Magazine article Government Finance Review

FAF Issues Revised Proposal on GASB Oversight

Magazine article Government Finance Review

FAF Issues Revised Proposal on GASB Oversight

Article excerpt

Last February, the Financial Accounting Foundation, which oversees the Governmental Accounting Standards Board, issued The GASB's Scope of Authority: Proposed Changes to Standard-Setting Process - Request for Comment. This document proposed establishing specific oversight procedures to ensure that the GASB consistently operates within the scope of its jurisdiction as an accounting and financial reporting standard-setting body In August 2013, the FAF issued a revised proposal, GASB Scope of Authority: Consultation Process, that takes into account concerns raised by respondents to the original request for comment.

Until now, the GASB has been the sole determiner of whether a given topic properly falls within the scope of its authority as an accounting and financial reporting standard-setting body. Some critics, including the Government Finance Officers Association, have viewed this situation as an inherent conflict of interest. In response to these critics, the FAF proposed in its February request for comment to make certain changes to the process used for setting the GASB's technical agenda. Specifically, the FAF suggested that its oversight committee become directly involved in the GASB's agenda-setting process, which would involve evaluating whether specific projects fell within the proper scope of the GASB'S jurisdiction.

A number of respondents to the February request for comment expressed concern that the FAF's proposal for enhanced oversight would compromise the GASB's independence. These respondents argued that FAF oversight would need to be exercised in a less intrusive and detailed manner if the GASB's independence is to be preserved.

In its revised proposal, the FAF attempts to address these concerns by proposing that the FAF's oversight committee:

* Be involved in a pre-agenda consultation with the GASB, rather than in the agenda-setting process itself.

* Operate from a more general perspective, rather than focusing on individual potential agenda projects. …

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