Douglas County commissioners review pros and cons of switching to GAAP accounting

Douglas County held a work session April 2, 2025, to review the differences between generally accepted accounting principles under the Governmental Accounting Standards Board (GAAP/GASB) and cash- or regulatory-based accounting. Brooke Sauer, the county’s finance manager, led staff remarks and introduced consultants Brian Stavenger and Jerry Bowes of Eide Bailly, who summarized the technical differences and trade-offs.

Consultants framed the choice as a spectrum. “If any of you still use a checkbook, the way that cash basis works is literally whatever goes in or out of that checkbook, or in or out of a bank account is what's recorded and reported on your financial statements,” said Brian Stavenger, partner at Eide Bailly. Jerry Bowes, director in Eide Bailly’s government advisory services, said GAAP emphasizes “accountability and interperiod equity,” meaning governments report how current choices affect future taxpayers.

The presentation described key differences: cash/regulatory methods record short-term inflows and outflows; full GASB-compliant financial statements use modified accrual for governmental funds but present a government-wide, full-accrual view that includes long-term assets and liabilities (pensions, OPEB, compensated absences, lease liabilities and certain intangible arrangements). Eide Bailly emphasized that GAAP produces a more comprehensive view useful to creditors and external users but is more complex and resource-intensive to implement.

Staff presented local context and preliminary cost estimates. Douglas County currently reports using a cash/regulatory framework, with roughly $19 million in outstanding debt reported (staff noted this does not include a proposed or potential $55 million bond issue under consideration this year). Staff said implementation consulting rates from firms contacted ranged from about $150 to $500 per hour and that initial conversion costs could reach into the “hundreds of thousands” of dollars; ongoing annual audit costs could increase significantly, possibly doubling in early years. Staff also said a neighboring county that reports under GAAP employs six finance staff with three positions focused solely on audit / single-audit schedules; staff estimated adding three in-house positions at an illustrative base salary of $65,000 would cost roughly $274,000 annually in the example they used.

Staff and consultants also ran a tentative debt-market example. Using many assumptions (including a hypothetical move from an Aa1 to AAA rating and a 5-basis-point yield differential), staff estimated a potential 20-year interest savings of about $318,006.82 on a modeled $55 million transaction; staff stressed those savings are not guaranteed and that bond-market effects can be zero in the current market. Commissioners and staff repeatedly cautioned that the county currently lacks capacity to issue an additional $55 million in debt and that timing and market conditions materially affect any potential savings.

Commission discussion focused on three areas: (1) implementation cost and staffing needs; (2) the county’s current ability to make budget and long-term decisions under the cash/regulatory framework; and (3) the timing of any transition. Commissioners asked how GAAP would change what they see during annual budget decisions and whether the county’s component units (for example, Lawrence-Douglas County Public Health, the extension council, and Douglas County Free Fair) would also be required to convert. Jerry Bowes explained GAAP places long-term liabilities on the face of government-wide statements, which can make the long-term fiscal implications of short-term decisions more visible.

Several commissioners said they value the simplicity and clarity of cash-based reporting for the annual budget process. Other commissioners noted many peer jurisdictions use GAAP and raised the possibility of aligning any conversion with a planned enterprise resource planning (ERP) system replacement to reduce duplication of effort. Brooke Sauer told the commission that Kansas requires staff to present an annual GAAP waiver and that staff plans to provide ongoing analysis and a quarterly report format to give commissioners more frequent snapshots of financial activity.

No formal action or vote was taken at the work session (work sessions are informational only); staff asked for direction on whether to continue studying GAAP implementation and to refine cost estimates and timelines. Commissioners did not reach a clear consensus during the session; staff said it would return with additional information if the commission requests more study.

The session closed with staff and consultants available for follow-up, and commissioners indicated they would continue the conversation during future budget and ERP planning work.