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The New Governmental Financial
Reporting Model (GASB 34)
In June 1999, the Government
Accounting Standards Board (GASB) unanimously approved
the issuance of the long-awaited statement on the
financial reporting model project. GASB Statement No.
34, Basic Financial Statements–and Management’s
Discussion and Analysis–for State and Local Governments
(GASBS No. 34) makes dramatic changes to the way state
and local governments report their finances to the
public.
Minimum Reporting Requirements
Under the new financial reporting model, general
purpose governments must present the following basic
financial statements and required supplementary
information (RSI):
- Management’s discussion and
analysis (MD&A).
- Government-wide financial
statements.
- Fund financial statements.
- Notes to the financial statements.
- RSI, including budgetary
comparison schedules, infrastructure condition data,
and other data required by previous GASB
pronouncements, if applicable.
The MD&A and RSI, though not
part of the basic financial statements, are required for
general purpose governments.
Management’s Discussion and
Analysis
The MD&A is a narrative report
prepared in an easy-to-read format by the government’s
financial manager. It should:
- Introduce the basic financial
statements.
- Provide an analytical overview
of the government’s financial activities for the
year based on the financial manager’s knowledge of
the transactions, events, and conditions reflected
in the financial report and the fiscal policies that
control the government’s operations. Use of
charts, tables, and graphs is encouraged.
Minimum Requirements
GASBS
No. 34 requires the MD&A to include the following,
at a minimum:
- A brief discussion of the
relationships of the basic financial statements to
each other and the major differences in the
information provided in each.
- A comparison in condensed form
of information presented in the government-wide
financial statements for the current and prior year.
- An analysis of the government’s
overall financial position and results of operations
to help users determine whether financial position
has improved or deteriorated due to current year
activities.
- An analysis of significant
changes that occurred in individual funds and any
limitations that might affect the availability of
fund resources in the future.
- An analysis of significant
budget variances (original vs. final budget and
final budget vs. actual results) for the general
fund or its equivalent, including reasons for those
variances that may affect future services or
liquidity.
- A summary of significant
capital asset and long-term debt activity with a
discussion of commitments and limitations that may
affect future financing of planned facilities or
services.
- A discussion of infrastructure
assets (if the government has elected not to
depreciate such assets).
- A description of facts,
condition, or decisions of which management was
aware on or before the audit report date that are
expected to have a significant impact on financial
position or results of operations after the
reporting date.
Effective Dates
GASBS No. 34 becomes effective in
phases, based on the primary government’s total
governmental and enterprise fund revenues for the fiscal
year ending after June 15, 1999. Prospective reporting
for infrastructure assets is effective when the
Statement is implemented. However, the retroactive reporting
of major general infrastructure assets is delayed four
years with retroactive reporting of major general
infrastructure assets being optional for
governments with revenues of less than $10 million.
Component units of a primary government should implement
the new reporting requirements in the same year as their
primary government regardless of their own total
revenues. GASBS No. 33, on nonexchange transactions,
must be adopted before or concurrently with GASBS No.
34.
The following table indicates the
effective dates for the general provisions and
retroactive general infrastructure reporting provisions
of GASBS No. 34. However, early implementation is
encouraged.
|
Phase |
Revenues |
General Statement
Provisions |
Retroactive
Infrastructure Reporting |
| |
|
(Fiscal periods
beginning after June 15) |
| 1 |
$100 million or more |
2001 |
2005 |
| 2 |
$10 million to
less than $100
million |
2002 |
2006 |
| 3 |
Less than $10 million |
2003 |
Reporting is optional |
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