NEWS RELEASE 06/14/06
GASB Seeks Constituent Views on Major Issues Related to Derivatives
Board Invites Comments on Project to Improve the Accounting and Financial Reporting of Derivatives
Norwalk, CT, June 14, 2006In line with its commitment to open and rigorous due process, the Governmental Accounting Standards Board (GASB) is seeking constituent comment and perspective on the Preliminary Views (PV) document, Accounting and Financial Reporting for Derivatives, which was released on April 28, 2006.
The PV proposes 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 GASB is encouraging the active participation of all constituents in this process. We are particularly interested in hearing from financial statement users, such as analysts, and governments that are participating in the derivatives market,” said Randal Finden, GASB Project Manager. “The proposed changes could have a significant impact on the way state and local governments account for derivatives and we want to ensure that all parties have an opportunity to carefully consider the issues and express their points of view.”
Those individuals or organizations that wish to submit a comment should email the Director of Research and Technical Activities at director@gasb.org or mail them to:
Governmental Accounting Standards Board
401 Merritt 7
PO Box 5116
Norwalk, CT 06856-5116
As an additional alternative, for the first time GASB constituents can now also submit comments through an Internet-based form. The Web address for the form can be found in the PV and in a plain-language supplement that summarizes the proposed standards for financial statement users. Both documents are available to download for free from the GASB Web site, www.gasb.org.
The deadline for comments is July 28, 2006.
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 www.gasb.org.