A bill that is now before the Connecticut State Senate would give its state comptroller the legal authority to establish GAAP for the state’s financials, thereby sidestepping the Governmental Accounting Standards Board — the standard-setter for governments and municipalities.
Connecticut said that under GASB’s accounting rules it makes it hard to achieve a balanced budget and like other states, Connecticut requires a balanced budget.
In 1993, Connecticut passed a law that required it to use the standards issued by GASB, but has delayed implementing the rules due to a lack of money and in the 14 years since, Connecticut has amassed a deficit of roughly $1 billion. Adoption of GASB’s standards would entail the state paying down that figure at a clip of $150 million a year, according to reports.
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Connecticut’s move to bypass GASB comes on the heels of a movement by Texas in an attempt to opt out of a new rule that requires governments to disclose how much they will have to pay for retired workers’ health care.
“The proposed Connecticut legislation is a threat to integrity and objectivity of the standard-setting process,” said Robert J. DeSantis, president of the Financial Accounting Foundation, parent to both GASB and its sibling, the Financial Accounting Standards Board. “It is a step backwards for public trust, government accountability and transparency.”
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