Employment/Human Resources

Pensions, Privatization, Municipal Bankruptcy Top GASB Research Priorities


The Governmental Accounting Standards Board (GASB) is an independent, not-for-profit organization that establishes and improves standards of accounting and financial reporting for U.S. state and local governments. The GASB was established in 1984 by agreement of the Financial Accounting Foundation (FAF) – the oversight body for the Financial Accounting Standards Board (FASB) and GASB – and ten national associations of state and local government officials.

According to David Bean, Director of Research and Technical Activities, the investment community can benefit from the GASB’s work by supporting the process and the use of GAAP accounting standards when state and local governments prepare their financial statements.

The GASB considers current market activities and economic trends, and works closely with related organizations to ensure the timeliness and relevance of its activities. As David Bean tells MuniNet, the GASB has a full agenda scheduled for 2009.

MuniNet: In what ways do economic trends affect the activities of the GASB?

Bean: The GASB continually monitors economic trends and other environmental factors to assess the impact on state and local government accounting and financial reporting. For example, recent financial concerns prompted the GASB to add a research project exploring accounting and financial reporting by governments that may seek Chapter 9 bankruptcy protection. However, the GASB’s action to add this project should not be viewed as a signal to the capital markets about potential bankruptcy filings.

While the impact of the credit crisis and turmoil was discussed with the GASB’s 30-member advisory council in November, no additional issues were identified as a priority. Current economic trends again will be considered as the Board’s advisory council provides the GASB with feedback on agenda priorities at its March meeting.   The GASB also discusses these trends and issues with various constituent groups during liaison meetings that are held throughout the year.  If important issues are identified that warrant immediate consideration, the GASB is committed to addressing those issues.

MuniNet: Honing in on changes in GASB standards, what areas would you indentify as having made the greatest progress over the last year?

Bean: From an implementation standpoint, we are seeing across-the-board adoption of the retiree healthcare benefit standard. Access to new information has resulted in very positive feedback from the financial statement user community.

The issuance of Statement 53 on derivative instruments was the most significant accomplishment in 2008. The derivatives standard will pave the way for clearer and more complete reporting of these often complex financial transactions.

The completion of our staff pension research project was also important in that it provided the Board with an unbiased view of how the current pension standards are being applied by governments and used by financial statement readers.

MuniNet: What are some of GASB’s top research projects and/or priorities for 2009?

Bean: The GASB has a very full agenda scheduled for 2009. A new fund balance reporting standard is at the top of the list. It is scheduled to be approved in February. The GASB’s research found major inconsistencies in how the current fund balance standards (which I should note have been effective for 30 years) are applied. Unfortunately, financial statements users believe that they are receiving consistent and comparable information. To address this inconsistency issue and to provide a more transparent view of what many financial statement users identify as one of the most important pieces of information in a government’s financial statements, the GASB has restructured how the data is to be presented.

Other important projects include issuing proposed guidance to governments on how to report their participation in public/private partnerships, enhancing the GASB’s current pension standards, and following up on our new derivatives instrument standard with an implementation guide for practitioners.

MuniNet: What is the relationship between the Municipal Standards Rulemaking Board (MSRB) and the Governmental Accounting Standards Board (GASB)?

Bean: The GASB maintains an open line of communication with the MSRB and all of our constituent organizations; however, there is no formal relationship between the two bodies. They welcome our input on relevant projects, as we welcome input from them on all of our technical and research projects. This line of communication has only gotten stronger over the years.

We are very excited about the EMMA system that the MSRB recently developed. This new database will be a terrific resource not only for its research capabilities, but also because we believe that users will better see the benefits that are associated with GAAP financial reports. (Editor’s note: see MuniNet’s “Ruling Poised to Increase Transparency in  Municipal Bond Market” and other articles related to EMMA.)

MuniNet: How can investors most benefit from the GASB’s work?

Bean: Investors benefit the most from the GASB’s work when they actively participate and support the process. The GASB continually reaches out to the user community to solicit input on both research and technical projects. In establishing accounting and financial reporting standards, the GASB’s goal is to provide financial statement users with information that is useful in making decisions and can assist them in assessing accountability. Without feedback to assess the needs of users, the GASB cannot accomplish its mission. As part of our efforts to keep investors informed of the GASB’s activities, we issue a bi-annual newsletter, The User’s Perspective, and have a section on our website devoted entirely to the financial statement user community.

Investors can also benefit from GASB’s work by supporting the process. If users believe that the work of the GASB is important, governmental financial report preparers need to hear that message. In difficult economic times when governments are looking for activities to scale back, they need to hear directly from the user community that GAAP financial statements are important.

David Bean, Director of Research and Technical Activities

David Bean, Director of Research and Technical Activities for the Governmental Accounting Standards Board, assigns and provides oversight to the GASB’s research, technical and administrative activities. David also serves as the United States member on the International Public Sector Accounting Standards Board.

Prior to joining the GASB, David worked in public accounting and government.

Related News