Key Takeaways
- With no new Governmental Accounting Standards Board (GASB) standards expected to take effect in fiscal year 2028, governments have an opportunity to address outstanding accounting and audit issues.
- Government finance teams can improve financial reporting efficiency by updating lease schedules, software subscription records and compensated absence calculations while documenting materiality thresholds.
- Documenting accounting procedures, cross-training employees and assigning responsibility for key financial processes strengthen internal controls, business continuity and audit readiness.
The Governmental Accounting Standards Board (GASB) has issued new standards that governments have been required to implement, one after another for more than a decade. Pensions. Other post-employment benefits (OPEB). Leases. Software subscriptions. Compensated absences. The list goes on.
It’s no easy task for finance teams to evaluate and implement new standards, all while continuing to manage budgets, administer grants, oversee daily operations and prepare for annual audits. A lighter implementation schedule would give finance teams and their auditors more time to focus on ongoing reporting needs.
The good news is that there may be some breathing room on the horizon. Michael Cohn, editor-in-chief of AccountingToday.com shared in his recent article that there are currently no new GASB standards expected to take effect in fiscal year 2028.
In this article, we’re sharing four ways that governments can begin to make the most of this break.
Clean-Up Items That Keep Carrying Forward
Most finance departments have a few: an old balance that needs research, a reconciliation that is never quite finished or an audit question that comes up every year. Use the time to resolve those items so they do not become part of next year’s audit again.
Make the Work Easier to Maintain
Finance departments may have had little time to revisit how the work gets done while working to implement new standards year after year. Use this break to review those processes. There are a few calculations that require regular updates such as lease schedules, software subscription records and compensated absences. You can decide who will maintain each schedule and when updates are due. No one likes a last-minute scramble when it’s time to prepare the financial statements. Gathering changes throughout the year is a proactive measure to help prevent this.
Consider Materiality in Your Calculations
A point emphasized in recent GASB continuing education sessions is that materiality matters when applying accounting standards.
It’s important to discuss materiality with your auditors and how you can put that guidance into practice.
Here’s an example: Consider a small copier lease or software subscription. Accounting for it involves calculating an asset and liability and preparing schedules for interest and amortization expense. Before completing those calculations, consider whether the amounts would be significant to the financial statements.
Payments must be recorded correctly, and accounts must reconcile. Your auditor can be a resource for you as you determine how to establish and document an appropriate threshold. Keep in mind that several small contracts can add up to a significant amount, so materiality should be considered both individually and collectively.
Document Key Processes and Procedures for Business Continuity
Don’t wait until key members of your team announce their retirement or accept another position to think about who will take over their work. Document key procedures and give another employee an opportunity to perform them while the person responsible is available to answer questions.
If a key employee left tomorrow, would someone else know what needs to be done, where the supporting records are and which deadlines are approaching? You can read more about how technology can help with this in our recent article, What to Do When Your Controller Leaves and Takes 10 Years of Knowledge with Them.
Contact Us
If you have questions about these ideas or would like more information, reach out to your client service team or:
Amy R. Neimeister, CPA, RMA, PSA
Partner
aneimeister@pkfod.com | 856.454.2325