MuniMarket Pulse Podcast Interviews Jim Towne of DerivActiv on GASB 53 and How It Applies to Governmental Entities

    MINNEAPOLIS, MN, January 27, 2010 /24-7PressRelease/ -- MuniMarket Pulse, has recently posted a podcast interview with Jim Towne, Senior Vice President, DerivActiv, LLC on "Explaining GASB 53 and How it Applies to Governmental Entities." This podcast is an excellent primer for accounting, auditing and treasury officials on how to meet the Fiscal Year 2010 requirements of GASB 53.

According to Towne, "GASB 53 was created by the Governmental Accounting Standards Board (GASB) to increase transparency in financial reporting due to the large volume of derivative transactions that have occurred by governmental entities during the past ten years. Adoption for this standard is not optional so in other words, governmental entities are going to be required to either determine that their derivatives are effective hedges or are investment derivatives."

With the increasing demand for greater transparency in financial reporting, public entities are urged to establish a process of evaluating their derivative hedges under GASB 53. These hedges, even though they may have been put in place a number of years ago, will still need to be evaluated.

"In the case of governmental entities, GASB 53 applies to all governmental entities that report their financial condition using governmental accounting standards. Those would be cities, counties, states, state agencies, governmental hospitals, governmental subdivisions, all those types of entities out there using GASB accounting. The statement is effective for financial reports that are issued after June 15, 2010. So the first entities to report under this new GASB 53 statement will be those that have a June 30, 2010 fiscal year end," said Towne.

This GASB 53 valuation involves more than simple accounting. There are four methods that are used to do a GASB 53 valuation to determine if it is an effective hedge: consistent critical terms, synthetic instrument method, dollar offset, and regression analysis. According to Towne, "One nice feature of GASB is that for each calculation you're allowed to continue to run the tests until one of the tests passes. So for example, an entity can fail three of the four tests but as long as one of the tests is positive, or they pass, that derivative can be declared an effective hedge."

For more information about MuniMarket Pulse or its sister podcasts CapitalMarket Pulse and MMA MuniCast, please visit http://podcast.derivactiv.com/. A complete audio interview and transcript can also be found at: http://podcast.derivactiv.com/

About MuniMarket Pulse
Since its inception in 2008, MuniMarket Pulse has become the most popular municipal bond industry podcast. On a regular basis, it invites leading opinion leaders from the ranks of economists, investment bankers, issuers, bond lawyers, portfolio managers, rating agencies and academics to comment on what is happening in the municipal bond industry. These 12-18 minutes interviews are insightful and timely looks into what leaders in the industry are doing and seeing. Listeners can download a podcast here: http://podcast.derivactiv.com/

About DerivActiv, LLC
DerivActiv, LLC is the primary sponsor of MuniMarket Pulse and is a leading provider of web-based derivative valuation and other financial monitoring services, serving financial institutions, corporations, non-profits, and municipalities. DerivActiv provides daily valuations of financial products, including equity, currency and fixed income securities derivatives as well as a number of alternative investments. DerivActiv is used for FAS 133 and 161, Topic 820 (FAS 157) and GASB 53 compliance in financial statements, board and finance committee reports, and as an internal risk management tool. For more information call 1-866-200-9012, or visit the company's website at: www.DerivActiv.com.

# # #