September 28 2018
The Governmental Accounting Standards Board has released two documents proposing a number of improvements in how state and local governments should report information on their financial statements and recognize transactions.
In one of the documents, Preliminary Views, Financial Reporting Model Improvements, GASB suggests several enhancements in the financial reporting model for governments’ annual financial reports. They include a short-term financial resources measurement focus for governmental funds that recognizes short-term transactions and other events when they’re incurred, and long-term transactions and other events when they come due. The board also suggests a format for governmental fund financial statements that distinguishes between current and long-term resource flows.
The second document, Preliminary Views, Recognition of Elements of Financial Statements, outlines GASB’s proposals on recognizing elements such as assets and liabilities. It proposes, among other things, a recognition framework for both a short-term financial resources measurement focus in governmental fund financial statements, and an economic resources measurement focus in government-wide, proprietary fund and fiduciary fund financial statements. The document also proposes that items be evaluated for recognition in financial statements using a hierarchy that would require a certain order of elements (such as an asset, deferred outflows of resources or expense).
“What the board ultimately is trying to do through these companion projects is provide better information to financial statement users,” said GASB Chairman David Vaudt in a statement. “These proposals are designed to enhance both the value and clarity of the information reported in financial statements.”
GASB released the two documents at the same time to give stakeholders more of a context for how the different elements of financial statements would be recognized and see how they would be presented in the financial reporting model. Both documents include alternative views to some proposals.
GASB is asking for written comments on the proposals, which should go 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 firstname.lastname@example.org.
GASB is planning to hold a series of public hearings and user forums to discuss the proposals. The public hearings are scheduled for March 5, 2019, in Rosemont, Illinois, near Chicago, March 12 in Atlanta, and March 14, 2019, in Flushing, New York. The user forums are set for March 6 in Rosemont and March 14 in Flushing. The deadline to participate is Feb. 15, 2019. More details are available in the preliminary views documents.