Question

This week, we are studying general capital assets and long-term obligations. Using key provisions of GASB No. 34, or an article on Financial Reporting by a state or local government that is less than 5 years old, discuss one key point you found interesting on GASB 34 or on your chosen article and explain why this point is important to this week’s topic. Choose a provision or an article different from your classmates.

Answer 1

Government Accounting Standard Board (GASB) issued statement number 4 mainly for the purpose of establishing the requirement for local and state government for the financial statement. GASB discusses some interesting points in the statements. The one found interesting was the essential features of Fund Financial Statements.

GASB very clearly states that "submitting additional information about the government, different fund financial statements such as balance sheet and a statement of revenues, expenditures, and changes in cash flow have to be presented for governmental and proprietary funds. Users of the financial statement should be able to evaluate the relationship between fund and government's financial statements, governments need to present a reconciliation of financial statements at the bottom of the fund financial statements"

Fund balances should be separated as reserved and unreserved. Net assets in Proprietary fund statements should be classified as current and noncurrent assets. Most important and interesting point is liabilities should be reported as restricted assets, not as liabilities.

One of the other main points Government Accounting Standard Board (GASB) emphasis on is that "Statements of revenues, expenses, and changes in fund net assets in proprietary fund statements should distinguish between operating and nonoperating revenues and expenses. Capital contributions, contributions to permanent and term endowments, special and extraordinary items, and transfers also should be reported separately at the bottom of the statement to arrive at the change in fund net assets. Cash flows statements should be reported using the direct method."

The main reason that I found this provision interesting is that GASB requires "the liabilities to be reported as restricted assets, not as liabilities.