NEWS RELEASE 12/06/11
GASB Proposes Financial Projections for Assessing
Economic Condition of Governments
Norwalk, CT, December 6,
2011—The Governmental Accounting Standards Board (GASB) today proposed
that state and local governments should present five-year projections of cash
inflows, cash outflows, and financial obligations that would accompany their
financial statements as required supplementary information. The objective of
this requirement is to better enable taxpayers, bond holders, and other
interested parties to assess a government’s financial health.
The GASB
is seeking public comment on its proposals, which are outlined in Preliminary
Views, Economic Condition Reporting: Financial Projections. Based on
its research and input from financial statement users, preparers, and auditors,
the GASB believes that the following information is necessary to assist users in
assessing a government’s economic condition:
- Projections of cash inflows and cash outflows, with explanations of the
known causes of fluctuations
- Projections of the financial obligations, including bonds, pensions, other
postemployment benefits, and long-term contracts, with explanations of the
known causes of fluctuations
- Projections of annual debt service payments, including principal and
interest Narrative discussion of governments’ dependencies on other
governments to provide its services.
"The GASB is issuing this
document for public comment because of significant concerns expressed by users
of state and local government financial reports regarding the importance of
understanding whether governments are on a financially sustainable path," said
GASB Chairman Robert Attmore. "The current economic downturn has emphasized what
has been known for a long time: information is not always publicly available
regarding the financial challenges facing governments."
The GASB proposed
that financial projections should be (a) based on current policy, (b) informed
by historical information, and (c) adjusted for known events and conditions that
will affect the government’s finances during the projection periods. Governments
would be required to present projections for at least the next five fiscal
years. The projections would be reported as required supplementary information
following the notes to the financial statements.
The GASB is seeking
public comment on the Preliminary Views through March 16, 2012. The full text of
the Preliminary Views is available for download at www.gasb.org.
Public Hearings
The GASB will host two public
hearings to obtain feedback on the Preliminary Views from interested individuals
and organizations:
- March 29, 2012, 8:30 a.m. PDT, in Los Angeles, California
- April 17, 2012, 8:30 a.m. EDT, in New York City.
More details,
including instructions for registering to participate in the hearings, can be
found in the front of the Preliminary Views.
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 www.gasb.org.