GASB financial reporting model project: potential impact on utilities

Authored by Jodi Dobson

The Governmental Accounting Standards Board (GASB) currently has a project to reexamine the comprehensive financial reporting model as outlined in Statements 34, 35, 37, 41 and 46. This project was added to GASB’s agenda in August 2013 and the current work plan is scheduled to conclude with the issuance of a final statement in late 2021. Initial research conducted by GASB noted many components of the existing model are effective as well as several areas where improvements could be made. 

Recently GASB issued an Invitation to Comment (ITC) on the first three areas of the model including alternative recognition approaches for governmental fund financial statements, potential changes to the governmental fund resources flows statement and the possibility of the inclusion of a governmental fund statement of cash flows.

In addition to these topics, GASB has identified seven more issues to explore throughout this process. Of specific interest to entities that follow enterprise fund accounting or full accrual accounting, this project will explore:

  • Proprietary fund and business-type activity financial statements – Evaluation of alternatives for operating indicators and guidance for the separate presentation of operating and non-operating revenues and expenses.
  • Management’s discussion and analysis (MD&A) – Options for enhancing the financial statement analysis, consideration of eliminating certain boilerplate or background requirements and clarity for presenting currently known facts, decisions or conditions that may have a significant effect on financial position or the results of operations.
  • Extraordinary and special items – Alternatives to improve the consistency in reporting extraordinary and special items in governmental financial reports

Proprietary fund and business-type activity financial statements is scheduled for initial discussion during this spring and is anticipated to be included in the preliminary views released in 2018.

The deliberations related to the MD&A and extraordinary and special item reporting are scheduled for late 2018 and would be included in the exposure draft issued in 2020.

While this may seem too far in the future, utilities are encouraged to follow this project and prepare to provide GASB with feedback as each of these documents is released.

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