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GASB Adds External Investment Pools to Pre-Research Agenda

Approved at its Friday meeting, the Governmental Accounting Standards Board (“GASB”) has added External Investment Pools to its pre-agenda research plan. In its research efforts, the GASB will review whether the reporting requirements for 2a7-like external investment pools that function as money market funds were impacted by recent Securities and Exchange Commission (“SEC”) regulation changes. The GASB hopes to acquire enough information to help decide whether a project should be added to its current technical agenda.

In July, the SEC issued Release No. 33-9616, Money Market Fund Reform; Amendments to Form PF to lower the possibility of investors seeking money funds during a market crisis. The GASB has been concerned how state-managed funds that handle short-term investments and cash accounts for city and local governments may have to change their reporting due to the SEC’s changes. Additionally, state investment pools aren’t protected by Rule 2a-7 of the Investment Company Act of 1940, the SEC rule on money market funds.

As part of its research plan, the GASB will complete the following:

  • A literature review, including having an understanding of the implications of SEC Release No. 33-9616.
  • Archival research with annual financial reports to assess Release No. 33-9616’s impact on 2a7-like external investment pools.
  • Interviews with 2a7-like pool sponsors, investment advisors, auditors, financial statement users, and other stakeholders, identify financial reporting alternatives, and initially evaluate the viability of those alternatives.

The literature review and archival research portions of the GASB’s research activities will be completed by September, as well as the development of interview protocols and materials. Stakeholder interviews will be conducted in October and November, along with the analysis of research results and completion of a draft research memorandum in the latter month. The educational memorandum with research findings are expected to be presented to the GASB in December.

Cherry Bekaert offers expertise in government services. Check out our Government  industry page for more information.

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