NEWS RELEASE 04/28/06

GASB Issues Preliminary Views Document on Major Issues Related to Derivatives

Norwalk, CT, April 28, 2006—The Governmental Accounting Standards Board (GASB) today issued a Preliminary Views document that intends to improve the accounting and financial reporting of derivatives by state and local governments.

The proposal would require that the fair value of derivatives be reported in the financial statements as well as the change in that fair value. If, however, a derivative is effectively hedging (reducing) the risk it was created to address, then the annual changes in the derivative’s fair value would be deferred and reported in a government’s balance sheet. Governments also would disclose additional information about their derivatives in the notes to the financial statements.

The Preliminary Views document and a plain-language supplement that summarizes the proposed standards for financial statement users and others without an accounting background are available to download for free from the GASB Web site, www.gasb.org.

Due Process

In line with its commitment to open and rigorous due process the Board is actively seeking constituent views on this proposal. Accordingly, the public is encouraged to email their comments to Director of Research and Technical Activities, Project No. 26-4P, director@gasb.org or mail them to: 

Readers of both documents also will be able to submit comments via Internet-based comment forms for the first time.

The GASB also will be conducting several public meetings in association with this project. Details are as follows:

Public Hearing:

• June 21, 2006, San Diego, CA, in conjunction with the annual conference of the Association of Government Accountants. The hearing will be held at the San Diego Marriott Hotel & Marina, 333 West Harbor Drive, beginning at 9 a.m. PDT.

Panel Discussion and Public Hearing:

• July 10, 2006, New York City. Panel discussions featuring persons with different perspectives (such as a preparer, an auditor, an external user of financial statements and a member of the derivatives community) and a public hearing will be held at Milano The New School, 72 Fifth Avenue (between 13th and 14th Streets), 3rd Floor (Room 321), beginning at 9 a.m. EDT. The hearing is expected to conclude at noon.

User Roundtable:

• July 10, 2006, New York City. The roundtable discussion, exclusively for external users of financial statements, will be held at Milano The New School, 72 Fifth Avenue (between 13th and 14th Streets), 3rd Floor (Room 321), beginning at 1 p.m. EDT. The Roundtable is expected to conclude at 5 p.m.

About the Governmental Accounting Standards Board

The GASB is the independent, not-for-profit organization formed in 1984 that establishes and improves financial accounting and reporting standards for state and local governments. Its seven members are drawn from the Board's diverse constituency, including preparers and auditors of government financial statements, users of those statements and members of the academic community. More information about the GASB can be found at its website.