GASB proposes targeted improvements, new concepts

GASB issued separate proposals that are designed to deliver targeted improvements to the financial reporting model and advance new concepts to guide the board in developing standards on recognition in state and local government financial statements.

In one preliminary views (PV) document, Financial Reporting Model Improvements, GASB presents proposals for improvements to the financial reporting model. The proposals aim to make the model more effective in providing information necessary for decision-making and assessing a government’s accountability.

The document considers improvements in selected areas of the existing financial reporting model; a subsequent proposal will address enhancement of other areas of the model.

The proposed improvements as described by GASB include:

• A short-term financial resources measurement focus for governmental funds that recognizes short-term transactions and other events when incurred and long-term transactions and other events when due.
• A format for governmental fund financial statements that distinguishes between current and long-term resource flows.
• Clarified explanations of operating and nonoperating revenues and expenses.
• An additional subtotal in proprietary fund financial statements for operating income or loss, and noncapital subsidies.
• Presentation of all budgetary comparison information as required supplementary information and required presentations of two variance columns.
• Communication of major component unit information either in the governmentwide statements or in combining financial statements.
• A new schedule of governmentwide expenses by natural classification as supplementary information in comprehensive annual financial reports.

The second PV document, Recognition of Elements of Financial Statements, presents the board’s views on concepts related to recognition of elements of financial statements, such as assets and liabilities.

In addition, GASB is proposing a recognition framework for the short-term financial resources measurement focus (proposed for use in governmental fund financial statements in the other PV document) and the economic resources measurement focus (used in governmentwide, proprietary fund, and fiduciary fund financial statements).

GASB is seeking public comments on the proposals. Comments can be emailed to director@gasb.org.