Providing public comments to exposure drafts is of great benefit in several ways. First, it helps to create a public response concerning matters that affect public in given set of rules and regulations, with an aim of amending them. People are given a chance to express their views on things they agree or disagree with. Providing this chance is therefore, essential because the public comments obtained relating to any matter in the proposed statement will be used or modified and finally issued as a statement finally agreed upon by voting. ‘When the Board is satisfied that all alternatives have been adequately considered and modifications, if any, have been made, a vote is taken on the Statement. A majority vote is required for adoption’ (Financial accounting Foundation, 2011).
In this case, it is seen as a tool that is used to make the public participate in the process of setting their standards. Providing this will also help the board to look into other alternatives of meeting the public needs, which they were not aware of. The public is encouraged to give reasons and explanations for their views on things that should be considered. Moreover, having an exposure draft for public comment helps in evaluating how the public will handle the changes that will be made in the statements and the possible complications that are likely to come with the changes.
Other than these, providing public comment to this particular exposure draft will help the GASB in developing local and state financial and accounting reporting and other communications. This will on the other hand, provide information useful for guiding the public, auditors, issuers and other financial report users. Considering all these benefits, the final statement will be that, which satisfy everyone and no specific group of individuals are locked out of a national benefit. This, therefore, ensures that there is uniformity is the national cake sharing and no one is marginalized.
Determine the critical elements of the exposure draft
The major critical element in the exposure draft is definition of government fund types and reporting of fund balances in relation to financial and accounting reporting, for issues related to insurance and financing of risks. Although the statement clearly allows classification of fund balancing, special revenues allows certain activities of risk financing to be indicated as a component of the special revenue fund. In this matter, there will be a non-conformation of the statement relating to internal service or general fund. The two fund types are given different preferences and this is seen to be an inappropriate way because both are not special revenue funds.
Another critical element is the issue of lease payment operations that are not ‘straight-line basis’ and differentiating between the purchase price and the face value of purchased or group loans. There exists a big variation on this matter because the face value is considered as the purchase price by the government, as stated in statement No. 48. Generally, the critical element in this statement is the conflicting financial and accounting reporting regulation issues. This poses a great challenge on how to interpret and hence, the need to resolve them.
Analyze the impact of the proposal on governmental agencies
On amending all the conflicting areas in the statement, a governmental agency responsible for revenue assessment will have to ensure that a fund type, considered as a special revenue fund, should be used for accounting entity’s risk financing. This will safeguard the national resources that are externally compelled by state statue. It will also lead to use of special revenues in reporting activities considered as entity risk financing. Lease operating agencies will have to apply straight-line approaches to enhance practicability and cost-effectiveness.
Other than these, more impact will be faced by the IACPA; they will have a difficulty in adjusting the financial, and accounting reporting guidance, which was in their pronouncement, showed initially that there was no conflict in this guidance but the issue of the board’s statement clearly shows the conflict.
Prepare a comment related to the exposure draft.
On behalf of my fellow members of North Baltimore organization of Certified Public Accounts, I am delighted for this offered opportunity to give a comment on the public exposure Draft, ‘Proposed Statement of the Governmental Accounting Standards Board Technical corrections; an amendment of GASB Statements No. 10 and No. 62.’ Our organization is interested with the straightforwardness on the accounting and financial reporting risks as well as the governmental funds especially the revenues type funds.
As a Certified Public Accountant, I would like to know what criteria would be used to determine if a fund qualifies to be a special revenue fund. This is of great concern because it is not provided in this exposure draft. I think it will be of great benefit for groups or individuals who are interested in this sector if a clear cut is mentioned. It is also certain that amendments done on this statement will affect many agencies; I recommend that emphasis on how such will be gathered for be stated.
Finally, I would like to urge the General Accounting Standards Board to uphold the most remarkable amendments to Generally Accepted Accounting ethics in the accounting and financing sector of the standard, in order to reduce chances of ineffectiveness of the state standards.