The Governmental Accounting Standards Board is considering a possible change to its structure for communicating GAAP to state and local governments—from its current dual-authority structure to a single-authority approach.
The standard-setting body is seeking comment on a discussion memorandum, The Structure for Communicating Generally Accepted Accounting Principles for State and Local Governments, as part of its pre-agenda research project related to the structure and approach for communicating GAAP to governments.
A discussion memorandum is a staff document designed to seek feedback on a topic at a relatively early stage, before the GASB has reached a consensus view. The document is part of the GASB’s pre-agenda research on the topic and doesn’t present any preliminary views of the board, but it will contribute to the board’s considerations related to whether a current technical agenda project to move to a single-authority structure should be initiated, the GASB said.
The overall objective of this pre-agenda research is to evaluate the effectiveness of the existing dual-authority structure and to consider whether a single-authority structure should be pursued and, if so, how it would be operationalized.
Under the current GAAP structure for governmental accounting standards, there are two sources, each with equal authoritative status—the stand-alone original pronouncements and the Codification—in which GAAP resides.
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As part of their feedback on other GASB due process documents, stakeholders have raised the issue of the dual-authority structure with some suggesting that the GASB move to a single source of GAAP, similar to the FASB Accounting Standards Codification.
As more governmental accounting standards are issued and as the board re-examines and amends existing standards, both using and maintaining a dual-authority structure becomes more complex, the GASB said.
The previous phase of the GASB’s pre-agenda research in this area focused on evaluating the dual-authority structure, specifically with respect to how stakeholders engage with GASB literature and how the structure is maintained. Based on the results of that research, the current phase of this pre-agenda research is exploring whether a single-authority structure should be pursued and what that potential structure could look like.
This research isn’t expected to lead to a project that would change existing accounting and financial reporting requirements; its focus is to consider how GAAP is communicated and maintained, the GASB said.
Stakeholders are asked to review the document and provide input to the GASB by Aug. 31. Comments can be submitted either in writing and addressed to the Director of Research and Technical Activities, who may be emailed at director@gasb.org, or through an electronic input form.
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