The Governmental Accounting Standards Board (GASB) has issued GASB Statement No. 52, Land and Other Real Estate Held as Investments by Endowments. The statement 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.
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.
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 amends paragraph two of GASB Statement No. 31 and 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.