GAAFR 2001--A Conversion Tool for GASB 34.

• Author: Allison, Greg
• Position: Governmental Accounting Standards Board

This article focuses on how to use the new Blue Book as a guide to converting fund financial information to government-wide information as required by GASB Statement No. 34.

Can you answer the following govern mental financial reporting riddle?

Some have thought about it; some are denying it; most are putting it off.

If you answered "converting the fund financials to the government-wide financial statements as requited by GASB Statement No. 34," then you are correct. One of the most feared requirements of the new model is the potentially daunting task of converting the governmental funds to governmental activities, a process that involves converting the funds from modified to full accrual accounting, as well as from a current financial resources measurement focus to a total economic resources measurement focus. Fortunately, the GFOA's Governmental Accounting, Auditing, and Financial Reporting (GAAFR 2001) provides extensive discussions and a comprehensive example of this conversion that will prove invaluable to those involved in this task. This article focuses on the how to use GAAFR 2001 as a conversion tool.

Addressing the Need

While previous GAAFRs have been designed to provide practical, easy-to-use guidance and examples of governmental accounting and financial reporting issues, the extensive changes in external financial reporting for governments as a result of GASB Statement No. 34 required a different approach. The GAAFR's new format reflects the changes in the reporting requirements. Because government-wide financial reporting is new to everyone, it was critical that the GAAFR provide a good working example of converting fund financial information to government-wide activity information. The text of GAAFR 2001 (specifically, Chapter 8-"Government-wide Financial Reporting") includes a detailed discussion on converting fund financial data to government-wide data. Appendix C, the Illustrative Conversion Worksheet, was designed to provide an extensive illustration of this conversion and will be a useful conversion tool for preparers and users of governmental financial statements.

A standard feature of the GAAFR has always been the sample journal entries, trial balances, and sample comprehensive annual financial report (CAFR). Users are able to trace transactions from their original form (i.e., journal entry) all the way through to reporting in the financial statements. In previous GAAFRs, individual chapters were devoted to each fund type and the account groups. Trial balances and journal entries for each of the funds and account groups were included at the end of the applicable chapter. These trial balances served as the source for the sample CAFR. GAAFR 2001 continues this tradition; however, the sample entries are now included together in an appendix-the chapter formats have moved away from focusing on individual funds and account groups.

GASB Statement No. 34 basically added a layer of external financial reporting to the existing generally accepted accounting principles (GAAP) requirements. The fund financial statements include all major funds (and non-major funds in the aggregate) and the formats are very similar to current GAAP reporting requirements. The government-wide statements, however, do not report funds but rather activities, specifically governmental activities and business-type activities. While the business-type activities are basically the enterprise funds in the aggregate, the governmental activities are governmental funds aggregated and converted from the current financial resources measurement focus and the modified...