STATE COMPTROLLERS OPPOSE GASB REPORTING MODEL

In March 1996, the National Association of State Comptrollers (NASC) issued a resolution calling for the Government Accounting Standards Board (GASB) to "cease work on implementing the financial reporting model project until due process considerations are addressed and a model that reflects generally accepted accounting principles is adequately developed." The resolution stated what NASC felt were the problems with the financial model as proposed in a preliminary document issued in June 1995:

* In NASC's view, GASB is to weigh carefully the views of its constituents so that its promulgated standards will gain general acceptance. NASC does not believe the model presented in the PV document has achieved the required level of general acceptance.

* A guiding premise with respect to standards is that the cost of implementation should not exceed the benefits to be derived. NASC does not think GASB has done the work necessary to conclude that will be the case with the PV model.

* NASC believes GASB did not follow the required due process: It did not give adequate consideration to the substantial opposition to numerous features in the model and did not adequately incorporate comments from earlier due process.

The resolution also mentions limited resources may be a threat to continued funding of GASB through NASC's funding arm.

The resolution demonstrates yet another challenge to private-sector standard setting. While it would seem that NASC has overreacted to a preliminary views document--it is not yet even a proposed standard--it does show the muscle flexing that is beginning to be more and more common when constituencies are faced with a possible accounting standard with which they do not agree. *