Questions and Answers on GASB 87 - Leases
Yes, agencies will use FPMT to maintain information about leases for facilities, land, and other assets (such as equipment and vehicles) that meet the defined requirements. Additional information is available on the Leases (GASB 87) Accounting Resources site, including a document to help you determine if a leased asset is in scope for the new lease accounting requirements.
Yes, you will need to maintain information specific to GASB 87 compliance for leased facilities that meet the defined requirements. For example, GASB lease term, master index, and vendor number. A list of the data fields that will be in FPMT for each type of lease is available on the Leases Accounting Resources site.
Yes, FPMT will send transactions to the Agency Financial Reporting System (AFRS) to comply with GASB 87, including sending lease payments to the lessor. Agencies that have their own accounting system may opt out of having FPMT send transactions to AFRS. GASB 87 entries will still need to be recorded in AFRS.
Agencies will need to assign a Mater Index (MI) to each Lease Contract in FPMT. Since, the MI will be the only chart of accounts field in FPMT, it must contain Account, Appropriation Index, and Program Index (Organization Index and Project can also be assigned, but are not required). Refer to the Master Index AFRS Documentation for instructions on how to create and update an MI.
All facilities leases and all leases that meet the definition of a lease under GASB 87 that exceed the state’s capitalization threshold will need to be tracked in FPMT. GASB 87 applies to leases of capital assets (land, buildings, equipment, etc.).
The definition of a lease is a contract that conveys control of the right to use another entity’s nonfinancial asset as specified in the contract for a period of time in an exchange or exchange-like transaction. See the Decision Tree and GASB 87 Scope guides on the Leases Accounting Resources site for more details.
The capitalization threshold is $500,000 in total lease payments over the lease term. For leases that began prior to July 1, 2021, any lease that has $500,000 or more in remaining lease payments must be recorded in FPMT.
This analysis should be applied to each lease contract (rather than each asset within the contract). However, if multiple contracts are entered into as a package with a single objective, then the contracts should be combined and considered a single contract.
Yes, agencies will have the option to record any lease in FPMT. The system will only send transactions to AFRS, including the payments, if all of the necessary accounting fields are entered in FPMT.
Before making this decision, consider the new business processes. FPMT will send lease payments to AFRS only for the fixed portion of lease payments, such as base rent. Agencies will need to pay the vendor directly for services, such as maintenance and utilities, and payments based on the usage of the asset, such as number of copies made.
We will work with agencies to setup new user accounts (user id/password) and modify existing accounts (role/permission levels) during readiness activities to prepare for training in Spring 2021.
The new functionality will go-live in FPMT on October 1, 2021 so that you can start maintaining additional lease information after you attend training. A list of the data fields that will be in FPMT for each type of lease is available on the Leases Accounting Resources site if your agency would like to start preparing.
Yes, beginning in September 2021, OFM will provide FPMT training sessions, reference materials, job aids, and follow-up support for new users as well as existing users. Training will also include information about new accounting policies and procedures.
FPMT does have the capability to import data from Excel. This function is done through the “importer” process, which is an Excel spreadsheet with all of the FPMT tables and data fields. After all of the required fields are updated/populated in the spreadsheet, it is imported into FPMT, and the applicable tables are updated. Any existing data is overwritten. It is possible to first download all existing facilities data and simply update the new fields.
At the initial implementation, OFM will provide some open lab time for agencies to attend in order to answer questions about FPMT and assist agencies that would like to use the importer to update and add data to FPMT. For ongoing FPMT updates, generally agencies will be required to report through the FPMT user interface. Importing permissions may be granted by OFM if the agency has a facilities or lease tracking solution, and they have attended the importer training.
All of the policies, procedures, and illustrative entries related to leases will be changed, including sections in Chapters 30 and 85. In addition, there will be new general ledger codes, sub objects and sub-subobjects, and revenue sources in Chapter 75. The accounting requirements for leases where the ownership of the asset transfers to the state at the end of the lease term, will remain similar to the current capital lease accounting requirement.
Yes, the FY 2022 Leases Disclosure Form will be completely updated to provide the new information needed for the financial statement disclosures under GASB 87. OFM will provide training resources to explain how to answer the new questions.