The Great GASB….Evaluating GASB Statement 34

By Heather Ricard - Director of Risk Management Services, Municipal Association of SC

In this context, the “Great GASB” is not F. Scott Fitzgerald’s character, but rather the Governmental Accounting Standards Board, the non-profit entity that sets required standards in government accounting. GASB issues statements to guide how government bodies report accounting information.

Fifteen years ago, GASB issued Statement No. 34, Basic Financial Statements-and Management’s Discussion and Analysis-for State and Local Governments. The statement was a dramatic change for preparers and users of government audited financial statements. It gave government officials a new and more comprehensive way to demonstrate their stewardship in the long term beyond the existing short term processes already in place at the time.

Now that GASB Statement 34 has been used for 15 years, the Board plans to revisit the statement and any related statements that have been issued since then. They will be asking questions such as has the statement improved the understanding of local government audited financial statements? How are the reports being used? How have the costs of applying the statements compared with the benefits?

GASB posted an interesting article on “What You Need to Know About: Reexamining the Financial Reporting Model” last week. There is also a good summary of GASB 34 on its website.

GASB has already conducted some preliminary research and will identify areas that may require  additional research. Cities and towns should be on the lookout for surveys to gather input from the users and preparers of their financial statements. More information is available about this project at www.gasb.org.