The User's Perspective

June 2010

New Projects on the GASB's Technical Agenda

            The typical GASB project starts as one item in a list of potential projects suggested by constituents, Governmental Accounting Standards Advisory Council (GASAC) members, Board members, or staff. The project moves to the research agenda if it is considered to be a high priority. Once research has been completed, if standards setting is needed and it is again considered to be a high priority, the project would then move to the current agenda—the list of projects that are being actively discussed by the Board.

            After consultation with GASAC members and fellow GASB members, GASB Chairman Attmore added a practice issue project related to a statement of net position on the current agenda in April 2010. He also added projects addressing fiduciary responsibilities and financial guarantees to the research agenda. This article briefly describes these projects and considers their potential impact on the information presented in state and local government financial reports.

Statement of Net Position

            GASB Concepts Statement No. 4, Elements of Financial Statements, includes definitions of deferred inflows and deferred outflows of resources as elements separate from assets, liabilities, inflows of resources, and outflows of resources. Deferrals are defined as resource inflows and outflows related to future periods.

            Certain projects and recent pronouncements have proposed or required the reporting of deferrals, including Statement No. 53, Accounting and Financial Reporting for Derivative Instruments and the current projects on pensions and service concession arrangements. However, it is not clear, based on Statement No. 34, Basic Financial Statements—and Management's Discussion and Analysis—for State and Local Governments, where deferrals should appear in the financial statements (Concepts Statement 4 refers to “net position”).

            This project considers how deferred inflows and deferred outflows of resources should be displayed in the financial statements.   If the deferred inflows and deferred outflows are to be displayed separately, then consideration will also be given to the term used to describe the difference between assets, deferred outflows, liabilities, and deferred inflows (at present, the difference between assets and liabilities is called net assets).

Impact on the financial report: Governments are not certain whether to present deferrals with assets and liabilities in the financial statements or to present them in their own sections. It may not be clear to financial statement users that deferred outflows and inflows of resources are not assets or liabilities, respectively, if they are presented with assets and liabilities. This project should resolve these issues regarding display in financial statements.

Status: In late summer 2010, after seeking preliminary input from constituents, the Board will begin to deliberate various display alternatives.

Contacts:   Ken Schermann (

More Information:   Statement of Net Position project page 

Fiduciary Responsibilities

            Statement No. 14, The Financial Reporting Entity, states that under certain circumstances, organizations that do not meet the criteria to be included as component units should nevertheless be reported by a government in its fiduciary fund financial statements. (The fiduciary fund financial statements report pension plans and other activities in which a government is holding resources that belong to others.) Those circumstances are when the government has a fiduciary responsibility for the organization. The meaning of that phrase, however, has never been clearly defined, leading to considerable uncertainty among governments and diversity in their interpretations.

            The objective of this project is to clarify what fiduciary responsibility means.

Impact on the financial report: A better understanding of when a government has a fiduciary responsibility for another entity should lead to more consistent inclusion of the appropriate organizations in a government’s financial report and the exclusion of those that do not belong. The result will be the communication to users of more relevant information.

Status:  Project research began in May.

Contacts:  Wesley Galloway (
                Dan Brown (

More Information:  Fiduciary Responsibilities project page 

Financial Guarantees

            Some governments provide several types of financial guarantees, which are primarily associated with commitments related to debt issued by other entities. For example, a county government may guarantee a school district’s general obligation bonds in the event of a debt service shortfall. The objective of this project is to assess whether additional guidance should be developed regarding how financial guarantees should be reported.

            Key research goals include identifying the various types of financial guarantees and determining what forms of financial reporting display or disclosures are necessary to meet financial statement user needs.  

Impact on the financial report: A consistent approach to reporting financial guarantees should benefit users by helping them to receive needed information that is comparable across governments. The project potentially could result in the disclosure of additional information regarding the magnitude of a government’s guarantees and the circumstances under which a government would be required to make good on it guarantees.

Status: Project research began in May.

Contacts:  Randy Finden (
                Rebecca Herrman (

More Information:  Financial Guarantees project page