Though the Governmental Accounting Standards Board expects to issue only one new standard in 2009, the year should be productive enough to position the board for significant advances over the subsequent two years.You could call it a year of research and deliberation - some of it conducted in-house by staff, and some by requests for comments and ideas from the field of state and local governments and the users of government financial information.
The one standard expected in 2009, on fund balance reporting, should be issued in the first quarter. It is likely to be very similar to an exposure draft that was proposed in 2008, though the board has made some changes to terminology and fund-type definitions.
One of the most fundamental issues that the board has to grapple with is how to express certain concepts in recognition and measurement - the criteria that would require information to be recognized and presented in statements, and the measurement attributes that should be used for that information. Among the issues that the board must contend with are the uses of fair value and historical costs.
The conclusions will establish the last big piece of the board's conceptual framework, but GASB research manager Dean Mead termed the project "extremely difficult."
"The thing that complicates this is that governmental fund statements use current financial resources measurement focus in a modified accrual-basis accounting, unlike the rest of the financial statements, which use accrual accounting," he said. "The board has been challenged to explain why those statements use a different measurement focus and basis of accounting - what the rationale is for that and how [that focus and basis] should be defined to best achieve the purposes of those governmental fund statements."
The board is striving to issue a preliminary views document in September 2009 to test the waters of the financial industry. Depending on the quality of comments, an exposure draft of a proposed concepts statement may be issued a year later, with a final document possible in the summer of 2011.
OTHER IRONS IN THE FIRE
The board also has been considering possible improvements to existing standards on post-employment benefits. Those standards, expressed in GASB Statements 25 and 27, were issued 14 years ago, so the board has been researching whether they could use updating.
The research has identified enough potential improvements to justify issuing an invitation to comment on whether the board should pursue amendments to the statements. The issues range from the basic transaction of exchanging work for retirement benefits to the specific accounting for inter-period equity. The invitation to comment may be out by March, with a subsequent due process document possible by the middle of 2010.
The board has also been deliberating a possible standard establishing accounting and financial reporting requirements for public-private partnerships, such as when a private company maintains and operates a highway. The scope would include governmental agencies that are managing an asset or providing a service for a general government.
"This is a timely project, given that governments are looking for ways to raise budgetary resources to cover an unusual shortfall that has come during this economic downturn," Mead said. "They might be interested in a public-private partnership in which they sign an agreement with a company to operate a major infrastructure asset. There isn't any solid, specific accounting guidance for those types of arrangements."
An exposure draft of a new standard should be issued in the first quarter of 2009, with a public hearing slated for June.
A final statement may be possible early in 2010.
In a two-issue project, GASB is re-assessing Statement 14, on the reporting entity, and concurrently working on a standard that would apply to governmental units that are not considered full reporting entities, such as departments or funds that are often audited despite a lack of generally accepted accounting standards that apply to them. The board has been deliberating the issue since November of 2008 and hopes to issue an exposure draft in the first quarter of 2010.
GASB has been researching a possible project on economic condition reporting - that is, reporting on the fiscal sustainability of governments. The research has been identifying the information that users need to assess economic condition and whether that information could be enhanced or made more consistent through guidelines. The Federal Accounting Standards Advisory Board recently issued an exposure draft on this same topic. Mead expects the research to be completed by the middle of 2009, at which point the board will decide whether to add the issue to its agenda.
Early in the first quarter, GASB expects to wrap up an implementation guide for derivative instruments, at which point it will be able to begin research on fair value measurement and a financial instruments "omnibus" statement that will lead to clarification of a variety of isolated issues.
GASB has also been working on a project to provide guidelines for voluntary reporting of "service efforts and accomplishments" information. Having received comments in the second half of 2008, the board plans to spend the first half of 2009 analyzing feedback before deciding how to proceed.
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