New GASB Rule Changes Real Estate Reporting Method

November 21, 2007 ( - The Governmental Accounting Standards Board (GASB) has issued a new statement that requires endowments to report their real estate investments at fair value.

According to the agency, GASB Statement No. 52, Land and Other Real Estate Held as Investments by Endowments, improves the quality of financial reporting by requiring endowments to report their land and other real estate investments at fair value, “…creating consistency in reporting among similar entities that exist to invest resources for the purpose of generating income,” according to a press release.

Prior “History”

According to GASB, prior to the issuance of Statement 52, state and local government endowments were required to report land and other real estate held as investments at historical cost, which provides information on investment results only in the year the investments are sold. However, entities that perform investment functions similar to endowments – including pension plans, other post employment benefit (OPEB) plans, external investment pools, and Internal Revenue Code Section 457 deferred compensation plans-have been required to report their land and real estate investments at fair value. Reporting those investments at fair value provides more decision-useful information about their composition, current value, and recent changes in value.

GASB notes that, in order to help users of financial statements better evaluate an endowment’s investment decisions and performance, Statement 52 requires governments to report the changes in fair value as investment income. It also requires them to disclose the methods and significant assumptions employed to determine fair value, and to provide other information that they currently present for other investments reported at fair value.

GASB Statement No. 52 is effective for financial statements for periods beginning after June 15, 2008. Governments that wish to implement earlier than that date are encouraged to do so, according to the release.

The GASB is the independent, not-for-profit organization formed in 1984 that establishes and improves financial accounting and reporting standards for state and local governments. Its seven members are drawn from the Board’s diverse constituency, including preparers and auditors of government financial statements, users of those statements and members of the academic community. More information about the GASB can be found at its website,