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Sample Board Resolution to Adopt Rate Stabilization Accounting - ASC 980 and GASB 62

Major expenses can put a dent in financial results, leading to a number of issues - operating losses, not meeting bond coverage, or uncertainty on when to increase electric rates.

Accounting Standards ASC 980 and GASB 62 make these issues manageable and tie expense and revenue recognition to the timing of rate recovery from your customers. One of the most beneficial uses of ASC 980 and GASB 62 is to establish a Rate Stabilization Fund. Not only is this fund used to set aside funds in good financial years to use in not so good years, you can also take revenues "off of the board" and set those revenues aside and re-recognize them in a poor earnings year to help meet budgets and bond coverage.

One of the requirements for using ASC 980 and GASB 62 is to obtain Board approval for transactions. This free download sample resolution will help you meet the requirements, plus it outlines one way to apply rate stabilization. There are other ways, but this can get you started.

If you'd like more information on how to use ASC 980 and GASB 62 for rate stabilization and other applications, this course will dive into the details.