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Service Efforts and Accomplishments Reporting

Elected officials and others charged with the management of public funds are responsible for ensuring and demonstrating that those funds are managed efficiently and effectively in the public interest. The measurement and reporting of service efforts and accomplishments (SEA) indicators by state and local governments can play an important role in helping to meet this responsibility.

The subject of SEA reporting is not a new one for the Governmental Accounting Standards Board (GASB). In 1987, the GASB passed its first resolution encouraging governments to experiment with SEA reporting. The GASB passed a similar resolution again in 1989. The GASB also has sponsored research on SEA reporting practices and potential reporting practices for a variety of specific government functions and activities. Most recently, the GASB has directed its efforts toward preparing a formal concepts statement outlining the potential role of SEA reporting within the context of general-purpose external financial reporting.

The GFOA commends the GASB for the efforts it has taken to heighten state and local governments' awareness of the potential benefits of SEA reporting. The GFOA also joins with the GASB in encouraging state and local governments to experiment with SEA reporting. At the same time, the GFOA believes it is important that the GASB appropriately define the scope and direction of its SEA research and future standard-setting activity.

There is no question that the full range of potential SEA indicators necessarily includes measures of both financial and nonfinancial performance. That is not to say, however, that the full range of potential SEA indicators properly falls within the purview of general purpose external financial reporting. General purpose external financial reporting is only one of several means used by state and local governments to demonstrate accountability. Other types of reporting (e.g., the appropriated budget, the capital plan) also play an integral role in achieving this goal.

The GFOA is concerned about recent indications that the GASB may attempt to use its power of setting "generally accepted accounting principles" to require the presentation of certain SEA indicators that attempt to measure, not the cost, but the quality of goods and services provided by governments to their citizens. While such "outcome" indicators undoubtedly can be of great value to elected officials, financial managers, citizens and others (and indeed often are used in the budgetary process), they clearly lie outside the proper scope of generally accepted accounting principles (GAAP). To use GAAP to mandate the reporting of such "outcome" indicators, in the GFOA's view, would exceed both the GASB's jurisdiction and its technical competence.

Therefore, the GFOA takes the following position on the GASB's proper role in the matter of service efforts and accomplishments reporting:

  • GASB members are selected for their expertise in accounting and financial reporting. Accordingly, the GASB enjoys the GFOA's full confidence and support when issuing standards involving accounting and financial reporting;
  • Many SEA measures, particularly those involving nonfinancial measures of the quality of services provided by governments to their citizens (i.e., "outcome" measures), transcend accounting and financial reporting;
  • Ultimate decisions on quality of service or "outcome" measures need to be made by professionals with specialized expertise in the services under consideration, not by accountants;
  • The GASB would be exceeding its mandate if it attempted to use generally accepted accounting principles (GAAP), either directly or indirectly, to require the presentation of nonfinancial measures of the quality of service as part of general purpose external financial reporting. The GASB would be considered to be using GAAP indirectly to require the presentation of quality of service measures in situations such as the following:
    • The board mandated the presentation of such SEA measures as "required supplementary information;"
    • The board required such SEA measures to be reported within the comprehensive annual financial report/component unit financial report (CAFR/CUFR), though not within the general purpose financial statements/component unit financial statements (GPFS/CUFS);
    • The board required the issuance of a separate SEA report as a prerequisite for a "clean" opinion on the GAAP financial statements.
  • Therefore, the GASB should take the lead in limiting the scope of its SEA research and standard-setting activities to those SEA measures that clearly fall within the GASB's jurisdiction and expertise, i.e., general purpose external financial reporting;
  • Also, the GASB should ensure that its work on SEA reporting in no way distracts the board's attention from its long-delayed comprehensive financial reporting model project;
  • The GFOA should join with other appropriate professional organizations to encourage the greater use and standardization of those SEA indicators that do not properly fall within the scope of general purpose external financial reporting.


Adopted: June 23, 1993