Governmental Accounting Standards Board Statement Number 3

In April 1986, the Governmental Accounting Standards Board issued Governmental Accounting Standards Board Statement 3: Deposits with Financial Institutions, Investments (including Repurchase Agreements), and Reverse Repurchase Agreements.

Summary

This Statement required certain note disclosures about governmental entities' deposits with financial institutions, investments (including repurchase agreements), and reverse repurchase agreements. The required disclosures should generally be made for the entity as a whole, but additional or separate disclosures for component units, pension trust funds, or other funds or fund types should be made in certain circumstances. This Statement also provided guidance on accounting for repurchase and reverse repurchase agreements.

Disclosure of the types of investments authorized by legal or contractual provisions was required, as well as disclosure of significant violations during the period of legal or contractual provisions related to deposits and investments.

Disclosures required for the deposit and investment portfolio as of the balance sheet date provide users with information about credit and market risks. These disclosures include the carrying amounts and market values of investments by investment type and in total and information about the level of credit risk associated with deposits and investments. Credit risk is affected by insurance coverage and registration of securities in the name of the governmental entity and, in the absence of insurance coverage or registration, by the custodial arrangements for investments, securities underlying repurchase agreements, and collateral on deposits. Entities are also required to disclose situations that resulted in significantly greater credit risk during the period than that existing as of the balance sheet date.

For reverse repurchase agreements, this Statement required disclosure of the source of authorization for their use, significant violations during the period of legal or contractual provisions related to the agreements, and summary information about the credit risk associated with the agreements as of the balance sheet date.

Liabilities resulting from reverse repurchase and fixed coupon reverse repurchase agreements are required to be shown as "Obligations under reverse repurchase agreements" and should not be netted with the related assets on the balance sheet. Interest costs associated with reverse repurchase and fixed coupon reverse repurchase agreements are required to be shown as interest expenditure/expense and are not to be netted with the interest income from the related investments. Income from repurchase and fixed coupon repurchase agreements is required to be shown as interest income. Yield maintenance repurchase and reverse repurchase agreements are required to be accounted for as purchases and sales of investments, with gains or losses on those investments recognized.

Status

Effective Date

Financial statements for periods ending after December 15, 1986.

Amends earlier standards

This Statement ammended NCGAI 6, ¶4 and ¶5,

Amended by later statements

This statement has been significantly affected by GASB 14, GASB 31, GASB 34, and GASB 40. Specifically, paragraphs 6, 8, 10, 11, 14, 18, 19, 21, 36, 44, 49–51, 53, 59, 60, 62, and 79 and fn11 were amended by GASB 31, ¶6. Paragraphs 15, 61, 67, 68, 72, and 116 and fn8 were amended by GASB 31, ¶6 and ¶9. Paragraphs 31 and 69 were amended by GASB 31, ¶22. Paragraph 63 was amended by GASB 34, ¶16, ¶91, and ¶106. Paragraph 64 was amended by GASB 14, ¶11 and ¶63, GASB 31, ¶18, GASB 34, ¶6, ¶70, ¶71, and ¶113, and superseded by GASB 40, ¶5. Paragraph 65 was amended by GASB 14, ¶11 and ¶63 and GASB 34, ¶6. Paragraph 67 was superseded by GASB 40, ¶8. Both paragraphs 68 and 69 were superseded by GASB 40, ¶9. Paragraph 70 was amended by GASB 14, ¶11 and ¶63, GASB 31, ¶18, GASB 34, ¶70 and ¶71, and superseded by GASB 40 ¶3. Paragraph 71 was amended by GASB 31, ¶6 and ¶9 and GASB 14, ¶11 and ¶63, then superseded by GASB 40, ¶3. Paragraphs 73 and 74 were superseded by GASB 40, ¶3. Paragraph 78 was amended by GASB 31, ¶6 and GASB Interpretation 3, ¶6. Paragraph 80 was amended by GASB Interpretation 3, ¶5 and ¶6 and fn2. Paragraph 81 was amended by GASB Interpretation 3, fn3. Paragraph 82 was amended by GASB Interpretation 3, ¶3 and ¶4. Lastly paragraph 116 was amended by GASB 40, ¶19.

Discussion