The Governmental Accounting Standards Board (GASB) recently issued Statement 31, "Accounting and Financial Reporting for Certain Investments and for External Investment Pools," requiring governmental entities to report their investments at fair value in their annual financial statements for periods beginning after June 15, 1997.
The statement requires all governmental entities to report investments at fair value on the balance sheet. All investment income, including changes in fair value, must be reported as revenue in the operating statement. The statement applies also to governmental external investment pools, which are similar to mutual funds.
Copies of the statement are available for $10.50 each from the GASB Order Department, 401 Merritt 7, P.O. Box 5116, Norwalk, CT 06856-5116; phone: 203/847-0700, ext. 555.
GASB is also proposing to change the way state and local governments report on their finances beginning in the next century. For the first time, financial statement readers will be better able to tell whether a government's current revenues are sufficient to pay for current services.
The new proposal would require governmental entities to show all operations, like police, fire, and water and sewer, in one place, which the GASB refers to as an "entity-wide perspective."
The entity-wide financial statements would be prepared on the accrual basis of accounting, similar to that used by most businesses. Information about the funds would still be required to report the government's operations in more detail.
Comments on the proposal, "Basic Financial Statements and Management's Discussion and Analysis for State and Local Governments," are requested by May 30. Public hearings will be held in June, July and August.
One copy of the proposal is available from the above address.