Financial Reporting Model Reexamination

What Is the Financial Reporting Model Reexamination?

In September 2015, the GASB added a project to its agenda to reexamine the blueprint of state and local government financial reporting. The project is meant to result in improvements to the financial reporting model, including Statement No. 34, Basic Financial Statements—and Management’s Discussion and Analysis—for State and Local Governments, and other related pronouncements.

When it was issued in 1999, Statement 34 set the formats and measurement focuses of financial statements in place today, ushered in important innovations to general purpose external financial reporting, and made it possible to more fully assess a government’s overall financial health.

The Statement also introduced important changes to the content and appearance of the governmental annual financial report, including the additions of management’s discussion and analysis, government-wide financial statements, and major fund reporting.

Continue to Full Project Information

What Does the Invitation to Comment Include?

The Board recently issued an Invitation for Comment or “ITC” in its reexamination of the Financial Reporting Model. The Financial Reporting Model is the blueprint for government financial statements.

Periodically, the Board goes back to see if a given standard is still working well. GASB research indicated that most areas are effective, but it also highlighted that there are opportunities for improvement. These potential improvement include:

Chapter 1

Provides detail on the overall objective and an overview of major issues related to potential improvements presented in the ITC. Among these issues are three alternative recognition approaches for governmental fund financial statements.

Near-term financial resources, short-term financial resources, and long-term financial resources fall on a continuum between a pure cash approach and the full- accrual approach. These alternatives were developed, in part, to make information about governmental funds more useful for decision-making purposes.

Continuum of Potential Governmental Funds Recognition and Measurement Approaches


Chapter 2

Describes key features of each recognition approach:
  • Messages that would be conveyed by financial statements prepared using each approach
  • Recognition concepts
  • Potential benefits and challenges.
Chapter 2 also addresses the issue of reconciliation to the government-wide statements.

Chapter 3

Introduces a potential improvement to the basic financial statements with the inclusion of a statement of cash flows for the short-term and long-term financial resources approaches.

The chapter also discusses presentation format alternatives for the resource flows statement of governmental funds.

Let us hear from you!

Feedback the Board receives on the ITC will help inform how other issues are approached at later project stages. This is a key opportunity for stakeholders to influence the direction of the Board’s deliberations on the fundamental issues related to governmental funds.

More information—including the ITC itself—is available at

Please read the ITC and let us know what you think by March 31, 2017!

Continue to Full Project Information

Why Did GASB Add this Project to the Agenda?

Reexamination of the model had become a high priority issue to GASB stakeholders. For a number of years the Governmental Accounting Standards Advisory Council— The Board’s advisory group—has ranked reexamination of the financial reporting model as a top priority.

The Board added the topic to its slate of pre-agenda research activities in 2013. While the results of extensive research conducted over two years by the staff indicate that most components of the financial reporting model remain effective, they did highlight a number of areas that could benefit from improvements.

In September 2015, the GASB decided that based upon the research results it was important, as part of its commitment to maintaining the effectiveness of its standards, to reexamine the current financial reporting model now that it has been in place for a sufficient period of time.

Continue to Full Project Information

What is the Objective of the Reexamination?

The overall objective of the many improvements being considered is to enhance the effectiveness of the financial reporting model in providing information essential for decision-making and assessing a government’s accountability and to address application issues.

Throughout this project, a key part of the Board’s work will be to look for opportunities to reduce the complexity and the length of the financial statements. Over the course of the project, the GASB will keep a keen eye out for appropriate changes to the financial reporting model that could positively impact the timeliness of government financial reports.

Continue to Full Project Information

What are Potential Areas of Improvement?

The reexamination will consider improvements to several key areas of the model, including:
  • Governmental Fund Financial Statements
  • Government-Wide Financial Statements
  • Major Fund Reporting
  • Management’s Discussion and Analysis
  • Budgetary Comparison Information
In conjunction with this project, the efforts of developing recognition concepts for information presented in governmental funds will resume. The Board’s conceptual framework project on recognition, which had been put on hold pending a decision on whether the financial reporting model should be reexamined, will recommence.

Continue to Full Project Information

Recent Announcements and Articles

  • News Release—GASB Issues Invitation to Comment in Project Designed to Improve Financial Reporting Model
  • Article From the GASB Outlook: From the Chairman
  • Article From the GASB Outlook: ITC Public Hearings and User Forums

Continue to Full Project Information

What is coming up?

The Board issued an initial due process document, and Invitation to Comment or “ITC” for public comment and feedback in December 2016. The comment deadline was March 31, 2017. Beginning in October, the Board will redeliberate issues raised in the ITC with the benefit of stakeholder input, including task force feedback. The results of these redeliberations will be presented in a second document for public comment, a Preliminary Views, that also will address a number of additional issues. That document is currently planned for issuance in late 2018.

Continue to Full Project Information

Share Your Feedback

Written comments should be addressed to the Director of Research and Technical Activities, Project No. 3-25I, and either emailed to or mailed to the GASB, 401 Merritt 7, PO Box 5116, Norwalk, CT 06856-5116.

GASB has scheduled a series of public hearings and user forums. For a schedule of these events and to register to attend, click here.

Continue to Full Project Information