What users think of the new reporting model for governments: The results of the GASB's focus group sessions.

• Author: Crain, Gilbert W.
• Position: Governmental Accounting Standards Board

The GASB gave significant weight to the opinions of users who participated, and now more users respond in writing to GASB proposals.

How many times has it been said, "Users never read governmental financial reports?" Many responses to Governmental Accounting Standards Board (GASB) due process documents, both in written form and at public hearings, assert that efforts to satisfy the informational needs of users are a waste of time because' "no one has ever asked for a copy of the annual report or asked a question regarding that document." Although users seldom respond to the due process documents issued by the GASB, prior research has indicated that there are individuals who do use annual financial statements of governments and are interested in seeing improvements made to the reporting process. In an effort to obtain a better understanding of what users would prefer, the GASB authorized the use of "focus group" sessions, beginning in 1994, where users and potential users could express their opinions. This article describes how focus groups work and what the GASB discovered about user needs.

Input on Reporting Model ITC

The GASB exposed an Invitation to Comment (ITC) in mid-1994 that presented two significantly different models of general purpose financial statements for governments. Both were developed within the framework of the existing "reporting pyramid" in that both had combined-level statements as well as more aggregated statements referred to as "Top of the Pyramid" (TOP). One model maintained the current fund structure at the combined level of reporting, adding "consolidated statements" for the governmental activities and for the business-type activities at the TOE The alternative model reconfigured the current reporting at the combined level and presented only a single column of consolidated data for the whole government at the TOP.

For GASB's first testing of the focus group waters, it used focus groups in eight sessions scheduled with a variety of users to discuss the two ITC models. Five of the sessions were with credit market representatives, such as raters, bond insurance providers, and institutional purchasers of bonds, who are the most frequent and thorough users of governmental financial statements. Four of these sessions were held in New York City and one was held in Chicago. Three additional focus group sessions devoted to other types of users were held in Denver, New York City, and Salt Lake City. Participants included elected officials from state and local government, media representatives, employees from state agencies with oversight responsibility for local governments, and individuals from citizen budget advisory groups.

A list of potential participants was developed that included representatives from each of the potential user groups identified in Concepts Statement No. 1, Objectives of Financial Reporting - creditors, elected officials, and citizen representatives. Names came from the extensive network of people who have previously worked with the GASB. Although the list was not, nor was it intended to be, a statistically meaningful sample, it did contain many of the key players in the tax-exempt debt market as well as a diverse sample of the other two user groups.

Each focus group session lasted three to five hours. An independent moderator led the sessions in order to reduce the risk of biasing the discussion. Two GASB staff members were present to add explanations of the ITC provisions as requested by the moderator. A set of questions was developed and asked at each focus group. The questions were designed to elicit responses on most of the major issues contained in the ITC, such as how to report the long-term debt for governmental funds. The moderators provided the board with independent reports summarizing the focus group discussions.

At GASB's second January 1995 meeting, the board discussed feedback from both the written due process letters and the focus group reports. The Board discussion evolved over two and a half days into the framework of what was ultimately issued in mid-1995 as the Preliminary Views (PV) document, which differed from both the models presented in the ITC. The board's decisions were significantly influenced by users' comments that they would like to know how a government is doing both in the short term and in the long term. From this base, the current model proposal was created. In a clear break from a tradition of split decisions on this project, all five board members agreed to support the proposal. As the model framework was further developed between January and June 1995, the board decided that user input had been so valuable that the focus group technique should be used again in an expanded...