The GASB has issued an Exposure Draft of a proposed Statement, Financial Reporting Model Improvements. The proposed Statement would continue the requirement for a management’s discussion and analysis and adjust guidance around unusual or infrequent items. The Exposure Draft also details changes around the application of the short-term financial resources measurement focus and accrual basis of accounting in governmental funds. For example, the measurement would be based on whether items arise from short-term or long-term transactions. Short-term transactions would be recognized as the underlying transaction or other event occurs. Long-term transactions would be presented when payments are due. Additionally, the Exposure Draft provides for changes around the presentation of governmental fund financial statements, proprietary fund financial statements, and budgetary comparison information.

The requirements of the Exposure Draft would be effective based on the government’s total annual revenues in the first fiscal year beginning after June 15, 2022. Governments with annual revenues greater than $75 million after June 15, 2022 would implement the standard with the earliest requirement, which is for fiscal years beginning after June 15, 2024. Governments with revenues below $75 million would implement the requirements a year later.

The comment deadline for the Exposure Draft is February 26, 2021. The full text of the Exposure Draft is available here.

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