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GASB Chair Lays Out Ambitious Agenda

S.J. Steinhardt
Published Date:
Jun 23, 2023

iStock-826741128 Accounting Standards

The Governmental Accounting Standards Board (GASB) has numerous items on its agenda, which Chair Joel Black discussed with Accounting Today.

"Our mission as an organization is to make sure that users of government financial information—those in the municipal bond community, citizens and legislators—are getting the right information to make decisions in assessing governments' accountability," he said.

GASB has been monitoring the Financial Data Transparency Act (FDTA), which is designed to modernize the collection and dissemination of financial data by federal financial regulators to make the information more accessible, uniform and useful to investors and consumers.

"This idea of electronic financial reporting, beyond FDTA, is something that I've been interested in since I came to the GASB" in June 2020, he said. 

Last year, GASB began devoting more resources to how technology is changing, what new technologies are available, and how people are using technology to extract information from government financial reports. 

An example of such a technology is Extensible Business Reporting Language (XBRL). Standards are being developed by the Treasury Department, the Securities and Exchange Commission (SEC) and six other federal regulators to streamline compliance and align data collections with governmentwide policies for "open data assets." The FDTA included a section requiring local governments to adhere to new financial data standards to be developed by the SEC.

Black has been in contact with the SEC about playing a role in deciding what information should be extracted and made available in a machine readable format.

He told Accounting Today that GASB’s new podcast series will debut later this month with a Q&A on the FDTA.

A year ago, GASB released a proposed standard on certain risk disclosures from state and local governments that would would require them to disclose information about risks that could affect the level of services they're able to offer or their ability to meet obligations as they come due. The exposure draft received 49 comments, including 15 from users of financial statements such as investors and average citizens, and expects to issue a final standard later this year.

"This project was not about all risks that a government faces, but we focused on two in particular," he said. "If a government has one of those two vulnerabilities … then the government would be required to disclose some information about that risk and its existence. That's what the proposal is now."

Later this month, GASB plans to release an implementation guide that will include information in Q&A format on its standards on lease accounting, subscription-based information technology arrangements, and other topics.

GASB rolled out a new version of its Governmental Accounting Research System this year that's now free and easier to navigate than the old system.

GASB is currently considering whether it needs a project on environmental credits offered by state and local governments and is asking stakeholders for their perspective on this area and what they're seeing.

"My concern at this point is that with the climate provisions in the inflation Reduction Act, I think there's going to be a lot more investment and creation of new types of these programs and more money flowing through them," he said. "I think they might have the potential to become more prevalent and pervasive.”

GASB also plans to issue a proposal to reconsider how certain nonfinancial assets, including capital assets and intangible assets, should be classified to ensure they're classified in the way that provides the most relevant information, and that the definitions are understandable and appropriate.

"This is really about assets that aren't financial," he said. GASB plans to issue an exposure draft on that project in the third quarter.

GASB has also been asking stakeholders about whether they're using other types of intangible assets such as digital assets and cryptocurrency in their states. 

"We've been asking people about legislation that's going on in their states," said Black. "There are a couple of states that are accepting cryptocurrency as a form of payment. But in all the cases we've seen so far, there's always a third-party intermediary who always takes all the holding risk."

GASB recently added a project on infrastructure assets, such as highways and sewer systems, that will examine how they should be recognized and measured in financial statements and other issues. This project is in its early stages.

The Infrastructure Investment and Jobs Act of 2021 provided more funds to be spent on repairing and rebuilding the country's decaying infrastructure, and there will probably be demand at the state and local level for how that money is spent.

"That act was a response to the same information that users are looking for from the accounting," he said. "There's a prevailing thought that at least some infrastructure in our country is undermaintained, is not in good condition and needs reinvestment. Are users getting the information so they know which governments have done a good job, which governments maybe haven't done a good job of maintaining those assets, and what their condition is to know when that reinvestment is necessary?"

One of the main topics of discussion right now for state and local government accountants is resource constraints. 

"I think all of the accounting profession is dealing with that, and I think governments as a whole are dealing with that, but government finance departments are not immune, and certainly are strained in the number of people and resources they have," he said, noting that anytime the board undertakes a project, a government finance officer has to read it and understand how to implement it.

"We understand anytime we change GAAP, that it's adding some burden to them, so we're trying to make sure that when we take on a project that we really think it has the potential to meaningfully improve government financial reporting, that there's a really important reason we're taking on that project," he said.

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