GASB ADDS PROJECT TO REVISIT BLUEPRINT OF
GOVERNMENTAL FINANCIAL STATEMENTS
Norwalk, CT, September 1, 2015—The Governmental
Accounting Standards Board (GASB) today added to its technical agenda a
project to reexamine the financial reporting model for state and local
government financial statements.
The project’s objective is to make improvements to the existing
financial reporting model, which was established in 1999 through Statement No. 34, Basic Financial Statements—and Management’s Discussion and Analysis—for State and Local Governments,
and subsequent related pronouncements. Among other benefits, any
improvements would be meant to enhance the effectiveness of the model in
providing information essential for decision-making and assessing a
government’s accountability.
The reexamination will benefit from research the GASB staff has
conducted with users, preparers, and auditors of governmental financial
statements over the past two years on how the financial reporting model
is functioning in practice.
“The financial reporting model has a pervasive influence on the
effectiveness of financial reporting of U.S. state and local governments
and the extent to which the objectives of financial reporting are
achieved,” said GASB Chair David A. Vaudt. “However, the current model
has been fully in effect for a decade. It is an important part of
effective standards setting to routinely seek to improve existing
standards that have been in effect for some time.”
“During the course of the reexamination, the Board will consider
concerns about the complexity of the current financial reporting model
and the potential effects on timeliness of financial reporting,” the
GASB Chair said.
Statement 34 established the present structure for state and local
government financial reporting—the format and contents of the basic
financial statements, certain related notes to the financial statements,
and required supplementary information including management’s
discussion and analysis (MD&A).
One of the most significant additions to the reporting model made by
Statement 34 was the introduction of government-wide financial
statements containing accrual information—which notably includes the
reporting of infrastructure, other capital assets, and long-term
liabilities.
Potential Areas of Improvement
The project will consider improvements to major features of the financial reporting model, including:
- MD&A—Explore options for enhancing the
financial statement analysis section of MD&A and clarify guidance
for presenting currently known facts, decisions, or conditions expected
to have a significant effect on financial position or results of
operations.
- Government-Wide Financial Statements—Explore
alternatives for the format of the statement of activities and assess
whether the value of the information provided by a government-wide
statement of cash flows would outweigh the costs of providing that
information.
- Major Funds—Explore options for providing additional information about debt service funds.
- Governmental Fund Financial Statements—Explore a
conceptually consistent measurement focus and basis of accounting and
develop a related presentation format for governmental fund financial
statements.
- Proprietary Fund Financial Statements—Explore options for enhancing the consistency and usefulness of presenting operating and nonoperating revenues and expenses.
- Budgetary Information—Explore options for enhancing the consistency of the presentation method and value of budgetary information.
In each of these areas, the Board will continually look for
opportunities to reduce the complexity of financial statements, which
could positively impact the timeliness of governmental financial
reporting.
The Board is scheduled to begin project deliberations in October 2015
and anticipates issuing an initial due process document for public
comment by the end of 2016.
Additional information about the reexamination of the financial report model is available on the GASB website, 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 www.gasb.org.