The GASB has issued the first Exposure Draft in a series of anticipated Concept Statements. Concept Statements provide conceptual frameworks that cover interrelated objectives and principals that are used to establish accounting and financial reporting standards.

The proposed Concept Statement covers recognition concepts related to two key areas:

• The measurement focus of a specific financial statement determines what items should be reported as elements of that financial statement.
• The related basis of accounting determines when those items should be reported.

The Exposure Draft provides framework for both the economic resources measurement focus and accrual basis of accounting and the short-term financial resources measurement focus and accrual basis of accounting. A proposed recognition hierarchy would also be followed when evaluating an item for recognition in financial statements.

In addition to serving as a guide for the GASB, the proposed Concept Statements may help practitioners apply the generally accepted accounting principles hierarchy in assessing transactions and other events for which the GASB does not provide authoritative guidance.

There is a series of public hearings and user forums scheduled throughout early 2021. A written notification of intent accompanied by a written submission in response to this Exposure Draft is required to participate in the public hearings and user forums. The notification of intent is due by February 21, 2021 and should be addressed to the Director of Research and Technical Activities, Project No. 3-20 at director@gasb.org. Written comments may also be submitted by February 26, 2021 addressed to the Director of Research and Technical Activities, Project No. 3-20, and emailed to director@gasb.org.

The full text of the Exposure Draft is available here.

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