The Governmental Accounting Standards Board has a host of complex projects on the docket for 2008. The first half of the year will see a few new documents, while the second half will entail mostly discussions.
Two of the board's most interesting projects deal with the way governments report their service efforts and accomplishments -- in other words, their success in doing what they are supposed to do.
One of those projects will propose amendments to Concepts Statement 2, Service Efforts and Accomplishments. In the 14 years since its issuance, said GASB director of research and technical activities David Bean, professional practice has evolved, and GASB has learned a lot through research efforts; hence the need to "update, clarify and amend" the fundamental concepts. The proposal should be issued by the end of March.
The board also expects to issue a related initial due-process document on suggested guidelines for voluntary reporting of performance information. "With terms like 'suggested' and 'voluntary,' this due process document will likely be different from anything that GASB has ever issued," Bean said. "We're still kicking around whether it will be an invitation to comment or a preliminary views document or something else."
The board also is exploring ways to make fund balance information more useful to creditors and citizens. Having discussed what kinds of decisions are based on fund balance information, what kinds of information are used, and how the users of that information would like to see it presented, the board expects to propose a standard by March.
"This is a big project that has a lot of implications for state and local governments," Bean explained. "It will propose how fund balances are displayed in financial statements. There are significant inconsistencies in practice, and it's not the preparers' fault. Many of these inconsistencies are related to definitions that are not clear in current literature. The board would like the end result to be clearly understandable presentations of the various fund balance classifications."
CLOSER ON DERIVATIVES
GASB is also closing in on a new standard on derivatives. Research and discussions on this issue have been going on since Statement 31, on reporting on certain investments, was issued in 1997. The board has been re-deliberating an exposure draft that was issued in June of 2007.
In an effort to streamline the development of the final standards, the board has tentatively excluded governmental fund accounting for derivatives from the scope of the project. The board will return to the issue after it has more deeply deliberated its conceptual framework project on recognition and measurement.
"What we wanted to avoid was any potential whipsawing of the preparers and users of financial statements that would result from first saying that derivatives should be reported in fund balances in a particular way, and then have the conceptual statement establish a framework that could result in different conclusions," Bean said. "We also didn't want to pre-judge what would happen in the framework."
The scope exclusion would allow the board to issue a final statement on derivatives by the end of June 2008. Bean expects the board to discuss the conceptual framework project through the end of the year. Those discussions will aim to determine what messages financial statements are meant to convey, the criteria for recognizing elements of a financial statement -- not just what to recognize, but when -- and the use of fair value versus historical costs in the financial statements.
At its April meeting, the board expects to discuss five possible new agenda issues: a re-examination of pension accounting and reporting; potential guidance on departmental reporting and a re-examination of Statement 14; public-private partnerships; an omnibus project to transplant certain accounting standards that are currently contained in auditing standards into GASB's accounting standards; and an omnibus project on investments.
"It's going to be a difficult decision," Bean said. "There are two or maybe three spots that will be available on the current technical agenda. The decisions made in April will likely determine what GASB will be focusing on for the next several years."
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