GASB delves into financial statement elements, revenue and expense models

By Ken Tysiac

GASB on Wednesday issued a proposed concepts statement addressing recognition of financial statement elements as well as a call for feedback on preliminary views on revenue and expense recognition model proposals.

The proposed concepts statement on recognition of financial statement elements proposes a framework of interrelated objectives and fundamental principles that can be used by GASB to establish consistent accounting and financial reporting principles for recognition of elements of financial statements.

Recognition concepts encompass the measurement focus, which determines what items should be reported in a financial statement, and the related basis of accounting, which determines when those items should be reported in a financial statement.

In the exposure draft, GASB proposes a recognition framework for both:

  • The economic resources measurement focus and accrual basis of accounting, and
  • The short-term financial resources measurement focus and accrual basis of accounting.

The proposed concepts statement also contains a recognition hierarchy that would be followed when evaluating an item for recognition in the financial statements.

Although concepts statements are primarily designed to guide GASB in establishing standards, they also may be used by preparers and auditors for assessment when GASB does not provide authoritative guidance.

Comments on the proposed concepts statement can be submitted by Feb. 26, 2021, by email to

Revenue and expense recognition

GASB is seeking to address revenue and expense recognition by:

  • Developing guidance applicable to topics for which existing guidance is limited.
  • Improving existing guidance that is challenging to apply.
  • Considering inclusion of a performance obligation approach in GASB’s authoritative literature.
  • Assessing existing and proposed guidance based on the conceptual framework.

In its preliminary views document, GASB presents its current thinking about the development of a comprehensive, principles-based model for accounting for revenue and expense transactions. The objective is to enhance the usefulness of information that governments report on their revenue and expenses.

In the preliminary views, the board suggests that the transaction category would be based on the assessment of specific characteristics that a binding arrangement may or may not contain. The categorization methodology is intended to identify transactions with performance obligations.

If a transaction is determined to have a performance obligation, the associated revenue or expense would be recognized based on the satisfaction of the performance obligation. For transactions that do not have a performance obligation, GASB proposed specific recognition guidance based on the various subcategories of transactions (for example, derived taxes such as income and sales taxes; and imposed taxes, such as property taxes).

Comments will be accepted through Feb. 26 by email to

Ken Tysiac ( is the JofA’s editorial director.


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