Statement No. 63 Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position

Statement No. 63 provides guidance for reporting deferred outflows of resources and deferred inflows of resources within the financial statements of governmental entities.

These elements were previously identified and defined in GASB Concepts Statement No. 4, Elements of Financial Statements, but no guidance was provided on the financial statement presentation.

Deferred outflows of resources are defined as a consumption of net assets by the government that is applicable to a future reporting period. They are required to be reported in the statement of financial position in a separate section following assets.

Deferred outflows differ from a prepaid expense. Prepaid expenses result from a current cash outlay that will be recorded as an expense in future periods. Deferred outflows represent future cash outlays that are incorporated as part of a liability on the current period’s financial statements.

Similarly, deferred inflows of resources are defined as an acquisition of net assets by a government that is applicable to a future reporting period. They should be reported in the statement of financial position in a separate section following liabilities.

Deferred inflows differ from deferred revenue. Deferred revenue results from a current cash receipt that will be recorded as revenue in future periods. Deferred inflows represent future cash inflows that are incorporated as part of an asset on the current period’s financial statements.

Certain transactions that require the use of deferred outflows and inflows have already been identified in Statement No. 53, Accounting and Financial Reporting for Derivative Instruments and Statement No. 60, Accounting and Financial Reporting for Service Concession Arrangements.

Additionally, Statement No. 63 renames the statement of net assets as the statement of net position. The statement of net position should report all assets, deferred outflows of resources, liabilities, deferred inflows of resources, and net position. Governments are encouraged to present the statement of net position in a format that displays:

Assets

+ Deferred outflows of resources
– Liabilities
– Deferred inflows of resources
= Net position
Net position represents the difference between all other elements in a statement of financial position and should be displayed in three components: net investment in capital assets; restricted (distinguished between major categories of restrictions); and unrestricted.

The elements of net position are similar to those of net assets and deferred inflows and outflows should be allocated to the restricted components if associated with restricted assets or liabilities.

The statement is effective for financial statements for periods beginning after December 15, 2011; however, earlier application is encouraged.