PROJECT PAGES

MINUTES ARCHIVE

CONCEPTUAL FRAMEWORK—DISCLOSURE FRAMEWORK


Minutes of Meetings, April 6–7, 2021

The Board reviewed a preballot draft of a final Concepts Statement, Communication Methods in General Purpose External Financial Reports That Contain Basic Financial Statements: Notes to Financial Statements. The Board discussed its tentative decisions related to the concept of essentiality, specifically with regard to (1) the depth or breadth of users that utilize or would utilize information in notes to financial statements in their analysis for making decisions or assessing accountability and (2) essential information having or being expected to have a meaningful effect on users’ analyses for making decisions or assessing accountability. Based on this discussion, the Board voted to re-expose the proposed concepts in an Exposure Draft.

The Board agreed that this re-exposure does not establish a precedent that if a Board member has not presented an alternative view in an Exposure Draft but is considering dissenting from a final Statement, re-exposure is necessary. The Board noted that the decision for re-exposure pertains to unique facts and circumstances that should not be applied as a precedent in future, similar situations. The circumstances in this case include, but are not limited to the following: (1) the concept of essentiality is the most significant element of the proposed Concepts Statement, (2) users (who are notably the most difficult for the Board to obtain input from) are uniquely impacted by the proposed determination of essentiality, and (3) comments heard from user members at the April 6 meeting of the Governmental Accounting Standards Advisory Council indicated some concern with the proposed definition of essentiality.

The Board then agreed to move forward with a preballot draft of a revised Exposure Draft of a proposed Concepts Statement, Communication Methods in General Purpose External Financial Reports That Contain Basic Financial Statements: Notes to Financial Statements.

Minutes of Meetings, February 24–26, 2021

The Board continued redeliberations on the Disclosure Framework project by discussing concepts related to notes to financial statements and reporting units.
 
The Board first discussed whether a final Concepts Statement should include the description of a reporting unit from Concepts Statement No. 3, Communication Methods in General Purpose External Financial Reports That Contain Basic Financial Statements, in the concepts themselves. The Board tentatively decided that a final Concepts Statement should not include that description.

Next, the Board discussed whether a final Concepts Statement should include examples of how the reporting unit concept should be applied to a particular circumstance. The Board tentatively decided that those examples should not be included.
 
The Board then discussed whether the concept related to notes to financial statements and reporting units (paragraph 13 of the Exposure Draft) should be modified by deleting the phrase “at a minimum” from the last sentence. The Board tentatively decided that this phrase should be removed.

Minutes of Meetings, February 11–13, 2020

The Board reviewed a ballot draft of the Exposure Draft of a proposed Concepts Statement, Communication Methods in General Purpose External Financial Reports That Contain Basic Financial Statements: Notes to Financial Statements, and discussed clarifying edits. The Board then voted unanimously to approve the issuance of the Exposure Draft.

Minutes of Meetings, January 7–9, 2020

The Board reviewed a preballot draft of the Exposure Draft of a proposed Concepts Statement, Communication Methods in General Purpose External Financial Reports That Contain Basic Financial Statements: Notes to Financial Statements, and discussed clarifying edits. The Board agreed to move forward with a ballot draft of an Exposure Draft for discussion at the February 2020 Board meeting.

Minutes of Meeting, November 20–22, 2019

The Board began by reviewing a draft of the concepts section of an Exposure Draft of a proposed Concepts Statement and discussed clarifying edits.
 
Next, the Board discussed the characteristics of the financial information that would be included in an Exposure Draft. The Board tentatively agreed that the proposed concepts in the Exposure Draft would meet all of the characteristics in Group 1 and, therefore, are within the scope of the GASB’s authority.
 
Finally, the Board discussed whether the expected benefits resulting from the application of the proposed concepts justify the perceived costs to preparers and other stakeholders. The Board tentatively decided that the expected benefits associated with the application of the proposed concepts justify the perceived costs of implementation and ongoing compliance of the resulting accounting standards.
 
The Board agreed that the project staff should prepare a preballot draft of an Exposure Draft for discussion at the January 2020 Board meeting.

Minutes of Meeting, October 15–17, 2019
 
The Board began deliberations by discussing how the proposed Concepts Statement communicates the relationship between the notes to financial statements and the financial statements themselves. The Board discussed whether the proposed Concepts Statement should explicitly include a proposed concept that the notes to financial statements are essential to users’ understanding of financial position or inflows and outflows of resources and tentatively decided not to include this proposal. The Board continued by further discussing the purpose of note disclosures and whether the proposed purpose effectively communicates the general relationship of the notes and the financial statements. The Board tentatively decided that “explain, describe, or supplement the financial statements” in combination with the description that the notes are integral to the financial statements describes the proposed general relationship of the notes to financial statements.
 
The Board then discussed the appropriate level of detail at which information should be presented for the notes to financial statements. The Board tentatively decided to propose that notes to financial statements provide information at a level of detail consistent with the reporting units presented in the financial statements.

Minutes of Meeting, August 27–28, 2019

The Board began deliberations by discussing the feedback from outreach conducted with financial statement users regarding their use of certain note disclosures and the operability of the proposed characteristics of essentiality. The Board tentatively decided that the characteristics of essentiality, in terms of obtaining evidence of use at the individual disclosure level, are operational.
 
The Board then discussed whether the number of users or user types that provide evidence of an individual note disclosure’s use should impact the assessment of whether that evidence is sufficient to establish the existence of the characteristics of essentiality. The Board tentatively decided that the number of users or user types utilizing information for decision making or assessing accountability should not impact the sufficiency of the evidence of use.
 
Finally, the Board discussed modifications to characteristic A to remove the phrases “regardless of source” and “currently.” The Board tentatively decided to modify characteristic A to: “Evidence that the information is being utilized in users’ analyses for decision making or assessing accountability.”

Minutes of Meeting, July 16–18, 2019

The Board began by discussing feedback from the June 2019 Note Disclosure Framework Task Force meeting. The Board reviewed the feedback received on the project objective and scope, users of the notes to financial statements, general purpose of note disclosures, types of information included in note disclosures, types of information inappropriate for note disclosures, characteristics of essentiality and the level of detail to which they should be applied, and the cost-benefit evaluation. Board members provided additional observations that will be further considered in future deliberations.
 
The Board then discussed whether concepts related to presentation and format of note disclosures should be included in the note disclosure conceptual framework. The Board tentatively decided not to develop proposed concepts related to presentation or format of notes to financial statements in the note disclosure conceptual framework.

Minutes of Task Force Meeting, June 4, 2019

The task force provided feedback on tentative Board decisions related to the disclosure framework. The task force first discussed the background of the project, including the objective, scope, and existing conceptual literature related to the notes to financial statements. Task force members generally agreed with the project objective of developing a disclosure framework to improve consistency and effectiveness of note disclosures. Some task force members noted that the role of a disclosure framework is important as technology continues to evolve in its impact on financial reporting.

The task force members then discussed concepts related to the users of note disclosures. Some task force members provided feedback about the appropriate level of understanding that users are responsible for obtaining. Other task force members suggested defining or further clarifying the term reasonable understanding, which is used in Concepts Statement No. 3, Communication Methods in General Purpose External Financial Reports That Contain Basic Financial Statements.

Next, the task force members discussed the purpose of note disclosures, the types of information that are appropriate for inclusion in the notes to financial statements, and the types of information that are inappropriate for inclusion. In general, task force members agreed with the purpose of the notes as a source of information for decision making and assessing accountability. Some task force members raised concerns that the purpose may be too broad. Other task force members questioned whether the types of information appropriate for the notes, especially the information associated with the accountability of the government, would lead to the inclusion of subjective information in note disclosures. In discussing types of general or educational information that should be included in the notes, task force members’ views were mixed about whether it was appropriate for governments to include general or educational information that was not specific to the government in the notes.

The task force members discussed the concept of essentiality as the degree of importance that the information in the note disclosures should possess. Members generally agreed that essential is an appropriate term to convey that level of importance. Members then provided feedback on the proposed characteristics that indicate the information is essential: evidence that users currently use the information or users would incorporate the information into their analyses if it became available for making decisions or assessing accountability. Some task force members expressed concerns that the essentiality characteristics were too broad or lacked clarity in the magnitude of evidence required. Other task force members suggested that a cost-benefit evaluation for note disclosures should be assessed at a more detailed level.

Finally, the task force members discussed future deliberations and the project timeline. Task force members generally were in agreement with the project plan.

Minutes of Meeting, April 22–24, 2019

The Board discussed the evaluation of costs and benefits in the establishment of requirements related to notes to financial statements. The Board tentatively decided that the costs and benefits for note disclosures should be considered separate from (and in addition to) an analysis that considers costs and benefits of a Statement as a whole.

To provide additional context for this tentative conclusion, the Board considered varying levels of detail at which to conduct a cost-benefit analysis in the establishment of note disclosures. The Board tentatively decided that the costs and benefits of proposed note disclosures should be considered as a whole for a Statement in all cases. In addition, the Board discussed cases in which cost-benefit considerations may be necessary at the individual disclosure level. The Board tentatively decided that the costs and benefits of proposed note disclosures should be considered at the individual disclosure level when appropriate, based on stakeholder feedback and the type of information that is being assessed.

Minutes of Meeting, March 13, 2019

The Board discussed the concept of essentiality as it relates to information in the notes to financial statements. The Board tentatively decided that a more distinctive criterion, beyond the objectives of financial reporting and the qualitative characteristics contained in Concepts Statement No. 1, Objectives of Financial Reporting, is needed to define or describe information presented in the notes to financial statements.

The Board then discussed which term would be most appropriate to convey the degree of importance intended for information included in the notes to financial statements. The Board tentatively decided that the term essential continues to be the most appropriate to convey the intended degree of importance.

Next, the Board discussed the characteristics of essentiality. The Board tentatively decided to propose that information is essential if it has either of the following characteristics:
  • Characteristic A: Evidence that the information, regardless of its source, currently is being utilized in users’ analyses for decision making or assessing accountability
  • Characteristic B: Evidence that if the information becomes available, users would modify their analyses for decision making or assessing accountability to incorporate that information.
Finally, the Board tentatively decided to propose that evidence supporting the determination of the characteristic be applied to individual pieces of information such that individual disclosures required by a final GASB pronouncement have Characteristic A or Characteristic B.

Minutes of Meetings, January 29–31, 2019
 
The Board discussed information that generally is not appropriate for note disclosures. The Board tentatively decided that existing descriptions of information that should not be included in note disclosures should be retained. As described in paragraph 37 of Concept Statement 3, Communication Methods in General Purpose External Financial Reports That Contain Basic Financial Statements, these include subjective assessments of the effects of reported information on the reporting unit’s future financial position or predictions about the effects of future events on future financial position.
 
In addition, the Board tentatively decided to propose that information that should not be included in notes be clarified so that expectations and assumptions about the future that are inputs to current measures in the financial statements or note disclosures are not excluded from the note disclosures.
 
Finally, the Board tentatively decided to propose that general information that is specific to the government and is easily obtainable from other sources not be included as information that is inappropriate for note disclosures, whereas general or educational information that is not specific to the government should be included as information that is inappropriate for note disclosures.

Minutes of Meetings, December 17–19, 2018

The Board discussed the purpose of note disclosures and tentatively decided that their purpose is to provide information that is essential to users that explains, describes, or supplements the financial statements in order to assist users in making economic, social, and political decisions and assessing accountability. The Board also tentatively decided that the types of information provided by the notes include:
  • Descriptions of the accounting and finance-related policies underlying amounts recognized in financial statements
  • More detail about or explanations of amounts recognized in financial statements
  • Additional information about financial position or inflows and outflows of resources that does not meet the criteria for recognition
  • Other finance-related information associated with the accountability of the government.
Minutes of Meetings, November 14–16, 2018

The Board initiated deliberations by affirming that notes to financial statements meet (or help meet) all of the objectives of financial reporting described in Concepts Statement No. 1, Objectives of Financial Reporting, and that the users of note disclosures are responsible for obtaining a reasonable understanding of governmental financial reporting as described in Concepts Statement No. 3, Communication Methods in General Purpose External Financial Reports That Contain Basic Financial Statements. The Board also tentatively decided that the scope of the project should focus on developing concepts that expand or elaborate on the portion of Concepts Statement 3 that relates to the notes to financial statements.

The Board tentatively decided that the following should be included in the scope of the project:
  • The purpose of note disclosures
  • The limitations of note disclosures
  • The characteristics of essentiality
  • The presentation and format of note disclosures, including the location of the information within the note disclosures section
  • The consideration of note disclosures individually and as a whole
  • The level of detail for note disclosures.
The Board also tentatively decided that the development of concepts related to materiality should be excluded from the scope of the project.

Minutes of Meetings, October 2–4, 2018

In an educational session, the Board discussed disclosure frameworks of other standards setters and GASB concepts related to note disclosures. No deliberations were conducted, and no decisions were reached.
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