GASB 34: Penalty or Panacea?
Bradford Henry, PE
URS, Senior Transportation Engineer
700 Third Street South
Minneapolis, MN 55415
Phone: (612) 373-6850
Fax: (612) 373-6522
Email: brad_henry@urscorp.com
Abstract
GASB 34 is a new and oftentimes misunderstood mandate placed upon governmental
organizations. The requirement of the mandate is for an organization to create a
consolidated annual financial report to describe the value of its infrastructure. This
requirement will place new burdens upon the Engineering and Finance Departments.
These are two agencies that today generally speak different languages and are already
stretched thin meeting the day-to-day requirements of their present jobs. The perceived
dilemma GASB 34 places upon an organization is: should it supply the bare minimum to
meet Finance™s needs or create an expensive new apparatus to also meet Engineering™s
needs.
Enter a third player: GIS, a largely untapped tool already in most organizations. The
irony of GASB 34 compliance is that by using under-utilized existing systems, including
GIS and asset management; and by cooperation and coordination between the Engineer,
the Finance Director and the GIS manager; the organization can be managed more
responsibly and GASB 34 compliance is essentially a by-product.
Introduction
A basic function of government is to protect the health and welfare of its constituents.
To do that government has created agencies, for example Engineering departments,
who build and manage infrastructure. Infrastructure includes such physical asset
facilities as roads, bridges, drinking water systems, sanitary and storm water systems,
dams, and in some cases electric, gas and telephone systems. Managing these assets
includes budgeting, planning, designing, building and maintaining them. Governmental
agencies that perform these functions include local (city), county, regional, state, and
federal units of government.
Because the individual assets and the units of government are large, typically these
assets are broken up into smaller, more manageable units. The good news about this
form of organization is that many of these separate assets are well managed. The bad
news is that few managers, public officials or citizens have any idea how these assets
are managed in the aggregate. Indeed few organizations have any idea of the total value of the assets that they manage inside their corporate boundary or have an
objective way of measuring how well their assets are managed.
Most of these organizations take great pride in their perception that they are excellent
stewards of their infrastructure but most of the evidence today is subjective. Part of the
reason is that individual infrastructure assets have a long life, 20-50 years, which puts
them beyond the work experience of most agency employees. Part of the reason is that
most infrastructure is buried out-of-sight, hence it is ‚out-of-mind™.
Another portion of the reason for this is that up to this time few tools have been
developed to manage and measure this stewardship. Part of the reason is that few
requirements have been placed upon these agencies to report how well they manage
their infrastructure so therefore the tools don™t get developed or if they are created, they
aren™t used. Also generally if the infrastructure agencies have developed measures, the
measures themselves are arcane and have no meaning to the layperson.
Into this situation steps a new financial reporting requirement for infrastructure: GASB
34. This new requirement will potentially have a profound impact on the producers, the
users and the payers of infrastructure. Once it becomes well known that this
requirement is inplace, it will be incumbent for agencies to responsibly comply with it.
How conscientiously agencies supply the GASB 34 number may have long-term impacts
on the funding and support of these agencies.
