Magazine article Government Finance Review

From the President

Magazine article Government Finance Review

From the President

Article excerpt

Dear Members:

Before the gavel even reached my hands, you, the members, presented me with what promises to be one of the major challenges of my presidency in the form of a strongly worded resolution opposing the Governmental Accounting Standards Board's (GASB) decision to mandate infrastructure reporting in the financial statements of state and local governments. In the end, despite numerous and sustained efforts on our part, GASB refused to compromise on this contentious issue and imposed mandatory infrastructure reporting as part of the new governmental financial reporting model established by GASB Statement No. 34.

Your resolution on infrastructure reporting directed the Executive Board to develop a strategy of ongoing opposition to the new infrastructure requirement, and even asked the board to consider the possibility of withholding funding should the GASB continue on its present course. Needless to say, this issue was a major topic of discussion at the first Executive Board meeting of the 1999-2000 year this past October in San Antonio, Texas. The purpose of this letter is to update you, the members of GFOA, on the Executive Board's discussions and decisions related to the infrastructure resolution.

The first thing your Executive Board did at its October meeting was to reaffirm our strong opposition to the new infrastructure reporting requirement and our continued support for efforts to have this requirement repealed. The board recognized that each individual government must be free to make its own decision regarding the relative costs and benefits of infrastructure reporting, and the GFOA is committed to supporting whatever decision an individual government makes in this regard.

We continue to encourage governments to weigh the relative costs and benefits of implementing the infrastructure reporting provisions of GASB Statement No. 34. Certainly, one important factor in such a cost-benefit analysis will be the risk of receiving a qualified auditor opinion. GFOA, for its part, will permit governments that elect not to implement the new infrastructure reporting requirements of GASB Statement No. 34 to continue to obtain the Certificate of Achievement for Excellence in Financial Reporting, even if they receive a qualified audit opinion for noncompliance. Furthermore, GFOA will furnish letters that members can share with legislative officials and the media explaining why noncompliance is considered acceptable in this particular case.

GFOA will aggressively promote least-cost implementation strategies for those governments that choose to implement the infrastructure reporting provisions of GASB Statement 34. For example, we plan to help such governments find economical ways to gather the required information. We also will encourage governments to use estimates whenever possible to keep their costs to an absolute minimum. In addition, we will publicize other strategies and tactics with the potential for significantly reducing implementation costs as they are developed. Finally, we will educate and encourage our members to resist conversion and implementation proposals from vendors that unnecessarily raise fees by going beyond the strictly defined minimum requirements of GASB Statement No. 34. Furthermore, in addition to such direct assistance, GFOA will actively encourage member-to-member sharing of information, especially through the Internet. …

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