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Governmental Accounting Standards Board Chair David A. Vaudt told the NASBA audience that the comment he hears most is that “government financial statements are too long and complex,” and he assured the audience that the GASB will be looking at the length and complexity of the reporting model. The same type of problem has been mentioned to the Financial Accounting Standards Board. “The FASB and GASB interrelate as much as possible,” Mr. Vaudt said, but he pointed out that the operations of government are really different from those of corporations. “We try to have differences only where differences are truly needed,” he said. GASB estimates there are approximately 90,000 governmental units in the United States, with 67 percent of them reporting in accordance with governmental GAAP (Generally Accepted Accounting Principles), including all state governments, 79 percent of the county governments and 72 percent of the school districts.
The nine projects the GASB currently has on their plate were described by Mr. Vaudt as falling into three categories: (1) Technical projects recently completed by the GASB covered the GAAP hierarchy (which is open for comment until the end of 2014), fair value measurement and application, and other post-employment benefits, where the first phase of due process has been completed and the GASB is studying the feedback. (2) Soon to enter the due process stage are projects on leases, tax abatement disclosures, and fiduciary responsibilities. Feedback on those three projects will be requested soon. (3) In the initial stages of GASB consideration are projects on irrevocable charitable trusts, asset retirement obligations, and blending requirements for certain business-type activities (BTAs), Mr. Vaudt reported.
The GAAP hierarchy provides types of guidance that governments follow for accounting and financial reporting purposes. What the GASB has proposed is reducing the GAAP hierarchy from four levels of authoritative guidance to two levels. It anticipated this would make finding the appropriate guidance easier and more straightforward, Mr. Vaudt explained. This exposure draft is out for comment until the end of 2014 and Mr. Vaudt encouraged feedback.
The GASB has engaged in an outreach program to listen to what its stakeholders have to say. “One well prepared comment may change the direction of the GASB,” he noted. In the past year, Mr. Vaudt has met with over 30 organization executives and Congressional leaders. The GASB has been strengthening their relationships with some of these organizations, reintroducing themselves to others and establishing relations with a few.
Chair Vaudt said he believes changes can be made that positively impact the timeliness of financial reports. For example, certain kinds of information probably don’t need to be audited. He explained that while financial statement users consider a significant number of measures, what needs to be determined is the level of assurance they are really looking for in some of the requested financial information. “The only ideas that are off the table are the ones you don’t share with us,” Mr. Vaudt stated.
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