GASB Scope of Authority

Final Policy on GASB Scope of Authority

The Financial Accounting Foundation (FAF) Board of Trustees adopted a new policy that clarifies the characteristics of the information the Governmental Accounting Standards Board (GASB) may incorporate into the financial accounting and reporting concepts, standards, and guidance that it issues for state and local governments.

The new policy, described in GASB Scope of Authority: Consultation Process Policy, outlines a pre-agenda consultation process for the GASB and the FAF’s Standard-Setting Process Oversight Committee to follow in determining whether information the GASB might consider for standard-setting activity is “financial accounting and reporting information” within the scope of the GASB’s standard-setting mission. The GASB’s and the Oversight Committee’s scope considerations will be based on accounting and reporting characteristics currently in the GASB’s Concepts Statements. The consultation will not focus on a specific standard-setting project.

The final, approved policy revised the original proposal so that the GASB would consult with the Oversight Committee in the pre-agenda phase. The policy clarifies that the Trustees’ authority lies in their oversight responsibility, and their authority to determine whether information constitutes “financial accounting and reporting information.” It also reiterates that the Trustees will have no involvement in setting the GASB’s agenda or otherwise being involved in the GASB’s independent standard-setting process.

The final policy is available at the FAF website.

The independent academic study

The FAF last August made public an independent academic study exploring the purposes of financial accounting and reporting of state and local governments. The study was commissioned in May 2011 by the FAF to examine the role of financial reporting standards and guidelines issued by the GASB in enabling users of governmental financial reports to assess the accountability of governments.

The FAF, as part of its oversight of the GASB, commissioned the study to provide insights to the Board of Trustees on how the GASB can best serve stakeholders within the context of its mission.

Three independent researchers from three universities, working as a team, conducted the study. The research was intended to provide greater understanding of the needs and expectations of governmental financial report stakeholders – preparers, auditors, and users.

The study also sought to examine stakeholders’ understanding and expectations of the role of financial accounting and reporting standards in enabling users of financial reports to assess the “accountability” of reporting governments.

Where can I review the comment letters?

To view the comment letters submitted on the revised proposal on GASB Scope of Authority: Consultation Process—Revised Proposal, you may reach them here.

To view the comment letters submitted on the original proposal on GASB’s Scope of Authority: Proposed Changes to Agenda-Setting Process, you may reach them here.