NORWALK, Conn.--(BUSINESS WIRE)--The Financial Accounting Foundation Board of Trustees today issued for public comment a proposal to revise the agenda-setting process for the Governmental Accounting Standards Board (GASB) to assist the Trustees in assessing the scope of the GASB’s standard-setting activity.
The proposal is the result of discussions between the Trustees and GASB leaders following completion of an independent academic study that documented GASB stakeholders’ views on the scope of the GASB’s standard-setting activities and authority. The study revealed a lack of consensus about the appropriate scope of the GASB’s activities and involvement in government accountability reporting.
“The FAF Trustees believe modifying GASB’s agenda-setting process to allow early stakeholder input is the best way to address scope of authority issues,” said FAF Chairman Jeffrey J. Diermeier. “Assessing a project to be ‘in scope’ early in the agenda-setting process would allow appropriate Trustee oversight while preserving the GASB’s standard-setting independence. We are seeking stakeholder input to help determine whether the proposed changes will help resolve these issues.”
The GASB’s current agenda setting process involves three principal phases: 1) Issue identification; 2) Research, and 3) Current technical agenda development. The GASB has classified governmental financial information into three categories:
- Group 1 – Information that GASB assesses as clearly within its standard-setting authority. Included in Group 1 are items recognized in basic financial statements, notes to the basic financial statements, current Required Supplementary Information, and other supplementary information for historical context.
- Group 2 – Information that the GASB believes is within its standard- setting authority, but that is not clearly in Group 1. Included in Group 2 are notes to the basic financial statements containing non-traditional information, current Required Supplementary Information providing operational or economic context, and other general purpose financial reports.
- Group 3 – Information clearly recognized as being outside GASB’s standard-setting authority. Included in Group 3 is information outside general purpose external financial reporting.
The FAF Trustees are proposing the following modifications to the GASB’s agenda-setting process that address the three groups of governmental financial information:
- The GASB would follow its established agenda-setting process without modification for Group 1 financial information projects.
- Consistent with current practice, the GASB will not conduct research on Group 3 financial information projects and will not add Group 3 projects to the research or technical agendas.
For Group 2 financial information projects, the GASB will
modify its established agenda-setting process as follows:
- In the issue identification phase, the GASB will provide an expanded project proposal to the FAF’s Standard Setting Oversight Committee. The Oversight Committee may conduct, or request the GASB to conduct, additional stakeholder outreach on the proposed project. The Oversight Committee will then make a recommendation to the Trustees about whether the project is within the GASB’s scope of authority for financial accounting and reporting guidance. If the Trustees decide that the project is within the GASB’s scope, the GASB will update its project descriptions in the technical plan and continue with its established agenda process.
- At the end of the research phase, the Oversight Committee may request to review the project prospectus. Factors that may lead to Oversight Committee review would include project scope changes and additional stakeholder input. If the Oversight Committee reviews the project prospectus, it may decide to obtain additional stakeholder input. The Oversight Committee will reevaluate the Trustees’ previous determination of whether the project is within the GASB’s scope of authority, based on any new information. It will make a final recommendation to the Trustees. If the Trustees determine the project still is within the GASB’s scope, the GASB will update the project prospectus and continue with its established agenda process.
The Trustees’ priority will be to ensure that the GASB’s standard-setting processes are independent, and free from undue influence or special interests. Therefore, the revised agenda-setting processes will be part of the Trustees’ GASB oversight, not an appeals process for GASB standard setting.
The proposal, as well as the independent academic study Independent Academic Study of the Scope of the GASB: Accounting and Accountability – Topics and Processes is available at the FAF website. Stakeholders can email comments to GASBscope@f-a-f.org or mail them to the following address by April 30, 2013: GASB Agenda Process, Financial Accounting Foundation, 401 Merritt 7, PO Box 5116, Norwalk, CT 06856
About the Financial Accounting Foundation
The FAF is responsible for the oversight, administration, and finances of both the Governmental Accounting Standards Board (GASB) and the Financial Accounting Standards Board (FASB). The Foundation is also responsible for selecting the members of both Boards and their respective Advisory Councils.
About the Governmental Accounting Standards Board
The GASB is the independent, not-for-profit organization formed in 1984 that establishes and improves financial accounting and reporting standards for state and local governments. Its seven members are drawn from the Board’s diverse constituency, including preparers and auditors of government financial statements, users of those statements, and members of the academic community. More information about the GASB can be found at its website, www.gasb.org.