The Governmental Accounting Requirements Board launched steerage Monday to enhance the accounting and monetary reporting necessities for accounting adjustments and error corrections by state and native governments.
GASB Assertion No. 100, Accounting Modifications and Error Corrections, affords extra easy steerage that goals to provide info that’s less complicated to know and extra dependable, related, constant and comparable throughout totally different state and native governments for making selections and figuring out accountability.
GASB’s earlier requirements on accounting adjustments and error corrections — in GASB Assertion No. 62, Codification of Accounting and Monetary Reporting Steerage Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements — stemmed from decades-old steerage courting again to the 1970s. Pre-agenda analysis by GASB’s workers discovered some variety in how the prevailing requirements have been utilized in follow, together with points with selecting the related class of accounting change or error correction.
Assertion 100 defines the next classes:
- Modifications in accounting ideas;
- Modifications in accounting estimates;
- Modifications to or inside the monetary reporting entity; and,
- Corrections of errors in beforehand issued monetary statements.
Assertion 100 prescribes accounting and monetary reporting for every class of accounting change along with error corrections. It requires:
- Modifications in accounting precept and error corrections be reported retroactively by restating prior intervals;
- Modifications in accounting estimate be reported prospectively by recognizing the change within the present interval; and,
- Modifications to and inside the monetary reporting entity be reported by adjusting starting balances of the present interval.
The brand new customary additionally explains how accounting adjustments and error corrections ought to be proven in monetary statements, disclosed in notes, and introduced within the required supplementary info and supplementary info.
Assertion 100 consists of a few of the necessities of Assertion 62 however affords clearer explanations. By way of classification, a notable change pertains to adjustments to or inside the monetary reporting entity, which beforehand didn’t embody adjustments inside the reporting entity, equivalent to a change from discrete presentation of a element unit to blended presentation or vice versa. By way of be aware disclosures, Assertion 100 requires state and native governments to reveal the consequences of every accounting change and error correction on their starting balances in a tabular format.
GASB chair Joel Black
Scott Areman Images
“Governments and different stakeholders ought to discover lots of the necessities of Assertion 100 acquainted,” stated GASB chair Joel Black in a press release. “However they need to discover the understandability of the steerage significantly improved, and monetary assertion customers ought to profit from the brand new tabular disclosure.”
The necessities of Assertion 100 take impact for accounting adjustments and error corrections made in fiscal years beginning after June 15, 2023, and all reporting intervals afterward, however GASB is encouraging earlier utility.