- The long and varied history of GASB statements explains some of the many fluctuations in government accounting over the years.
- The last 10 years have seen a significant increase in issued statements.
- The level of activity and the complexity of subject matters may require some government entities to employ someone solely to manage the implementation of standards.
- Revisions and elimination of issued standards are quite common; keeping an eye on the ebb and flow can help your organization stay in compliance.
How might the next GASB statement affect your governmental organization?
For those in the governmental accounting sector, the last few years may have felt a bit tumultuous. Discussions on accounting issues are more complex; meetings with the board or audit committee require more education; specialists and third parties are more involved with government finance teams. What happened? What changed?
At the time this article was written, 97 Governmental Accounting Standards Board (GASB) statements have been issued. Three additional projects are nearing the final pronouncement stage — which will bring the total issued statements to an eye-opening 100. This milestone reflects the extensive changes governmental entities have had to adopt over the years — and why you need someone on your team to be responsible for keeping up with these changes.
GASB statement highlights
Consider these interesting observations regarding the history of GASB statements:
- 1985 and 2014 are the only years in which a GASB statement was not issued
- 19 statements have been superseded
- 17 statements have been amended (at least five of these are related to component unit reporting)
- Six statements are for corrections and/or clarification (omnibus) of previously issued statements
- 39 of the 97 GASB statements (40%) have been issued over the last 10 years (see below)
|Years||Number of GASBs|
|1984 – 1989||10|
|1990 – 1999||25|
|2000 – 2009||23|
|2010 – present||39|
Common topics covered by GASB statements include:
- Financial statement reporting, fair value reporting, the reporting entity, and disclosures — 19 statements
- Pensions, other post-employment benefits (OPEB), and deferred compensation — 19 statements
- Investments and liabilities — 10 statements each
- Debt and revenues (taxes, assessments, grants, etc.) — Eight statements each
- GAAP hierarchy and codification related to FASB and Auditing Standards — Seven statements
Complexity of GASB statements vary
The most complex statements have been related to financial statement reporting and pensions/OPEB. These subject areas encompass roughly 40% of all GASB statements issued to date. As entities worked to implement the standards of these initial statements, questions and obstacles arose. The GASB addressed these items by issuing additional standards that either clarified or changed the initial standard.
In contrast, some GASB statements (or portions thereof) were entirely ineffective. GASB Statement No. 11, Measurement Focus and Basis of Accounting, was issued in 1990 and was a highly debated standard that was never implemented. GASB Statement No. 17, issued in 1993, indefinitely postponed the implementation of GASB No. 11, and eventually the GASB issued Statement No. 34 (1999) — which completely replaced the guidance in GASB No. 11.
Similarly, portions of GASB Statement No. 62, Codification of FASB, had a very short life. One segment required governmental entities to capitalize interest costs incurred before the end of the construction period; the statement was issued in 2010 and was effective for fiscal year 2012 – 13.
GASB Statement No. 89, issued in 2018, eliminated the capitalized interest requirement. Many governmental clients early implemented GASB No. 89, rendering the statement’s total effective life to five years. The standard was such a speck on the timeline of an entity’s financial life that most forgot or never even knew the requirement existed.
Subsequent GASB statements that suspended or revised implementation of certain existing standards resulted in some of the shortest statements issued — GASB No. 17 was a total of eight paragraphs and GASB No. 89 was a total of six paragraphs. There are three GASB statements that are four paragraphs or less (GASB No. 36, 41, and 71) — these statements simply include an introduction, the scope, an amendment to a specific GASB statement, and the effective date.
Although the most robust statements are those related to financial statement reporting and pensions/OPEB, GASB Statement No. 62, Codification of FASB, is a record-breaking 502 paragraphs. Prior to the issuance of GASB No. 62, government entities would follow certain Financial Accounting Standards Board (FASB) guidance issued after November 30, 1989 (GASB No. 29), which did not contradict a GASB standard. When FASB codified its standards and the date of issuance was no longer prominent, GASB had to issue specific guidance on a variety of topics such as troubled debt restricting, foreign currency, sale-leaseback transactions, and research and development arrangements.
Why is this important?
GASB statements are complex and continue to change. Consider formally designating individual(s) responsible for the implementation of new standards. This person would:
There are three projects nearing the final pronouncement stage covering the disclosure framework, recognition framework, and re-examining the current financial reporting model (GASB Nos. 34, 35, 37, 41, and 46). Now is a good time to begin planning for the implementation of these new standards. The Financial Reporting Model Improvements is planned to be effective for fiscal year 2024 – 25.
Keep in mind that GASB has a history of revising, superseding, or eliminating standards if they don’t meet the needs of financial statement users or present an undue burden on the preparer of the financial statements. Be proactive in monitoring GASB projects and communicate with GASB before, during, and after a new standard is issued.
How we can help
CLA’s government industry professionals can provide implementation assistance for complex GASB statements. Our decades of experience serving federal, state, local, and tribal governments and agencies give us the insight to help improve financial and operational results and lower compliance risk.