GASB revises proposed approach for notes to financial statements

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The GASB on Tuesday released a revised concept statement proposal that would guide the board of directors when establishing financial statement notes requirements for state and local governments.

The proposal updates and revises concepts that have been proposed by GASB in February 2020. The revised proposal, Methods of communication in general purpose external financial reports that contain basic financial statements: notes to financial statements, suggests concepts that would help the board by establishing:

  • The purpose of the notes to the financial statements;
  • The intended users of the information provided by the notes;
  • The types of information that should be disclosed in the notes; and
  • The types of information that are not appropriate for note disclosures.

The concept of essentiality is an important element in the statement of the proposed concepts. According to the revised proposal, notes to financial statements would be essential for making economic, social or political decisions or for assessing liability.

According to the revised proposal, the following characteristics indicate that information is essential to users of financial statements:

  • Users use the information in their analyzes to make decisions or assess liability or would modify those analyzes to incorporate the information if available.
  • The information has or would have a significant effect on user analyzes to make decisions or assess liability.
  • A large or a depth of users use or would use the information in their analyzes to make decisions or assess liability.

The revised DE reflects the comments provided by stakeholders in the previous DE. Comments on the revised ED can be emailed by October 15 to [email protected]

Ken tysiac ([email protected]) is the JofAeditorial director of.


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