Proposal seeks proper ingredients in federal financial reporting

BY KEN TYSIAC

New standards proposed by the Federal Accounting Standards Advisory Board (FASAB) are designed to make sure the appropriate agencies and organizations are included in the federal government’s financial reporting.

Under the proposed standards, the governmentwide general purpose federal financial report (GPFFR) would include organizations that are:

  • Budgeted for by elected officials of the federal government;
  • Owned by the federal government; or
  • Controlled by the federal government with risk of loss or expectation of benefits.


The proposal also would require that the GPFFR include an organization if it would be misleading to exclude that organization, even if it does not meet one of the three inclusion principles.

With the proposal, FASAB is refreshing inclusion standards that date to 1995.

“The federal government and its relationships with organizations have become increasingly complex,” FASAB Chairman Tom Allen said in a news release. “This guidance will help ensure users of GPFFRs are provided with comprehensive financial information about federal reporting entities.”

In addition, the proposal describes criteria for determining whether information about an organization should be presented in the consolidated financial statements or through disclosures. This decision is based on an assessment of the degree to which the organization:

  • Is financed by taxes or other non-exchange revenue.
  • Is governed by Congress and/or the president.
  • Imposes or may impose risks and rewards on the federal government.
  • Provides goods and services on a non-market basis.


The proposed standards also would address which organizations should be included in component reporting entity GPFFRs, minimum disclosures around central banking activities, and disclosures about related parties.

Comments are requested by July 3. The proposed statement would take effect for periods beginning or after Sept. 30, 2016; earlier implementation would be encouraged. FASAB also has scheduled a public hearing on the proposal for its Aug. 28 board meeting.

Ken Tysiac ( ktysiac@aicpa.org ) is a JofA senior editor.

SPONSORED REPORT

Post-busy season checklist

Now that tax season is over, pause for some introspection to guarantee that next year’s busy season is even better. Bonus: “Dirty dozen” scams list to share with your clients. Sponsored by Thomson Reuters, Bloomberg BNA, Bloomberg BNA // Software and Wolters Kluwer.

QUIZ

News quiz: Risks are top of mind in finance

Americans are worried about risks to their financial security. Accountants also see risks to their organizations and their careers. See how much you know about recent news and reports with this quiz.

CHECKLIST

Auditing risks in culture

Cultural flaws can seriously damage an organization. Here’s how internal auditors can reduce risks by embedding culture audits into existing audit programs.