Key Takeaways:
GASB’s proposed amendment to Statement No. 34 could significantly change how infrastructure assets in governmental financial statements are defined, depreciated, and disclosed.
The Exposure Draft introduces expanded reporting requirements related to infrastructure asset components, aging assets, modified approach documentation, and network-level disclosures.
Governments should begin evaluating how the proposed changes could affect capital asset records, depreciation practices, financial reporting processes, and long-term infrastructure management.
—
The Governmental Accounting Standards Board (GASB) has issued an Exposure Draft, Infrastructure Assets, proposing an amendment to GASB Statement No. 34 that could reshape how governments define, depreciate, and disclose infrastructure assets.
If finalized, the proposal would impact state and local governments, utilities, transportation agencies, public works departments, special districts, and other public sector entities that maintain significant infrastructure networks.
For many governments, infrastructure assets represent some of the largest and most complex items on the statement of net position. The proposed updates are designed to improve consistency, comparability, reliability, and transparency in how those assets are reported.
Why GASB Is Revisiting Infrastructure Reporting
According to GASB, the proposed changes are intended to improve how financial statement users understand the condition, age, maintenance, and long-term management of infrastructure assets.
Unlike many other capital assets, infrastructure assets are often long-lived, interconnected, and central to the services governments provide. Roads, bridges, water systems, sewer systems, dams, tunnels, lighting systems, and communication towers are just a few examples identified in the Exposure Draft.
GASB’s research found opportunities to strengthen how governments recognize, measure, and disclose infrastructure assets, particularly when it comes to depreciation practices, aging assets, and the modified approach.
A New Definition of Infrastructure Assets
One of the more notable proposed changes is a formal definition of “infrastructure assets”.
Under the Exposure Draft, infrastructure assets would be defined as capital assets that:
- Are part of a network of assets
- Are stationary in nature
- Can be maintained or preserved for a significant number of years
The proposal also clarifies that some buildings may qualify as infrastructure assets if they are integral to a broader infrastructure network and serve only an ancillary role within that network.
In addition, GASB proposes defining a “component” as a separate and distinguishable part of an infrastructure asset that contributes to its service capacity. For example, a roadway may include components such as roadbeds, overlays, curbs, and gutters.
What the Proposed Depreciation Changes Could Mean for You
The proposal places increased focus on componentization and depreciation practices.
Under the proposed guidance, a component of an infrastructure asset may need to be treated as a separate asset for depreciation and disclosure purposes if:
- The component’s cost is significant relative to the total infrastructure asset
- The component has a substantially different estimated useful life
For example, portions of a roadway or utility system may need to be tracked and depreciated separately if they meet the proposed criteria.
If your government currently tracks infrastructure assets at a broader level, the proposal could require more detailed asset records and depreciation approaches moving forward.
The Exposure Draft also emphasizes the need to periodically reassess estimated useful lives and salvage values for infrastructure assets reported using historical cost net of accumulated depreciation. GASB notes that this is intended to reduce situations where infrastructure assets remain actively used despite being fully depreciated on paper.
Proposed Updates to the Modified Approach
The Exposure Draft would retain the modified approach but revise several requirements tied to it.
If you use the modified approach, you would still need to:
- Maintain an up-to-date inventory of eligible infrastructure assets
- Perform condition assessments
- Estimate annual maintenance and preservation costs
- Maintain documentation demonstrating that assets are being preserved at or above your established condition level
However, GASB is proposing clearer expectations around documentation and replicability of condition assessments.
Importantly, the proposal would remove language that may imply governments must maintain a formal asset management system to qualify for the modified approach. Instead, GASB acknowledges that governments may use methods appropriate to how they manage and document infrastructure assets internally.
Expanded Disclosure Requirements
The proposed disclosure requirements could substantially expand the amount of infrastructure information presented in your financial statements.
Under the proposal, governments would be required to organize infrastructure disclosures by network of assets. Depending on your operations, that could mean separate disclosures for:
- Roads
- Bridges
- Water systems
- Sewer systems
- Transit infrastructure
- Other infrastructure networks
If you maintain a policy for monitoring infrastructure maintenance and preservation, you would also need to briefly describe that policy in the notes to the financial statements.
For infrastructure assets reported using historical cost net of accumulated depreciation, the proposal would require additional disclosures related to aging assets. Specifically, you would need to disclose by network:
- Historical cost
- Accumulated depreciation
- Historical-cost weighted-average age for infrastructure assets exceeding 80% of their estimated useful lives
Assets that have reached 100% of their estimated useful lives would need to be disclosed separately from those that have exceeded 80% but have not yet reached full useful life.
For governments with aging infrastructure, these disclosures may draw increased attention from governing bodies, taxpayers, bondholders, and other stakeholders.
Changes to Required Supplementary Information
For governments using the modified approach, the proposal would also expand required supplementary information (RSI).
Currently, governments compare estimated annual maintenance and preservation costs to actual amounts expensed over five reporting periods. Under the proposal, that comparison period would increase to 10 reporting periods and would be presented by infrastructure network.
The Exposure Draft would also require governments to disclose when they change the condition level at which they intend to preserve infrastructure assets, along with the reason for the change.
When the Changes Could Take Effect
If finalized as proposed, the new requirements would take effect for fiscal years beginning after June 15, 2028. Earlier adoption would be encouraged.
Most provisions would be applied prospectively. However, GASB has proposed several transition provisions that governments should understand:
- Componentized infrastructure assets: Requirements related to separating components of infrastructure assets would apply to assets placed into service after the beginning of the reporting period in which the standard is first implemented.
- Estimated useful lives and salvage values: Requirements related to reviewing estimated useful lives and salvage values would apply to infrastructure assets held at the beginning of the implementation period. Any resulting adjustments would be reported retroactively through a restatement of beginning net position or fund net position, as applicable.
- Infrastructure disclosures and RSI: Requirements related to infrastructure asset note disclosures, required supplementary information (RSI), and disclosures for infrastructure assets that have exceeded 80% of their estimated useful lives would apply beginning in the reporting period in which the standard is first implemented.
Why Now Is the Time to Evaluate the Impact
Because the proposal is still in the Exposure Draft stage, the requirements are not yet final. GASB is actively requesting feedback from governments, auditors, and other stakeholders before issuing a final standard.
This is an important opportunity to evaluate how the proposed changes could affect your:
- Capital asset records
- Depreciation practices
- Infrastructure inventory processes
- Modified approach documentation
- Financial statement disclosures
- Required supplementary information preparation
If implementation costs, operational challenges, data availability, or disclosure requirements raise concerns for your organization, consider submitting comments to GASB before the June 26, 2026 deadline.
How You Can Submit Comments
Written comments should be addressed to the Director of Research and Technical Activities, Project No. 3-43, and submitted by June 26, 2026. Comments may be emailed to director@gasb.org or submitted through GASB’s electronic input form.
How MGO Can Help
As governments begin assessing these proposed changes, many will need support interpreting requirements and preparing for implementation.
MGO’s State and Local Government professionals can help you evaluate the proposed changes, assess potential impacts on your infrastructure reporting processes, and prepare for future implementation requirements if the standard is finalized.