Accounting standards for risk financing and insurance-related activities of state and local governments, including public risk pools, achieve their purpose, according to a Financial Accounting Foundation (FAF) review report released Tuesday.
GASB Statements No. 10, Accounting and Financial Reporting for Risk Financing and Related Insurance Issues, and No. 30, Risk Financing Omnibus, were reviewed by a FAF post-implementation review (PIR) team. The reviewers found that:
- The standards resolve the issues they were designed to address.
- Preparers and practitioners understand and can apply the standards. Some disclosure requirements may be applied inconsistently, but preparers otherwise report the information reliably, the reviewers found.
- The standards have increased consistency and comparability across governments’ insurance activities.
- Users find the resulting information reliable and useful.
- No significant unexpected changes to financial reporting or operating practices resulted from the standards.
- Costs and benefits appear to be consistent with what was expected.
“We are considering the reported findings and will provide our initial response in the coming weeks,” GASB Chairman David Vaudt said in a news release. “Additionally, the FASB is working on a project to amend its guidance for insurance activities. The GASB is actively monitoring that project and, when complete, will determine whether action by the GASB is appropriate.”
In addition, the PIR team:
- Is reviewing FASB Statement No. 157, Fair Value Measurements. The review will include a survey of stakeholders about the application and effectiveness of the standard.
- Will start a review of FASB Statement No. 123(R), Share-Based Payment, later this year.
Interested parties who would like the opportunity to participate in PIR surveys can register online.
—Ken Tysiac (firstname.lastname@example.org) is a JofA senior editor.