Point of view: The municipal securities market - Greater transparency and comparability of financial information would benefit stakeholders

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Point of view 02/24/2014 by Assurance services
Point of view: The municipal securities market - Greater transparency and comparability of financial information would benefit stakeholders

At a glance

Greater transparency and comparability of financial information in the muni- market would benefit stakeholders.

A diverse mix of entities, including governments, not-for-profit organizations, and private sector entities raise capital in the $3.7 trillion municipal securities (muni) market. Some of those entities prepare financial statements using GASB standards while others report using FASB standards. Stakeholders should be aware that significant differences exist between the two models that can result in varying levels of transparency and a lack of comparability between governmental businesses and their private sector counterparts. GASB should continue its efforts to enhance the usefulness of the governmental financial reporting model. In particular, its new standard on accounting for pensions and its current project on other postemployment benefits (OPEB) will promote greater transparency of relevant information. GASB also should consider whether there are opportunities for convergence with the FASB model in areas that are not uniquely governmental. And, we recommend the Financial Accounting Foundation evaluate whether it would be beneficial to muni market investors if certain governmental businesses used the FASB’s accounting standards.