Financial Reporting and Regulatory Update

Second Quarter 2021

From the GASB

Final Standards

Implementation guidance update

On June 2, 2021, the Governmental Accounting Standards Board (GASB) issued Implementation Guide 2021-1, “Implementation Guidance Update – 2021,” to clarify, explain, or elaborate on certain GASB pronouncements. The guide includes 23 new questions and answers to address application of existing GASB standards covering various topics including the following:

  • Accounting and financial reporting for derivative investments (1)
  • Fiduciary activities (2-3)
  • Leases (4-22)
  • Accounting and financial reporting for nonexchange transactions (23)

In addition, the guide also amends four previously issued questions and answers from Implementation Guides 2015-1 and 2019-1.

Effective dates

The requirements of this implementation guide are effective as follows:

  • Questions 1-4.3, 4.23, 5.2-5.4, and the supersession of questions Z.51.4-Z.51.7 in Implementation Guide 2015-1 are effective for reporting periods beginning after June 15, 2022.
  • Questions 4.4-4.21 are effective for fiscal years beginning after June 15, 2022, and all reporting periods thereafter.
  • Question 4.22 is effective for fiscal years beginning after June 15, 2021.
  • Question 1 is effective for reporting periods beginning after June 15, 2023.

Early application is encouraged for guidance related to standards that already have been implemented.


The annual comprehensive financial report

On April 13, 2021, the GASB issued an exposure draft, “The Annual Comprehensive Financial Report,” proposing to change the “comprehensive annual financial report” to the “annual comprehensive financial report.”

This proposed statement establishes the term “annual comprehensive financial report” and its acronym ACFR. That new term and acronym would replace instances of “comprehensive annual financial report” and its acronym in generally accepted accounting principles for state and local governments. This proposed statement was developed in response to concerns raised by stakeholders that the common pronunciation of the existing acronym for the report sounds like a racial slur. No changes have been proposed to the structure or content of the report.

Comments were due July 9, 2021.

Accounting changes and error corrections

On June 1, 2021, the GASB issued an exposure draft, “Accounting Changes and Error Corrections.” The proposal is designed to improve the accounting and financial reporting requirements for accounting changes and error corrections to provide more understandable, reliable, relevant, consistent, and comparable information for making decisions or assessing accountability.

The exposure draft proposes definitions for the following categories of accounting changes or error corrections:

  • Changes in accounting principles
  • Changes in accounting estimates
  • Changes to or within the financial reporting entity
  • Corrections of errors in previously issued financial statements

The proposed statement would establish accounting and financial reporting guidance for each category of accounting change and error correction, including display in financial statements, note disclosures, and presentation in required supplementary information and supplementary information.

Comments are due Aug. 31, 2021.