AGA Today
GASAC Update
By: Eric Berman
Greetings to the AGA membership. As a member of the Greater Boston
Chapter and deputy comptroller of the Commonwealth of Massachusetts, I
am proud to serve as your representative to the Governmental Accounting
Standards Advisory Council (GASAC.)
For those who are new to the profession, GASAC effectively serves as the
Governmental Accounting Standards Board’s (GASB) eyes, ears and voice to
GASAC’s constituent organizations and beyond. The GASAC mission is:
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To
consult with GASB on its technical agenda.
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To
communicate by providing input, views and comments to GASB on proposed
and existing standards.
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To
consult with GASB on its task forces, budgets and other administrative
matters.
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To
assist in raising funds to support the GASB.
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To
encourage cooperation among all constituent organizations. And,
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To
ensure that information on GASB is shared with those organizations and
beyond.
It
is my pleasure to share with the AGA membership what transpired at the
GASAC meeting on March 6 and 7 at the GASB offices in Norwalk,
Connecticut.
Chairman Daniel Ebersole, director of the Treasury, state of Georgia,
welcomed the GASAC. Members in attendance included representatives from
all but three of the 30 participating organizations. The meeting began
with a presentation from John Radford, CGFM, Oregon state controller and
trustee of the Financial Accounting Foundation (FAF), along with Terri
Polley, interim chief operating officer of the FAF, and Steven Getz,
also of the FAF.
Ms. Polley, Mr. Radford and Mr. Getz made a presentation on the finances
of GASB and the changes adopted by the FAF Board of Trustees on February
26, 2008. Though most of the changes affect FASB, a few change certain
matters of GASB. The FAF voted to assume a more active role in the
oversight of the FASB and GASB standard-setting process. However, the
FAF will not insert itself into GASB’s due process. The FAF will
formalize an evaluation process by which it recommends actions to GASB
and commence a post-implementation standards review process to make sure
that issues are addressed by constituents, including AGA.
Even though the composition of the FAF trustees will change, the core
governmental membership will not. The FAF voted to shrink the size of
FASB from seven members to five as of July 1, 2008. However, the GASB
board size will not change. GASB’s agenda-setting process and
prioritization will slightly change, with more powers invested in the
GASB chairman. But most importantly, the FAF has affirmed that finding a
secure, stable and permanent funding source for GASB is an urgent matter
that must be finalized in the near future.
After a lengthy discussion on these changes, GASB Chairman Robert
Attmore, CGFM, discussed the activities of GASB from October 1, 2007 to
February 29, 2008. GASB has recently released a proposed statement,
Fund Balance Reporting and Governmental Fund Type Definitions.
Comments on the proposal are due June 30 and a public hearing is
scheduled for July in Kansas City. AGA’s Financial Management Standards
Board will be providing comment to GASB on this proposal. I urge you to
read the draft, which is available on GASB’s website and make comments
through the FMSB so we can report your views as part of AGA’s views as a
whole.
Because of the events in the sub-prime mortgage market and with auction
rate securities debt, a considerable amount of time was spent discussing
the derivative instruments proposal that is slated to be voted on by
GASB later this spring. The most important tentative decisions to date
by GASB include:
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All derivatives should be measured and reported on the statement of net
assets at fair value.
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Hedge accounting should be required if an effective hedge is present.
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The fair value changes of effective hedging derivatives will be reported
on the statement of net assets as deferrals, rather than adjusting
investment income in the statement of activities.
As
the standard becomes effective, it will be very important for our
organization to educate our membership about this important change in
disclosure.
Other discussions ensued on the ongoing project on service efforts and
accomplishments reporting. It has been tentatively decided to issue an
exposure draft in April, proposing to amend Concepts Statement No. 2,
Service Efforts and Accomplishments Reporting, to clarify the
guidance contained within the statement.
Presentations on the technical agenda ensued for the rest of the
meeting. As part of its role to the GASB, GASAC then prioritized the
projects that GASB should allocate its resources to. Because of the
timing of the meeting amidst the turmoil in the capital and debt
markets, it was recommended by the GASAC members that issuing an
implementation guide to the upcoming derivative instruments standards
was of the utmost importance. Other high priority projects will include:
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Public/Private Partnerships
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A
reexamination of GASB Statement No. 14, The Financial Reporting
Entity, as amended by Statement No. 39.
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Related projects that would: separate accounting standards that are
currently included within AICPA audit standards, codify pre-November
1989 standards that are applied in governments and a project on the GAAP
hierarchy.
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A
pensions accounting and reporting research project
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A
proposed investment omnibus statement.
Other projects that were discussed included economic condition
reporting, which was placed at a lower priority.
As
part GASAC’s mission statement to provide comments to GASB and to ensure
that information on GASB is shared with those organizations and beyond,
I will be working with the AGA communications staff to obtain feedback
from the membership so AGA can continue to actively speak directly to
the GASB board. I’ll be participating in the new AGA Blog in late April
and will look forward to discussing these issues with interested
members.