According to the Governmental Accounting Standards Board (GASB) a bevvy of new proposals are expected to arrive by the end of the second quarter in 2021. The planned Exposure Drafts will address four key practice issues for state and local governments including Compensated Absences, Risks and Uncertainties Disclosures, Prior-Period Adjustments, and a 2021 Implementation Guidance Update1.
For each project, there are specific areas of interest. According to the GASB, Compensated Absences guidance will be examined, including certain forms of accrued leave benefits, measurement options for sick leave and the usefulness of certain required notes to financial statements which are used for decision-making and accountability assessments. Additionally:
“The Board is considering issues including:
- When a liability should be recognized for various types of leave
- How compensated absences liability should be measured, and
- What disclosures about compensated absences should be required.
What’s next: After concluding initial project deliberations, the Board is expected to consider issuing an Exposure Draft for public comment in the first quarter of 2021.”
In addition to Compensated Absences the GASB plans to identify potential of risks and uncertainties within the state and local government realm and whether to develop disclosure requirements around them. According to the GASB:
“The Board is considering issues including:
- Categories of risks and uncertainties (for example, estimates and concentrations)
- Whether specific disclosure requirements within each category should be proposed, and
- Potential thresholds associated with risk and uncertainty disclosures.
What’s next: After concluding initial project deliberations, the Board is expected to consider issuing an Exposure Draft for public comment in the second quarter of 2021.”
Next, the Board plans a full review of the existing standards regarding prior-period adjustments, accounting changes and error corrections within Statement No. 62., Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements. The review will serve to address any inconsistencies, confusion and difficulty associated with application of the existing requirement while also assessing the usefulness of any associated disclosures.
“The Board is considering issues including:
- Types of events that constitute the different accounting changes and error corrections
- The relationship between the existing requirements for accounting changes and error corrections and other GASB requirements
- Clarification of terminology regarding reporting of accounting changes and error corrections, and
- Usefulness of the disclosure requirements associated with each type of accounting change and error correction.
What’s next: After concluding initial project deliberations, the Board is expected to consider issuing an Exposure Draft for public comment in the second quarter of 2021.”
Finally, according to the GASB, the first half of 2021 will see an update to Implementation Guidance. The new annual Implementation Guide will tackle leases, fiduciary activities and derivative instruments using the usual question-and-answer method. Updates will be applied respectively to the Codification of Governmental Accounting and Financial Reporting Standards and the Comprehensive Implementation Guide.
The MICPA will be tracking these changes as they occur throughout the coming year. Subscribe to our enewsletter for more information and updates on topics like this.
References:
- On the Horizon: A Number of New Proposals are Coming Soon. Governmental Accounting Standards Board. Accessed 16 Nov. 2020.