Politics

Rough Sea's

There's a new and higher level of strain in the already-tense relationship between GASB and state and local officials.
by | February 2007
 

The latest tussle between the Governmental Accounting Standards Board and associations of public interest groups is over Service Efforts and Accomplishments, commonly called SEAs. There have been behind-the- scenes threats to GASB funding, some not-very-polite name-calling and suggestions that GASB is beholden to one foundation funder or another. Clearly, the SEA issue has the "Big 7" public interest groups, as well as the Government Finance Officers Association, united in their stand against GASB.

That's because GASB is moving toward a suggestion--not a ruling--that government accounting shed light upon the way a government is performing. "Governments need to report results, not just how much money they are spending," says Jay Fountain, who recently retired as GASB's assistant director of research. "This should be part of general purpose, external financial reporting."

The Big 7 and GFOA don't disagree with the substance of the issue. "There is no argument over the value and importance of performance measures," says Don Borut, who heads the National League of Cities, "or on the value of reporting them."

Rather, it's a question of who's in charge, and the Big 7 and GFOA don't believe it should be GASB, an agency whose mission, they point out, is to deal with financial reporting--not the budgeting process. "A bunch of green eyeshades at GASB are trying to move the thoughtful strategic planning and budgeting process in with accounting," says GFOA's executive director, Jeff Esser. "It doesn't belong there." It belongs, he says, with elected officials who decide what their priorities are and how to achieve their goals--which is the heart of the budget process.

Although GASB says any SEA reporting suggestions it comes up with would be voluntary, there is concern that, in reality, that will not be the case. "They are a standard-setting body," Esser says, "and when they put their rubber stamp on something, it carries weight." What GFOA and other associations want to do is take care of SEA reporting themselves--by setting up a commission that can issue guidance on effective performance management.

In an effort to dissuade GASB from moving ahead with SEAs, the group of associations took their case to GASB's governing board, the Financial Accounting Foundation, in November, but FAF confirmed that GASB had the jurisdictional authority to include SEAs in its financial accounting and reporting activities.

The FAF fight was just the opening skirmish. The public interest groups requested a meeting with Bob Attmore, who chairs the GASB board, to discuss their concerns. That meeting took place on January 11 as part of a GASB/SEA roundtable, attended by some 50 interested parties.

The depth of anger leveled at GASB has surprised Attmore, who thinks a lot of it stems from misinformation. "People are opposed because a small group of people is telling them it's a bad thing," he says, adding that no one can know what GASB is going to do because the board hasn't deliberated on the issue yet. Until it puts a project on its agenda to do something, everyone is "reacting to something they're afraid we'll do," he says. "People are getting ahead of themselves."

THE TWO BIG ONES

In the past decade, GASB has issued two standard-setting rules that have had an enormous impact on state and local governments.

34: full ccrual accounting for economic resources, which include infrastucture

45: accounting for the liabilities of other post employement benefits, which include retiree health care

Join the Discussion

After you comment, click Post. You can enter an anonymous Display Name or connect to a social profile.

More from Politics