WASHINGTON — While the Governmental Accounting Standards Board is widely accepted as the financial accounting standards setter for state and local governments, stakeholders disagree about the scope of its authority and its process for setting standards, according to a study released Monday.

The study, commissioned in May 2011 by GASB's overseer, the Financial Accounting Foundation, was led by three professors with governmental expertise from different universities who worked as a team.

The FAF's trustees plan to study and evaluate the report's findings during the next several months, the co-chairs of their Standard-Setting Process Oversight Committee said in a letter accompanying the report.

"In so doing, we will also explore the potential of better distinguishing the nature of GASB's authority in those areas of financial accounting and reporting generally considered by stakeholders to be clearly within GASB's scope, and in those areas of financial reporting for which there is far less agreement," said Edward E. Harrington, general manager of the San Francisco Public Utilities Commission, and Jeffrey J. Diermeier, retired president and chief executive officer of the CFA Institute.

John Pappas, FAF's senior manager of media relations and constituent communications, said, "As a part of the Trustees' evaluation of the study, the FAF plans to reach out to GASB's constituent groups — governmental preparers of financial reports, users of such information, and auditors — to discuss GASB's authority." The trustees "will consider process enhancements to clarify GASB's scope as well as to better enable GASB to serve its stakeholders," Pappas said.

The report comes as many state and local governments have complained for years that GASB sometimes oversteps its bounds. In 1999, the Government Finance Officers Association threatened to withhold funding from GASB if it moved forward with the controversial infrastructure reporting standard. More recently, states and localities criticized GASB's efforts to set performance standards and standards for forward-looking statements in financial documents.

The study found there is broad support for GASB setting historical financial standards, but controversy over its attempts to set standards in nonfinancial and future financial areas.

It also found that auditors and governmental preparers of financial documents prefer a slower standard-setting process that offers more opportunities for input and reduces the cost and complexity of implementation.

The professors that wrote the study are: Kenneth A. Smith, senior lecturer at the Daniel J. Evans School at the University of Washington; Donald R. Deis, Ennis & Virginia Joslin Endowed Chair & Professor of Accounting at Texas A&M University in Corpus Christi; and Marc A. Rubin, PricewaterhouseCoopers professor of accountancy and chair of the Department of Accountancy at Miami University in Oxford, Ohio.

They conducted an online survey of 423 governmental preparers, 49 users, 130 auditors and 166 others, as well as 30 interviews or focus groups, and attended almost a dozen conferences and reviewed literature and websites.

This is the fourth such study of GASB activities since it was created in 1984.

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