NORWALK, Conn.--(BUSINESS WIRE)--Two accounting standards established to improve the consistency and comparability in reporting U.S. state and local governments’ insurance activities achieve their purpose.
“On behalf of the FAF and the GASB, I’d like to thank the stakeholders who helped the PIR team assess the real-world application, usefulness, and effectiveness of the insurance and risk financing standards for state and local governments.”
That was the overall conclusion of the Post-Implementation Review (PIR) of Governmental Accounting Standards Board (GASB) Statements No. 10, Accounting and Financial Reporting for Risk Financing and Related Insurance Issues, and No. 30, Risk Financing Omnibus, an amendment of GASB Statement No. 10. The Statements establish accounting and financial reporting standards for risk financing and insurance-related activities of state and local governments, including public risk pools.
The review of Statements 10 and 30 was undertaken by an independent team of the Financial Accounting Foundation (FAF), the parent organization of the GASB and the Financial Accounting Standards Board (FASB). The team’s formal report is available at www.accountingfoundation.org.
FAF President and CEO Teresa S. Polley said: “On behalf of the FAF and the GASB, I’d like to thank the stakeholders who helped the PIR team assess the real-world application, usefulness, and effectiveness of the insurance and risk financing standards for state and local governments.”
GASB Chairman David A. Vaudt said: “The post-implementation review report on Statements 10 and 30 identified many positive aspects of the insurance and risk financing standards, including their decision-usefulness to users.
“We are considering the reported findings and will provide our initial response in the coming weeks. Additionally, the FASB is working on a project to amend its guidance for insurance activities. The GASB is actively monitoring that project and, when complete, will determine whether action by the GASB is appropriate.”
The PIR team received input from analysts and other financial statement users, as well as from preparers and auditors. Based on its research, the review team concluded that, overall, Statements 10 and 30 are accomplishing their stated purpose. In particular, their research indicates:
- Statements 10 and 30 resolve the issues underlying their need.
- Preparers and experienced practitioners are able to understand and apply the standards as intended.
- The standards have increased consistency and comparability across governments’ insurance activities.
- The resulting information is reliable and decision useful for those who use it.
- The standards did not result in significant unexpected changes to financial reporting or operating practices, nor did they have any significant unanticipated consequences.
- The implementation and continuing application costs appear to be consistent with the costs that the GASB considered and stakeholders expected, and the benefits appear to be consistent with what the GASB intended.
The PIR team for Statements 10 and 30 also concluded that the standard-setting process worked well overall and contributed to successful standards. The PIR team had no significant standard-setting process recommendations as a result of the review.
Update On Other PIR Activities
The PIR team is currently reviewing FASB Statement 157, Fair Value Measurements, which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. In September, the team will survey stakeholders about the application and effectiveness of Statement 157.
Later this year, the PIR team will start a review of FASB Statement 123(R), Share-Based Payment. Statement 123R focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. It establishes standards for the accounting for transactions in which an organization exchanges its equity instruments for goods or services. It also addresses transactions in which an organization incurs liabilities in exchange for goods or services that are based on the fair value of the organization’s equity instruments or that may be settled by the issuance of those equity instruments.
Stakeholders who would like the opportunity to participate in upcoming PIR surveys, conducted by an independent survey firm on behalf of the Financial Accounting Foundation, should register online.
For more information on the PIR process, visit the FAF website.
About the Financial Accounting Foundation
The FAF is responsible for the oversight, administration, and finances of both the Governmental Accounting Standards Board (GASB) and the Financial Accounting Standards Board (FASB). The Foundation is also responsible for selecting the members of both Boards and their respective Advisory Councils.
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.