The Names Have Been Changed ...

Author:Levine, Michele Mark
Position:The Accounting Angle

Change is the only constant in life." The Greek philosopher Heraclitus said it approximately 2,500 years ago, and it remains true. Government financial reporting is a case in point. The Governmental Accounting Standards Board (GASB) has kept up a rapid pace of standard setting for over 35 years, with most standards introducing new terminology or attributing specific meanings to existing terms that were formerly used with a wider range of meanings.

Submissions to GFOA's Certificate of Achievement for Excellence in Financial Reporting (CAFR) Award Program sometimes contain relics of bygone governmental generally accepted accounting principles (GAAP) in the form of outdated terminology. There are also numerous instances of terminology that is specific to one kind of fund or financial statement element being misapplied to others, which has the potential to add confusion to the complexity inherent in a reporting model with more than one measurement focus and basis of accounting.

Although a full generation has passed since GASB Statement No. 34, Basic Financial Statements--and Management's Discussion and Analysis --for State and Local Governments, was issued, we still see terminology from earlier reporting used in some governments' comprehensive annual financial reports (CAFRs). The following are a few to watch out for.

Recommended terminology: basic financial statements

In place of: general purpose financial statements

While other GASB literature, including several concepts statements, talk about general purpose financial statements, references to the set of government-wide financial statements, fund financial statements, and notes to the financial statements that are required by current (post GASB Statement No. 34) GAAP are appropriately referred to as basic financial statements. (1)

Recommended terminology: issuance of debt

In place of: debt proceeds (or proceeds from debt)

Context: other financing sources

In the governmental funds statement of revenue, expenditures, and changes in fund balance, the other financing source that results from a new debt issue should be referred to as issuance of debt rather than proceeds. This is because the full face amount of long-term debt issued, rather than the proceeds (the face amount net of premiums, discounts, and issuance costs) must be reported. (2)

Recommended terminology: inter-fund services provided and used

In place of: quasi-external transactions

Before GASB Statement No. 34 was issued...

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