Going after GASB

Many public finance officials worry that a series of new accounting rules will burst their budgets.
Source: PENELOPE LEMOV
Governing
November 2007

http://www.governing.com/articles/11gasb.htm

When public finance officers met this summer in Anaheim, their association’s outgoing president kicked off the convention with an all-out assault on an accounting board. Thomas J. Glaser spent the lion’s share of his opening-day address ticking off the follies of the Government Accounting Standards Board’s recent rules and what the Government Finance Officers Association intended to do about them. GASB’s “time has come and gone,” Glaser told the 3,000 or so members in attendance, some of whom interrupted the speech with their applause.

The attack on GASB was more than a little ironic, given that when the organization came into being in 1984, the finance officers’ group played a major role in persuading the Financial Accounting Foundation, which oversees financial reporting standards for the private and nonprofit sectors, to set up a special branch for government accounting. In subsequent years — especially in the early years when it really mattered — GFOA worked to build its membership’s respect for and acceptance of GASB and the standards it set.

Today, GASB is a powerful entity. Its financial-reporting rules have the potential to bring a government’s budget to crisis. Refusal to follow its accounting precepts could lead to a downgrade in a credit rating or a shunning by the financial community.

But it is also an agency under pressure — and not just from GFOA. There is a threat to its financial-reporting hegemony: At least one state and several of its localities are set to defy a major GASB accounting rule. What’s more, the chairman of the Securities and Exchange Commission has suggested that the SEC participate in the selection of some GASB board members. Such a move could impinge on the organization’s independence and bring it, along with state and local accounting rules, closer to federal purview.

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