Government financial reporting model would change under GASB proposal

The state and local government financial reporting model would change under a new proposal issued by GASB.

GASB’s exposure draft, Financial Reporting Model Improvements, proposes changes that are designed to enhance the effectiveness of financial reports in providing information essential for making decisions and assessing a government’s accountability. The proposal also addresses certain application issues.

The proposal would establish or modify existing accounting and financial reporting requirements related to:

• Application of the short-term financial resources measurement focus and accrual basis of accounting in governmental funds. This would replace the existing current financial resources measurement focus and the modified accrual basis of accounting.
• Management’s discussion and analysis.
• Presentation of the proprietary fund statement of revenues, expenses, and changes in fund net position.
• Unusual or infrequent items.
• Budgetary comparison information.

The proposal is intended to improve financial reporting in a number of ways. For example, the proposed short-term financial resources measurement focus and accrual basis of accounting is designed to improve the consistency of the information in governmental fund statements.

Proposed changes to the presentation of governmental financial statements are designed to make the short-term nature of their information more evident and understandable while more clearly differentiating them from the long-term perspective of the governmentwide financial statements.

GASB is seeking comments, which can be submitted by emailing director@gasb.org, by Feb. 26, 2021.

— Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com) is the JofA’s editorial director.