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ARTICLE

The Governmental Accounting Standards Board (GASB) has released Concepts Statement No. 7, Communication Methods in General Purpose Financial Reports That Contain Basic Financial Statements: Notes to the Financial Statements. Concepts Statement No. 7 is one in a series of concepts statements that are intended to provide a conceptual framework for establishing consistent accounting and financial reporting standards.

Concepts Statement No. 7 supersedes paragraphs 35–39 of Concepts Statement No. 3, Communication Methods in General Purpose External Financial Reports That Contain Basic Financial Statements, which address the communication method of disclosures in the notes to the financial statements. This new Concepts Statement:

  • Describes the purpose of notes to the financial statements
  • Sets out criteria for disclosing information in the notes to the financial statements, including:
    • The types of information to be disclosed
    • The types of information that are not appropriate to disclose
    • The degree of importance that information disclosed in the notes should have (i.e., the essential information), as well as characteristics of what makes information “essential”

The concepts set out in Concepts Statement No. 7 are intended to assist the GASB when it evaluates and develops new note disclosures. It is also intended that this Concepts Statement will assist preparers, auditors and other stakeholders in understanding the fundamental concepts underlying the disclosure requirements in future GASB pronouncements.

This article was written by RSM US LLP and originally appeared on Aug 26, 2022.
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