GASB 1O1. Literally.

• Author: Levine, Michele Mark
• Position: ACCOUNTING

GASB entered the era of the three-digit statement numbers on June 1, 2022 with the approval of GASB Statement No. 100, Accounting Changes and Error Corrections (GASB 100). At that same meeting, the Board also approved the issuance of GASB Statement No. 101, Compensated Absences (GASB 101). Here's an overview of the most significant changes to generally accepted accounting principles (GAAP) made by the statements, both of which will first become effective for most governments' fiscal years ending in 2024, with earlier adoption encouraged.

GASB 100

Effective for fiscal years beginning after June 15, 2023, and for all reporting periods thereafter, GASB 100 removes prior period adjustments from the generally accepted accounting principles (GAAP) lexicon; clarifies, expands, and distinguishes among three classifications of accounting changes (principles, estimates, and reporting entity) and error corrections; and provides guidance on the presentation of historical information in required supplementary information (RSI) including management's discussion and analysis (MD&A) and in (other) supplementary information (SI), including data in a statistical section when changes or corrections are made. The scope of the guidance excludes the first-time adoption of GAAP financial reporting by a government, which should not be accounted for as either an accounting change or a correction of an error. Highlights of changes that GASB 100 makes to GAAP include the following.

No more prior period adjustments. Restatements of amounts previously published are necessitated by either accounting changes or error corrections, so GASB concluded there is no need for this redundant and potentially confusing category in GAAP.

Display of the total amount of all restatements. For each reporting unit (excluding total columns) included in basic financial statements, the aggregate amount of all restatements for accounting changes and error corrections on a year's beginning net position, beginning fund balance, or beginning fund net position (collectively, "beginning position") must be displayed on the face of the financial statements. (1)

Disclosure table to crosswalk previously published to restated beginning positions. In addition to individual disclosures for each change and correction, which will be required to include the details of each individual accounting change and error correction that affected the beginning position, and an identification of which financial statement line items are affected, governments will need to provide details in a table in their note disclosures summarizing each changed amount that is part of the aggregated amount displayed on the face of the statements (discussed above). (2)

Clarifications to distinguish among accounting principle changes, accounting estimate changes, and error corrections. GASB has included language to make clear the differences among the various types of accounting changes and corrections to previously reported amounts, including that:

* "A change in accounting principle (method) is the application of an accounting principle to transactions or other events of a similar type that is different from the accounting principle previously applied to those (types of) transactions or other events." (3)

* The application of a new accounting principle that is generally accepted to transactions and other events that were previously both (1) significant and (2) reported by applying a principle that was not generally accepted, is the correction of an error. (4)

If both (1) the prior and the new accounting principles are (or were when used) generally accepted and (2) the new principle is preferable (as discussed below) or required for implementation of a new GAAP pronouncement, (5) and (3) the change is not a change in an accounting estimate (as discussed below).

If the amount was previously insignificant, there was neither an accounting principle change nor an...