Every taxpayer and beneficiary of government services and benefits should care about good government accounting. Accountants and other financial professionals should take special note because GASB is attempting to change one of the basic tenets of accounting. This is a rare opportunity to convince GASB to reverse course and move toward true accrual accounting in budgeted funds statements.
GASB currently has two exposure drafts out for public comment: Project 3-20, “Recognition of Elements of Financial Statements,” and Project 3-25, “Financial Reporting Model Improvements.” Together, these proposals assert a foundation in something called the “short term financial resources measurement focus and accrual basis of accounting.”
The proposals, most importantly, do not relate to government-wide financial statements such as the Statement of Net Position (a balance sheet) and Statement of Activities (an income statement), both of which have significantly firmed up their accrual accounting foundations in the last decade. GASB’s proposals relate instead to governmental funds statements, such as those for general funds, which are widely used for budgeting purposes.
Author(s): Bill Bergman
Publication Date: 11 February 2021
Publication Site: Accounting Today