In its April 2024 meeting, the Governmental Accounting Standards Board (GASB) approved the issuance of Statement No. 103 regarding changes to the financial reporting model. The new standard will revise and build upon the requirements in GASB Statement No. 34. The full standard will ultimately be published on the GASB’s website. Key changes in the new standard are summarized below.
- Revises the requirements for management’s discussion and analysis (MD&A) with the goal of making it more readable and understandable
- Combines extraordinary items and special items into one category of “unusual or infrequent items”
- Defines operating and nonoperating revenues, specifically by defining nonoperating revenues and classifying all other revenues as operating
- Includes a new section for noncapital subsidies for proprietary funds’ statement of revenues, expenses, and changes in fund net position
- Requires the presentation of proprietary funds’ statement of revenues, expenses, and changes in fund net position in the statistical section report the same categories of revenues and expenses as the face of the financial statements
- Removes the option to disclose major component units in a condensed form in the notes to the financial statements and requires them to be shown individually or in combining financial statements following the fund financial statements
- Requires budgetary comparisons to be presented as RSI and adds new columns for variances between original-to-final budget and final budget-to-actual results
One of the most-talked-about aspects of the draft versions of the standard were the potential changes to the basis of accounting, terminology, and presentation of governmental fund financial statements. GASB Statement No. 103 does not include any changes to these items as they were dropped in the final version.
These changes will be effective for fiscal years ending June 30, 2026 and later. Stay tuned for more information once the final standard is available. Please contact your Rea Advisor so we can help you navigate the implementation of this standard.
By Danny Sklenicka (Dublin Office)