Should governments provide more information on their economic conditions? How should changes in the fair value of government investments be measured? Is the Statement 34 reporting model working well enough?Such questions being crucial to financial reporting by government entities, the Governmental Accounting Standards Board has put out a call for proposals for research projects. Offering up to $5,000 per project, the board is seeking input on several questions relating to three general issues:

* The new financial reporting model promulgated in Statement 34;

* Economic condition reporting on the sustainability of major government projects; and,

* Financial performance measurement, and the preservation method of accounting for changes in asset condition levels.

GASB spokesperson Gerard Carney said that this is the first time that the board has called on academia to propose research projects on the impact - potential and observed - of both possible and existing government accounting standards.

"GASB needs to know about issues that arise as governments implement a new standard, and needs to know about problems that might be solved with new or amended standards," he said. "Are standards accomplishing what they were intended to do? Do they provide the information that investors, citizens and others need to know to make decisions? Are there information needs that are unmet that could be addressed through standards-setting? We hope independent researchers can help us answer these kinds of questions."

Statement 34 - as amended by Statement 38 - requires financial statements to include a management discussion and analysis with eight types of information. The board would like to know whether governments are sufficiently discussing those eight items, or going beyond those items.

Statement 34 also requires that government-wide statements of activities be prepared at the level of detail required in fund statements of revenues, expenditures and changes in fund balances. The board would like to know at what level governments are reporting these details, and whether the users of these statements find that level useful.

The board is also seeking research relating to fund statements and reconciliations under Statement 34.

Major projects

Economic conditions reporting is a broad, long-term GASB project. At the current stage of the project, the board is looking into how governments might provide information on the sustainability of major programs. One key question is whether state and local governments should provide information on social insurance programs, as the federal government is required to do.

GASB is also considering a project on financial performance measurement that would determine the best method of presenting changes in fair value in statements of activities, proprietary fund statements, governmental fund statements and statements of changes in fiduciary net assets.

This issue arose during the development of Statement 34, and more recently in deliberations on derivatives and hedging. In a statement of activities, changes in fair value might be reported as program revenue or expense, a separate line below general revenues, a separate column, possibly added to the governmental or business-type activities columns, or any of several other options.

GASB is hoping that academic researchers can suggest ways that changes in the fair value of assets or liabilities might be recognized in operating statements, whether reporting should be different if the asset is a financial asset rather than a capital asset, and whether reporting should be different for changes in fair value associated with program expense or revenue and changes associated with general revenue.

GASB has yet to formally begin a project on reporting the depreciation expense for infrastructure assets. The issue came up during deliberations on Statement 34, but was put aside due to measurement questions. One method discussed at that time was a so-called preservation method that would report a capital use charge based on changes in an asset's condition level in the statement of activities.

Before taking up a project on this issue, the board would like to know how governments have been implementing a modified approach, what methods are being used to assess condition, and how useful reports under that approach have proven.

GASB is requesting research proposals by Nov. 1, 2006. Details on the request are available at

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