In September 2015, the Governmental Accounting Standards Board (GASB) added a major project to its agenda to re-examine the financial reporting model used to prepare governmental financial statements. The objective of the project is twofold:
Phase one focused on potential changes being considered to the measurement focus, basis of accounting, and presentation and format of the governmental fund financial statements. In December 2016, the GASB issued an Invitation to Comment (ITC) on this first phase of the project.
The ITC is the first opportunity that governments and users of governmental financial statements will have to provide feedback to the GASB to shape the overall direction of the project. Comments on the ITC are due by March 31, 2017.
The GASB’s ITC is requesting input on its preliminary decision to change how governments would account for activities in governmental fund financial statements. It proposed to eliminate the use of two items: current financial resources as the measurement focus and modified accrual as the basis of accounting.
The ITC is requesting input on three alternative recognition approaches to governmental fund financial reporting. These approaches include:
The ITC also addresses other potential improvements to governmental fund financial reporting, including:
The GASB will utilize the feedback it receives to shape a preliminary views document, followed by an exposure draft, and then several rounds of public comment before any final guidance is issued. Final issuance of an updated Reporting Model Statement may be ready by November 2021, with an effective date sometime after this date, according to the GASB Web site.
Although the focus of this ITC is on governmental funds, future phases of the project will likely include additional proposed changes in these areas:
Management’s Discussion and Analysis (MD&A)
Government-Wide Financial Statements
Major Funds
Proprietary Fund and Business-Type Activity Financial Statements
Fiduciary Fund Financial Statements
Budgetary Comparisons
Other Issues
On February 1, 2017, the GASB issued Statement No. 84—Fiduciary Activities. The statement establishes new criteria for identifying fiduciary activities and clarifies and changes the types of fiduciary funds reported, among other changes. The statement also clarifies that stand-alone statements issued for business-type activities should present fiduciary funds, when applicable. The statement is effective for periods beginning after December 15, 2018.
If you have questions about the ITC or Statement No. 84—Fiduciary Activities, contact your Moss Adams professional. You can also contact:
Government Practice
(541) 225-6070
jim.lanzarotta@mossadams.com
Tasha Repp, National Practice Leader
Tribal & Gaming Practice
(360) 685-2246
tasha.repp@mossadams.com
Jim and Tasha each serve as representatives to the Governmental Accounting Standards Advisory Council—Jim for the American Institute of Certified Public Accountants and Tasha for the Native American Finance Officers Association.