Recent Changes in Government Accounting and Financial Reporting Standards

By G. Robert Smith Jr. CPA CGFM Continuing Professional Education and Dwayne N. McSwain CPA Associate Professor of Accounting Sam Houston State University *

Introduction

The United States economy is comprised of two major sectors: the private sector and the public sector. Most accountants are well-versed in the components of the private sector. After all, the great majority of courses in most accounting programs cover – almost exclusively – the accounting and reporting principles of this sector of the economy. This sector consists of the proprietorships, partnerships, and corporations that all accountants have studied over the years.

Although the composition of public-sector accounting is not well studied, it is very well known. Government accounting principles are far from static; new or revised standards appear with increasing regularity. The reader can obtain detailed analyses on all aspects of governmental accounting in the Matthew Bender treatise, Applying Government Accounting Principles.

Since its inception in 1984, the Governmental Accounting Standards Board (GASB) has issued over 90 pronouncements containing standards, interpretations, implementation and user guides, technical bulletins, and concepts that have significantly changed the landscape of governmental accounting. (Exhibit 1-3 in Chapter 1 of Applying Government Accounting Principles shows a complete list of the publications.) Also, the GASB is working on a variety of projects that are likely to result in additional pronouncements.

Recently Issued or Effective GASB Statements Include:

GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position. This Statement, issued June 2011, effective for fiscal years ending after December 15, 2012. Although this standard is not really new, it remains important because it is so closely linked to GASB Statement No. 65.
GASB Statement No. 65, Items Previously Reported as Assets and Liabilities. This Statement, issued March 2012, is effective for fiscal years ending after December 15, 2013.
GASB Statement No. 67, Financial Reporting for Pension Plans (an amendment of GASB Statement No. 25). This Statement, issued June 2012, is effective for periods ending after June 15, 2014.
GASB Statement No. 68, Accounting and Financial Reporting for Pensions (an amendment of GASB Statement No. 27). This Statement, issued June 2012, is effective for fiscal years ending after June 15, 2015.
GASB Statement No. 69, Government Combinations and Disposals of Government Operations. This Statement, issued January 2013, is effective for fiscal years ending after December 15, 2014.
GASB Statement No. 70, Accounting and Financial Reporting for Nonexchange Financial Guarantees, issued April 2013, effective for fiscal years ending after June 15, 2014.
GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date, issued November 2013, effective simultaneously with the provisions of Statement No. 68.

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Other Projects

The GASB always has other ongoing projects that may or may not impact accounting and reporting standards in the future. The GASB web site is the best place to learn about pending actions of the Board. The web site has been recently redesigned and is much more user-friendly than it has been in the past.

When you open the site, you are immediately greeted by "Latest News," which is a good summary of what is going on at the GASB or the Financial Accounting Foundation (FAF); usually a "Featured Video" on some hot topic; and "Quicklinks" to other parts of the web site. The tabs across the top give you quick links to various pages within the web site and include:

1. Home,
2. Standards and Guidance,
3. Projects,
4. Meetings,
5. Reference Library,
6. News & Media,
7. About Us, and
8. Store.

 To examine in greater detail what is on the Board's current technical agenda, click on "Projects" and follow the links to the "Technical Plan."

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When one closely examines the number of items on the technical agenda, it can seem overwhelming. Indeed, in the recent past GFOA or other government organizations have complained about standards overload. That condition may seem to apply today. However, if you examine the last seven standards issued by the GASB, only three--Statement No. 65, No. 68, and No. 71--apply to all governments. Statement No. 67 applies to governments that run their own pension plans. The other three--Statement No. 66, No. 69, and No. 70--apply only to governments where those particular sets of circumstances (certain technical corrections, combinations and disposals of government operations, and nonexchange financial guarantees) might apply. Of the nine projects that are on the active Technical Plan, only three--fair value measurements, OPEB, and the GAAP hierarchy--will apply to all governments. That is still a lot of projects to consider, but we do not believe it is the "standards overload" that many fear.

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*G. Robert Smith, Jr., C.P.A., C.G.F.M., has his Ph.D. from Texas Tech University. He is a Continuing Professional Education Consultant on Governmental Accounting and Reporting.

Dwayne N. McSwain, C.P.A., has his Ph.D. in Accounting from the University of Texas, Arlington. He is an Associate Professor of Accounting at Sam Houston State University.

Information referenced herein is provided for educational purposes only. For legal advice applicable to the facts of your particular situation, you should obtain the services of a qualified attorney licensed to practice law in your state.

LEXIS users can view the complete commentary HERE. Additional fees may apply. (Approx. 20 pages).

RELATED LINKS: For more information on this topic, see:

Applying Government Accounting Principles § 2.02 et seq.