Monday, December 24, 2007

Venable: When it comes to accounting, don't keep Texans in the dark

"We told you so" isn't our objective, but when we opposed the legislation which would allow Texas jurisdictions the option of using less stringent accounting standards than recommended by the national accounting standards board (GASB), we weren't just crying wolf.

Fitch (a leading global credit rating agency) released their findings last week that revealed that the legislative action taken in Texas has potential negative credit implications for state and local governments in Texas.

This is exactly the point that we made in opposing HB 2365 which gives state and local jurisdictions in Texas the option of using accounting standards less stringent than OPEB. Non-compliance with OPEB will be reported in qualified auditor reports, i.e. reports stating that the jurisdiction does not follow generally accepted accounting standards. Rating Agencies such as Fitch view non-compliance with OPEB as a management weakness. The implication is that those jurisdictions' bonds will receive a lower rating, resulting in higher interest costs to taxpayers.

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