The Governmental Accounting Standards Board released a proposed concepts statement to guide GASB when establishing note disclosure requirements for state and local governments.
The proposal is part of GASB’s response to its research reexamining the existing note disclosure requirements. The proposed concepts mainly aim to provide GASB with criteria to consistently evaluate notes to financial statements in the standards-setting process. They also could help constituents understand the fundamental concepts underlying future GASB pronouncements.
The revised exposure draft,
One of the main elements of the proposal is the concept of “essentiality.” The revised exposure draft would say that notes to financial statements are essential to making economic, social, or political decisions or assessing accountability. The revised exposure draft also identifies some characteristics that indicate information is essential to users, including that users utilize the information in their analyses for making decisions or assessing accountability or would modify those analyses to incorporate the information if it were made available; the information has or would have a meaningful effect on users’ analyses for making decisions or assessing accountability; and a breadth or depth of users utilize or would utilize the information in their analyses for making decisions or assessing accountability.
GASB issued an exposure draft on this topic in early 2020 and has now issued the revised exposure draft to incorporate feedback received from stakeholders on the previous draft and to seek feedback on the resulting proposed revisions, which GASB believes will improve the final concepts.
