GASB revises requirements for accounting changes and error corrections

The Governmental Accounting Standards Board (GASB) has released Statement No. 100, Accounting Changes and Error Corrections (Statement 100), which amends GASB Statement No 62.

The revised and enhanced requirements of the new Statement are expected to improve the clarity of the accounting and financial reporting requirements for accounting changes and error corrections, thereby providing more understandable, reliable, relevant, consistent and comparable information. The changes include:

• Defining accounting changes as changes in accounting principles, changes in accounting estimates, and changes to or within the financial reporting entity

• Describing the transactions or other events that constitute the “accounting changes,” including explaining when a change is justified

• Prescribing the accounting and financial reporting for each type of accounting change, and for error corrections:

  • Changes in accounting principles and error corrections to be reported retroactively by restating prior periods
  • Changes to or within the financial reporting entity be reported by adjusting opening balances of the current period
  • Changes in accounting estimates to be reported prospectively by recognizing the change in the current period

• Setting out the required disclosures in the notes to financial statements including:

  • ˗Descriptive information about accounting changes and error corrections, such as information about their nature
  • The quantitative effects on beginning balances, for each accounting change and error correction, by opinion unit, in a tabular format to reconcile what was previously reported to the balances as restated

• Addressing how information affected by a change in accounting principle or error correction should be presented in required supplementary information

The requirements of Statement 100 are effective for accounting changes and error corrections made in fiscal years beginning after June 15, 2023, and all reporting periods thereafter, with earlier application encouraged.