GASB 87: What the public sector needs to know

GASB 87 covers the Governmental Accounting Standards Board’s update on leases. It defines lessee and lessor protocol and narrows the definition of a lease.

In 2020, the Governmental Accounting Standards Board (GASB) voted to defer the effective date of lease accounting standard GASB 87. This was done to give public sector entities more time to adapt to the many impacts of Covid-19. Since the standard has officially gone into effect for fiscal years beginning after June 15, 2021, completing and maintaining compliance remains top of mind for all public sector finance professionals.

Do not wait to start

Most government entities, including school districts, have a fiscal year that starts July 1, so they must adopt GASB 87 in their June 2022 audited financial statements. To start on the right foot, affected public sector entities should prioritize getting their Day 1 accounting and reporting right to maintain compliance into the future.

What changed

GASB 87 refers to the Governmental Accounting Standards Board’s Statement No. 87, Leases, the new lease accounting standard for public sector entities in the United States. The new standard states that “a lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources.” Further, GASB 87 narrows the lease definition, as it establishes a single model for lease accounting based on the foundational principle that leases are financings.

By adopting GASB 87, public sector entities will bring additional liabilities onto their financial statements, potentially impacting their credit ratings. And because leases are classified differently under GASB 87, the standard will directly impact how entities recognize, measure, and manage their leases.


If you are late in preparing for GASB 87, or need a refresher to ensure you are on the right course; AGH University has a webinar that will give you the tools and information you need. Contact Tara Laughlin using the information below to learn more about the webinar or GASB 87.

Tara Laughlin

Vice President
Assurance Services

Tara Laughlin, a public sector team audit vice president, focuses exclusively on serving governmental and not-for-profit entities. Her practice includes some of the largest local government entities in the central US.

Tara has earned the Certified Government Finance Manager credential from the Association of Government Accountants. She is an active member and presenter for the Government Finance Officers Association. She is also a member of the American Institute of Certified Public Accountants and the Kansas Society of Certified Public Accountants. Tara earned both a bachelor’s and master’s degree in accountancy from Wichita State University.

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