GASB proposes to improve guidance around note disclosures

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The Governmental Accounting Standards Board is proposing to enhance the disclosures made by state and local governments with their financial statements.

On Friday, GASB issued a proposed concepts statement with the goal of providing improved guidance for when it establishes note disclosure requirements for state and local governments.

When they’re finalized, the concepts could be used by preparers and auditors when they apply GAAP while weighing information in the kinds of circumstances where GASB doesn’t offer authoritative guidance. The concepts can also help people understand the basic concepts behind future GASB standards.

The exposure draft of the proposed concept statement, "Communication Methods in General Purpose External Financial Reports That Contain Basic Financial Statements: Notes to Financial Statements," explains the purpose of notes to financial statements and the people who are intended to use the footnotes. The proposals in the exposure draft would replace the existing criteria for disclosing information in notes to financial statements.

The proposals spell out the kinds of information that should be disclosed in notes, and the types of information that aren’t appropriate for note disclosures. GASB emphasized in particular the proposals for the characteristics that distinguish information that’s essential to users in making economic, social, or political decisions or assessing accountability. Those proposed characteristics are that:
1. The information is currently being utilized in users’ analyses for making decisions or assessing accountability; or,
2. Would be utilized if it became available.

GASB is asking for feedback on the proposals by April 17. It has also scheduled a public hearing on May 17 in New Orleans, in conjunction with the Government Finance Officers Association’s annual conference. The deadline for providing written notice of intent to participate is April 17.

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Accounting standards Government accounting GASB Financial reporting