Reporting model proposals.

• Author: Gauthier, Stephen
• Position: Issues in Accounting

In June, the Governmental Accounting Standards Board (GASB) issued an invitation to comment (ITC) document on the "financial reporting model" (i.e., the framework used for financial reporting by state and local governments). The ITC document outlines two alternative proposals for improving the current financial reporting model. This article will outline the key features of both of these models, highlighting similarities and differences between them.

Common Features

Both of the proposed models under consideration share a number of common features. These features are described briefly in the following paragraphs.

Aggregated Reporting. Currently, data in financial reports are not aggregated beyond the "fund-type" level (e.g., general fund, special revenue funds, debt service funds). Nowhere are data from different fund-types aggregated. Both of the reporting models proposed in the ITC document would change current practice by requiring that fund-type reporting be accompanied (not replaced) by more aggregated financial presentations (to be known as "top-of-the-pyramid" or "TOP level" reports).

Budget to Actual Presentations. Budget to actual reporting now focuses exclusively on the final amended budget. Both of the reporting models proposed in the ITC document would require presentation of the original as well as the final amended budget. Furthermore, both of the proposed models call for 'the format of the budgetary comparison statement to be more consistent with the underlying budget document (e.g., comparisons by department rather than by function). Finally, both models would eliminate the requirement to report "fund-type" budget to actual comparisons. Instead, financial statement preparers would be asked to report budget to actual comparisons within the general purpose financial statements (GPFS) for each major individual governmental fund with an annual appropriated budget.

Cash Flows Reporting. Currently, cash flows reporting is required only in connection with proprietary funds. Both of the reporting models outlined in the ITC document would extend the cash flows reporting requirement to all fund types.

Account Groups. Presently, state and local governments report their general fixed assets and general long-term obligations in two account groups. Both ITC models would eliminate these account groups.

Major Fund Reporting. Currently, the GPFS report data by fund type rather than by individual fund. Both of the reporting models under...