The Governmental Accounting Standards Board issued a proposal Tuesday to improve the accounting and financial reporting requirements for accounting changes and error corrections at state and local governments.
The exposure draft, "Accounting Changes and Error Corrections," offers a set of proposed improvements to the guidance for accounting changes and error corrections in an effort to make the information easier to understand, more reliable, relevant, consistent and comparable across governments for making decisions and determining accountability.
GASB’s current guidance on accounting changes and error corrections was spelled out back in 2010 in GASB Statement No. 62, "Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989, FASB and AICPA Pronouncements," but the guidance actually dates back to the 1970s. GASB has been seeing differences in the ways governments are applying the standards in practice, including issues with selecting the appropriate category of accounting change or error correction. To clear up the confusion, GASB is proposing definitions in the categories of changes in accounting principles, changes in accounting estimates, changes to or within the financial reporting entity, and corrections of errors in previously issued financial statements.
GASB headquarters in Norwalk, Connecticut
Courtesy of GASB
The proposal would also provide accounting and financial reporting guidance for each category of accounting changes and error corrections, including display in financial statements, note disclosures, and presentation in required supplementary information and supplementary information.
GASB is asking its stakeholders to review the exposure draft and send comments to the board by Aug. 31, 2021. The document includes information about how to send comments.
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