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The views expressed in this article are those of the author only, not GASB. Official positions of GASB are determined only after extensive public due process and deliberations.

In the government environment, the notion of inter-period equity appears to be fairly straightforward. It refers to whether current-year taxpayers have provided adequate resources to pay for the cost of current-year services rendered. Another way to look at interperiod equity is as the state in which a government is neither deferring costs to the future nor using previously accumulated resources to pay for currentperiod services.

Thomas Jefferson, who drafted the Declaration of Independence and served as the third President of the United States, is quoted as saying, "It is incumbent on every generation to pay its own debts as it goes. A principle, which if acted on, would save one-half the wars of the world."

Inter-period equity traces its origin in GASB literature back to Concepts Statement No. 1, Objectives of Financial Reporting. In that document, GASB linked the concept of inter-period equity to accountability, and discussed companion notions like "living within our means" and a "balanced budget" and "fairness" to help characterize what it means. The idea is that by achieving inter-period equity, taxpayers and other resource providers would pay for the current services that they receive, and the burden of payment for services today is not shifted to future taxpayers. Through enhanced financial reporting, the extent to which inter-period equity has been achieved can be assessed, and information can be provided that will assist financial report readers to determine whether they believe current fiscal policy is appropriate.

As an example of the relevance of this concept today, GASB is currently examining existing pension benefits standards to determine, among other things, whether the existing standards help financial report users to assess the degree to which inter-period equity has been achieved. Given the substantial cost of public...

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