GASB adds projects on digital assets, pensions and benefits

The Governmental Accounting Standards Board added several items to its research agenda on digital assets and on an issue related to pensions and other post-employment benefits during a meeting this week, but decided against adding a research project on cybersecurity disclosures.

Processing Content

On the matter of crypto, it will be joining its sister standard-setting board, the Financial Accounting Standards Board, which has been pursuing projects on digital assets, including cryptocurrency asset transfers and stablecoins that act as cash equivalents, in recent years.

“We’ve been monitoring it for a while, but governments are starting to get involved more and more with different types of digital assets, and given some of the work the FASB has done in that area, we’re trying to look at it,” GASB chair Joel Black told Accounting Today last week ahead of the meeting. 

The research will look at what types of digital assets are being used by state and local governments and what standard-setting needs to be done.

“It could be a pension fund investing in cryptocurrency,” said Black. “Our guidance already covers fair value. That’s what Statement 72 would tell you, but maybe there’s some implementation guidance to help in certain areas for governments to understand how to deal with different types of digital assets and the way they’re using them. Maybe there’s a standard-setting project on governments issuing stablecoins and how to classify that. We might have a project to undertake there, or there may be areas where there’s standard-setting yet to do.”

GASB already has standards in place for state and local government pensions and other post-employment benefits. “The pension and OPEB disclosure research is really resulting from the post-implementation reviews we did,” said Black. “We completed it on the pension standards, and we’re almost completed on the OPEB standards.”

The post-implementation reviews found that both standards, which date back about a decade, are working well by and large, but they both added a great many note disclosures to the financial statements. Roughly a third of the note disclosures of a typical state and local government are related to pensions and OPEB. After the pension and OPEB standards were finalized, GASB issued Concepts Statement No. 7, which is a rule the board enacted in 2022 for itself that said for it to require a note disclosure, it has to be essential. That is, Black explained, it should have a meaningful impact on users’ decision-making or accountability assessments. 

“We’re going to talk to users about every disclosure requirement issued prior to 2022 and say, ‘Are you using this disclosure? If so, how?'” he added. “And then the board can take that under advisement and say, ‘Does that use of that information seem to rise to this level of essentiality that Concepts Statement 7 provides?’ And so, because pension and OPEB are the largest volume, and we heard in the post-implementation reviews that was the most effort people spend tends to be on the note disclosures, we decided to do this research, which is listing all those individual disclosure requirements, going out and surveying and then interviewing users about if and how they’re using each of those individual disclosure items.”

He predicts the research should be completed by the end of this year. 

At that point, the board could vote on whether to undertake a standard-setting project that might remove some of those disclosure requirements that aren’t being used. “We wouldn’t have a standard-setting project to remove things that we thought were still essential and were being used in a meaningful way,” said Black. “The research is really geared at trying to gather that information for the board to have that knowledge so that we can either go back to preparers that are spending a lot of time and effort, as the post-implementation review told us, preparing those disclosures and taking up all that volume in the financial report, and say, ‘Yes, it’s a lot, but it’s all being used. It’s all essential. It all meets this criteria, or maybe there’s some reductions and requirements we can do without limiting the effectiveness, because they’re not being used anyway, but we can reduce some burden and volume in the financial report.'”

Cybersecurity concerns

GASB has also been doing research into cybersecurity, as state and local governments as well as companies come under attack from hackers deploying AI-generated ransomware. This week, there was a ransomware attack on a popular learning management system called Canvas, which is used by many schools, including in their accounting tests and exams.

GASB and its advisory council have heard over the years from people voicing their concerns about cybersecurity. 

“It’s becoming a more pervasive risk for state and local governments, and users wanted more information about it,” said Black. “The research was really about trying to understand how pervasive it was, how material the resulting transactions — if there are cyberattacks — are, and then what would be appropriate and useful disclosure related to cybersecurity risks that would help inform users of the financial report.”

The research has been completed and presented to the board, but GASB ultimately voted this week not to pursue a standard-setting project. The research indicated that a generic cybersecurity risk disclosure by governments would probably just be boilerplate and not overly helpful to anybody, except maybe the hackers.

“The question becomes why require it, and almost anything else at least runs the risk of what we termed a cybersecurity disclosure conflict,” said Black. “A disclosure conflict would be us requiring a disclosure about a government cybersecurity posture or controls, and it actually elevating or increasing the risk to the government of a bad actor using that information to attack the government.”

The research showed it would be difficult to develop a disclosure that doesn’t increase the government’s risks but also be useful in the context of an external financial report. Black noted that the research showed that some governments are disclosing information about attacks that have already happened, sometimes in their financial reports and sometimes in their disclosures related to bond offerings. 

Infrastructure assets

GASB has also been working on a project on infrastructure assets and released an exposure draft last month. “The comment period extends through June 26 so we’re just waiting to receive comments,” said Black. “We haven’t gotten many in yet. It’s only been on the street for a couple of weeks at this point. We typically get our comment letters really close to the deadline. We don’t often get them early, so that’s not a surprise. We will have a series of three public forums where we’ll bring some commenters from different stakeholder groups, like auditors, preparers or users, into a roundtable format with the board to have discussions about their feedback in addition to just the comment letters. Those will be in late June, and early to mid July.”

So far, GASB has heard from users about several concerns, for example, saying the carrying value on the Statement of Net Position of the existing infrastructure wasn’t always very reflective of the actual condition.

“They wanted more information on how the government is maintaining and preserving its infrastructure assets, and that’s been the goal of the project, is to improve those two kinds of components,” said Black. “We have some proposals on recognition and measurement, although they’re not major changes from what currently exists. There are some changes proposed to try to get a better carrying value on the Statement of Net Position to be more reflective of where the infrastructure asset is in its life cycle. But then we’ve got a couple of new and enhanced disclosures that are really going to try to highlight, especially when a government has aging infrastructure that’s close to nearing the end of its estimated useful life, or at the end of its estimated useful life.”

Implementation guide

GASB has also been working on an implementation guide for GASB Statement No. 103, Financial Reporting Model Improvements.

“We released it a couple years ago, but it’s effective now in 2026,” Black explained. “As governments were working on their implementations, we were getting some common questions, so in 2025 we released some implementation guidance related to that standard. This is another update specifically tied to subsidies.”

One of the major changes in Statement 103 is for proprietary funds or business type activities in the income statement, he noted.

“Prior to Statement 103, how you classified revenues and expenses as operating versus nonoperating was up to the government to establish a policy, and because of the inconsistency that creates,” he added. “Statement 103 changed that and really defined the things that are nonoperating revenues and expenses, and anything else by default is then an operating revenue or expense.”

Within the nonoperating category, one of the biggest items is subsidies. “We’ve never had that term before, but now we’ve defined what subsidies are and said if an enterprise fund has a subsidy, it needs to report it in this nonoperating section of their income statement,” said Black.

Governments were asking questions based on GASB’s definition of what a subsidy is and whether it’s considered a subsidy. There are eight proposed questions in the implementation guide for determining whether something is considered a subsidy or not, how to report and classify the subsidies, and how to show them on the income statement.

GAAP restructuring

GASB is also looking into restructuring its accounting literature, much as FASB did with its Accounting Standards Codification.

“We have those original pronouncements, like Statement 101, 102 and 103, and then we have a codification that takes those original pronouncements and statements, and you mush them all together and then present them by topic instead of by original pronouncement,” said Black. “The research is, do we need to continue to maintain both of those or not? In particular, what we’re finding is as you amend a statement once or twice, it becomes harder for the user to find the right place to be, especially if they’re just using PDFs of the original pronouncements. They may not know it’s been superseded. Maybe we’re going to get better use of the standards if we just have one place to go that has a codification organized topically.”

The recent discussion memorandum says the board wants to explore what a single authoritative source would look like, and some of the issues with a codification, such as whether it would include nonauthoritative guidance like a basis for conclusions or illustrations.

Black anticipates that research will probably conclude in early to mid 2027 and then the board will have the opportunity to make a choice of creating a single authoritative source, like a codification, and how it would be structured. 

Around mid-2027 is when GASB will have a new chair as well as FASB. Their parent organization, the Financial Accounting Foundation, has already begun to search for a successor for both Black and FASB chair Richard Jones. The FAF also has a new chair, Dalia Blass, whose term began in January. 

“A lot of leadership transitions at our organization,” said Black. “The FASB and the GASB chairs are on a single seven-year term, and they’re the same seven-year period. Both the FASB chair, Rich, and my term will end June 30, 2027, so the FAF trustees, who appoint the board members and the chairs have announced and are working through the searches for both of our replacements.”

Digital taxonomy and AI

In the meantime, there is plenty of work ahead, including a Voluntary Digital Financial Reporting Taxonomy. 

“That is our project for governments who want to report digitally and/or for users who are more and more consuming information digitally, rather than reading manual PDFs,” said Black. “It’s providing a data standard or a data structure so the information as it’s being presented digitally and consumed digitally isn’t being lost and is organized in a way that utilizes GAAP and GAAP principles, so that the reliability and value of that information maintains all its relevance that it has up until now, when presented, prepared and consumed more manually through PDFs.”

That’s currently done through Extensible Business Reporting Language and data tagging. But there are discussions about using artificial intelligence in the future. 

“My objective, from the beginning of this project, has been to create a taxonomy that’s important and used no matter what,” said Black. “I call it ‘technology solution agnostic.’ XBRL could use it. In today’s environment, it would be a tool to train AI agents in the understanding of data structure. In other words, if I’m a user and I have this scraping tool, and I’m trying to train my AI agent to extract information from PDFs and automatically populate my decision-making analysis system, I’ve got to spend a lot of time training the agent and having it understand what all this information is and how I want it organized, not to mischaracterize or misuse information that’s in one part of the report. A governmental fund revenue on a modified accrual basis, or revenue in the budgetary basis, is very different than a full accrual revenue in the statement of activities. But the machine doesn’t necessarily know that. It all looks like revenue to it. How do we train it to know how to read the government financial statement? Instead of each user training the agent on their own, they could just say, go read and understand this taxonomy from the GASB. And now it’s way better informed how to extract and not lose valuable information and context for that information.”

Ongoing projects

There are also ongoing standard-setting projects on revenue and expense recognition, as well as going concern and severe financial stress.

Black said the revenue and expense recognition project is very broad. “It covers many of the revenues and expense transactions of the government,” he added. 

As FASB did with Topic 606, GASB is adopting a performance obligation approach to recognizing those types of transactions. GASB has gone through a few rounds of due process, and the next step will be an exposure draft of a standard. Because the project is so broad, GASB may break the exposure draft into two parts. The first part would probably come out in mid 2027 and the second part in mid 2028, Black predicted.

On the going concern and severe financial distress project, GASB issued its preliminary views and received a great deal of feedback during the comment period, especially from auditors.

“We’re trying to have public sector-related going concern guidance,” said Black. “Governments often don’t go out of business, so we created two concepts. One is probable dissolution, whether or not created by financial stress, and then severe financial stress, which is irrespective of whether you can continue or not. And because they’re different, we didn’t use the term ‘going concern.’ The auditors — because going concern is in the audit literature, and they have a specific requirement to evaluate it — really gave us a lot of feedback about that. We’re trying to work with them and work our way through that to decide what to do.”

The board has made some tentative decisions, including avoiding the use of the term “going concern,” because the board believes the concepts are different enough, and doesn’t want to confuse people. GASB listened further to the audit community, which pointed out that in the initial proposal, it didn’t require management to do any kind of forward assessment, for example, of insolvency in the next 12 months.

“The audit community felt that in their literature they had to do that, so they wanted to evaluate management doing that instead of only doing it on their own,” said Black. “The board has tentatively decided that we need to add some kind of forward-looking assessment to what we propose.”

He expects that to be included in an exposure draft in the next round of due process to help the auditors after the feedback they provided. The board is in the process of going back through all those items and deliberating them. Black anticipates an exposure draft in early to mid 2027.

GASB has also rolled out a series of videos to help government officials understand financial statements. 

“It’s a series of 16 videos,” said Black. “They’re each relatively short, around 10 minutes in length, but there’s three introductory ones, and then 13 that take a specific part of the government financial report, and explain in layman’s terms what this part of the financial report is trying to do, and how you, as an elected official in particular, might use the information in this report. You could watch all 16, or if you just want to know what these government-wide statements are trying to tell me, you can just go watch that video on that, or if you want to understand pension and OPEB disclosures, there’s just a video on pension and OPEB disclosures.”