GFOA of the US & Canada

Report on GFOA Standing Committees’ Activities at the June 27, 2009, Meetings

The GFOA’s seven standing committees met in conjunction with the GFOA’s annual conference in Seattle, Washington, on June 27, 2009. All the committees began work on an Executive Board directive to reclassify current recommended practices into one of two categories: best practices (BP) or advisories. Furthermore, in a joint effort, all committees began discussing a new best practice, Providing Successful Financial Leadership in a Changing Environment, planned to be complete early next year. What follows is a summary of each committee’s activities during the recent meetings.

The Committee on Accounting, Auditing, and Financial Reporting (CAAFR) tentatively agreed on the GFOA responses to Governmental Accounting Standards Board (GASB) exposure drafts that address issues for agent multiple-employer OPEB plans, financial instruments, service concession arrangements, and Chapter 9 bankruptcies and to the GASB’s proposal for voluntary reporting of service efforts and accomplishments  performance information. The CAAFR also worked jointly with the Committee on Retirement and Benefits Administration to reach tentative agreement on the GFOA response to the GASB on its invitation to comment on pension accounting and financial reporting.

The CAAFR and the Committee on Governmental Budgeting and Fiscal Policy worked together to update the Appropriate Level of Unreserved Fund Balance in the General Fund best practice to revise the guidance to be consistent with the new fund balance reporting categories that the GASB Statement No. 54 requires. Also, because of practical misunderstandings about how to apply the guidance, additional revisions were made to clarify the intent of the guidance and how it should be applied in practice. This included enhancing the discussion of the factors that could cause a government to maintain more than the minimum level recommended in the best practice.

The Committee on Canadian Issues concentrated on analyzing the GFOA best practices most applicable for Canadian governmental entities, identifying 10 approved GFOA best practices deemed applicable in Canada. The committee is working in a joint effort with the GFOA Budget Committee to develop a potential best practice that a) explains why the consumer price index would not be applicable to governmental entities and b) provides potential alternatives. Additionally, the committee is examining a role it may have in increasing student interest in local government finance.

The Governmental Debt Management Committee discussed recent developments in the municipal bond marketplace, including new types of bonds authorized by Congress as well as other legislative and regulatory proposals. The committee also received a market update from one of its advisors and heard from GFOA Director of Technical Services Center Stephen Gauthier on financial reporting issues. The committee then drafted a policy statement supporting regulation of financial advisors, which the full membership approved at the annual business meeting.

Additionally, the committee approved revisions to the Issuer’s Role in Selection of Underwriter’s Counsel best practice and began discussions on needed changes to numerous best practices and advisories, including: Using Variable Rate Debt Instruments, Issuing Taxable Debt, and Use of Debt-Related Derivatives Products and Development of a Derivatives Policy. The committee also proposed new practices and advisories on general disclosure issues, using credit enhancement, and issuing Build America Bonds.

The Committee on Economic Development and Capital Planning discussed a variety of best practices, while the economic development subcommittee worked on drafts for best practices relating to Analyzing the Benefits of Economic Development Projects and Balancing the Fiscal Costs and Benefits of Economic Development Projects. Presently, the capital planning subcommittee is working on best practices for Financing the Capital Program, Going Green in Capital Infrastructure, and Condition Analysis for Capital Facilities and Infrastructure.

The Committee on Retirement and Benefits Administration adopted both revised and new best practices and approved the following revised best practices: Public Employee Retirement System Investments, The Funding of Public Employee Retirement Systems, Asset Allocation, Guidance for Defined Benefit Plans and Asset Allocation, and Guidance for Defined Contribution Plans. These revised best practices reflect changes over the past 15 years in both the administration and implementation of retirement plans offered in the public sector. Also, the committee approved a new best practice, Participant Education—Guidance for Defined Contribution Plans, which recommends to public employers that they provide quality investment education to defined contribution plan participants.  

The Committee on Treasury and Investment Management (formerly the Committee on Cash Management) sent three best practices to the Executive Board for approval. The committee also updated the Revenue Control and Management Policy best practice to incorporate two other subset best practices: Revenue Control and Management Policy: Cash, and Revenue Control and Management Policy: Accounts Receivable. Additionally, the Acceptance of Payment Cards and Selection of Merchant Card Services Provider best practice was updated to highlight the benefits of accepting such cards and to more clearly identify steps for selecting an acceptable provider of services. The committee also updated the advisory, Use of Commercial Paper, to differentiate commercial paper types and identify steps toward appropriately mitigating the risks involved in commercial paper investing. Finally, nonsubstantive alterations were made to the best practice, Selection of Investment Advisers for Non-Pension Fund Assets.