Academic journal article The Government Accountants Journal

Did GASB Listen to Its Constituents?

Academic journal article The Government Accountants Journal

Did GASB Listen to Its Constituents?

Article excerpt

I have often heard the comment that the Governmental Accounting Standards Board (GASB) paid no attention to its constituents when it adopted the new reporting model for state and local governments. If you prepare financial statements, you may feel that way. You may say to yourself, "Full accrual? Who needs it? Depreciation? That's for the private sector. It has no useful purpose in government. And depreciating infrastructure-that's ridiculous! Who wants this stuff, anyway?"

Although I do not agree with many of the provisions of Statement 34, 1 can attest to the fairness of the process. All constituents had an opportunity to express their views at virtually every step of the process-an Invitation to Comment, Preliminary Views and an Exposure Draft. Unfortunately, most of the 70,000-plus government units did not voice their views. Even though the reporting model received more comments than any item in the board's 15-year history, the 400 responses represented less than 1 percent of all possible governments. Most of the comments came from constituent organizationsthe Association of Government Accountants (AGA), the Government Finance Officers Association (GFOA) and the American Institute of Certified Public Accountants (AICPA). Accounting firms, large and small, and a number of larger governments responded as well.

I was a member of GASB's Reporting Model Task Force, which met four times to deliberate adoption of Statement 34. The number of members increased to ensure that virtually all constituents were represented. A number of task force members represented GFOA, representing primarily local government, and the National Association of State Auditors, Comptrollers and Treasurers (NASACT), representing primarily state governments. A number of task force members were auditors in the private sector, some represented large constituent organizations, others came from bond rating agencies, insurers and purchasers of state and local government bond issues.

At the first meeting, it was evident that it would be difficult to obtain a consensus among the major constituent organizations. There were disagreements even within the organizations about particular proposals. As we continued to meet, the gap never narrowed. Furthermore, GASB did not often have a simple majority on many issues. I recall, in particular, near the end of the second meeting, GASB Chairman Tom L. Allen, CGFM, posed a question as to the measurement focus and basis of accounting that should be used in the new model. Six task force members voted for the flow of economic resources and six for the flow of financial resources. …

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