The GASB Should Not Set Standards For Fiscal Sustainability Reporting
Accounting and financial reporting in the public sector traditionally have focused on providing users of basic financial statements with historical information concerning a government’s financial position, results of operations, cash flows, and compliance with finance-related legal and contractual provisions. In recent years, there has been some movement on the part of authoritative accounting standard-setting bodies in the public sector to expand this traditional understanding of accounting and financial reporting to embrace all forms of financial accountability (a much broader concept than accounting), which would effectively justify their involvement in virtually any aspect of public finance, including budgeting. One highly visible practical manifestation of this trend has been the Governmental Accounting Standards Board’s (GASB) involvement in performance measurement. More recently, the GASB has expressed an interest in developing standards of reporting for fiscal sustainability as part of its economic condition reporting project.
Whereas, the GFOA recognizes that accounting and financial reporting are essential to accountability; and
Whereas, the GFOA recognizes at the same time that accounting and financial reporting are just one component of accountability; and
Whereas, the involvement of an accounting standard-setting body in matters beyond the scope of accounting and financial reporting exceeds its legitimate authority and expertise and constitutes an inappropriate use of scarce resources; and
Whereas, the GFOA believes that the issue of assessing a government’s future fiscal sustainability clearly is beyond the scope of accounting and financial reporting as they have traditionally and universally been understood
Therefore, be it resolved that the GFOA adamantly opposes any effort on the part of the GASB to set standards of reporting for fiscal sustainability.
Policy adopted by the GFOA Membership, June 8, 2010.