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States, Local Governments Will Need to Meet Technology-Driven Reporting Age,GASB Chair Says

Thomson Reuters Tax & Accounting  

Thomson Reuters Tax & Accounting  

By Denise Lugo

State and local governments can expect the GASB to make more strides in the next seven years to advance electronic financial reporting to take advantage of the opportunities technology present.

New GASB Chairman Joel Black told Thomson Reuters on August 31, 2020, everyone involved in state and local government accounting and financial reporting will need to evolve, over time, to work in this information-age environment.

“Technology will undoubtably be the driving engine of this evolution,” Black said. “People today expect information to be available to them when and how they want it,” he said.

The GASB on September 10 will hold a closed educational session on topics associated with electronic financial reporting, according to its latest meeting summary. Those discussions are part of ongoing efforts by the board to monitor the issue.

“At the GASB, we will continue to have sessions, gather information, and work collaboratively with all our stakeholder groups on the topic of electronic financial reporting and how technology is being utilized to evolve how governments provide financial information so that we can ensure we can play our role in the evolving process,” Black said.

Black said it will be important that the right financial information is provided in a consistent and reliable manner in order for the needs of government financial statement users to be met. “We will all need to find our role and work collaboratively to evolve efficiently and effectively,” he said.

Change is the Watchword of This Moment

Black was appointed chair of the GASB earlier this year on July 1, following departure of David Vaudt on June 30 due to term limits.

In remarks on LinkedIn early August, Black said two themes will be ongoing during his tenure: change and collaboration.

“Change is the watchword of this moment that we’re all dealing with – whether it’s a virus that changes how we all live and work, a system that is changing to right inequities, or changing technology, which for many years now, has also been redefining the way we all live and work,” he said.

He said practitioners are only starting to see the implications of how technology will drive improvements in governmental accounting and financial reporting for state and local governments in the U.S. “Changes are not likely to happen quickly—most won’t happen in the next two years, but by the end of my seven-year term as GASB chair, I’m certain that they will be significant,” he said.

Slimmer Technical Agenda

According to GASB’s meeting summary, the board will kick off its third-quarter discussions on September 8-10, 2020.

The board will begin the meetings with discussions about feedback it received on GASB Exposure Draft No. 3-34Communication Methods in General Purpose External Financial Reports That Contain Basic Financial Statements: Notes to Financial Statements an amendment of GASB Concepts Statement No. 3, the meeting summary for September 8 states. The proposal was issued in February with an April 17 comment deadline. The board received 33 comment letters, including from universities and state boards.

The proposal is about the guidelines the board plans to follow to revise existing disclosures or write new ones for state and local governments. The proposal elaborates on the types of information that are essential and therefore should be disclosed in notes, and those that are not appropriate and therefore should be left out, according to a text of the guidance.

The board’s upcoming discussions will focus on issues raised by respondents, including scope and purpose of notes to financial statements.

On the same day, the board will separately discuss its project to improve the accounting and financial reporting for prior-period adjustments, accounting changes, and error corrections in GASB Statement (GASBS) No. 62Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements. Board deliberations will focus on what events, if any, that should be included in the changes in reporting entity category. The overall objective of the board’s work on the topic is to fully reexamine the existing standards to address issues related to: inconsistency in practice, confusion about and difficulty applying regarding the requirements, and the usefulness of the related disclosures.

In February 2020, the board started discussions on the project with a focus on the categories for classification of events. In March, the board considered how to distinguish between changes in accounting principle and changes in accounting estimate.

On September 9 the board will review the research conducted on its project on disclosure rules about risks and uncertainties faced by state and local governments. The board also plans to discuss potential rules about risks and uncertainties related to the nature of operations and the use of estimates in the preparation of financial statements.

Separately, later on that same day, the board will begin to deliberate practice issues related to lease accounting rules under its new omnibus project.

 

This article originally appeared in the September 1, 2020 edition of Accounting & Compliance Alert, available on Checkpoint.

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