GASB proposes a final blueprint for financial reports

The third and final round of public comment on the Governmental Accounting Standards Board’s proposed improvements to the blueprint for state and local government annual financial reports is open to public comments.

Following a comment period that ends Feb. 26, 2021, there are five public hearings tentatively scheduled for March and April.

GASB is also webcasting a daylong public hearing scheduled for Tuesday on a proposed update on financial note disclosures.

The financial notes hearing covers the third part of a comprehensive update that GASB has undertaken on state and local financial reporting.

GASB’s exposure draft final statement released Friday identifying the contents of an annual audited financial report is the first of those three parts and referred to as the "blueprint."

The second part of the comprehensive update covering the reporting of revenue and expenses for operations is about a year behind in development.

The updated blueprint released Friday includes proposed rules for how the pieces to a state or local government financial statement should be arranged.

This revision represents an update of Statement 34 issued in June 1999 on Basic Financial Statements-And Management’s Discussion and Analysis-For State and Local Governments.

It specifies what financial statements are required, what they should look like, what kind of information they should include, and establishes the relationship between those financial statements and the subsequent note disclosures and required supplementary information.

GASB began doing research updating Statement 34 in 2014 and added an update to its financial reporting model to its technical agenda in September 2015.

The general conclusion from GASB’s research was that Statement 34 was working fine but there were certain things identified by stakeholders that could be improved, according to a GASB spokesman.

“And there was the measurement focus and basis of accounting for the governmental funds, which we knew was an issue and which the research confirmed was still a problem,” the spokesman said.

Two years ago GASB issued its preliminary views on the update as the board's first position on what needed to be changed.

“If anybody was following this, it's gonna look a lot like what was in the preliminary views,” the GASB spokesman said in reference to the proposed final draft. “The board did make a couple of adjustments to address the concerns that were raised the last time.”

In defining whether a transaction is short-term of long-term, there is an exception to the one-year rule for revenue anticipation notes that are up to 15 months.