The GASB Chair Looks Ahead at 2023
March 28, 2023
By Joel Black, Chair, Governmental Accounting Standards Board
I’m excited to let readers of the Government Finance Research Center blog know about the key areas the Governmental Accounting Standards Board (GASB) is focusing on in 2023.
Before I turn to those issues, I want you to know that we understand that state and local government are dealing with significant resource challenges including workforce shortages. With this in mind, the GASB understands that when we add to or change Generally Accepted Accounting Principles (GAAP), we are adding to those resource challenges. We will not undertake a project unless the change would represent a meaningful, substantial improvement in government financial reporting and those resulting benefits outweigh the costs and burden we are placing on those who have to implement the change.
Four Milestones for 2023
The GASB is on track to issue guidance on the disclosure of certain governmental risks in 2023, an exposure draft on the classification of nonfinancial assets, a post-implementation report detailing how the pension standards are working in practice, and research findings on capital assets.
Risk disclosures. This final standard will provide disclosure requirements for two categories of risk that governments face: concentrations (like a principal employer) and constraints (like a cap on property tax amounts).
Providing financial statement users with information about these kinds of vulnerabilities can have a meaningful impact on financial statement users’ decision making and assessments of accountability. The Board looks to issue this standard in the third quarter.
Nonfinancial assets. The effort here is to reconsider the existing classification of those assets and other related sub-classifications, including capital assets or intangible assets. In doing outreach, users told us that separate presentation or disclosure of different types of nonfinancial assets is important to them. We’ll issue the proposal for public comment in the third quarter and look forward to the feedback we receive on the types of improvements we are thinking about.
Pensions. When the GASB issued the pension standards in 2012, it represented a monumental change in how governments report these liabilities. Reviewing those standards now that they’ve been in place for several years is critical to making sure they are functioning as intended. The final report on what we call “the post-implementation review” of the pension standards will be released to the Board and to the public before the end of the year. It will provide information on how the standards are working and what areas could potentially be improved.
The Board will carefully evaluate the findings to determine whether a project addressing any potential changes to the pension standards is needed. We are appreciative to all of our stakeholders who took the time to share their perspective in this important review process. That feedback is the lifeblood of the review—and helps ensure we come to the right decision going forward. Look for the report in the final quarter of 2023.
Capital assets, including infrastructure. Over the last several years the GASB has looked at these assets across the full financial reporting model. Many people shared their perspective with us on how the model is it working, what problems and challenges they see, and what information are they not getting or could be improved. The Board will make a decision this spring on the staff’s research findings presented earlier this year to determine whether to add a project to the agenda in this area. Stay tuned for more soon.
You can learn more about these and other GASB projects through the Technical Plan page on our website.
Other Improvements Underway
In addition to these efforts, the GASB is also focused on making internal improvements that will lead to enhancements in how we do our work, how we engage with our stakeholders, and the resources we provide.
Earlier this year, we announced the availability of a new version of the Governmental Accounting Research System, or GARS, that is now available free-of-charge, features a more modern interface, greatly improved search functionality, and other improvements. Initial feedback on this research tool has been extremely positive.
We are continuing to offer electronic input forms on our proposals to provide a convenient way for you to share your thoughts with the Board. We plan to feature an electronic input form for the upcoming proposal on nonfinancial assets mentioned above.
The GASB has also increased the resources that we’re dedicating to monitoring electronic financial reporting so we’re prepared to understand and adapt to the continuing evolution of government financial reporting, including those advancements achieved through the use of technology.
Finally, we are preparing to launch a podcast series called Bridging the GAAP that will offer informal discussions of key issues in governmental accounting, including topics I’ve raised here and others, like digital assets.
If you have any questions, or if you have concerns or comments about governmental financial accounting and reporting that you’d like us to know about, please reach out to us at firstname.lastname@example.org. We’d be very pleased to hear from you.
The contents of this blog post reflect those of the author, and not necessarily those of the GFRC.