Peering into the future: emerging issues in governmental accounting.

• Author: Bean, David R.
• Position: Financial management

The landmark issuance of Statement 34 and related guidance clearly did not signal the end of a need for the Governmental Accounting Standards Board. To the contrary, in the dynamic and ever-changing government environment, significant new issues requiring authoritative guidance are continually being identified, and many issues that previously had been brought to the GASB's attention still must be resolved. The next 20 years will no doubt bring many challenges to the GASB. This article offers some insights into what these challenges will be, focusing first on the near term as defined by the current technical agenda, then exploring the projects on the GASB's research agenda, and finally looking forward to the issues that may draw the GASB's attention in the long term.

The GASB faces the future with a newly adopted strategic plan, which can be found at the GASB Web site, www.gasb.org. This plan identifies four major goals:

* Standards Setting--Establish high-quality standards that improve public accountability and result in useful information for making decisions.

* Constituent Relations and Communications--Foster constructive relationships with constituents to ensure that the GASB considers their needs and views.

* Education--Promote the development of informed and competent financial report users, preparers, and auditors.

* Organizational Effectiveness--Improve the GASB's organizational capacity to pursue its vision, mission, and goals in a timely and sustainable manner.

These goals will establish the future direction of the GASB and will play an important role in how and when standards are adopted in the years to come.

THE TECHNICAL AGENDA

A companion article in this issue of Government Finance Review provides an overview of the GASB's first 20 years. That article uses the GASB's original technical agenda to highlight its most significant accomplishments, including the new financial reporting model, the financial reporting entity, and the postemployment benefits standards. Although much has already been accomplished, much also remains to be done. The following discussion of the GASB's current technical agenda summarizes the projects the Board is now working on.

Conceptual Framework. The current technical agenda cannot be analyzed without noticing the predominance of the conceptual framework projects. Although considerable time was devoted to the conceptual framework in the past, the Board recently--and for the first time--deliberated two concepts projects at the same Board meeting. The two projects are expected to result in final concepts statements on communication methods in general-purpose external reports that contain basic financial statements and on the elements of financial statements.

The concepts statements, which primarily serve as guidelines for current and future Boards, provide insight to financial statement preparers, auditors, and users as to the direction that financial reporting standards may take in the future. The communication methods project, which is expected to be released as Concepts Statement 3 in April 2005, is groundbreaking in that no other standards setter has addressed conceptually where an item of information should be placed within a general-purpose external financial report. Criteria have been developed that will assist the Board in selecting which of the following provides the most appropriate communication method for conveying an item of information:

* Recognition in basic financial statements

* Disclosure in notes to basic financial statements

* Presentation as required supplementary information

* Presentation as supplementary information

The communication methods are presented in hierarchical form; therefore, the concepts statement clearly states that "disclosure in the notes to financial statements is not an adequate substitute for recognition in the...