GASB introduces possible new approaches for governmental fund reporting

The proposal builds on 2 years of research.

GASB is seeking feedback on three alternative recognition approaches as well as other potential changes that could be made to reporting rules for governmental fund financial statements.

In an invitation to comment, GASB introduced the approaches, which it described as:

  • Near-term financial resources.
  • Short-term financial resources.
  • Long-term financial resources.

The near-term model is a closer-to-cash approach, while the long-term model is a closer-to-economic resources approach. The short-term model is also known as a working capital approach and is situated between the other two models on a cash vs. economic resources continuum.

In the invitation to comment, GASB addresses potential improvements that were initially identified during research the board conducted to evaluate the effectiveness of the existing standards. In addition to recognition approaches, these potential improvements include:

  • Format of the governmental funds statement of resource flows.
  • Specific terminology.
  • Reconciliation to the governmentwide statements.
  • For certain recognition approaches, a statement of cash flows.

Only selected aspects of the existing financial reporting model are being considered for improvements in the project. Changes to other parts of the model are expected to be considered in the future.

"This initial document in the reexamination of the financial reporting model lays out what two years of research indicated were the prime areas for improvement for governmental funds," GASB Chairman David Vaudt said in a news release.

Comments are sought by March 31 and can be emailed to director@gasb.org.

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