GASB explores fundamental changes

GASB will take a fundamental look at the reporting model for state and local government financial statements in an effort that aims to enhance the information available for decision-making and assessing a government’s accountability.

In adding a new project to its technical agenda, GASB committed to examining a financial reporting model that was established in 1999 through Statement No. 34, Basic Financial Statements—and Management’s Discussion and Analysis—for State and Local Governments, and subsequent related pronouncements.

The current structure of state and local government financial reporting was established in Statement No. 34, which set the foundation for the format and contents of the basic financial statements, certain related notes to the financial statements, and required supplementary information, including management’s discussion and analysis (MD&A).

One of the most significant additions to the reporting model that resulted from Statement No. 34 was the introduction of governmentwide financial statements including accrual information, which includes the reporting of infrastructure, other capital assets, and long-term liabilities.

GASB’s reexamination will take into account research GASB’s staff has conducted over the past two years with users, preparers, and auditors of governmental financial statements, who have shared views on how the financial reporting model is functioning.

Potential areas of improvement include MD&A, governmentwide financial statements, major funds, governmental fund financial statements, proprietary fund financial statements, and budgetary information.

GASB will look for opportunities to reduce the complexity of financial statements in each of these areas, which may improve the timeliness of reporting. Deliberations were scheduled to begin in October, and the board expects to issue an initial due process document by the end of 2016.