FAF ISSUES FINAL POLICY ON GASB SCOPE OF AUTHORITYNorwalk, CT,
November 19, 2013—The Financial Accounting Foundation (FAF) Board of
Trustees today adopted a new policy that clarifies the characteristics of the
information the Governmental Accounting Standards Board (GASB) may incorporate
into the financial accounting and reporting concepts, standards, and guidance
that it issues for state and local governments.
The new policy, described
Scope of Authority: Consultation Process Policy, is effective
immediately. Key elements of the new policy will be included in the GASB´s
Rules of Procedure.
The policy outlines a pre-agenda consultation process
for the GASB and the FAF´s Standard-Setting Process Oversight Committee to
follow in determining whether information the GASB might consider for
standard-setting activity is "financial accounting and reporting information"
within the scope of the GASB´s standard-setting mission. The GASB´s and the
Oversight Committee´s scope considerations will be based on accounting and
reporting characteristics currently in the GASB´s Concepts Statements. The
consultation will not focus on a specific standard-setting project.
our initial proposal, stakeholders were concerned that the proposed process
could involve the Trustees inappropriately in the GASB´s agenda setting and
interfere with the GASB´s standard-setting process and independence," said FAF
Chairman Jeffrey J. Diermeier. "The consultation policy clarifies that the
Trustees´ authority lies in their oversight responsibility, and in their
authority to determine whether information constitutes financial accounting and
reporting information. Consultation in the pre-agenda phase limits the Trustees´
involvement to advising and counseling the GASB about whether information it is
considering for standard-setting activity is within the context of financial
accounting and reporting."
GASB Chairman David A. Vaudt said: "The GASB
is pleased that the Trustees addressed stakeholder concerns and established a
consultation process based on the GASB´s Concepts Statements. The final policy
strikes the right balance by maintaining the independence of the GASB, while
ensuring appropriate oversight by the Trustees."
Under the final policy,
the GASB will classify governmental financial information as follows:
When the GASB believes that certain Group 2
information it is considering for standard-setting activities is within its
scope, the policy provides that the GASB and the Oversight Committee will
consult on whether the information constitutes "financial accounting and
reporting information." The GASB and the Oversight Committee will consider the
classification of Group 2 information based on characteristics currently
contained in the GASB´s Concepts Statements.
- Group 1: Information that the GASB assesses is clearly within its
standard-setting authority that meets the objectives, and has the
characteristics, of governmental financial reporting currently described in GASB Concepts Statement No. 1, Objectives of Financial
Reporting, and GASB Concepts Statement No. 3, Communication Methods in
General Purpose External Financial Reports That Contain Basic Financial
- Group 3: Information that the GASB assesses as clearly outside GASB´s
standard-setting authority (such as information that has no relationship to
information presented in general purpose external financial reporting, or does
not meet at least one of the objectives of governmental financial reporting as
defined in GASB Concepts Statement 1 and GASB Concepts Statement 3); and
- Group 2: Information that does not clearly possess the characteristics of
Groups 1 or 3, but that meets at least one of the objectives of governmental
financial accounting currently set forth in the GASB´s existing Concepts
Statements 1 and 3.
The final, approved policy
revised the original proposal so that the GASB would consult with the Oversight
Committee in the pre-agenda phase. The policy clarifies that the Trustees´
authority lies in their oversight responsibility, and their authority to
determine whether information constitutes "financial accounting and reporting
information." It also reiterates that the Trustees will have no involvement in
setting the GASB´s agenda or otherwise being involved in the GASB´s independent
Previously issued GASB concepts, standards,
and guidance are not subject to the additional consultation process unless the
GASB expands the scope of existing concepts, or expands or reclassifies the
information covered by existing standards or guidance.
the Financial Accounting Foundation
The FAF is responsible for
the oversight, administration, and finances of both the Governmental Accounting
Standards Board (GASB) and the Financial Accounting Standards Board (FASB). The
Foundation is also responsible for selecting the members of both Boards and
their respective Advisory Councils.
About the Governmental
Accounting Standards Board
The GASB is the independent,
not-for-profit organization formed in 1984 that establishes and improves
financial accounting and reporting standards for state and local governments.
Its seven members are drawn from the Board´s diverse constituency, including
preparers and auditors of government financial statements, users of those
statements, and members of the academic community. More information about the
GASB can be found at its website,