GASB revises proposed approach to financial statement notes

By Ken Tysiac

GASB issued a revised proposed concepts statement Tuesday that would guide the board when it establishes requirements for notes to financial statements for state and local governments.

The proposal updates and revises concepts that were proposed by GASB in February 2020. The revised proposal, Communication Methods in General Purpose External Financial Reports That Contain Basic Financial Statements: Notes to Financial Statements, proposes concepts that would help the board by establishing:

  • The purpose of notes to financial statements;
  • The intended users of note disclosures;
  • The types of information that should be disclosed in notes; and
  • The types of information that are not appropriate for note disclosures.

The concept of essentiality is an important element in the proposed concepts statement. Under the revised proposal, notes to financial statements would be essential for making economic, social, or political decisions or assessing accountability.

According to the revised proposal, the following characteristics indicate that information is essential to financial statement users:

  • Users utilize the information in their analyses for making decisions or assessing accountability or would modify those analyses to incorporate the information if it were made available.
  • The information has or would have a meaningful effect on users’ analyses for making decisions or assessing accountability.
  • A breadth or depth of users utilize or would utilize the information in their analyses for making decisions or assessing accountability.

The revised ED reflects feedback provided by stakeholders in the previous ED. Comments on the revised ED can be emailed by Oct. 15 to

Ken Tysiac ( is the JofA’s editorial director.

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