New federal accounting process raises ire of town officials

DEXTER – The federal government has created the perfect job for Sesame Street’s Count.

One streetlight, two streetlights, one park bench, four potholes – that will be the way officials will have to do an annual count to comply with new federal accounting standards. Federal, state, county and town governments, as well as school districts and public utilities are also included.

This extra work could create the need to add another position in some communities, an expense that few governments can handle.

“My concern is we simply don’t have the staff to effectively deal with this new complex reporting requirement,” said Dexter Town Manager Robert Simpson. “I am concerned that we’ll once again have to victimize critical programs and customer service in order to comply with a federal mandate.”

While the new government accounting standards have been in place for two years for federal and state governments, they are now trickling down to municipalities and counties, and officials at those levels aren’t happy.

The new federal regulations, also known as GASB 34 procedures, require governments to establish a basis for accounting and reporting on all nonmonetary assets, including equipment, buildings, roads, sidewalks and other capital infrastructure.

“The intent was to make financial statements more user friendly and to give a different picture,” said Carol Lehto, director of the state’s Department of Audit. “It’s probably the most significant change in reporting for governments in a long time.”

Some town officials see the added reporting requirements as another unfunded mandate. “State and federal government is losing perspective, and at the local level we’re being smothered by yet another demand by ‘bureaucratic bean counters,”‘ Simpson said.

Lehto said the new standards are being phased in based on the size of the federal, state, county and municipal governments. Governments with total annual revenue of $100 million or more had to apply the new standards for periods beginning after June 15, 2001. That was followed by governments with at least $10 million but less than $100 million in revenue that had to apply the standards for periods starting after June 15, 2002.

Governments such as Dexter, with less than $10 million in revenue, must apply the standards for periods beginning after June 15, 2003.

“It basically changes the whole format of the basic financial statement,” Lehto said.

“There is a fair amount of work to implement it,” Lehto said. State, municipalities and counties will be required to report the condition of their roads, sidewalks and other nonmonetary and fixed assets. It’s an intimidating concept at first, but it’s not as difficult as some people may believe, she said. Like anything new, she said, it would take getting used to.

Simpson said the required implementation of GASB 34 in small towns and cities statewide may well necessitate the creation of a position to develop, manage and report all items required for compliance. The report must be updated annually.

“From my perspective, this is something we can ill-afford at this point in time,” he said.

Nor do the new standards sit well with Greenville Town Manager John Simko. “It’s an example of a federal rule reaching down to try to treat everybody the same, and we’re not the same,” he said.

Simko said a Southwest firm called and offered to complete the requirements for $3,500. But the town has not accepted any offer, he said.

“I imagine it’s going to be a bunch of gobbledygook of what we have and don’t have,” Simko said. “What makes me the most irate about this is we turn this in to them and it will set on a shelf.”