Minutes Archive

Financial Reporting Model—Reexamination of Statements 34, 35, 37, 41, and 46 and Interpretation 6

Minutes of Meetings, March 8–10, 2022

The Board continued redeliberations by discussing feedback received on the proposals in the Exposure Draft, Financial Reporting Model Improvements, with consideration as to whether to require specific standardized terminology for the reconciling items to be included in the reconciliations of the information presented in the governmental fund financial statements to the information presented in the governmental activities column in the government-wide financial statements. The Board did not reach a tentative decision but directed the staff to conduct research and to further explore improvements to the reconciliations, including whether to standardize the format, terminology, or communication method.

The Board also considered requiring an additional explanation at the top of the governmental fund financial statements that highlights that governmental fund financial statements do not contain the same information as presented for governmental activities in the government-wide financial statements, as was proposed in the Preliminary Views, Financial Reporting Model Improvements. The Board tentatively decided that the additional explanation should not be included in a final Statement

Minutes of Meetings, January 25–27, 2022

The Board continued redeliberations on the Financial Reporting Model project by discussing feedback received on the proposals in the Exposure Draft, Financial Reporting Model Improvements, with consideration of the presentation of governmental fund financial statements. The Board tentatively decided to retain and carry forward to a final Statement (1) the proposed current- and noncurrent-activity format for the governmental fund resource flows statement, (2) the proposed current and noncurrent terminology for the governmental fund resource flows statement, (3) the proposed governmental fund financial statement titles of the short-term financial resources balance sheet and the statement of short-term financial resource flows, and (4) the proposed terminology of inflows of resources and outflows of resources used in the governmental fund resource flows statement.

The Board directed the staff to further explore language to explain the linkage between the inflows of resources and outflows of resources terminology used with governmental fund financial statements and the revenue and expense terminology used in the Revenue and Expense Recognition project.

Lastly, the Board tentatively decided to reconsider the additional explanation at the top of the governmental fund financial statements that was proposed in the Preliminary Views, Financial Reporting Model Improvements, and directed the project staff to prepare appropriate discussion materials.

Minutes of Meetings, December 14–16, 2021

The Board discussed whether illustrations of transactions, such as those proposed in Appendix C of the Exposure Draft, Financial Reporting Model Improvements, should be included as a nonauthoritative appendix to a final Statement, and tentatively decided that they should be included. The Board also discussed modifications to the illustrations proposed in the Exposure Draft and the underlying concepts of the short-term financial resources measurement focus and modified accrual basis of accounting.

Minutes of Meetings, November 2–4, 2021

The Board continued redeliberations of the Conceptual Framework—Recognition and the Financial Reporting Model projects by discussing the name of the measurement focus and basis of accounting for governmental fund financial statements. The Board discussed whether any modifications should be made to the name short-term financial resources measurement focus as proposed in the Exposure Drafts, Recognition of Elements of Financial Statements (Concepts ED), and Financial Reporting Model Improvements (Financial Reporting ED), and tentatively decided that the name of the measurement focus should be retained.
 
The Board then discussed whether any changes should be made to the use of accrual to describe the basis of accounting proposed in the EDs and tentatively decided that the basis of accounting for governmental fund financial statements should be identified as the modified accrual basis of accounting.
 
The Board then discussed whether any modifications should be made to the description of the economic resources measurement focus (as proposed in paragraphs 7 and 8 of the Concepts ED). The Board tentatively decided that the proposed description of the economic resources measurement focus should be retained.
 
The Board next discussed whether to modify the language proposed in the Concepts ED related to the hierarchy of recognition. The Board tentatively decided that the proposed language related to the hierarchy of recognition should be retained. The Board also discussed whether the Basis for Conclusions should discuss recognition of note disclosures in relation to the hierarchy of recognition, in response to stakeholder comments. The Board tentatively decided that the Basis for Conclusions should not discuss the recognition of note disclosures in the hierarchy of recognition.

The Board discussed the proposed exception for long-term financing issued for short-term purposes. The Board discussed whether a short-term purpose should be described as “a government obtaining and consuming a financial asset or service within one year or providing financial resources to a service recipient without restricting the use of the resources to the acquisition of nonfinancial assets.” The Board directed the project staff to further develop the description of a short-term purpose for discussion at a future meeting.
 
The Board then considered certain transactions in financial statements presented applying the short-term financial resources measurement focus and modified accrual basis of accounting. The Board first discussed whether any changes should be made to the accounting for escheat property in governmental funds and tentatively decided that the Codification Instructions of a final Statement should reflect that (1) a liability should be recognized for all amounts expected to be paid to claimants, including the percentage that is paid to claimants beyond one year from receipt, and (2) the recognition of an asset for escheat property from a long-term transaction should be associated with a liability for the effect on fund balance to be neutral.
 
The Board then discussed the accounting for irrevocable split-interest agreements in governmental funds. The Board first considered whether the guidance for recognition of irrevocable split-interest agreements in governmental funds should be removed and tentatively decided that it should not be removed. Next, the Board discussed whether the governmental funds guidance for recognition of irrevocable split-interest agreements in which the government is the intermediary and that arise from long-term transactions should require that (1) assets be recognized for financial assets received, such as cash and investments; (2) deferred inflows of resources be recognized for the government’s beneficial interest; and (3) a liability be recognized for the third party’s beneficial interest. The Board tentatively decided that those changes to the existing guidance should be reflected in the Codification Instructions of a final Statement.

The Board then discussed whether the guidance for recognition of irrevocable split-interest agreements in which a third party is the intermediary, arising from short-term transactions, should require that assets and a related deferred inflow of short-term financial resources be recognized for the government’s beneficial interest. The Board tentatively decided that this guidance should be reflected in the Codification Instructions of a final Statement.

The Board then discussed whether the guidance for recognition of irrevocable split-interest agreements in which a third party is the intermediary, arising from long-term transactions, should require that an asset and inflow of short-term financial resources be recognized when payments are due. The Board tentatively decided that this guidance should be reflected in the Codification Instructions of a final Statement.

The next issue the Board discussed was whether the proposed guidance that investments should be reported as assets in the short-term method should be modified to exclude land (and capital assets) held as an investment. The Board tentatively decided that this guidance should not be modified in a final Statement.

The Board then discussed whether the guidance for reporting nonspendable fund balance proposed in the Reporting Model ED should be modified to include the description that nonspendable fund balance should be reported for amounts that are not in spendable form. The Board tentatively decided that this guidance should be provided in a final Statement.

Lastly, the Board discussed whether the proposed guidance that all investments should be reported as assets in the short-term method should be modified to exclude investments not reported at fair value. The Board tentatively decided that this guidance should not be modified in a final Statement.

Minutes of Meetings, September 21–23, 2021
 
The Board continued deliberations on the short-term financial resources measurement focus and accrual basis of accounting (short-term method) to be used in presenting governmental fund financial statements.

The Board first discussed examples of transactions highlighting the similarities and differences between a near-term and a one-year recognition period and tentatively decided that the recognition period of the short-term method should continue to be one year.

Next, the Board discussed stakeholder feedback received pursuant to the Exposure Drafts, Recognition of Elements of Financial Statements, and Financial Reporting Model Improvements, related to the following five features of the short-term method:

1. Description of financial assets and financial liabilities
2. Payments made or received in advance of the due date
3. Deferred outflows of resources and deferred inflows of resources
4. Items arising from interfund events
5. Allowance for doubtful accounts and receivables not paid by their due date.

The Board tentatively decided to retain the language for financial liabilities proposed in the Exposure Drafts.

Subsequently, the Board discussed whether the proposed description of financial assets should be modified to accommodate the corpus of permanent funds and tentatively decided to retain the language proposed in the Exposure Drafts.

The Board then discussed whether the proposed description of financial assets should be modified for items consumable in lieu of cash that arise from long-term transactions. The Board tentatively decided to retain the language proposed in the Exposure Drafts for financial assets and to modify the language for the application of the short-term method to indicate that assets recognized include inventories and certain prepaid items.

The Board then discussed whether the proposed description of financial assets should be modified to include examples and tentatively decided to retain the language proposed in the Exposure Draft.

The Board considered whether the proposed guidance regarding payments made or received in advance of the due date should be modified to identify the specific elements to be recognized and tentatively decided to retain the language proposed in the Exposure Draft.

The Board then considered whether to carry forward to the final Statement the proposal that applicability to the period for outflows of resources and inflows of resources in the short-term method be determined using the concept of interperiod equity. The Board tentatively decided to retain that proposed guidance and to modify the guidance for the application of the short-term method to deferred outflows of resources and deferred inflows of resources to clarify that recognition of those elements is limited to those instances identified in GASB Statements.

The Board then discussed stakeholder feedback related to items arising from interfund events and tentatively decided that the proposal to recognize interfund events as short-term transactions should be carried forward to the final Statement.

The Board then discussed stakeholder feedback related to recognition of an allowance for doubtful accounts and to receivables not paid by their due date and tentatively decided that no additional recognition guidance is appropriate. However, the Board may consider whether amounts of receivables not paid by their due date should be classified as nonspendable fund balance at a subsequent meeting.

The Board then transitioned to discuss stakeholder feedback related to the following three additional features of the short-term method:

1. Recognition of a liability for long-term debt issued for short-term purposes
2. Continued classification of a transaction or other event as short term or long term (as determined upon inception) when there are changes in the existing binding arrangement’s terms or conditions
3. Recognition of inflows or outflows of short-term financial resources for on-behalf payments for fringe benefits and salaries and direct vendor financings (for example, leases). 

The Board tentatively decided to broaden the exception for long-term debt issued for short-term purposes to include instances when a government is required to make payments that extend beyond one year from the inception of the transaction to finance a fixed amount for a short-term purpose. The Board then tentatively decided to broaden the examples provided for this exception to include wage settlements and accounts payable with similar extended payment terms. The Board considered whether short-term purpose should be defined as obtaining a good or service within the short-term time frame established by the short-term method (one year) but indicated that it would like to consider additional alternatives at a subsequent meeting.

The Board then discussed stakeholder feedback related to the classification of a transaction or other event as short term or long term when there are changes in the existing binding arrangement’s terms or conditions. The Board tentatively decided to modify the proposed guidance to instead require reclassification of the transaction or other event if amendments are made to the terms or conditions of the original binding arrangement that warrant such a change from short term to long term or vice versa prior to the fiscal year-end based on the concepts for the short-term method. The Board tentatively decided not to allow reclassification for such amendments that are made subsequent to the fiscal year-end but prior to the issuance of the financial statements. The Board tentatively decided to retain the proposal to require reclassification of a transaction or other event as either short term or long term when a new binding arrangement is entered into.

Regarding the recognition of inflows and outflows of short-term financial resources for on-behalf payments for fringe benefits, salaries, and direct vendor financings, the Board tentatively decided to carry forward the proposed requirement related to on-behalf payments for fringe benefits and salaries but to modify the proposed requirement related to direct vendor financings. The proposed requirement related to direct vendor financings would be modified to instead require recognition of assets or outflows of short-term financial resources, as applicable, for all direct vendor financings and inflows of short-term financial resources for direct vendor financings, with the exception of direct vendor financings for short-term purposes, which the Board tentatively determined should be reported as fund liabilities.

Minutes of Meetings, August 10–12, 2021

The Board continued redeliberations on the short-term financial resources measurement focus and accrual basis of accounting (short-term method) to be used in presenting governmental fund financial statements. The Board first discussed whether the recognition terms for the short-term method should be (1) the terms of the binding arrangement (or estimated payments if there is no binding arrangement or the binding arrangement does not include specific payment terms) as proposed in the Exposure Drafts, Recognition of Elements of Financial Statements, and Financial Reporting Model Improvements, or (2) the terms that are normal for governments. The Board tentatively decided to retain the terms proposed in the Exposure Drafts.

The Board then discussed whether the recognition method for long-term transactions and events used in the short-term method should be based on (1) the inception date of the transaction as proposed in the Exposure Drafts or (2) the balance sheet date. The Board tentatively decided that the recognition method for such transactions should be based on the inception date of the transaction (that is, transactions and other events for which the period from inception to conclusion is greater than the recognition period should be recognized when payments are due).

Lastly, the Board discussed whether the recognition period for the short-term method should be one year as proposed in the Exposure Drafts or a shorter “near-term” period. The Board tentatively decided that the recognition term should be one year.

Minutes of Meetings, June 30–July 2, 2021

The Board continued deliberations by discussing approaches to governmental fund financial statements suggested by stakeholders other than a conceptually based short-term approach.

First, the Board discussed stakeholder feedback recommending that governmental fund financial statements be excluded from the basic financial statements. The Board tentatively decided that the governmental fund financial statements should continue to be presented as part of the basic financial statements.

The Board then discussed stakeholder feedback recommending that governmental fund financial statements be presented applying a government’s budgetary basis of accounting. The Board tentatively decided that governmental fund financial statements should not be presented applying a government’s budgetary basis of accounting.

Next, the Board discussed stakeholder feedback recommending that governmental fund financial statements be presented applying the economic resources measurement focus and accrual basis of accounting. The Board tentatively decided that a short-term perspective should be retained in governmental fund financial statements, rather than the economic resources measurement focus.

Lastly, the Board discussed stakeholder feedback recommending retaining and modifying the current financial resources measurement focus and modified accrual basis of accounting rather than establishing a conceptual basis for recognition in governmental fund financial statements. The Board tentatively decided that the current financial resources measurement focus and modified accrual basis of accounting should not be retained and modified.

Minutes of Meetings, May 20–21, 2021

The Board reviewed and discussed feedback from comment letters, public hearings, and user forums related to the Exposure Drafts, Financial Reporting Model Improvements, and Recognition of Elements of Financial Statements. The Board agreed to redeliberate overarching topics related to recognition in governmental funds before addressing coordination and timing with the Revenue and Expense Recognition project. No tentative Board decisions were made regarding the substantive issues of either Exposure Draft.

Minutes of Videoconference Meeting, June 30, 2020

The Board reviewed the codification instructions associated with the ballot draft of an Exposure Draft of a proposed Statement, Financial Reporting Model Improvements, and provided clarifying additional edits to the Exposure Draft. The Board then voted to approve the issuance of the Exposure Draft.

Minutes of Meetings, June 16–18, 2020

The Board reviewed a ballot draft of the Exposure Draft, Financial Reporting Model Improvements, excluding the Codification instructions, and provided clarifying edits.
The Codification instructions will be discussed by the Board at the June 30, 2020 special Board meeting.

Minutes of Videoconference Meeting, May 26, 2020

The Board reviewed changes to various draft sections of an Exposure Draft of proposed Statement, Financial Reporting Model Improvements. and after providing clarifying edits, tentatively agreed on the proposed approach to describing the short-term measurement focus and accrual basis of accounting.
 
While reviewing those changes, the Board discussed the application of the recognition concepts of the short-term financial resources measurement focus and accrual basis of accounting to transactions such as on-behalf payments for fringe benefits and salaries and direct vendor financing, such as leases. The Board tentatively agreed to identify such transactions as examples of inflows of resources and outflows of resources in the proposed Statement. 
 
The Board then tentatively decided that certain language regarding the short-term financial resources measurement focus and accrual basis of accounting from the proposed Statement also should be included in a ballot draft of an Exposure Draft of a proposed Concepts Statement, Recognition of Elements of Financial Statements, which will be discussed at the June 2020 Board meeting.
 
Finally, the Board also reviewed selected sections of the Codification, marked up to reflect the proposed standards and suggested clarifying edits.

Minutes of Meetings, May 6–8, 2020

The Board reviewed a preballot draft of the Exposure Draft, Financial Reporting Model Improvements, and provided clarifying edits.
 
While reviewing the preballot draft of the Exposure Draft, the Board tentatively agreed to clarify in the Exposure Draft a previous tentative Board decision that accrued interest related to a long-term transaction should be accounted for as a long-term transaction. The Board also tentatively decided that in MD&A, governments should include the relative magnitude of reasons for changes in their analysis of year-to-year changes.
 
In addition, the Board requested that the definitions of certain terms from other due process documents and Board pronouncements be considered for inclusion in the Exposure Draft.  The Board will discuss those potential modifications at the May videoconference.
 
The Board then agreed to move forward with a ballot draft of an Exposure Draft, which will be discussed at the June 2020 Board meeting.

Minutes of Meetings, March 24–26, 2020

The Board discussed whether any modifications should be made to the tentatively agreed upon exception to the application of the short-term financial resources measurement focus and accrual basis of accounting for long-term debt issued for short-term purposes. The Board tentatively decided to retain the exception and to link usage of the term “debt” to the definition in Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements. Therefore, wages payable would not be proposed as an example of the exemption.
 
The Board then reviewed a comprehensive illustration including management’s discussion and analysis, government-wide financial statements, fund financial statements, combining financial statements, certain disclosures, and required supplementary information and provided clarifying edits.
 
Finally, the Board reviewed various sections of the codification that reflected terminology changes based on the tentative decisions made by the Board to date. The Board tentatively agreed to refer to “special revenue funds” as “special resources funds” based on the proposed governmental funds terminology changes.
 
The Board voted to proceed with a pre-ballot draft of the Exposure Draft, which will be discussed at the May 2020 Board meeting.

Minutes of Meetings, February 11–13, 2020
 
The Board began by reviewing proposals for the descriptions of the governments required to implement in each of the two implementation periods—the approach that was tentatively agreed to at the February 2020 meeting. First, the Board tentatively decided to propose that the determination of which governments are in the first and second implementation periods be based on total annual revenues. The Board then considered when component units should implement the financial reporting model improvements relative to their primary governments and tentatively agreed to propose that all component units implement no later than the same year as their primary government, regardless of the amount of each component unit’s total annual revenues. Additionally, the Board tentatively decided to propose that total annual revenues be described as all revenues of the primary government’s governmental and enterprise funds, except for extraordinary and special items, and to clarify that special-purpose governments engaged only in fiduciary activities should use total annual additions, rather than revenues, to determine the appropriate implementation date. The Board then considered when the measurement of a government’s total annual revenues for purposes of determining the appropriate implementation period should take place and tentatively agreed to propose a measurement date for a government’s total annual revenues of the first fiscal year ending after June 15, 2022. Lastly, the Board tentatively decided to propose that governments with total annual revenues of $75 million or more be required to implement the financial reporting model improvements for fiscal years beginning after June 15, 2024, and governments with total annual revenues of less than $75 million should be allowed to implement the financial reporting model improvements for fiscal years beginning after June 15, 2025.
 
The Board then reviewed the draft Standards section of the proposed Exposure Draft and provided clarifying edits.
 
Finally, the Board discussed considerations related to the benefits and costs of the project, as well as considerations related to the scope of the GASB’s authority. The Board tentatively decided that the expected benefits of the proposed financial reporting model improvements justify the perceived costs of implementation and ongoing compliance. The Board also tentatively agreed that the proposed requirements to be included in the Exposure Draft meet all of the characteristics of Group 1 and, therefore, are within the scope of the GASB’s authority.

Minutes of Meetings, January 7–9, 2020

The Board concluded redeliberations based on feedback received on the proposals in the Preliminary Views, Financial Reporting Model Improvements. First, the Board considered whether any modifications should be made to the proposals in the Exposure Draft for small governments as a result of the feedback received on the Preliminary Views. The Board tentatively decided not to modify any of the proposals in the Exposure Draft for small governments based on that feedback. The Board then considered whether any opportunities to develop specific proposals for small governments exist in the proposals of the Exposure Draft, including the proposals being carried forward from the Preliminary Views to the Exposure Draft and the tentative decisions reached to date related to the proposed measurement focus and basis of accounting for governmental fund financial statements, MD&A, and items that are unusual in nature or infrequent in occurrence. The Board tentatively determined that no opportunities exist to develop specific proposals for small governments during further development of the Exposure Draft.
 
The Board then reviewed proposed language for application of the short-term financial resources measurement focus and provided clarifying edits.
 
Finally, the Board discussed proposals for the effective date and transition requirements to be included in the Exposure Draft. First, the Board tentatively decided to propose transition provisions that (a) require retroactive application; (b) allow that if retroactive application is not practicable for all periods presented, the cumulative effect at the beginning of the earliest period presented should be restated; and (c) require disclosure of any restatement and, if applicable, the reason for not restating prior periods. The Board then discussed effective date considerations. First, the Board tentatively decided that early implementation of the proposals should be permitted. Next, the Board tentatively decided that a phased-in implementation with small governments implementing the proposals one year later than large governments should be developed. Finally, the Board tentatively decided to propose an effective date of fiscal years beginning after June 15, 2024 for larger governments. The Board will deliberate the classification parameters at a future meeting.

Minutes of Meetings, November 20–22, 2019

The Board continued redeliberations based on feedback received on the proposals in the Preliminary Views, Financial Reporting Model Improvements, related to the short-term financial resources measurement focus. First, the Board deliberated whether to propose an exception for the recognition of certain long-term debt or an exception for the presentation of transactions related to certain long-term debt in governmental funds. The Board tentatively decided that an exception from the recognition concepts of the short-term financial resources measurement focus should be proposed in the application of the measurement focus, and that exception should be for long-term debt issued for short-term purposes. The Board then discussed the treatment of effective hedging derivative instruments and accrued interest. The Board tentatively decided that effective hedging derivative instruments and accrued interest should be illustrated as long-term transactions.

Minutes of Meetings, October 15–17, 2019

First, the Board discussed proposed language describing the application of the proposed short-term financial resources measurement focus, providing various clarifying edits.
 
The Board then continued redeliberations based on feedback received on the proposals in the Preliminary Views, Financial Reporting Model Improvements, with consideration of the presentation of governmental fund financial statements. The Board tentatively decided to carry forward the proposed format for the governmental fund resource flows statement, the proposed current and noncurrent terminology for the governmental fund resource flows statement, and the proposed governmental fund financial statement titles from the Preliminary Views to the Exposure Draft. The Board tentatively decided to not carry forward the proposed governmental fund financial statement element titles from the Preliminary View to the Exposure Draft. Instead, the Board tentatively decided to illustrate the element headings “assets,” “deferred outflows of resources,” “liabilities,” “deferred inflows of resources,” “fund balances,” “inflows of resources for current activities,” “outflows of resources for current activities,” and “net flows of resources for noncurrent activities” in the Exposure Draft. Additionally, the Board tentatively decided that the additional explanation at the top of the governmental fund financial statements proposed in the Preliminary Views should not be carried forward to the Exposure Draft.
 
Finally, the Board considered feedback received on the alternative views proposal to require a government-wide statement of cash flows. The Board tentatively decided to not propose that requirement in the Exposure Draft.

Minutes of Meetings, August 27–28, 2019
 
The Financial Reporting Model Reexamination project and the Conceptual Framework: Recognition project were discussed in conjunction. The Board continued redeliberations based on feedback received on the proposals in the Preliminary Views, Financial Reporting Model Improvements, and the Preliminary Views, Recognition of Elements of Financial Statements, related to the measurement focus of governmental funds. The Board tentatively decided that the measurement focus for governmental fund financial statements should have the following characteristics:

• The term used to classify short-term transactions or other events and long-term transactions or other events should be established by the specific applicable contractual (or statutory) terms of the transaction or other event or estimated payments when there are no contractual terms
• Items arising from long-term transactions or other events should be recognized when due—the date at which payment is scheduled or, if not scheduled, expected to be made in accordance with the recognition terms
• The recognition period should be one year.

Minutes of Meetings, July 16–18, 2019
 
The Board continued redeliberations based on feedback received on the proposals in the Preliminary Views, Financial Reporting Model Improvements, related to the measurement focus of governmental funds [in conjunction with the discussions of the Conceptual Framework: Recognition project]. The three topics discussed include whether (a) the measurement focus for governmental funds should determine recognition by contractual terms (or expected payment dates) or what is normal for governments in general, (b) long-term assets and liabilities should be accrued to the extent that they are due within the given recognition period or recognized when due, and (c)  the recognition period should be one year or near-term. No tentative decisions were reached.

Minutes of Meetings, June 5–6, 2019
 
The Board continued redeliberations based on feedback received on the proposals in the Preliminary Views, Financial Reporting Model Improvements, discussing the following topics: approaches to recognition in governmental funds other than the short-term financial resources measurement focus, the presentation of proprietary fund financial statements, and budgetary comparison information. The Board first discussed approaches to recognition in governmental funds other than the short-term financial resources measurement focus, tentatively deciding that governmental fund financial statements should continue to be presented as part of the basic financial statements for governments. The Board also tentatively decided that the current financial resources measurement focus should not be retained for use in governmental fund financial statements. The Board tentatively decided that neither the total financial resources measurement focus nor the economic resources measurement focus should be proposed for use in governmental fund financial statements. Additionally, the Board tentatively decided that once feedback received on the Preliminary Views in relation to the short-term financial resources measurement focus including the modification suggested by the alternative views has been redeliberated, the Board should then consider how its tentative decisions related to information to be presented in governmental funds relate to the near-term financial resources measurement focus.
 
The Board next considered feedback received on the proposals related to the reporting of operating and nonoperating revenues and expenses in proprietary fund financial statements. The Board tentatively decided that research need not be conducted at this time to assess whether flexibility in financial statement presentation should be allowed for stand-alone business entities. The Board also tentatively decided that the proposed definition of operating revenues and expenses and the proposed description of nonoperating revenues and expenses should not be changed to specifically address interest expense, payments in lieu of taxes, landfill closure costs, litigation and insurance costs, endowments and spending from endowments, grants (including Pell grants), transfers, assessments, contributed services, and healthcare reimbursements. Furthermore, the Board tentatively decided to propose that nonroutine and nonrecurring items not be included in the description of nonoperating revenues and expenses. Additionally, the Board decided to propose that when investing or financing activities are the primary purpose of a proprietary fund, those revenues and expenses be excluded from nonoperating revenues and expenses.
 
Next, the Board tentatively decided that rental income (and other ancillary items) should not be included in the description of nonoperating revenues and expenses. The Board also tentatively decided to carry forward in the proposal the approach of providing a description of nonoperating revenue and expenses and defining operating revenue and expenses as those that are not nonoperating. Additionally, the Board tentatively decided to propose that the definition of a subsidy be modified to clarify that a subsidy includes both resources received from or provided to another party. Furthermore, the Board tentatively decided to propose that capital contributions, additions to permanent and term endowments, and transfers are subsidies and should be reported as part of nonoperating revenues and expenses and that only unusual and infrequent items should continue to be reported outside of operating and nonoperating revenues and expenses. The Board also tentatively decided to propose that the proprietary fund statement of revenues, expenses, and changes in net position include a subtotal for operating income (loss) and noncapital subsidies.
 
Finally, the Board considered feedback received on the proposals related to the reporting of budgetary comparison information. The Board tentatively decided to propose that required supplementary information be the single communication method for budgetary comparison information. Lastly, the Board tentatively decided to propose that the variances between the (a) final budget and actual amounts and (b) original budget and final budget amounts be required as part of the budgetary comparison schedule.

Minutes of Meetings, April 22–24, 2019
 
The Board reviewed the results of the field test and began redeliberations based on stakeholder feedback received on the Preliminary Views, Financial Reporting Model Improvements, discussing the following topics: major component unit information and the government-wide schedule of expenses by natural classification. The Board tentatively decided to carry forward to the Exposure Draft the preliminary view that if it is not feasible to present major component unit financial statements in a separate column(s) in the reporting entity’s statement of net position and statement of activities, the financial statements of the major component units should be presented in the reporting entity’s basic financial statements as combining financial statements after the fund financial statement. Additionally, the Board tentatively decided that the benefits of presenting a government-wide schedule of expenses by natural classification as supplementary information do not justify the costs of presenting that schedule and, therefore, the preliminary view regarding the schedule for governmental activities and business-type activities should not be carried forward to the Exposure Draft.

Minutes of Meetings, January 29–31, 2019
 
The Board considered amendments to paragraphs 8–11 of Statement No. 34, Basic Financial Statements—and Management’s Discussion and Analysis—for State and Local Governments, as amended, based on the tentative decisions reached at the December 2018 meeting and tentatively agreed to propose various edits.  The Board tentatively decided that the illustration of management’s discussion and analysis (MD&A) in Appendix C of Statement 34 should be replaced using financial statements that reflect current circumstances. The Board also tentatively decided that the MD&A illustration should include figures such as charts, graphs, and tables when they can be used to meet an MD&A requirement.
 
Additionally, the Board considered changes to the current requirements for the separate presentation of special and extraordinary items. The Board tentatively decided to propose replacing the current guidance with a requirement to separately present at the bottom of resources flows statements inflows of resources and outflows of resources that are either unusual in nature or infrequent in occurrence or both. Additionally, the Board tentatively decided to propose that additional information about these items, including the program or function or identifiable activity to which it is related and whether the item is within the control of management, be disclosed.

Minutes of Meetings, December 17–19, 2018
 
The Board considered amendments to paragraphs 8–11 of Statement No. 34, Basic Financial Statements—and Management’s Discussion and Analysis—for State and Local Governments, as amended, based on the tentative decisions reached at the November 2018 meeting. The Board also discussed whether current financial reporting requirements should be proposed to be changed to provide additional information about debt service funds.  The Board tentatively decided not to pursue any changes with regard to information about debt service funds because the expected benefits do not justify the perceived costs of providing and auditing the information.

Minutes of Meetings, November 14–16, 2018

The Board began initial deliberations on topics in addition to those presented in the Preliminary Views, Financial Reporting Model Improvements, that may be included in the upcoming Exposure Draft on the project, beginning with a discussion on management’s discussion and analysis (MD&A) requirements. The Board first discussed the target audience for the MD&A and tentatively decided that the users of MD&A are the broad types of users discussed in paragraph 63 of Concepts Statement No. 1, Objectives of Financial Reporting. The Board also tentatively decided that the requirement to present a brief discussion of the basic financial statements, including the relationships of the statements to each other and the significant differences in the information they provide, should continue to be required to be included as part of MD&A with the proposal to be presented in a way that adds more structure and clarity to the requirement.

Additionally, the Board tentatively decided to address concerns regarding the thoroughness of the analysis of year-to year changes through a combination of proposed amendments to the current guidance, further consideration of modifications to implementation guidance, and educational efforts. The Board then tentatively decided that amended guidance for the MD&A should be proposed to indicate that the analysis should be presented in a manner that avoids unnecessary duplication. The Board next considered the location of the discussion of significant variations between the original and final budget amounts and between the final budget amounts and actual results for the general fund. The Board tentatively decided that to assist users in locating the information, the Exposure Draft should include a proposal that such information should be located as notes to budgetary comparison information, which is proposed to be presented as required supplementary information. The Board also tentatively decided to propose removing the requirement to present information about infrastructure assets accounted for using the modified approach.

Next, the Board discussed the requirement to include in MD&A a description of currently known facts, decisions, or conditions that are expected to have a significant effect on the financial position or results of operations. The Board tentatively decided to propose that the description of the requirement include examples of specific types of information. The Board tentatively decided that the following examples should be proposed:

• Economic data, including population growth and unemployment rates
• Details of the subsequent year’s adopted or approved budget, including
  (1) the change in total amount available for appropriation with reference narratively to the types of revenues (taxes and fees) and changes in rates and bases; (2) the changes in planned spending with reference to sources such as inflation, labor contracts with unions, adjustments, and whether new programs were added; and (3) expected changes in fund balance
• Information related to actions the government has taken related to postemployment benefit plans, capital improvement plans, and long-term debt
• Information related to actions other parties have taken that affect the government, such as legislative changes, litigation, and new regulations or standards imposed on the government.

Minutes of Teleconference, September 12, 2018
 
The Board reviewed and provided suggested edits to a ballot draft of the Preliminary Views, Financial Reporting Model Improvements, which included the alternative views of two Board members. The Board approved the issuance of the Preliminary Views in a four to three vote.

Minutes of Meetings, August 22–24, 2018

The Board reviewed and provided clarifying edits to a preballot draft of the Preliminary Views, Financial Reporting Model Improvements. The Board then agreed that the project staff should present a ballot draft for consideration at the September 2018 teleconference meeting.

Minutes of Meetings, July 10–12, 2018

The Board reviewed and discussed the alternative views of two Board members and the position of another Board member related to the draft Preliminary Views, Financial Reporting Model Improvements.  The Board then tentatively decided that the comment deadline for the Preliminary Views will be February 15, 2019. The Board reviewed the draft Preliminary Views, discussed clarifying edits, and agreed to consider a preballot draft of the Preliminary Views, including the alternative views of the two Board members, for discussion at the August 2018 meeting.

Minutes of Teleconference, June 18, 2018
 
The Board continued deliberations on topics to be presented in the Preliminary Views. The Board discussed possible communication methods for information about major component units. The Board tentatively decided that when it is not feasible to present major component unit financial statements in a separate column in the reporting entity’s statements of net position and activities, the financial statements of the major component units should be presented as combining financial statements after the fund financial statements.

Minutes of Meetings, May 29–31, 2018
 
The Board continued deliberations on topics to be presented in the Preliminary Views. The Board first discussed possible communication methods for information about noncash investing, capital, and financing activities. The Board tentatively decided to propose that the information continue to be communicated as a schedule to the statement of cash flows.
 
The Board next considered the feedback received on the Invitation to Comment (ITC), Financial Reporting Model Improvements—Governmental Funds, regarding topics that have not been previously addressed. The Board tentatively decided to propose that governmental fund statements present financial information of nonmajor funds, as currently required.
 
The Board then considered whether there is an opportunity to develop governmental fund recognition guidance specific to small governments and whether there is an opportunity to provide a small government concession related to the reconciliation between governmental fund financial statements and government-wide financial statements. The Board tentatively decided that the Preliminary Views should not propose a concession for small governments to exclude the reconciliation between governmental fund financial statements and government-wide financial statements.

The Board also considered the ITC feedback related to small government concerns and discussed potential small government concessions. The Board tentatively decided that the tentative Board decisions reached to date do not provide opportunities to develop specific recognition-approach-related proposals for small governments. Additionally, the Board tentatively decided based on the additional feedback to the ITC that no tentative decisions for the Preliminary Views should be reconsidered for potential small government exceptions.
 
The Board also tentatively decided that the Preliminary Views should not propose a concession for small governments to allow the use of (1) a natural classification of expenditures in the governmental fund financial statements, (2) a natural classification of expenses in the government-wide statement of activities, and (3) a revenue/expense format in the statement of activities.
 
The Board then reviewed draft sections of the Preliminary Views and discussed clarifying edits.

Minutes of Meetings, April 17–18, 2018
 
The Board continued deliberations on topics to be presented in the Preliminary Views on the Financial Reporting Model. The Board first discussed the appropriate communication method for the reconciliations of information in governmental fund financial statements to information in the government-wide financial statements. The Board tentatively decided that those reconciliations should continue to be presented as part of the governmental fund financial statements. The Board also tentatively decided that the proprietary fund reconciliation of operating income to net cash flows from operating activities should continue to be presented as part of the proprietary statement of cash flows. Additionally, the Board tentatively decided that a notice should not be included at the bottom of the governmental and proprietary fund financial statements to alert readers to the location of the reconciliations. The Board then tentatively decided that the Preliminary Views would not propose a requirement to use standardized terminology for the reconciling items.
 
The Board next considered the feedback received on the Invitation to Comment, Financial Reporting Model Improvements—Governmental Funds, as well as the feedback received from task force and Governmental Accounting Standards Advisory Council (GASAC) members regarding a statement of cash flows for governmental funds. Based on the feedback, the Board tentatively decided that the Preliminary Views should not include a proposal that a statement of cash flows for governmental funds be required.
 
The Board then considered the effect of its tentative decisions in relation to the short-term financial resources recognition approach for governmental funds on the reporting of permanent funds. The Board tentatively decided that the Board’s tentative decisions in relation to the short-term financial resources recognition approach applied by governmental funds should not change the classification of permanent funds.

The Board also tentatively decided that the notice at the top of the Short-Term Financial Resource Balance Sheet should be shortened to include only the first sentence: “This financial statement presents a short-term view of the governmental fund activities and excludes items of a long-term nature.”
 
The Board then provided editorial clarifications to the draft regarding (a) recognition concepts for governmental funds, (b) application of the recognition concepts to selected transactions and other events, and (c) illustrations of the recognition concepts.

Minutes of Meetings, March 7–8, 2018
 
The Board continued deliberations on topics to be presented in the Preliminary Views. The Board first considered feedback received on the Invitation to Comment (ITC), Financial Reporting Model Improvements—Governmental Funds, as well as feedback received from task force and Governmental Accounting Standards Advisory Council members regarding (a) the reconciliation of information in the governmental fund financial statements to information in the government-wide financial statements and (b) the terminology used in the governmental fund financial statements. The Board tentatively decided that the Preliminary Views should not propose that the reconciliation between information in governmental fund statements and government-wide information be presented on the same page. The Board also tentatively agreed that the communication method of the reconciliation should be evaluated before the Board makes any further tentative decisions on the presentation of the reconciliation.
Regarding the terminology used in the governmental fund financial statements, the Board tentatively decided that (a) the additional explanations after the governmental fund financial statement titles proposed in the ITC should be carried forward to the Preliminary Views, (b) the additional explanation after the governmental fund balance sheet should exclude the language referring to nonfinancial resources such as capital assets and long-term debt related to capital assets when carried forward to the Preliminary Views, (c) the element titles and line item descriptions proposed for the short-term approach in the ITC should be carried forward to the Preliminary Views, and (d) the governmental fund financial statement titles proposed for the short-term approach in the ITC should be carried forward to the Preliminary Views. The Board then discussed the feedback received to the ITC regarding the format of the governmental funds resource flows statement. The Board tentatively decided that the current and noncurrent (long-term) activity format should be proposed in the Preliminary Views and that the potential inconsistency in the usage of the term long-term should be resolved by describing the capital assets and long-term debt activity as noncurrent, rather than long-term, activity. The Board also tentatively decided that a practical expedient for small governments to report governmental funds resource flows information using the existing format instead of the current and noncurrent activity format should not be proposed.

Minutes of Meetings, January 23−24, 2018
 
The Board continued deliberations on topics to be presented in the Preliminary Views. The Board first considered proposed language that describes the messages conveyed by the recognition approach, the recognition concepts, features of the recognition approach, and the approach’s relationship with the objectives of financial reporting and a table that applies the recognition concepts to selected transactions, providing suggestions for clarifying the language. The Board tentatively decided that the recognition approach proposed in the Preliminary Views be should be referred to as short-term financial resources.
 
The Board then discussed tentative Board decisions reached to date on
(1) budgetary comparison information, (2) the format of proprietary fund financial statements, and (3) the format of the statement of activities and supplementary schedule of natural classifications for consideration of the financial reporting model within the context of small governments. The Board tentatively decided that these tentative Board decisions reached to date do not provide opportunities to develop specific proposals for small governments.
 
The Board next discussed the differences between the recognition concepts in the 2011 Preliminary Views, Recognition of Elements of Financial Statements and Measurement Approaches, and the recognition approach that the Board has tentatively agreed to propose in the financial reporting model reexamination Preliminary Views. The Board tentatively decided that the differences are sufficiently significant to reissue a Preliminary Views related to recognition concepts for governmental funds. The Board also tentatively decided that the Preliminary Views on recognition concepts should be issued as a separate document.

Minutes of Meetings, December 12−14, 2017
 
The Board continued deliberations on topics to be presented in the Preliminary Views. The Board first considered feedback received on the Invitation to Comment, Financial Reporting Model Improvements—Governmental Funds, relating to the overall focus of governmental fund financial statements. The Board tentatively decided to propose that governmental fund financial statements present information that reflects a shorter time perspective than information in the government-wide financial statements and that facilitates comparison with a government’s budgetary information.
 
The Board then discussed the feedback received relating to the recognition approaches presented in the Invitation to Comment. The Board tentatively decided that the long-term financial resources approach neither as proposed in the Invitation to Comment nor with the columnar presentation of capital assets and debt or other alternatives should be pursued further in developing a Preliminary Views. The Board then tentatively decided that the near-term and short-term financial resources recognition approaches as proposed in the Invitation to Comment should not be pursued further.
 
The Board next discussed suggested modifications to the near-term and short-term approaches. The Board tentatively decided that the recognition approach for governmental funds presented in the Preliminary Views should be based on a combination of the near-term and short-term recognition approaches with the following characteristics:

• One-year (operating cycle) period of availability
• Accrued interest will be recognized when payable and normally due within one year, which may not necessarily align with the recognition of principal payments on the related debt
• Recognition of tax and revenue anticipation notes as liabilities
• Exclusion of the recognition of the current portion of long-term assets and liabilities.

Minutes of Meetings, October 31−November 2, 2017

The Board continued deliberations on topics to be presented in the Preliminary Views (PV). The Board considered feedback received on the Invitation to Comment (ITC), Financial Reporting Model Improvements—Governmental Funds, regarding recognition approaches for governmental funds other than the three proposed in the ITC (near-term financial resources, short-term financial resources, and long-term financial resources) or modifications to any of those three approaches. The Board discussed whether the current financial resources recognition approach with modifications, the economic resources recognition approach, or presentation outside of the basic financial statements should be pursued further in developing the PV. The Board tentatively decided that none of those alternatives should be pursued during the development of the next due process document.

The Board then deliberated the definition of financial resources that should be presented in the PV. The Board tentatively decided to propose the following definition of financial resources— “cash, resources that are expected to be converted to cash, and resources that are consumable in lieu of cash.”

 Minutes of Meetings, September 27 and 28, 2017

The Board continued deliberations on topics to be presented in the Preliminary Views, specifically the proposals related to the format of the government-wide statement of activities and presentation of information about natural classification of expenses. The Board discussed four alternatives and tentatively decided to propose that the existing format of the government-wide statement of activities be presented with a schedule of natural classification of expenses by function or program. The Board then tentatively decided to propose that the information conveyed in a schedule of natural classification of expenses be presented in general purpose external financial reports as supplementary information.

Minutes of Task Force Meeting, September 26, 2017

The task force discussed feedback received on the Invitation to Comment (ITC), Financial Reporting Model Improvements—Governmental Funds, and provided input to the Board on developing preliminary views on the major issues in the ITC.

The task force first discussed the feedback related to the shorter term and budgetary perspective that has been the focus of governmental funds. Many task force members supported governmental fund financial statements continuing to present information that (1) reflects a shorter time perspective than the information presented in the government-wide financial statements; (2) focuses on financial, rather than economic resources; and (3) facilitates comparisons with a government’s budgetary information.

The task force then discussed the feedback on the definition of financial resources, specifically with respect to inventory and prepaid items. Some task force members expressed that this discussion would be more appropriate after the Board selects one of the three recognition approaches.

The task force also discussed the common recognition suggestions in the feedback to the ITC focusing on identifying fatal flaws in the approaches and which one(s) they would suggest the Board consider for the Preliminary Views (PV). The commonly suggested approaches included:

• Near-term financial resources as presented in the ITC
• Near-term financial resources with changes to accrued interest and tax and revenue anticipation notes
• Short-term financial resources as presented in the ITC
• Short-term financial resources without certain liabilities (capital debt and postemployment benefits, for example)
• Long-term financial resources as presented in the ITC
• Long-term financial resources with columnar presentation of capital assets and debt
• Current financial resources with modifications
• Economic resources.

Many task force members were not in support of the Board further considering:

• Near-term financial resources as presented in the ITC
• Short-term financial resources as presented in the ITC
• Long-term financial resources as presented in the ITC
• Long-term financial resources with columnar presentation of capital assets and debt
• Economic resources.

Support was expressed by those task force members for the Board further considering (1) near-term financial resources with modifications, (2) short-term financial resources with modifications, or (3) current financial resources with modifications. Some task force members believe that there is not a persuasive argument to abandon the current financial resources measurement focus and that, instead, the GASB should be focusing on fixing the conceptual inconsistencies within the existing measurement focus. It is important to note that (1) and (3) are similar because the near-term financial resources approach was the closest to the current financial resources approach and included modifications to increase the conceptual consistency. Additional modifications to the current financial resources approach suggested by task force members included:

• Specifying a single period of availability
• Recognition of prepaid items and inventory (as discussed above)
• Recognition of debt principal payments or just short-term debt principal payments
• Recognition of long-term receivables.

The task force members then discussed the feedback on a same-page reconciliation of the governmental fund financial statements to the government-wide financial statements. Although many task force members were supportive of a reconciliation between the government-wide financial statements and the governmental fund financial statements, those task force members were not supportive of it being on the same page.

The task force members next discussed the feedback received on a statement of cash flows for governmental funds. Many task force members stated that a statement of cash flows for governmental funds would not be necessary if the funds retain a shorter term focus (for example, the near-term or current financial resources recognition approach) in the PV. Some task force members stated that the cost of preparing the statement of cash flows would exceed the benefits of the information conveyed in the statement. If a statement of cash flows is to be presented in the PV, some task force members expressed that the statement should be prepared only for certain governmental funds or for all governmental funds in the aggregate.

The task force members also discussed the appropriateness of the four categories of cash flows currently used in the statement of cash flows for proprietary funds (operating activities, noncapital financing activities, capital and related financing activities, and investing activities). Some task force members believed that the four categories would be appropriate for governmental fund cash. Other task force members stated that three categories (operating, investing, financing) should be used to classify governmental fund cash flows. However, some task force members stated that if the classifications were changed, they should be changed for proprietary funds and business-type activities as well, to provide consistency.

Minutes of Meetings, June 28–29, 2017

The Board continued deliberating a topic to be presented in the upcoming Preliminary Views—the classification of operating and nonoperating revenues and expenses in proprietary fund and business-type activity financial statements. The Board tentatively decided to propose a direct definition of nonoperating revenues and expenses and to derive the definition for operating revenues and expenses from the definition of nonoperating revenues and expenses. The Board tentatively decided to propose that the definition of nonoperating revenues and expenses include subsidies received and provided, revenues and expenses of financing, resources from the disposal of capital assets and inventory, and investment income and expenses. Sale of inventory held for resale in the ordinary course of operations is not considered a disposal of inventory for purposes of this definition. In addition, the Board tentatively agreed with the proposed schedule of discussing feedback from the Invitation to Comment, Financial Reporting Model Improvements—Governmental Funds, and developing a Preliminary Views.

Minutes of Meetings, May 23–25, 2017

The Board continued deliberations on topics to be presented in the Preliminary Views, specifically the industry outreach conducted by the project staff regarding the high-level alternatives for defining operating and nonoperating activities in proprietary fund and business-type activity financial statements.

The Board tentatively decided that the self-sustaining or subsidized alternative, with modifications, should be developed at a high level for the purposes of defining operating and nonoperating revenues and expenses. Specifically, the potential modifications include (1) whether additional subtotals should be required or allowed; (2) whether the definition of nonoperating activities should include financial, investing, and ancillary activities in addition to subsidies; and (3) whether operating activities should include certain taxes and grants that are closely associated with operating activities.

Minutes of Meetings, January 17-19, 2017

The Board continued deliberations on topics to be presented in the Preliminary Views, specifically the high-level alternatives for defining operating and nonoperating activities in proprietary fund and business-type activity financial statements. The general themes of the alternatives included (a) self-sustaining or subsidized, (b) financial performance, (c) recurring or nonrecurring, and (d) debt covenant compliance. The Board will not make a tentative decision on the approach to defining operating activities until additional outreach efforts with industry groups to gather feedback regarding the proposed alternatives has been completed.

Minutes of Meetings, December 5-8, 2016

The Board reviewed a ballot draft of the Invitation to Comment, Financial Reporting Model Improvements—Governmental Funds, and provided clarifying edits. After reviewing the Invitation to Comment and providing clarifying edits, the Board did not object to the issuance of the Invitation to Comment.

The Board then began deliberations of additional topics to be presented in the Preliminary Views. Two topics were introduced: (1) budgetary comparison reporting and (2) presentation and classification of operating and nonoperating revenues and expenses in proprietary fund and business-type activity financial statements.

First, the Board discussed the communication method for budgetary comparison information. Following discussion of alternatives, the Board tentatively agreed that budgetary comparison information should be proposed to be presented using a single primary method of communication and tentatively agreed that budgetary comparison information should be proposed to be presented in RSI.

The Board then discussed presentation of budget variances as part of budgetary comparison information. The Board tentatively agreed to propose that governments present specific budget variances and that governments should report the variance between:

• Final budget and actual amounts
• Original budget and final budget amounts.

Finally, the Board discussed presentation and classification of operating and nonoperating revenues and expenses for proprietary fund and business-type activity financial statements. The Board tentatively decided to propose that financial statements for business-type entities continue to distinguish between operating and nonoperating revenues and expenses. Additionally, the Board tentatively agreed to propose that both the resource flows statement and the statement of cash flows be presented using the same definition of operating activities and to develop a new definition for operating activities.

Minutes of Meetings, October 25-27, 2016

The Board reviewed the preballot draft of the Invitation to Comment, Financial Reporting Model Improvements—Governmental Funds. In conjunction with this review, the Board tentatively decided that it is not necessary for the Invitation to Comment to present a single definition of financial resources consistently applied to all recognition approaches. Rather, the Invitation to Comment will be used to solicit feedback on the definitions of financial resources and the issues related to assessing whether prepaid items and inventory are considered financial resources. Additional language explaining this issue will be added to the end of Chapter 2.

In conjunction with reviewing the illustrations in Appendix D and the discussion of selected transactions in Appendix E, the Board tentatively decided to remove the service concession arrangement transaction from the illustrations.

Additionally, the Board proposed various clarifying edits throughout the document.

The Board did not object to moving forward with a ballot draft of an Invitation to Comment for discussion at the December 2016 meeting.

Minutes of Meetings, September 13-15, 2016

The Board discussed a proposal to change the name of the working capital recognition approach to the short-term financial resources recognition approach. In addition to tentatively deciding to use the term short-term financial resources in the forthcoming Invitation to Comment, the Board also tentatively decided to rename the total financial resources recognition approach as the long-term financial resources recognition approach to more clearly convey the differences in the recognition approaches.

The Board then discussed whether to reaffirm its previous tentative decision that governmental fund financial statements should present a short-term view of a government’s financial position and flows of resources. The Board tentatively decided to describe the information in governmental fund financial statements as having a shorter duration than information in the government-wide financial statements.

The Board also tentatively decided to remove from the Invitation to Comment the materials related to the government-wide statement of activities to focus the feedback on governmental funds. The proposed title of the Invitation to Comment was tentatively changed to Financial Reporting Model Improvements—Governmental Funds. The potential improvements to the government-wide statement of activities will be included in the Preliminary Views phase.

Additionally, the Board discussed the first full draft of the Invitation to Comment and proposed various clarifying edits.

The Board did not object to moving forward with a preballot draft of an Invitation to Comment.

Minutes of Meetings, August 10-12, 2016

The Board discussed feedback received on the draft Invitation to Comment from task force members at the June 2016 task force meeting held in New York City. The Board discussed issues raised at the meeting related to the three governmental funds recognition approaches, the format of the governmental funds resource flows statement, the proposed governmental funds statement of cash flows, and the format of the government-wide statement of activities.

The Board tentatively agreed not to object to the addition in Appendix B of more detail about the development of the three recognition approaches. The Board also tentatively agreed with the addition of the explanation of what is meant by the term normally as used in the context of the near-term recognition approach.

The Board tentatively agreed with relocating the presentation of the common benefits and challenges collectively in paragraphs before the introduction of the individual recognition approaches as presented in the draft ITC. The Board also tentatively agreed with the addition of examples of items both recognized and not recognized as assets and liabilities in the near-term and working capital approaches. The Board tentatively agreed with the modifications to common benefits and challenges to further explain fund balance and its usefulness in assessing the amount available for spending in the subsequent period for each recognition approach.

The Board tentatively agreed not to include examples related to permanent funds in Chapter 2 of the ITC that is being developed.

The Board tentatively agreed with retaining the elements terminology currently being used in the draft ITC and with the addition of a paragraph in the introduction of Chapter 2 to explain the meaning of and rationale for using those terms in the document and illustrations. The Board also tentatively agreed that the illustrations should continue to be presented as an appendix at the end of the draft ITC and that the illustrations will be referenced in the introduction to Chapter 2.

The Board tentatively agreed that a comparison schedule of the statements of net position and resources flows statement for each of the recognition approaches and additional illustrations of other types of governments should not be provided.

The Board tentatively agreed that the draft ITC should note that a specified single period of time following the end of the reporting period will be selected as part of development of the near-term recognition approach, if such an approach were further developed. The Board also tentatively agreed that the near-term approach should not be modified at this time to recognize certain anticipation notes (for example, TANs) as fund liabilities.

The Board tentatively agreed that the length of the discussion and number of challenges related to the working capital recognition approach should not be modified for comparability to the other two recognition approaches; however, the Board did agree that work on simplifying language to enhance the understandability of the working capital recognition approach section should continue.

The Board tentatively agreed that the classification of current and long-term activities should be clarified in Chapter 3, paragraph 4 of the draft ITC. The Board also tentatively agreed that additional language should be added to Chapter 3, paragraph 4, of the draft ITC to clarify the distinction between current and long-term transfers.

The Board tentatively agreed that a question should be included in the draft ITC that addresses the classification of cash inflows and cash outflows. The Board also reaffirmed that a statement of cash flows should not be included for the near-term recognition approach in the draft ITC; however, the Board tentatively agreed that the explanation of this position should be further clarified in Chapter 3, paragraph 7, of the draft ITC.

The Board tentatively agreed that in developing a statement of cash flows for the general fund under the working capital and total financial resources recognition approaches, the separation of restricted and unrestricted cash flows should not be explored further at this time. The Board also tentatively agreed that a discussion of the purpose of a cash flows statement should be added to Chapter 3, paragraph 8, of the ITC.

The Board tentatively agreed that clarifications are necessary in Chapter 4, paragraph 5, regarding the benefits of the presentation of a total revenues amount in the statement of activities. The Board also tentatively agreed with the inclusion of a revised schedule of business-type activities expenses by function and natural classification in the draft ITC.

The Board tentatively agreed that discretely presented component units should not be included in the illustrations presented in the draft ITC.

Minutes of Task Force Meeting, June 23, 2016

The task force provided feedback on the Board’s tentative decisions to date for the Financial Reporting Model Reexamination project, which were presented in a draft Invitation to Comment (ITC). The task force provided comments on how the discussion and illustrations in each section of the ITC can be made more clear and complete.

The task force first discussed the three general approaches to the recognition of elements of financial statements and presentation for the governmental fund financial statements that would be proposed in the ITC. These approaches are: total financial resources, working capital, and near-term financial resources. For each approach, the task force members provided feedback on the explanation of the recognition concepts, potential benefits and challenges, illustrations, and explanations of the application of the recognition approach to certain transactions. Some task force members recommended that the ITC provide additional discussion around how these three approaches were developed and selected for inclusion in the ITC and how they differ from the existing model. In addition, some task force members suggested that the discussion of each recognition model explain which assets and liabilities will not be recognized in addition to the existing discussion of which assets and liabilities are included for each recognition model. Some task force members also expressed concern about changing terms and definitions used in the models due to the uncertainty and confusion that it may cause in practice.

The task force members also provided feedback on the discussion of the two alternatives for the format of the governmental funds resource flows statement. Some task force members suggested that a definition for and additional explanation of current activity and long-term activity be provided. Some task force members also asked that variations in this section be highlighted to better identify differences between the two formats.

The task force members also expressed their thoughts on how the sections discussing and illustrating the statement of cash flows for governmental funds can be made more clear and complete. Some task force members expressed support for a governmental funds statement of cash flows, while others questioned its utility.

The task force then provided feedback on the two alternatives for the format of the government-wide statement of activities. Some task force members expressed their support for the existing statement of activities format, and other task force members favored the traditional format with the presentation of a total for all revenues. Some task force members also supported presenting information about program expenses by function and by natural classification.

Minutes of Meetings, May 10-11, 2016

The Board discussed three general approaches to the recognition of elements of financial statements and presentation for governmental fund financial statements: near-term financial resources, working capital, and total financial resources. For each approach, the Board discussed messages conveyed by financial statements, recognition concepts, potential benefits and challenges, and illustrative financial statements.

The Board also reviewed initial sections of a draft Invitation to Comment that describe alternatives pursuant to the format of the resources flows statement for governmental funds, a statement of cash flows for governmental funds, and the format of the government-wide statement of activities. After the discussion, the Board tentatively decided to obtain feedback on all three recognition approaches and the related issues tentatively presented in the draft Invitation to Comment from the task force at the June 2016 meeting.

Minutes of Meetings, March 29-31, 2016

The Board discussed three general approaches to the recognition of elements of financial statements and presentation for governmental fund financial statements: near-term financial resources, working capital, and total financial resources. For each approach, the Board discussed the relationship with the objectives of financial reporting, messages conveyed by financial statements, recognition concepts, potential benefits and challenges, recognition of specific transactions, and pre-agenda research. After the discussion, the Board tentatively decided to further develop all three approaches.

The Board also discussed two alternatives for the presentation of the governmental funds resource flows statement: the existing format of the statement of revenues, expenditures, and changes in fund balances and a format that separates short-term (or current) activities from long-term activities. The Board tentatively decided to present both alternatives in an Invitation to Comment.

The Board considered three alternatives related to the appropriateness of a reconciliation between the statements of cash flows and the resource flows statements of governmental fund financial statements. The three alternatives discussed were (1) reconciliation of net change in net position to net change in cash, (2) no reconciliation, and (3) reconsideration of the cash flows classifications for governmental funds. The Board tentatively decided that a reconciliation should not be presented in an Invitation to Comment.

The Board then discussed the appropriate presentation for cash flows from purchases and sales of investments of an internal investment pool if a statement of cash flows for governmental funds were to be required. The four options considered were (1) designation to a single fund, (2) allocation to each participating fund, (3) disclosure of the amounts in the notes, and (4) retention of the existing guidance. The Board tentatively decided to retain the existing guidance that cash flows from purchases and sales of pooled investments should be neither reported in statements of cash flows for individual funds nor disclosed.

The Board continued by deliberating whether fiduciary activities should be reported in the government-wide financial statements and tentatively decided that they should continue to be reported only as fund financial statements in the basic financial statements.

Finally, the Board discussed issues related to presenting functional or programmatic expenses by natural classification, tentatively agreeing to use the Invitation to Comment to gather additional feedback on whether certain natural classifications should be required to be presented.

Minutes of Meetings, February 16-18, 2016

The Board continued discussion of two general approaches to the recognition of elements of financial statements and presentation for governmental fund financial statements. The two approaches discussed by the Board include: near-term financial resources and working capital. The working capital approach included two different versions: working capital with past-due compensation liabilities and working capital with current shortfall in compensation liabilities. For each approach, the Board discussed the relationship with the objectives of financial reporting, messages conveyed by financial statements, recognition concepts, potential benefits and challenges, recognition of specific transactions, and pre-agenda research. After the discussion, the Board tentatively decided to further develop the near-term financial resources approach and the version of the working capital approach with past-due compensation liabilities. In addition, the Board tentatively agreed to develop a total financial resources approach.
The Board discussed four alternatives for the presentation of the governmental funds resource flows statement and tentatively decided to further explore the existing format of the statement of revenues, expenditures, and changes in fund balances and a format that separates short-term (or current) activities from long-term activities (for example, capital outlays).

In addition, the Board considered three alternatives for the presentation of the government-wide statement of activities and tentatively decided to further explore the existing format for the statement of activities and a traditional format with expenses presented by function or program. The Board directed the staff to further consider communication methods for presenting functional expenses by natural classification.

Finally, the Board considered issues related to presenting statements of cash flows and tentatively decided to further develop a statement of cash flows for governmental funds that could be presented as part of the working capital approach or the total financial resources approach.

Minutes of Meetings, January 5-6, 2016

The Board continued discussion of three general approaches to the recognition of elements of financial statements and presentation for governmental fund financial statements. The three approaches discussed by the Board include near-term financial resources, near-term financial resources with current-period operating liabilities, and working capital (formerly referred to as short-term accrual). For each approach, the Board discussed the relationship with the objectives of financial reporting, messages conveyed by financial statements, recognition concepts, potential benefits and challenges, recognition of specific transactions, and pre-agenda research. After the discussion, the Board tentatively decided to further develop the near-term financial resources approach, working capital approach, and a working capital approach with a variation to recognition of post-employment benefits and compensated absences. The Board also tentatively decided to further explore the following four presentation alternatives for resources flows: statement of revenues, expenditures, and changes in fund balances (current format); cash flows statement categories; recurring transactions separated from one-time and limited-time transactions; and short-term (or current) activities separated from long-term activities.

Minutes of Meetings, November 18-20, 2015

The Board considered five general approaches to the recognition of elements of financial statements and presentation for governmental fund financial statements. The five potential approaches discussed by the Board include near-term financial resources, near-term financial resources with current-period operating liabilities, working capital (formerly referred to as short-term accrual), cash basis, and multiple measurement focuses/bases of accounting. The Board discussed the general features of each approach as well as the potential benefits and challenges that are associated with each approach. After the discussion, the Board tentatively decided to further develop the near-term financial resources, near-term financial resources with current-period operating liabilities, and working capital approaches.

Minutes of Meetings, October 6-8, 2015

In its initial deliberations of the project, the Board discussed the conclusions related to users of financial statements and the objectives of financial reporting that serve as the foundation of the financial reporting model introduced by Statement No. 34, Basic Financial Statements—and Management’s Discussion and Analysis—for State and Local Governments. The Board generally agreed that these foundational viewpoints remain valid, although details about the meaning of certain language, such as current financial resources and short-term, may be reconsidered during the course of the project. The Board also generally reconfirmed its previous tentative decision that the messages that should be conveyed in current financial resources financial statements should at a minimum include:

• The current financial resources and claims against current financial resources of the entity at the reporting date
• The balance of current financial resources at the reporting date that is available for spending in future periods
• The amounts and sources of inflows and outflows of current financial resources during the reporting period.

Minutes of Meetings, July 21-23, 2015

The staff presented a capstone report on the five phases of the financial reporting model reexamination research. The research activities include a literature review, archival research, stakeholder roundtables, stakeholder surveys, and individual stakeholder interviews. The Board will consider whether a project should be added to the current technical agenda at the September meeting.