GASB Issues Proposals Designed to Improve Government Financial Reports and Establish Recognition Concepts
Norwalk, CT, September 28, 2018—The Governmental
Accounting Standards Board (GASB) today issued a Preliminary Views
proposing improvements to key components of the financial reporting
model. In a separate, related document, the Board also proposed new
concepts intended to guide the Board in developing standards on
recognition in financial statements.
GASB Chairman David A. Vaudt said: "What the Board ultimately is trying
to do through these companion projects is provide better information to
financial statement users. These proposals are designed to enhance both
the value and clarity of the information reported in financial
statements," he added.
Stakeholders are asked to review and provide input on the proposals contained in the two Preliminary Views by February 15, 2019.
Financial Reporting Model Improvements
The Preliminary Views, Financial Reporting Model Improvements,
presents the Board´s current thinking on targeted improvements to the
financial reporting model—the blueprint for the annual audited financial
report. The proposals are designed to improve the model´s effectiveness
in providing information essential to decision making and assessing a
The proposed improvements include:
The Preliminary Views considers improvements in selected areas of the
existing financial reporting model. The Board plans to address
enhancement of other areas of the model in a subsequent proposal.
- A short-term financial resources measurement focus for governmental
funds that recognizes short-term transactions and other events when
incurred and long-term transactions and other events when due
- A format for governmental fund financial statements that distinguishes between current and long-term resource flows
- Clarified explanations of operating and nonoperating revenues and expenses
- An additional subtotal in proprietary fund financial statements for operating income (loss) and noncapital subsidies
- Presentation of all budgetary comparison information as required
supplementary information and required presentation of two variance
- Communication of major component unit information either in the government-wide statements or in combining financial statements
- A new schedule of government-wide expenses by natural
classification as supplementary information in comprehensive annual
Recognition of Elements of Financial Statements
The Preliminary Views, Recognition of Elements of Financial Statements,
presents the Board´s current views on concepts related to recognition
of elements of financial statements, such as assets and liabilities.
Recognition concepts encompass two aspects of state and local government financial statements:
The Preliminary Views proposes that an item being considered for
recognition in financial statements would be evaluated using a hierarchy
for recognition of elements. The hierarchy would require the Board
follow a specific order of elements when considering if an item should
be recognized and as what element (for example, as an asset, deferred
outflows of resources, or expense).
- The measurement focus of a specific financial statement determines what items should be reported.
- The related basis of accounting determines when those items should be reported.
The Preliminary Views also proposes a recognition framework for both the
short-term financial resources measurement focus (proposed for use in
governmental fund financial statements in the companion Preliminary
Views) and the economic resources measurement focus (used in
government-wide, proprietary fund, and fiduciary fund financial
Issuing the two documents concurrently is intended to provide
stakeholders with a conceptual context for how elements of financial
statements would be recognized and then to see how those elements would
be presented within the financial reporting model.
The documents also contain alternative views to some of the proposals.
Share Your Comments
Written comments should be addressed to the Director of Research and Technical Activities, Project No. 3-25 (Financial Reporting Model Improvements) or Project No. 3-20 (Recognition of Elements of Financial Statements), and emailed to email@example.com.
A series of public hearings and user forums on the Preliminary Views documents are scheduled as follows:
- March 5, 2019, Rosemont, IL
- March 12, 2019, Atlanta, GA
- March 14, 2019, Flushing, NY
The deadline for written notice of intent to participate is February 15,
2019. Additional information is available in each of the Preliminary
- March 6, 2019, Rosemont, IL
- March 14, 2019, Flushing, NY.
About the Governmental Accounting Standards Board
Established in 1984, the GASB is the independent, private-sector
organization, based in Norwalk, Connecticut, that establishes financial
accounting and 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 financial 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.