accounts payable and accrued expenses $ 68,000 $ 65,500 $ 2,5003
Accrued interest payable 1,250 750 5008
Revolving loan 3,000 23,000 (20,000)9
Equipment contracts payable 7,500 10,000 (2,500)10
Revenue bonds 575,000 390,000 185,00011
Total liabilities $ 654,750 $ 489,250 $ 165,500
Fund equity:
Contributed capital $1,795,000 $1,915,000 $(120,000)12
Reserved retained earnings 112,000 64,000 48,00013
Unreserved retained earnings 1,646,650 1,620,650 26,00014
Total fund equity $3,553,650 $3,599,650 $(46,000)
Total liabilities and fund equity $4,208,400 $4,088,900 $119,500
34
Water and Sewer Fund
Statement of Revenues, Expenses, and Changes
in Retained Earnings
for the Year Ended June 30, 19X2
Operating revenues:
Water sales $695,250
Sewer charges 231,750
Other operating revenues 15,075
Total operating revenues $ 942,075
Operating expenses:
Costs of sales and services $507,300
Administration 250,275
Payment in lieu of taxes 50,000
Depreciation 245,000
Total operating expenses 1,052,575
Operating income (loss) $ (110,500)
Nonoperating revenues (expenses):
Interest income $ 6,500
Interest expense (28,000)
Gain on sale of equipment 1,000
Operating grants 100,000
Net nonoperating revenues (expenses) 79,500
Net income (loss) before operating transfer (31,000)
Transfers to other funds (75,000)
Net income (loss) for the year (106,000)
Add back depreciation on assets acquired
with capital grants 180,000
Increase in retained earnings 74,000
Retained earnings—beginning of year 1,684,650
Retained earnings—end of year $1,758,650
76. The following information provides the details to the changes in the balance sheet
amounts. The letters (A–N) correspond to the coding on the statement of cash flows and
the reconciliation of operating income to net cash provided by operating activities; the
numbers (1–14) correspond to the coding on the balance sheets.
35
1. Net changes in cash and cash
equivalents
2. Increase in customer receivables $15,000 A
Increase in allowance for
uncollectibles (2,000)B
$13,000
3. Simple increase (decrease)—traces
directly to the reconciliation of
operating income to net cash
provided by operating activities
4. Purchase of investments $125,000C
Sales and maturities (75,000)D
$ 50,000
5. Interest earned $ 8,500 ($6,500 revenue,
$2,000 capitalized)
Interest received (9,000)E
$ 500
6. Acquisition and construction $357,500 ($350,000 cash paid,F
$7,500 time-pay)
Cost of equipment sold (11,000)
Net construction period interest:
Expense $ 7,500
Income (2,000) 5,500
$352,000
7. Depreciation expense $245,000G
Accumulated depreciation on equipment sold (2,000)
$243,000
8. Interest accrued $ 35,500 ($28,000 expense,
$7,500 capitalized)
Interest paid (35,000) ($33,500H capital,
$1,500I noncapital)
$ 500
9. Short-term borrowing $ 5,000
Repayments (25,000)
$20,000J (qualifies for ―net‖
reporting)
36
10. New contracts $ 7,500
Installments on old contracts (10,000)K
$ (2,500)
11. New bonds sold $250,000L
Principal payments made (65,000)M
$185,000
12. Subdivider contribution received $ 60,000N
Depreciation of assets bought
with contributed capital (180,000)
$(120,000)
13. Decrease in restricted cash
and cash equivalents $ (1,500)
Increase in restricted investments 50,000
Decrease in restricted interest
receivable (500)
Net increase in restricted assets $ 48,000
14. Net loss for the year $(106,000)
Depreciation expense charged
against contributed capital 180,000
Net increase in reserves (48,000)
$ 26,000
37
77. The following information is provided as a reconciliation between certain amounts
reported in the statement of cash flows and the amounts in the statement of revenues,
expenses, and changes in retained earnings:
Water sales $695,250
Sewer charges 231,750
Plus beginning receivables 89,000
Less ending receivables (104,000)
Cash received from customers $912,000
Cost of sales and services $507,300
Administration 250,275
Plus:
Allowance for uncollectibles, 6/30/X1 5,500
Inventory, 6/30/X2 46,000
Prepaids, 6/30/X2 600
Accounts payable, 6/30/X1 65,500
Less:
Allowance for uncollectibles, 6/30/X2 (7,500)
Inventory, 6/30/X1 (48,000)
Prepaids, 6/30/X1 (1,100)
Accounts payable, 6/30/X2 (68,000)
Cash paid to suppliers and employees 750,575
Less cash paid to employees (300,575)
Cash paid to suppliers $450,000
Proceeds from sale of equipment $ 10,000
Cost of equipment sold (11,000)
Accumulated depreciation on equipment sold 2,000
Net gain on sale $ 1,000
38
Appendix C
CODIFICATION INSTRUCTIONS
78. The sections that follow update the June 15, 1987 Codification of Governmental
Accounting and Financial Reporting Standards for the effects of this Statement. Only the
paragraph number of this Statement is listed if the paragraph will be cited in full in the
Codification.
* * *
SUMMARY STATEMENT OF PRINCIPLES SECTION 1100
Sources: [Add the following:] GASB Statement 9
.112
c. [Revise parenthetical phrase as follows:] (and cash flows of proprietary fund types and
nonexpendable trust funds)
e. [Revise parenthetical phrase as follows:] (and cash flows of proprietary fund types and
nonexpendable trust funds) [NCGAS 1, pp. 2–4, as amended by GASBS 6, ¶13 and
¶15; NCGAS 7, ¶7, ¶8, and ¶25; GASBS 5, ¶7; GASBS 6, ¶17; and GASBS 9, ¶6]
* * *
FINANCIAL REPORTING SECTION 1900
Sources: [Add the following:] GASB Statement 9
Statement of Principle
Interim and Annual Financial Reporting
[Revise general principle as follows:]
c. [Revise parenthetical phrase as follows:] (and cash flows of proprietary
fund types and nonexpendable trust funds)
e. [Revise parenthetical phrase as follows:] (and cash flows of proprietary
fund types and nonexpendable trust funds) [NCGAS 1, ¶128; NCGAS 7,
¶7, ¶8, and ¶25; GASBS 5, ¶7; and GASBS 9, ¶6]
39
.113b(2)(e) [Revise as follows:] Combined Statement of Cash Flows—All Proprietary
Fund Types and Nonexpendable Trust Funds [NCGAS 1, ¶139, as amended by NCGAS
7; GASBS 5, ¶7; and GASBS 9, ¶6]
* * *
COMPREHENSIVE ANNUAL FINANCIAL REPORT SECTION 2200
Sources: [Add the following:] GASB Statement 9
Statement of Principle
Annual Financial Reporting
[Revise general principle as follows:]
b. [Revise parenthetical phrase as follows:] (and cash flows of proprietary
fund types and nonexpendable trust funds) [NCGAS 7, ¶7 and ¶8; GASBS
5, ¶7; and GASBS 9, ¶6]
.105b(2)(e) [Revise as follows:] Combined Statement of Cash Flows—All Proprietary
Fund Types and Nonexpendable Trust Funds [NCGAS 1, ¶139; NCGAS 7, ¶15; GASBS
5, ¶7; and GASBS 9, ¶6]
.106b(2) [Revise items (b), (d), and (e) as follows:]
(b) A Combined Statement of Cash Flows—All Proprietary Fund Types (See
Section 2450, ―Cash Flows Statements.‖)
(d) Combining statements of proprietary fund cash flows
(e) Individual statements of revenues, expenses, and changes in retained
earnings (or equity) and of cash flows for each proprietary fund
type—where necessary to present fund operating results and cash
flows—and schedules necessary to demonstrate compliance with
finance-related legal and contractual provisions [NCGAS 1, ¶143 and
GASBS 9, ¶6]
.106b(3)(a) [Add the following at the end of the subsection:] , except that pension trust
funds are not required to present a statement of cash flows [NCGAS 1, ¶143 and GASBS
9, ¶6]
.112 [Revise paragraph as follows (deleting footnote 6):] ―Statements of Cash Flows.‖
Statements of cash flows are required to be presented for proprietary fund types,
40
nonexpendable trust funds, and governmental entities that use proprietary fund
accounting. As described above for the other statements at the GPFS (Combined
Statements—Overview) level, the Combined Statement of Cash Flows—All Proprietary
Fund Types and Nonexpendable Trust Funds should present the separate data for each
major fund type in a columnar format and may contain a total column, with or without
interfund eliminations. Total columns of combining statements of cash flows by fund type
should agree with the column for that fund type in the Combined Statement of Cash
Flows—All Proprietary Fund Types and Nonexpendable Trust Funds. Any interfund and
similar eliminations made should be consistent with eliminations made in the other
financial statements and should be apparent from the headings or disclosed in the notes to
the financial statements. [NCGAS 1, ¶156 and GASBS 9, ¶6 and ¶36]
.129e [Revise as follows:] Combined Statement of Cash Flows—All Proprietary Fund
Types and Nonexpendable Trust Funds (See Section 2450.) [NCGAS 1, ¶167; SOP 80-2,
¶4; GASBS 5, ¶7; and GASBS 9, ¶6]
Nonauthoritative Discussion
[Revise paragraph .607 and related heading as follows:]
Combined Statement of Cash Flows—All Proprietary Fund Types and
Nonexpendable Trust Funds
.607 Section 2450 provides an example of a statement of cash flows for proprietary fund
types and nonexpendable trust funds. [Delete example.]
* * *
NOTES TO FINANCIAL STATEMENTS SECTION 2300
Sources: [Add the following:] GASB Statement 9
.102 [Revise as follows:] Section 2200, ―Comprehensive Annual Financial Report,‖
requires the presentation, within ―liftable‖ GPFS, of notes to the financial statements that
are essential to present fairly the financial position of the fund types and account groups,
41
the results of operations by fund type, and the cash flows of proprietary fund types and
nonexpendable trust funds. [NCGAI 6, ¶2 and GASBS 9, ¶6]
.104a [Add item (6) as follows:]
(6) Definition of cash and cash equivalents used in the statement of cash flows
for proprietary fund types and nonexpendable trust funds (See Section 2450,
―Cash Flows Statements,‖ paragraph .106.)
* * *
[Add a new section as follows:]
CASH FLOWS STATEMENTS SECTION 2450
Source: GASB Statement 9
Scope of This Section
.101 This section establishes standards for reporting cash flows of proprietary and
nonexpendable trust funds and governmental entities that use proprietary fund
accounting, 1
including public benefit corporations and authorities, governmental utilities,
and governmental hospitals. [GASBS 9, ¶1 and ¶8]
Applicability of This Section
.102 The provisions of this section are applicable to proprietary funds, nonexpendable
trust funds, and governmental entities that use proprietary fund accounting, 2
including
public benefit corporations and authorities, governmental utilities, and governmental
hospitals. Some governmental colleges and universities report their transactions and
balances within the governmental model using National Council on Governmental
Accounting (NCGA) Statement 1, Governmental Accounting and Financial Reporting
Principles. This section applies to the proprietary and nonexpendable trust funds of those
governmental colleges and universities. However, this section is not required to be applied
to those governmental colleges and universities that follow the specialized industry
1
[GASBS 9, fn1] 2
[GASBS 9, fn3] [Change ―Statement‖ to ―section.‖]
42
accounting and reporting principles contained in the American Institute of Certified Public
Accountants (AICPA) Industry Audit Guide, Audits of Colleges and Universities.
[GASBS 9, ¶5 and fn4]
Financial Reporting of Cash Flows
.103 [GASBS 9, ¶6]
Purpose of a Statement of Cash Flows
.104 [GASBS 9, ¶7]
Focus on Cash and Cash Equivalents
.105–.108 [GASBS 9, ¶8–¶11] [Change ―Statement‖ to ―section,‖ footnote numbers, and
cross-references as appropriate.]
Gross and Net Cash Flows
.109–.111 [GASBS 9, ¶12–¶14] [Change footnote number and cross-references as
appropriate.]
Classification of Cash Receipts and Cash Payments
.112–.125 [GASBS 9, ¶15–¶28] [Change footnote numbers and cross-references as
appropriate.]
Distinguishing between Capital and Noncapital Financing
.126 [GASBS 9, ¶29]
Content and Form of a Statement of Cash Flows
.127–.133 [GASBS 9, ¶30–¶36] [Change cross-references as appropriate.]
Information about Noncash Investing, Capital, and Financing Activities
.134 [GASBS 9, ¶37]
43
Nonauthoritative Discussion
.601 [GASBS 9, Appendix B] [Change ―Statement‖ to ―section,‖ footnote numbers, and
cross-references as appropriate.]
* * *
SEGMENT INFORMATION FOR ENTERPRISE FUNDS SECTION 2500
Sources: [Add the following:] GASB Statement 9
.108 [Revise the second sentence as follows:] Segment information may also be reported
by (a) including individual enterprise fund statements as columns on the Combined
Statement of Revenues, Expenses, and Changes in Retained Earnings (or Equity)—All
Proprietary Fund Types and the Combined Statement of Cash Flows—All Proprietary
Fund Types and Nonexpendable Trust Funds or (b) including the combining enterprise
fund statement of revenues, expenses, and changes in retained earnings (or equity) and the
combining enterprise fund statements of cash flows as part of the GPFS. [NCGAI 2, ¶8
and GASBS 9, ¶6]
* * *
REPORTING ENTITY AND COMPONENT UNIT SECTION 2600
PRESENTATION AND DISCLOSURE
Sources: [Add the following:] GASB Statement 9
Statement of Principle
Reporting Entity and Component Unit Presentations
[Revise the general principle as follows:]
b. [Revise parenthetical phrase as follows:] (and cash flows of proprietary
fund types and nonexpendable trust funds)
d. [Revise parenthetical phrase as follows:] (and cash flows of proprietary
fund types and nonexpendable trust funds) [NCGAS 1, ¶128; NCGAS 7,
¶7 and ¶8; GASBS 5, ¶7; and GASBS 9, ¶6]
44
.118b [Revise parenthetical phrase as follows:] (and cash flows of proprietary fund types
and nonexpendable trust funds) [NCGAS 7, ¶25; GASBS 5, ¶7; and GASBS 9, ¶6]
* * *
COLLEGES AND UNIVERSITIES SECTION Co5
Sources: [Add the following:] GASB Statement 9
.101 [Add the following to the beginning of the list in the paragraph:]
2450, ―Cash Flows Statements‖1 [GASBS 2 through 9 and GASBI 1]
_________________________ 1
This section applies to the proprietary and nonexpendable trust funds of those governmental colleges and
universities that report their transactions and balances within the governmental model using National
Council on Governmental Accounting (NCGA) Statement 1, Governmental Accounting and Financial
Reporting Principles. However, this Statement is not required to be applied to those governmental colleges
and universities that follow the specialized industry accounting and reporting principles contained in the
American Institute of Certified Public Accountants (AICPA) Industry Audit Guide, Audits of Colleges and
Universities. [GASBS 9, fn4]
* * *
HOSPITALS SECTION Ho5
Sources: [Add the following:] GASB Statement 9
.102 [Add the following to the beginning of the list in the paragraph:]
2450, ―Cash Flows Statements‖ [GASBS 2 through 9 and GASBI 1]
* * *
PENSION FUNDS—ACCOUNTING SECTION Pe5
Sources: [Add the following:] GASB Statement 9
.107 [Revise paragraph as follows:] PERS annual financial statements should contain (a)
a balance sheet showing total assets, liabilities, and the total actuarial present value of
credited projected benefits, (b) a statement of revenues, expenses, and changes in fund
balance, and (c) disclosures in accordance with Section Pe6. PERS and pension trust funds
are not required to present either a statement of changes in financial position or a
45
statement of cash flows. [NCGAS 6, ¶27, as amended by GASBS 5, ¶4; and GASBS 9,
¶5]
.602 [Delete Example 3.]
* * *
PUBLIC BENEFIT CORPORATIONS SECTION Pu5
AND AUTHORITIES
Sources: [Add the following:] GASB Statement 9
[Add the following to the beginning of the list in footnote 1:]
2450, ―Cash Flows Statements‖ [GASBS 2 through 9 and GASBI 1]
* * *
UTILITIES SECTION Ut5
Sources: [Add the following:] GASB Statement 9
[Add the following to the beginning of the list in footnote 1:]
2450, ―Cash Flows Statements‖ [GASBS 2 through 9 and GASBI 1]
