GASB issued an Invitation to Comment to seek feedback to assist its efforts to develop a revenue and expense recognition model for state and local government accounting.
The three objectives cited by GASB in the development of the model are:
- To create a more robust framework to address a wide range of transactions, including some for which no guidance currently exists;
- To improve the comparability of how transactions are accounted for and reported by governments; and
- To provide more useful information to users of financial reports for making decisions and assessing accountability.
Two potential models are discussed in the Invitation to Comment document. An exchange/nonexchange model would include a classification process based on the existing definition for exchange transactions. The recognition process in this model would be based on existing guidance for nonexchange transactions and a standardized recognition approach for exchange transactions.
A performance obligation/no performance obligation model would include a classification process based on a tentative definition of a performance obligation. That recognition process would retain existing guidance for transactions without a performance obligation, but it also would apply a structured recognition approach for transactions classified as containing a performance obligation.
"This Invitation to Comment lays out potential paths forward for establishing comprehensive guidance for revenue and expense transactions," GASB Chairman David Vaudt said in a news release. "The board needs stakeholder feedback on the potential benefits and challenges of the two models before it begins to develop potential changes to the standards for future input."
Comments can be emailed to firstname.lastname@example.org. Public hearings on the issue are scheduled for May 6 in St. Louis, May 18 in Burlingame, Calif., and May 30 in Norwalk, Conn.