The Financial Accounting Foundation (FAF) on Tuesday issued a revised proposal describing a process that would decide which information GASB could consider for its standard setting for state and local governments.
Under the proposal, GASB would consult with the FAF trustees’ Standard-Setting Process Oversight Committee to determine whether particular information falls within the scope of GASB’s standard-setting mission.
Public comment is sought by Sept. 30 and can be emailed to GASBscope@f-a-f.org.
The revised proposal diminishes the role the FAF trustees would have performed under the original proposal. FAF Chairman Jeffrey Diermeier said in a news release that many stakeholders had expressed concerns that the trustees were stepping into GASB’s standard-setting role.
“The revised proposal strikes a balance that should maintain the GASB’s independence while affording the FAF trustees the appropriate oversight to ensure that the GASB is operating within its scope of authority,” GASB Chairman David Vaudt said in a news release.
Under the revised proposal, “Group 1 information” would be items that GASB believes clearly fall within its standard-setting authority, and “Group 3 information” would be items that clearly fall outside GASB’s authority.
Group 2 information would meet at least one of the objectives of governmental financial accounting set forth in GASB’s concepts statements, but would not clearly belong in Group 1 or Group 3. The revised proposal calls for GASB and the Oversight Committee to consider whether Group 2 information falls within GASB’s jurisdiction.
The original proposal called for the Oversight Committee to make recommendations to the trustees on whether a project was within GASB’s authority. Under the revised proposal, the Oversight Committee would be involved in a pre-agenda consultation rather than GASB’s agenda-setting process.
Under the revised proposal, GASB and the Oversight Committee would consult only to discuss whether the Group 2 information appropriately constitutes financial accounting and reporting information in the context of GASB’s mission. The FAF trustees would not vote on specific projects for GASB agenda consideration and would not be involved in GASB’s agenda-setting process.
The pre-agenda consultation could have the following outcomes:
- If GASB and the Oversight Committee agree that the Group 2 information is financial reporting and accounting information, GASB would be free to include it in a standard-setting project.
- If the Oversight Committee concludes that GASB has not demonstrated that the Group 2 information is financial accounting and reporting information, the committee may ask GASB to engage in further research and outreach, or may refer the matter to the FAF trustees for discussion.
- After such a referral, the trustees would decide whether GASB had demonstrated that the information is within its jurisdiction and whether GASB could include the information in its standard-setting activities.
GASB’s existing concepts, standards, and guidance would not be subject to the consultation process unless GASB expects to expand the scope of existing concepts, or expects to expand or reclassify the information covered by existing standards and guidance.
—Ken Tysiac (email@example.com) is a JofA senior editor.