GASB ADDS PRE-AGENDA RESEARCH ON GOING CONCERN,
DEBT;
REMOVES PROJECT ON FINANCIAL
PROJECTIONS
Norwalk, CT, April 24, 2015—The
Governmental Accounting Standards Board (GASB) yesterday voted to initiate
pre-agenda research on improvements to going concern and debt disclosure
guidance. In a related action, the Board also decided to remove the project on
Economic Condition Reporting from the current technical agenda.
The
Board decided to initiate research on going concern disclosures based on
feedback from stakeholders, who suggested that the GASB should examine the
relevance of the "going concern" concept as it applies to governments and
government organizations. Stakeholders noted that governments rarely go out of
business.
The going concern research will focus on whether existing GAAP
standards provide state and local government financial statement preparers with
sufficient guidance about management´s responsibilities for evaluating and
disclosing uncertainties associated with severe financial stress.
The
economic condition project—which contemplated financial reporting requirements
related to financial projections—was put on hold in 2012 and has not been
subject to deliberations since that time.
"The input and feedback we
received from stakeholders on the Preliminary Views on economic condition
reporting was highly valuable and will likely serve to inform our work in the
future—including the research the Board has called for regarding going concern
disclosures," said GASB Chair David A. Vaudt.
The GASB also approved
research on potential improvements to debt disclosure guidance. With state and
local governments diversifying their debt-issuance practices—increasingly
seeking direct bank loans rather than issuing municipal bonds—disclosures in
this area have been inconsistent. The research will focus on whether notes to
the financial statements currently provide sufficient debt information to
financial statement users for decision making and assessments of
accountability.
Both going concern and debt disclosure guidance were
identified as high priorities by the members of the Governmental Accounting
Standards Advisory Council (GASAC) at their March 2015 meeting. Based on the
outcomes of the research and feedback from stakeholders, including the GASAC,
the Board will decide whether to add projects to the current technical agenda to
consider amending the existing standards.
More information about the new
pre-agenda research activities will available in the coming weeks at http://www.gasb.org/.
About
the Governmental Accounting Standards Board
Established in 1984,
the GASB is the independent, private-sector organization based in Norwalk,
Connecticut, that establishes accounting and financial reporting standards for
U.S. state and local governments that follow Generally Accepted Accounting
Principles (GAAP). These standards are recognized as authoritative by state and
local governments, state Boards of Accountancy, and the American Institute of
CPAs (AICPA). The GASB develops and issues accounting standards through a
transparent and inclusive process intended to promote financial reporting that
provides useful information to taxpayers, public officials, investors, and
others who use financial reports. The Financial Accounting Foundation (FAF)
supports and oversees the GASB. For more information, visit http://www.gasb.org/.