The User's Perspective

June 2010

GASB Project Update

This article summarizes major projects on the GASB’s current agenda. Major projects on the current agenda are those that are likely to result in significant changes to current accounting and financial reporting standards. (The GASB’s project on pension accounting and financial reporting is discussed in a separate article in this issue.)

The Financial Reporting Entity

            A key way the GASB works to keep pace with the ever-changing governmental environment is to periodically reexamine its existing standards. A central focus of the reexamination of Statement No. 14, The Financial Reporting Entity—the standards for determining what entities are included in a government’s financial report—is consideration of whether it results in the appropriate entities being included and excluded. The result should be greater assurance that financial statement users are getting the information they need about the entities that have the potential to affect decisions about a government’s financial health and to assist in assessing accountability issues.  

            In March, the GASB issued an Exposure Draft that proposes to modify certain requirements for inclusion of component units in the financial report of a primary government, focusing more on the existence of financial relationships that place a burden or provides a benefit to the primary government.

Impact on the financial report: If the amendments proposed in the Exposure Draft were to be included in the final Statement, it should be more likely that the appropriate component units are included in government financial reports. As a result, users of financial statements would have access to more relevant information.

Status: The comment period on the Exposure Draft concludes June 30 and a field test (in which governments go through the hypothetical process of applying the proposed standards) will continue through July. Public hearings and redeliberations, as needed, will follow. A final Statement is planned for the first quarter of 2011.

Contacts:  Wesley Galloway (
                Ken Schermann (

More information:  Statement 14 Reexamination project page 

                            Exposure Draft, The Financial Reporting Entity,
                            an amendment of GASB Statements No. 14 and No. 34

Service Concession Arrangements

            Another central way the GASB works to keep pace with change is by issuing standards that address emerging transactions in the government environment. This project would establish reporting guidance for service concession arrangements (SCAs). For the purposes of this project, an SCA is an arrangement between a government transferor and a governmental or private sector operator in which two things necessarily happen. First, the government conveys the right and related obligation to the operator to provide services through the use of infrastructure—like a toll road—or another public asset. Second, the operator collects associated fees from third parties—for example, those who drive on the toll road.

            As these types of public-private and public-public partnerships become more commonplace, financial statement users need access to clear, understandable, and comparable information about the related costs, revenues, and obligations.

Impact on the financial report: The requirements of the proposed Statement should result in more consistent reporting—from government to government and from transaction to transaction—of the information that users need about SCAs. It should be clearer to users what resources a government has received or can expect to receive from an SCA, as well as any obligations the government transferor may now have to make payments or provide services to the operator.

Status : Considering the extent of the changes made to the proposed Statement since the issuance of the initial Exposure Draft last summer, the Board recently decided to issue a revised Exposure Draft in June 2010. A final Statement is planned for the end of 2010.

Contacts:   Lisa Avis (
                 Roberta Reese (

More information:  Service Concession Arrangements project page 

Service Efforts and Accomplishments Reporting

            While traditional financial statements provide information about a government’s fiscal and operational accountability, they do not provide all the essential information financial statement users need to gain a full picture of how well a government is managing the financial resources entrusted to it. Supplementing the traditional financial statements with information about a government’s service efforts and accomplishments (SEA) goes a long way toward completing the picture.

            SEA reporting refers to the communication of measures of a government’s performance results. This includes the public reporting of key service performance indicators that provide decision-useful information about the government’s actual accomplishments achieved in pursuit of its goals and objectives. It can include such information as the number of miles of roads that were paved (output measures), the impact of police services on crime (outcome measures), and how that performance may have changed over time.

            The GASB has been developing suggested guidelines for voluntary reporting that, if applied, could assist governments to be publicly accountable and to provide citizens, elected officials, and other interested parties with decision-useful information that will allow them to assess how well a government is using the resources available to it.

Impact on the financial report: None. The suggested guidelines, once final, primarily will apply to separately issued reports.

Status: In June 2010, the Board is scheduled to issue final Suggested Guidelines for Voluntary Reporting, SEA Performance Information.

Contacts:  Lisa Parker (
                Dan Brown (

More information:  Service Efforts and Accomplishments Reporting project page 

Conceptual Framework: Recognition and Measurement Attributes

            Concepts projects do not establish standards; they provide a foundation to guide future standards-setting by the Board. This project will develop recognition criteria for whether and when the financial effects of transactions and events should be reported in the financial statements. In addition, the Board will consider how to measure the liabilities, assets, and other elements reported in financial statements—for instance, historical cost versus fair value.

Impact on the financial report: Minimal, at first. Once published, the Concepts Statement will help to ensure the uniformity of the Board’s future standards-setting decisions regarding recognition and measurement for assets, liabilities, revenues, expenses, deferred inflows and outflows, and other financial statement elements. A benefit to users is the expectation that similar transactions and events will be treated in the same manner.

Status: Project deliberations are ongoing, including working to harmonize the measurement attribute portion of the project associated with economic resource-based (full accrual) financial statements with a similar project at the Federal Accounting Standards Advisory Board.

Contacts:  Roberta Reese (
                Ken Schermann (

More information:  Conceptual Framework—Recognition and Measurement Attributes project page 

Economic Condition Reporting: Fiscal Sustainability

            The GASB added the Economic Condition Reporting: Fiscal Sustainability project to its current agenda in December 2009 because it believes it is important to understand a government’s financial health—including how the government arrived at its current status—and to equip users with the necessary tools that will allow them to assess the government’s future financial viability. The GASB’s exploration of fiscal sustainability issues is the most recent phase of a long-term project that previously resulted in the issuance of Statement No. 44, Economic Condition Reporting: The Statistical Section.

            One of the first issues the GASB will address in this project is defining fiscal sustainability, relying in part on working definitions that have been developed by other standards setters, national governments, and other organizations, and on the GASB’s own research findings. Common themes running through these definitions include the ability and willingness to continue providing public services and to meet its financial commitments as they become due.

Impact on the financial report: This project will consider how best to communicate any additional information needed by users to make assessments about fiscal sustainability. Potentially, this additional information could be reflected in financial statements, notes, required supplementary information, the statistical section, or in separate reports.

Status: The GASB staff is currently obtaining feedback from a task force of financial statement users, preparers, and auditors appointed by the GASB chairman. Deliberations are scheduled to begin in August.

Contacts:  Lisa Parker (
                Dean Mead (

More information:  Economic Condition Reporting project page