In his first act as Connecticut’s new governor, Dan Malloy signed three executive orders, the first of which commits the state to following U.S. GAAP.
“By signing an order mandating that our state begin to transition into Generally Accepted Accounting Principles — the same standard used in other states, Fortune 500 companies and required of municipalities — we will begin to move toward honest budgeting and fiscal responsibility,” said Malloy in a statement on the gubernatorial Web site.
The other two executive orders mandate the preservation of e-mails from Malloy’s predecessor in the governor’s mansion, Jodi Rell, “for historical use and archival purposes,” according to Malloy (not for blackmail, that is). The other ensures that, while Malloy’s administration transitions into office, the good people of Connecticut “do not experience any delay in or discontinuation of services or programs.”
That’s certainly reassuring. It probably wouldn’t be a great idea if they stopped collecting the garbage in Hartford until the governor settles into his new digs.
Still, the GAAP announcement does seem long overdue. Considering that the Governmental Accounting Standards Board, the Financial Accounting Standards Board, and their parent organization, the Financial Accounting Foundation — which all set, codify, and promulgate U.S. GAAP — have been headquartered in Norwalk, Conn., since 1988, plus there was the so-called “Norwalk Agreement” of 2002, it appears to be high time that the state of Connecticut finally decided to switch to U.S. GAAP.
About three years ago, there was a controversy in the Constitution State over whether they should flat out ignore GASB standards. The state legislature even passed a bill that would have given the state comptroller the power to set accounting standards. Governor Rell vetoed it. Now Governor Malloy has made abidance by GAAP official with the stroke of a pen.
Still, it’s a little unclear what they’ve been using in Connecticut for all these years instead. Maybe they were ahead of the curve of FASB and actually adopted International Financial Reporting Standards some time ago without anybody knowing it.
Of course, now that they’ve committed to move to U.S. GAAP, they will probably have to switch to IFRS like everybody else at some point in the next few years. Hopefully by then the “transition” to U.S. GAAP mandated by Governor Malloy will be well underway, and FASB and the International Accounting Standards Board will be pretty much done with converging U.S. GAAP with IFRS. Good luck, Nutmeg Staters.