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FACT-Based Accounting

Why We Need FACT-Based Accounting

Many states have requirements to balance their budget every year, but because of the way they prepare financial reports, budgets that appear balanced are anything but. All too often, government’s official financial statements don’t reflect reality, because they follow “cash based” accounting principles. What does that mean?

With cash-based accounting, financial reports show expenses only when money is paid, not when debt or future expenses are incurred. By only reporting cash spending, and not accumulated debt, the financial reports paint a much rosier – but far from accurate –  picture of government finances. 

This delusional and nontransparent approach to government accounting has had dire real-world consequences for cities, states and their citizens. When it comes time to pay the previously-hidden debt, elected officials face a sudden need to hike taxes or slash services—or both. People suffer. 

The vast majority of state and local governments follow accounting standards set by the Governmental Accounting Standards Board (GASB). For the first time in 21 years, GASB is considering updates to its accounting standards. 

Now is the time to advocate for common-sense reforms to government accounting and financial reporting requirements. Truth in Accounting is mobilizing experts, advocacy organizations, watchdog groups, journalists and everyday citizens to let GASB know that we’re watching and demanding that they institute FACT-based accounting standards. 

 

Here’s how you can make your voice heard by GASB:

Submit a public comment

Email your letter, addressed to the Director of Research and Technical Activities, Project 3-25, to director@gasb.org. 

Attend and speak at a GASB public hearing in person or virtually

GASB will hold a series of public hearings tentatively scheduled as follows:

  • March 23, 2021, in Boise, ID 

  • March 30–31, 2021, in Atlanta, GA

  • April 8, 2021, in New York, NY

  • April 13–14, 2021, in Chicago, IL

  • April 20–21, 2021, in San Francisco, CA

Individuals or organizations that want to make an oral presentation are required to provide a written notification of that intent, accompanied by their written submission by February 26, 2021. This notification should be addressed to the Director of Research and Technical Activities, Project No. 3-25, and emailed to director@gasb.org


For more information, visit GASB’s public comments page and review the Financial Reporting Model Improvements draft.  

 

Click here to learn more about FACT-based accounting.

Click here to watch a webinar on FACT-based accounting.