Question

the GASB requires governments to identify their principal taxpayers in their CAFRs’ statistical sec- tion. In what way does this information contribute to an analysis of nancial condition?

Answer 1

The independent, non-political organization dedicated to establishing rules that require state and local governments to report clear, consistent and transparent financial information to their constituents is the Governmental Accounting Standards Board (GASB).

The GASB’s mission is to establish standards for financial reporting that provide decision-useful information to assist individuals in assessing a government’s financial condition and performance.

The GASB also works to educate the public, including financial statement preparers, auditors, and users, about its standards and the information those standards require governments to present in their financial reports.

The GASB meets the needs of taxpayers and other financial statement users by helping them decipher and understand financial statements issued by state and local governments through discussions, speeches, roundtables, and issuing easy-to-understand User Guides.

The GASB’s mission is achieved through an open and independent process that encourages broad participation from all stakeholders and objectively considers and analyzes all their views. The GASB’s due process is subject to oversight by the Financial Accounting Foundation (FAF) Board of Trustees.

GASB standards are recognized by governments and the accounting profession as the official source of U.S. Generally Accepted Accounting Principles (U.S. GAAP) for state and local governments.

For many of the issues it addresses, the GASB:

1. Appoints an advisory task force of outside experts
2. Studies existing literature on the subject and conducts or commissions additional research if necessary
3. Publishes a discussion document for public comment setting forth the issues being addressed and possible solutions
4. Broadly distributes an Exposure Draft of a proposed standard for public comment
5. Conducts public hearings and forums on its due process documents

Significant steps in the process are announced publicly. The GASB’s meetings are open for public observation and a public record is maintained.

There are several ways that governments may approach this situation. Some may obtain the information from other sources, such as chambers of commerce, and thereby present employment numbers with the employers identified. Others may present the employment information without employer names-perhaps labeling them "Employer 1, Employer 2," and so on. Although the absence of employer names may make it difficult to make judgments about the likelihood of individual employers relocating or downsizing, the schedule is still valuable in identifying concentrations of employment within a few employers. Governments that cannot obtain employment numbers for individual employers, even without identification, may present other information instead, such as employment by industry.

            There are other important considerations regarding the availability of information. Governments should present the information that is most current for the 10-year period. Certain indicators, such as personal income, are revised for several years before being finalized. Personal income and other information also take some time to be produced and, therefore, may not be available for the most recent year or two of the decade covered by the statistical section. Governments should clearly indicate on the schedule when information is not available and why.

            Governments also should present information that is most specific to their geographic area. For states and larger cities and counties, indicators are often available every year. But for smaller governments, such as many towns and villages, information may not be available every year. Population, for example, may only be available from the decennial Census. Such governments may seek information for the intervening years from other sources, such as a department of the state government, or may not provide any information at all for those years.

            Furthermore, demographic and economic indicators may not be collected for the jurisdictions covered by some governments. For example, a school district may cover all or some portions of multiple local governments. Such a government might present information for each of the jurisdictions it covers, or perhaps for the jurisdiction it most closely overlaps with. In any case, the schedule should be clearly noted to explain how the information relates to the government's geographic area. Finally, some governments, such as public colleges and universities other than community colleges, are not related to any particular geographic area; these governments will have to apply professional judgment to determine what information is most meaningful to its statistical section users.