Reporting model update.

• Author: Gauthier, Stephen

In January 1997, the Governmental Accounting Standards Board (GASB) issued an exposure draft (ED) Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments, which proposed a new framework (i.e., "reporting model") for state and local government financial reporting. Highlights of this proposal were covered in an "Issues in Accounting" article that appeared in the June 1997 issue of Government Finance Review. It now appears probable that the GASB will issue a final pronouncement on the governmental financial reporting model in June 1999. This article will summarize some of the key differences expected between the GASB's anticipated final pronouncement and the proposals originally set forth in the ED.

Dual-perspective v. Integrated Reporting. Both the ED and the final pronouncement would call on governments to prepare two different types of financial statements (i.e., financial statements for the overall government and financial statements for a government's funds). The ED, however, would have emphasized the differences between the two types of statements (i.e., "dual-perspective reporting"). The final pronouncement, on the other hand, will likely focus on the continuity between government-wide financial statements and fund financial statements (i.e., "integrated reporting"). Practical evidence of this change can be seen in the approach taken toward reconciling government-wide (accrual-based) financial statements and fund (often modified-accrual-based) financial statements. The ED would have prohibited governments from providing a reconciliation between entity-wide and fund financial statements on the face of the financial statements (i.e., emphasize differences), whereas the final pronouncement will likely mandate that such a reconciliation be presented on the face of the fund financial statements (i.e., highlight continuity).

Major Fund Reporting. Both the ED and the final pronouncement would require that information be provided on each individual major fund. The two approaches differ, however, on the appropriate treatment of nonmajor funds. The ED would have required that information on nonmajor funds be presented by fund type whereas the final pronouncement will likely require only aggregate information for all nonmajor funds combined. For example, assume a government has a general fund, six special revenue funds, two capital projects funds and a debt service fund. Also assume that two special...