The Government Finance Officers Association approved policy statements Tuesday calling on the Governmental Accounting Standards Board not to move forward with its “fiscal sustainability” project and for the Securities and Exchange Commission to scrap plans to consider requiring floating net asset values for shares of money market funds.
The GFOA approved the policy statements at its membership luncheon yesterday, during which Len Brittain, Toronto’s corporate finance director, became president of the group, succeeding Paul Maklem, general manager of corporate sustainability for Kelowna, British Columbia.
The GASB policy statement warns that the board’s development of standards for forward-looking statements in government financial documents goes beyond the accounting standard-setter’s mandate, exceeding “its legitimate authority and expertise and constitutes an inappropriate use of scarce resources.”
“The GFOA believes that the issue of assessing a government’s future fiscal sustainability clearly is beyond the scope of accounting and financial reporting as they have traditionally and universally been understood,” the group said in the policy statement, adding that the GFOA is “adamantly opposed” to the project.
Michael Genito, commissioner of finance for White Plains, N.Y., said prior to the vote on the policy statement that states and localities have “struggled over the past decade” with GASB pronouncements that are “at odds” with their mission, most recently with the sustainability project.
“We are struggling,” Genito said. “The theme of our conference is doing more with less, and we would ask that the GASB do the same and focus on accounting and financial reporting.”
The measure passed by voice vote, with only a handful of individuals voting against it.
GASB declined to respond directly to the GFOA’s resolution, but has said it plans to move forward with the project, contending research and findings of other standard-setters show that users of state and local financial reports consider it key to understand past and current economic condition, “including how the government arrived at its current status, with an eye toward assessing a government’s future financial viability and sustainability.”
The GFOA also unanimously passed a policy statement calling on the SEC not to make changes to its Rule 2a-7 on money market funds that would require a floating net-asset value. Currently the price of each share is pegged at $1.00, which the issuer group said has worked well for states and localities, which invested some $92 billion in money funds last year.