WASHINGTON, Nov 20 (Reuters) - The board that sets accounting standards for local governments said on Thursday it could soon lay out a strict framework for reporting on business-type activities such as operating utilities.
The Governmental Accounting Standards Board released a preliminary statement on the scrutiny it is giving to how governments account for areas where they control assets belonging to others in a trustee or custodial capacity, which the board considers fiduciary duties.
“This proposal would provide financial statement users with needed information regarding both general and special-purpose governments, including business-type activities such as public universities, hospitals, and utilities, which generally have not reported their fiduciary activities in the past,” said GASB Chair David Vaudt in a statement.
The proposal, to be further developed in 2015, could define when a government has a fiduciary responsibility and is required to present financial statements about an activity and lay out what to report on those statements, including inflows and outflows of funding.
GASB, which sets voluntary accounting standards for governments to follow, will hold hearings on its statement in April.
Many municipalities issue private-activity bonds and revenue bonds to finance enterprises that fall outside their typical operations. GASB said there is currently no clear indication of which activities should be reported, or where they should be reported.
The board is also looking at how governments account for equipment they lease.
Reporting By Lisa Lambert; Editing by Alan Crosby