The Governmental Accounting Standards Board (GASB) is asking for input on possible changes that could be made to the governmental funds portion of the financial reporting model.
In an invitation to comment, issued on Jan. 4, the GASB addresses potential improvements that were initially identified during research the board conducted to evaluate the effectiveness of the existing standards.
Among the improvements are three alternative recognition approaches that were developed to provide more useful governmental funds information to financial statement users for making decisions and assessing governmental accountability.
- Near-term financial resources.
- Short-term financial resources.
- Long-term financial resources.
“The three recognition approaches provide a spectrum of alternatives related to which assets, deferred outflows of resources, liabilities, and deferred inflows of resources are reported in governmental fund financial statements,” the GASB said.
The near-term approach would report balances of governmental fund activities from a near-term perspective and flows of near-term financial resources for the reporting period.
The short-term approach would provide information that is focused on the government’s one-year fiscal period.
The long-term approach would recognize the effects on financial resources of transactions or events when they take place, regardless of when cash is received or paid.
Other potential improvements to governmental fund reporting include:
- Format of the governmental funds statement of resource flows.
- Specific terminology.
- Reconciliation to the government-wide statements.
- For certain recognition approaches, a statement of cash flows.
“This project is intended to consider improvements to only selected aspects of the existing model,” the GASB said.
Improvements to other parts of the financial reporting model are expected to be considered in the future, the board added.
“This initial document in the re-examination 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 written statement. “This is a key opportunity for stakeholders to influence the direction of the board’s deliberations on the fundamental issues related to governmental funds.”
Comments on the proposed improvements are due to the GASB by March 31. The invitation to comment explains several ways to provide feedback.
About Jason Bramwell
Jason Bramwell is a staff writer and editor for AccountingWEB. He has nearly 20 years of experience in print and online media as a journalist and editor.