Reporting Requirements for Annual Financial Reports of State Agencies and Universities

Notes & Samples

NOTE 28 – Deferred Outflows of Resources and Deferred Inflows of Resources
Sample (Illustrative, may not tie to exhibits)

In fiscal 20CY, Sample Agency entered into an interest rate swap to hedge exposure to variable-rate debt. The derivative was determined to be an effective hedging instrument. As a result, increases in fair value were reported as deferred inflows of resources, while decreases in fair value were reported as deferred outflows of resources. Additional disclosures are disclosed in Note 7.

In fiscal 20CY, Sample Agency refunded a portion of its outstanding bonds to achieve interest cost savings. The resulting difference between the reacquisition price and the net carrying amount of the old debt was reported as a deferred outflow of resources that is being amortized over the life of the new debt.

In fiscal 20CY, Sample Agency participated in the Employees Retirement System (ERS) of Texas pension plan and recognized deferred outflows of resources for contributions made after the measurement date. The agency also recognized deferred inflows of resources related to differences between projected and actual investment earnings. For OPEB, the agency participates in plans administered by the ERS and other state systems and recognized deferred inflows and outflows related to changes in actuarial assumptions. Additional information is disclosed in Note 9 (Pensions) and Note 11 (OPEB).

In fiscal 20CY, Sample Agency entered into a lease agreement to rent building space to a third party. The agency reported a deferred inflow of resources at lease commencement representing the future lease payments to be reported as revenue over the lease term. Additional information is disclosed in Note 8.

Sample Agency had a government acquisition of private ABC University and recorded deferred outflows of resources for the excess consideration over the net position acquired — and disclosed the acquisition in supplemental Note XX.

In fiscal 20CY, Sample Agency entered into a public-private public-public partnership (PPP) with a private operator for the use of a state-owned facility. The agency received an upfront payment and recognized a deferred inflow of resources, which will be reported as revenue over the term of the agreement. Additional information is disclosed in Note 27.

In addition, Sample Agency also earned dividends on its investments in foreign companies but would not receive them within 60 days after the fiscal year-end. Sample Agency reported the dividends to be received as deferred inflows of resources in its governmental fund.

In fiscal 20CY, Sample Agency reported other deferred amounts related to timing differences between when resources are received and when they are earned or eligible for recognition under applicable standards.

Sample Agency presented the deferred outflows of resources and deferred inflows of resources related to its derivative instruments, bond refunding transactions, employee pension, government acquisition, PPPs and dividends from foreign investments in the following Note 28.

Note 28 – Deferred Outflows of Resources and Deferred Inflows of Resources

In fiscal 20CY, Sample Agency reported deferred outflows of resources and deferred inflows of resources in connection with its hedging derivative instruments, bond refunding transactions, employee pension, government acquisition and dividends from foreign investments as presented below.

Aug. 31, 20CY

Deferred outflows of resources of $12,367,488 in business-type activities were related to hedging derivative instruments in a liability position, losses related to bond refunding transactions, employee pension and excess consideration provided over net position acquired in private ABC University. Deferred inflows of resources of $1,088,521 were related to hedging derivative instruments in an asset position and employee pension. The ARO deferred outflows of resources, the net hedging derivative instrument liability of $375,527 and the components of pension deferred outflows of resources of $1,962,532 and deferred inflows of resources of $1,071,022 are disclosed in Note 5, Note 7 and Note 9, respectively.

Deferred inflows of resources of $5,254,633 in governmental activities were related to a PPP entered into by the agency with a private company. This amount reflects the unamortized balance of up-front payments received and capital assets acquired from this company. Details of Sample Agency’s PPP are disclosed in Note 27.

Deferred inflows of resources of $27,520 in governmental funds were related to dividends earned on investments in foreign companies but not available within 60 days after the fiscal year-end.

Sample Agency must also:

• Make a cross reference between the detailed notes and Note 28.
• Tie the Note 28 total for deferred outflows of resources and deferred inflows of resources for governmental activities, business-type activities and governmental funds (respectively) to the basis conversion fund, proprietary fund and governmental fund section of its financial statements.