FAF Revises Proposal on Panel's Role in Determining Scope of GASB Authority

The Financial Accounting Foundation board of trustees has revised a proposal to clarify the type of information the Governmental Accounting Standards Board may incorporate into the financial accounting and reporting concepts, standards, and guidance it issues for state and local governments.

Under the original proposal released in February, GASB, when considering a project possibly within its scope of authority, would have provided the FAF oversight committee with an expanded project proposal during the agenda-setting process. The oversight committee would have made recommendations to the FAF trustees on whether the project was within GASB’s scope of authority. The new proposal would move the oversight committee’s involvement from the agenda-setting process to a pre-agenda consultation.

GASB maintains a set of criteria to determine if government financial information is within its scope, and places it into one of three groups. Group one is information that GASB assesses as clearly within its standard-setting authority, such as items recognized in basic financial statements and notes to those statements. Group three is information clearly recognized as being outside GASB’s standard-setting authority, such as information that has no relationship to information presented in general purpose external financial reporting.

Group two is the information at issue in the revised proposal, consisting of information that does not clearly possess the characteristics of groups one or three, but that meets at least one of the objectives of governmental financial accounting set forth in GASB’s existing concept statements.

GASB leaders said the change came as a result of public feedback that GASB should maintain its independence from FAF.

“In comments we received on the original proposal, many stakeholders expressed concern that the trustees were stepping into the GASB’s standard-setting role,” said FAF chairman Jeffrey Diermeier.

GASB Chairman David Vaudt lauded the new proposal  for providing for proper oversight while addressing stakeholder concerns.

“The GASB is pleased that the trustees have proposed a revised process based upon GASB’s concept statements and focused on pre-agenda consultation,” Vaudt said. “The revised proposal strikes a balance that should maintain GASB’s independence while affording the FAF trustees the appropriate oversight to ensure that GASB is operating within its scope of authority.”

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