Inclusion of Management Discussion and Analysis
The GASB Statement No. 34 (GASB 34) requires that every financial report, which is audited, include an MDA (Management Discussion and Analysis) section covering particular financial events. The section ought to be incorporated into the corresponding financial report as RSI (Required Supplementary Information). The MDA is essential in the report owing to various reasons. First, it presents the government’s general financial status or condition. Second, it assists users in determining whether or not the finances of the government have deteriorated or increased in the preceding year. Third, it reveals why there are considerable changes if any in the status instead of merely listing the changes as percentages or monetary values. Fourth, the MDA helps users in comparing the year-to-year finances in line with the government-wide type of information regarding expenditures, revenues, assets as well as liabilities.
Fifth, the inclusion of the MDA is important since it explains the variations that may be present between final and initial budget amounts. Sixth, the MDA helps describe long-term debt, as well as capital asset, activities in given years, including descriptions of any executed capital expenditure commitments. Seventh, the MDA presents users with discussions of any established or known, actualities that may be anticipated to impact on the financial positions of given governments in the days ahead, including tax changes and employment-base changes. Eighth, the MDA presents users with discussions of any established, or known, conditions that may be anticipated to impact on the financial positions of given governments in the days ahead, including tax changes and employment-base changes. Lastly, the MDA presents users with discussions of any established, or known, decisions that may be anticipated to impact on the financial positions of given governments in the days ahead as well.
Net Assets to Replace Fund Balance in the Statement of Net Assets’ Equity Section
GASB 34 requires that net assets replace fund balance in the net asset statement’s equity section. Notably, the statement was previously christened the balance sheet. Notably, the statement allows users to establish rapidly whether or not the financial condition of the government has deteriorated or improved by zeroing on the residual net assets at the end of a given accounting period.
The statement shows the degree of ease with which given assets may be sold since the assets are listed in it in line with a liquidity order. Assets that are listed in the statement as being current can be disposed of in a year. They are listed at top of the list. They include receivables, cash, and investments. The assets that are typified as non-current are listed below the current ones. They can be disposed of off to get cash in a period extending beyond a year. Governments report capital assets along with restricted assesses as non-current in the statements. The restricted ones are those that a given government is bound by law or externally not to utilize to attain any given operating goals. Consequently, the inclusion of net assets in the statement can be viewed as helpful in showing users the different forms of assets that are available to given governments for specific uses.
Inclusion of Statements of Activities
GASB 34 requires that statements of activities be included in the government’s financial reports. The inclusion of statements of activities in the financial report helps with the presentation of information regarding the costs of running the government’s programs. The inclusion of statements of activities in the financial report helps with the presentation of information regarding the costs related to the government’s programs. Besides, the inclusion of statements of activities in the financial report helps with the presentation of information regarding how the costs are shared out among the organizers of the civil actions aimed at promoting budgetary accountability.
Users find the statements rather useful in showing them the degrees to which specific government functions or mandates place on themselves by way of things like taxes. Besides, the statements assist users in assessing the bottom lines of their governments. One of the bottom lines is whether or not government expenditure is less than government spending. The second of the bottom lines is whether or not the government is running its operations using the resources accumulated over the years or burdening succeeding generations with the payment for the services it offers today.
Inclusion of Government-Wide Financial Statements (GWFS)
GASB 34 requires that GWFS be included in the government’s financial reports. Its inclusion in the reports is important since it provides users with a detailed overview of the finances available to or spent by the government in the same place. Previously, information regarding the finances available to or spent by the government was not found in the same place. The information includes the costs related to affording citizens specific services within a given. It is possible to provide users with a detailed overview of the finances available to or spent by the government in the same place since the GWFS are put together in line with the FABA (Full Accrual Basis of Accounting). Private enterprises as well use the FABA to ensure that they report own activities together rather than spreading them across several funds.
The FABA recognizes expenses along with revenues as they happen or occur. Every government activity is reported: current liabilities, current assets, lasting liabilities, and infrastructure assets. Every GWFS prepared using the FABA assists users more effortlessly appraise whether or not the financial position of the government has deteriorated or gotten better owing to the various activities it executes within the year.
Every GWFS prepared using the FABA assists users more effortlessly judge whether or not the activities are being paid for today or burden of paying for them is transferred to succeeding generations. Every GWFS prepared using the FABA assists users more effortlessly judge whether or not the activities are supported by user fees, or charges, or taxes. Besides, every GWFS prepared using the FABA assists users more effortlessly determine the government’s investment in specific infrastructure assets, including bridges and roads.
Presentation of Fund-Based Information (FBI) by Principal, or Major, Funds
A major fund is defined as the one whose liabilities, expenditures, revenues, and assets are as a minimum a tenth of the whole of that fund type or class and as a minimum a twentieth of all the related enterprise and governmental fund aggregates. The government can require that other funds be taken as major when reporting if the government views them as especially essential to users.
Enhanced Budget to Real Comparisons
To date, different governments provide specific information within own yearly reports showing how their general fund accrual results compare to their final budgets (Fischer, Taylor & Cheng, 2012; Gross, McCarthy & Shelmon, 2005). As well, to date, different governments provide specific information within own yearly reports showing how each of its principal special revenue fund, which has lawfully adopted a budget, compares with the others (American Institute of Certified Public Accountants, 1996; Financial Accounting Foundation, 1998). Even then, GASB 34 requires that the governments should provide information on their initially, or originally, adopted budgets.
The majority of governments execute the revision of own budgets severally within any given year (Heinfeld & Association of School Business Officials International, 2003). The GASB 34 requirement that the governments should provide information on their initially, or originally, adopted budgets and information on own actual and final budgets ought to assist users to easily, as well as readily, appraise the governments’ capacity to estimate own general resources (American Institute of Certified Public Accountants, 2002). The requirement ought to assist users to easily, as well as readily, appraise the governments’ capacity to manage own general resources.
Besides, the requirement ought to assist users easily, as well as readily, determine the budgetary compliance of the governments (Fischer, Taylor & Cheng, 2012; Gross, McCarthy & Shelmon, 2005). The schedules for comparing the different budgets are found in financial statements’ RSI sections. The comparisons and the related reconciliations presented in the statements assist users to appreciate how GWFS and the FBI relate with each other.
Infrastructure Asset Reporting
GASB 34 requires that GWFS include information regarding every capital asset. The assets that are typified as being capital in nature include every general government-owned infrastructure asset, including sewer systems, roads, and bridges. Before the actualization of GASB 34, the then financial statements were devoid of information regarding the capital assets (American Institute of Certified Public Accountants, 2002). The GASB 34 requirement that GWFS include information regarding every capital asset obligates the government to provide users with the information. American Institute of Certified Public Accountants, 2002).
In cases where governments supply the users with the information via condition assessment, the information becomes rather handy to users in varied ways. First, the information helps users assess the related infrastructure assets’ condition regularly. Second, the information sheds light on the approaches that the government employs in measuring, as well as reporting, the condition of infrastructure assets and their anticipated condition levels. Third, the information helps the users compare the yearly resources needed to maintain, as well as preserve, infrastructure assets with the corresponding actual expenses. Fourth, the information explains the factors that affect any trends defining the information that is disclosed in the RSI section.
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