Journal EntriesThis recurring website feature highlights articles from The GASB Report, the GASB’s monthly newsletter. The current article appeared in the May 2012 issue.
GASB Holds Public Hearings on Financial Projections Preliminary ViewsThis spring, the GASB held two public hearings on the Preliminary Views, Economic Condition Reporting: Financial Projections. The first public hearing was held on March 29 in Los Angeles, California, and the second was held on April 17 in East Elmhurst, New York.
The GASB holds public hearings to allow the Board an opportunity to better understand constituent input through question and answer sessions with respondents and listening to the rationale behind positions provided in response to questions asked about the Board’s proposals.
During the two public hearings, the GASB received testimony from 23 individuals and organizations, including financial report users, preparer organizations, and other interested parties. The participants expressed a wide range of opinions, including those that supported the Board’s preliminary views on financial projections as they relate to economic condition reporting and those that disagreed in varying degrees with those preliminary views.
Testifiers in agreement with the Board’s preliminary views indicated that the proposed guidance will assist users in assessing a governmental entity’s economic condition and, more specifically, fiscal sustainability. Further, these testifiers stated that supplementing the annual financial report (AFR) with information necessary to assess a government’s ability to generate inflows of resources necessary to honor current services and to meet its financial obligations as they become due, without transferring financial obligations to future periods that do not result in commensurate benefits, provides users with more comprehensive financial information and allows for more informed decision making.
Testifiers in disagreement with the Board’s preliminary views do not support the proposal for one or more of the following reasons: (1) they assert that the reporting of financial projections is not within the scope of the GASB; (2) they believe the reporting of financial projections conflicts with GASB Concepts Statement No. 1, Objectives of Financial Reporting; (3) they contend the information necessary for users to assess fiscal sustainability is already included in the AFR or comprehensive annual financial report, budget documents, official statements, or other sources; or (4) they believe the costs of preparing and reporting financial projections outweigh the benefits.
The Board approved the Preliminary Views for public comment in November and received 170 written responses. The Board will receive an overview of constituent feedback received to date at its June 1 meeting. Redeliberations are expected to begin at the July meeting to consider the input received during the comment period and through these public hearings and then determine the next steps in this project.