VSCPA Letter on HB 2590

January 28, 2009

Delegate Adam P. Ebbin
House of Delegates
P.O. Box 406
Richmond, VA 23218

Re: HB 2590 Financial accounting and reporting system; establish alternative system for postemployment benefits.

Dear Delegate Ebbin:

I am writing on behalf of the 8,300 members of the Virginia Society of Certified Public Accountants (VSCPA) regarding the VSCPA’s opposition to HB 2590, which would establish an alternative financial accounting and reporting system for postemployment benefits, other than pension benefits.

The VSCPA is extremely concerned about the negative accounting ramifications associated with HB 2590, which are outlined in detail in the attached issue summary. The bill would ultimately require the State Comptroller to prepare and issue annual financial statements that would not be in compliance with generally accepted accounting principles (GAAP) as established by the Governmental Accounting Standards Board (GASB) regarding the manner in which postemployment benefits other than pensions are accounted for and reported.

Not following GAAP in Other Postemployment Benefits (OPEB) reporting has several negative consequences, including causing confusion and concern for bond rating agencies and those seeking to purchase the Commonwealth’s debt, as well as issuance of a qualified or adverse GAAP opinion in government organizations’ audit reports because the financial statements would not be presented in conformity with GAAP.

The legislation could also have a negative affect on Virginia’s budget. Requiring auditors to use a specific set of standards established by and for the Commonwealth may cause an increase in audit fees due to the need to establish audit practices unique to Virginia requirements.

Additionally, there are major financial reporting issues related to HB 2590, which are also detailed in the attached issue summary.

In light of these concerns, the VSCPA strongly urges you to withdraw HB 2590. Thank you for your consideration and please do not hesitate to contact us if we can be of any assistance to you on this or any other matter facing the Commonwealth. 

Questions and concerns may be directed to VSCPA Government Affairs Director Emily Walker at ewalker@vscpa.com or (804) 612-9428.

Sincerely,

 
Gregory F. Lawson, CPA
Chair, VSCPA Board of Directors

Enclosure: Issue Summary

Cc:    Members of House Committee on General Laws
        Travis G. Hill, Williams Mullen
        Bill Axselle, Williams Mullen