GASB Statement No 34 Cliff Notes Laurie L

GASB Statement No. 34 Cliff Notes Laurie L. Piccirillo, Business Manager Brockway Area School District Dr. David M. Piper, Assistant to Superintendent Altoona Area School District

Key Improvements Resulting from the New Governmental Financial Reporting Model Improvements Designed to Enhance Operational Accountability Previous Model New Model All reporting based on funds and fund types Introduction of government-wide financial statements Information on governmental activities limited to near-term inflows and outflows of spendable resources Government-wide financial statements provide additional long-term focus for governmental activities Cost data available only for business-type activities Cost data provided for both governmental and business-type activities No narrative required Narrative overview and analysis required in the form of Management’s Discussion and Analysis

Improvements Designed to Enhance Fiscal Accountability Previous Model Information in basic financial statements aggregated by fund type New Model Information in basic financial state-ments presented separately for major individual governmental and enterprise funds Budgetary comparisons associated with the basic financial statements aggregated by fund type Budgetary comparisons associated with the basic financial statements presented for the general fund and individual major special revenue funds Budgetary comparisons report only final amended budget Budgetary comparisons report both original and final amended budget

Financial Statement Format Management’s Discussion and Analysis Government-Wide Financial Statements Fund Financial Statements Notes to the Financial Statements Required Supplementary Information (Other than MD&A)

Effective Dates • Periods beginning after – June 15, 2001 for governments with revenues of $100 million or more (Phase 1) – June 15, 2002 for governments with revenues of $10 million or more but less than $100 million (Phase II) – June 15, 2003 for governments with revenues of less than $10 million (Phase III) – Early application is encouraged

Basic Financial Statements Government Wide a. Statements of Net Assets b. Statements of Activities Fund Financial Statements Governmental Funds a. Balance Sheet b. Statement of revenues, expenditures and changes in fund balance

Proprietary Funds a. Statement of net assets or balance sheet b. Statement of revenues, expenses and changes in fund net assets or fund equity c. Statement of cash flows Fiduciary Funds a. Statement of fiduciary net assets b. Statement of changes in fiduciary net assets

Fund Statements: – Governmental (emphasizing major funds) • • • General fund Special revenue funds Capital projects funds Debt service funds Permanent funds (legally restricted – earnings only benefit government or its citizenry) – Proprietary funds • Enterprise funds (emphasizing major funds) • Internal service funds

Fund Statements: – Fiduciary funds • Pension trust funds • Investment trust funds • Private purpose trust funds which are trust arrangements under which principal or interest benefit specific individuals, private organizations and other governments • Agency funds that are limited to net assets held for a specific other person or entities

Fund Statements – Fund statements presentation • Major funds • Non-major funds presented in a single column by category • Concept of major and non-major funds does not apply to fiduciary funds and internal service funds – Major funds criteria • General fund always major • Individual fund is major if: – At least 10 percent of assets, liabilities, revenues or expenditures / expenses (excluding extraordinary items) of the relevant fund category of fund type

Fund Statements – Major funds criteria (cont’d) • Individual fund is major if: – At least 5 percent of total governmental and proprietary funds combined • Other funds that are important • PDE considerations

Major Fund Determination Worksheet

Fund Statements – Governmental fund statements • Balance sheet • Statement of revenues, expenditures and changes in fund balances – Reconciliation required for both statements – Current financial resources – Modified accrual basis

Reconciliation of the Governmental Funds Balance Sheet to Statement of Net Assets

OWEN J. ROBERTS SCHOOL DISTRICT BALANCE SHEET GOVERNMENTAL FUNDS AS OF JUNE 30, 2002

OWEN J. ROBERTS SCHOOL DISTRICT RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS AS OF JUNE 30, 2002

Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the Year Ended June 30, 20 XX

Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balance To the Statement of Activities

OWEN J. ROBERTS SCHOOL DISTRICT STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2002

OWEN J. ROBERTS SCHOOL DISTRICT RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2002

Fund Statements – Proprietary fund statements – Economic resources • Accrual basis • Enterprise redefined – debt / user charge based – Debt secured solely by pledge of net revenues from fees or charges – Laws or regulations require recovery of costs – Pricing policy designed to recover cost

Fund Statements – Proprietary fund statements (cont’d) • Statement of net assets / balance sheet – Classified – Restricted assets should be reported – Fund net assets / equity has three classifications that replace contributed capital and retained earnings • Invested for capital assets net of related debt • Restricted • Unrestricted

Fund Statements – Proprietary fund statements (cont’d) • Statement of revenues, expenses and changes in fund net assets / equity – Distinguish between operating and non-operating – Capital contributions and transfers reported separately • Statement of Cash Flows – Four categories of cash flows: • Operating • Non-capital financing • Capital and related financing • Investing – Direct method required for operating activities

Statement of Net Assets Proprietary Funds June 30, 20_ _

OWEN J. ROBERTS SCHOOL DISTRICT STATEMENT OF NET ASSETS PROPRIETARY FUND AS OF JUNE 30, 2002

Statement of Revenues, Expenses and Changes in Fund Net Assets Proprietary Funds June 30, 20 XX

OWEN J. ROBERTS SCHOOL DISTRICT STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS PROPRIETARY FUND FOR THE YEAR ENDED JUNE 30, 2002

Combined Statement of Cash Flows Proprietary Fund Types June 30, 20 XX

Combined Statement of Cash Flows For the Fiscal Year Ending June 30, 20 XX Schedule of Noncash Investing, Capital and Financing

OWEN J. ROBERTS SCHOOL DISTRICT STATEMENT OF CASH FLOWS PROPRIETARY FUND AS OF JUNE 30, 2002

Fund Statements – Fiduciary fund statements • Statement of fiduciary net assets • Statement of changes in fiduciary net assets – Redefined – cannot be used to support the governments own programs – Economic resources – Accrual basis

Statement of Net Assets Fiduciary Funds June 30, 20 XX

OWEN J. ROBERTS SCHOOL DISTRICT STATEMENT OF NET ASSETS FIDUCIARY FUNDS AS OF JUNE 30, 2002

Statement of Changes in Net Assets Fiduciary Funds

OWEN J. ROBERTS SCHOOL DISTRICT STATEMENT OF CHANGES IN NET ASSETS FIDUCIARY FUND FOR THE YEAR ENDED JUNE 30, 2002

Government Wide Statements – Government-wide – Government and business type activities presented for primary government. Nonblended component units retain a discrete presentation. • Economic resource • Accrual basis • Fiduciary funds not reported

Government Wide Statements – Statement of net assets • Assets less liabilities = net assets is encouraged • Traditional balance sheet format allowed (Assets = Liabilities + Net Assets) • Assets and liabilities in order of liquidity

Government Wide Statements – Statement of net assets • Liabilities that are long-term should be current and long-term • Classified balance sheet can be presented • Net assets three categories – Capital – Restricted – Unrestricted • Infrastructure assets included

Statement of Net Assets – Elimination and Reclassification • Balances between funds that are initially recorded as interfund receivables and payables at individual fund level should be eliminated for governmental and businesstype activities – Eliminate the grossing up of assets and liabilities – Interfund receivables / payables between general fund – special revenue and other governmental funds eliminated and same with interfund receivables/payables between proprietary funds – Net residual interfund receivables / payables not eliminated and labeled internal balances

Statement of Net Assets – Interfund receivables / payables between primary government and fiduciary funds not eliminated and reported as receivables from / payable to external parties

Statement of Net Assets June 30, 20_ _

OWEN J. ROBERTS SCHOOL DISTRICT STATEMENT OF NET ASSETS AS OF JUNE 30, 2002

Government Wide Statements Statement of Activities – Net cost format – Expenses by function / programs – Direct expenses – required – Indirect expense allocation permitted – separate column for indirect expenses, if allocated – Depreciation – Interest – Special, extraordinary items and transfers

Basic Financial Statements – Statement of Activities • Program revenues reduce the cost of a program – Charges for services – Operating grants and contributions – Capital grants and contributions • Net cost is financed by general revenues

Statement of Activities – Eliminations and Reclassifications • Internal activities should be eliminated so that expenses and revenues are recorded only once – The general fund may charge other funds for services such as insurance coverage on an internal basis. When these costs are consolidated the “doubling up” should be eliminated so that the allocated expenses are reported only by the function to which they are allocated. – Internal activities should not be eliminated when classified as interfund services provided or used. Example, sale of water, electricity from utility to general government.

Statement of Activities – Intra-entity activity – Transaction between primary government and its discretely presented component units • Should not be eliminated • Amount payable / receivable should be reported as a separate line item – Internal service fund activity should be eliminated to avoid doubling up of expenses and revenue. • Any profit (loss) should be allocated pro rata to the participating funds • Residual balances related to assets and liabilities reported in governmental activities in statements of net assets.

Statement of Activities

OWEN J. ROBERTS SCHOOL DISTRICT STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2002

Basic Financial Statements • Four types of revenue sources: – Type A – Those who purchase, use or directly benefit from the goods or services of the program (always program revenue) – Type B – Parties outside the reporting government’s citizenry (program revenue if restricted) – Type C – The reporting government’s taxpayers – all taxpayers, regardless whether they benefit from a particular program. (always General Revenue) – Type D – The governmental institution itself (usually General Revenue)

General vs Program Revenue Pocket Guide

Component Unit Presentation – Discrete presentation in government wide statements • Fiduciary component units • Major component unit reporting – Separate columns in government wide statements – Separate statements after fund presentation – Condensed information in notes.

Required Supplementary Information – Budgetary comparisons for general and major special revenue funds • Original and final budget • Actual on budgetary basis