Two AICPA panels – the AICPA State and Local Government Expert Panel (Panel) and the AICPA Private Companies Practice Section Technical Issues Committee (TIC) – recently submitted comments to the Governmental Accounting Standards Board (GASB) on its Preliminary Views (PV), Financial Reporting Model Improvements, and testified at a March 5th GASB hearing. The PV is GASB’s proposal to use a short-term financial resources measurement focus for governmental funds, presentation changes to governmental and proprietary funds, and other related reporting changes. The PV also presents alternative views from GASB.
The Panel submitted a letter on February 14, 2019 letter supporting the short-term financial resources measurement focus, noting that governmental fund financial statements should be presented on a shorter timeframe than the information presented in the government-wide statements. The Panel agreed, conceptually, with the Board’s definitions of short-term and long-term transactions, but strongly encouraged the Board to expand upon the underlying concepts of “normally” and “governments in general” in future related due process documents.
TIC’s February 15, 2019 letter also supported the short-term financial resources measurement focus, noting that it provides an effective shorter-term look than the government-wide statements. TIC raised concerns related to use of the terms “outflows” and “inflows,” recommending that GASB use the terms “revenues” and “expenditures” that are already widely understood by users of governmental financial statements. In addition, TIC thought there was excessive use of the terminology “short term financial resources” on the face of the fund statements, which clutters up the statements. TIC also agreed with the use of “normally,” rather than stated or contractual maturities (or best estimates), in determining recognition for classes of transactions.
The Panel and TIC also submitted comments to the GASB on its Exposure Draft (ED), Implementation Guide-Fiduciary Activities. The ED presented 53 new questions addressing GASB Statement No. 84, Fiduciary Activities, as well as amendments to existing questions as a result of the Statement.
In its March 8, 2019 letter, the Panel expressed concerns over the application of Statement No. 84 to pension and OPEB plans that lack a governing board. The Panel also raised concerns about various deferred compensation and defined contribution plans, such as plans under IRC sections 457, 401(k), and 403(b). It suggested that GASB add questions to address these plans and to promote consistency and comparability of fiduciary activity reporting.
Lastly, the TIC’s February 28, 2019 letter recommended adding additional implementation guidance on how to apply the new flowchart for determining fiduciary activities and adding an illustration that would show the presentation of external portions when there are two investment pools in the basic financial statements. TIC also questioned county clerk collections and the interplay between payroll and what is deemed “own revenue.”