GASB proposal: Accounting changes and error corrections
FINANCIAL REPORTING INSIGHTS |
Authored by RSM US LLP
The Governmental Accounting Standards Board recently issued an Exposure Draft, Accounting Changes and Error Corrections – an amendment of GASB Statement No. 62. If finalized, this proposed Statement would:
- Define accounting changes as changes in accounting principles, changes in accounting estimates, and changes to or within the financial reporting entity, and would describe the transactions or other events that constitute those changes. As part of those descriptions, for (a) a change in accounting principle and (b) a change in accounting estimate that results from a change in measurement methodology, the new principle or methodology would be required to be justified on the basis that it is preferable to the principle or methodology used before the change.
- Address corrections of errors in previously issued financial statements. The first-time adoption of the U.S. generally accepted accounting principles established by the GASB would not be an accounting change or an error correction.
- Require that (a) changes in accounting principles and error corrections be reported retroactively by restating prior periods, (b) changes to or within the financial reporting entity be reported by adjusting beginning balances of the current period, and (c) changes in accounting estimates be reported prospectively by recognizing the change in the current period. The proposed Statement also would require the aggregate amount of adjustments to and restatements of beginning net position, fund balance, or fund net position, as applicable, to be displayed by reporting unit in the financial statements.
- Require disclosure in the notes to the financial statements of descriptive information about accounting changes and error corrections, such as their nature. In addition, information about the quantitative effects of each accounting change and error correction would be required to be disclosed in a tabular format by reporting unit to reconcile beginning balances as previously reported to beginning balances as restated.
- Address how information for prior periods that is affected by a change in accounting principle or error correction would be presented in required supplementary information and supplementary information. For periods that are not presented in the basic financial statements but for which information is presented in required supplementary information or supplementary information, information would be required to be restated in required supplementary information and supplementary information for error corrections but not for changes in accounting principles.
If finalized, the proposed Statement would be effective for accounting changes and error corrections made in reporting periods beginning after June 15, 2023. The Exposure Draft is available for comment until August 31, 2021.
Call us at (325) 677-6251 or fill out the form below and we'll contact you to discuss your specific situation.
This article was written by RSM US LLP and originally appeared on 2021-06-07.
2020 RSM US LLP. All rights reserved.
RSM US Alliance provides its members with access to resources of RSM US LLP. RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each is separate and independent from RSM US LLP. RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM International. Visit rsmus.com/about us for more information regarding RSM US LLP and RSM International. The RSM logo is used under license by RSM US LLP. RSM US Alliance products and services are proprietary to RSM US LLP.
Condley and Company, LLP is a proud member of the RSM US Alliance, a premier affiliation of independent accounting and consulting firms in the United States. RSM US Alliance provides our firm with access to resources of RSM US LLP, the leading provider of audit, tax and consulting services focused on the middle market. RSM US LLP is a licensed CPA firm and the U.S. member of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries.
Our membership in RSM US Alliance has elevated our capabilities in the marketplace, helping to differentiate our firm from the competition while allowing us to maintain our independence and entrepreneurial culture. We have access to a valuable peer network of like-sized firms as well as a broad range of tools, expertise and technical resources.
For more information on how Condley and Company can assist you, please call (325) 677-6251.