GASB issues new standard for endowments

NORWALK, Conn., Nov. 29, 2007 – The Governmental Accounting Standards Board has issued a new standard related to the reporting of investments in land and other real estate by endowments.

Prior to the issuance of GASB Statement No. 52, "Land and Other Real Estate Held as Investments by Endowments," accounting standards required permanent and term endowments, including permanent funds, to report land and other real estate held as investments at historical cost. Other entities that exist for the purpose of generating income – such as pension plans – report them at fair value. The GASB believes that fair value information about investments is more transparent and useful to the users of financial statements than original cost.

Statement 52 eliminates the reporting inconsistency by requiring permanent and term endowments, including permanent funds, to report these assets at fair value. It also requires the changes in fair value to be reported as investment income and the methods and significant assumptions employed to determine fair value to be disclosed. Governments should also disclose other information that they currently present for other investments reported at fair value.

Statement 52 is effective for periods beginning after June 15, 2008, with earlier application encouraged.

To order Statement 52 (product code GS52) or learn more about the standard, visit the GASB Web site or call the GASB’s order department at (800) 748-0659.

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