On March 16, 2012, the GFOA, along with the International
City/County Management Association (ICMA), the National Association
of Counties (NACo), the National League of Cities (NLC), and the
U.S. Conference of Mayors (USCM) issued a joint response in
opposition to the Governmental Accounting Standards Board (GASB)
Preliminary Views (PV) on Economic Condition Reporting: Financial
Projections.
The GASB PV proposes to mandate that governments of all types
and sizes present five-year projections of their cash inflows, cash
outflows, and financial obligations as required supplementary
information, along with information on financial interdependencies
with other governments. The GASB argues that such information would
"better enable taxpayers, bondholders, and other interested parties
to assess a government's financial health and its fiscal
sustainability."
The joint response, which is available on the GFOA's website,
strongly objects to the GASB's proposals, which it describes as
unnecessary, confusing, and beyond the legitimate scope of an
accounting and financial reporting standard-setting body. The
proposed required supplementary information is unnecessary because
many governments routinely prepare financial projections as part of
their budget process, which is the appropriate place for
subjective, future-oriented information. The proposed required
supplementary information would be confusing because it would
result in two sets of financial projections (the GASB proposes that
data be based exclusively on past trends and known future events,
whereas budgetary projections represent a government's best
estimate of actual future outcomes). Finally, the GASB would be
going beyond the proper scope of accounting and financial reporting
by mandating the presentation of future-oriented
information.
GFOA and its local partners were not alone in voicing strong
objections to the GASB's proposals. Many governments and other
associations, including the National Association of State Auditors,
Comptrollers, and Treasurers and the National Association of State
Budget Officers have also voiced their concern.
