What is GASB 34 - Petoskey High School

Report
GASB 34
And the
Public Schools of Petoskey
GASB 34: Basic Financial
Statements – and Management’s
Discussion and Analysis – for
State and Local Governments
10 Years in the Making.
 Arguably the most significant change in
the history of governmental accounting.
 Implemented at the Public Schools of
Petoskey effective with Year Ended June
30, 2003.

Prior to GASB 34
Current system has been in place for 20
years.
 Recent emerging consensus regarding the
need for public schools to institute financial
reporting that promotes fiscal and operational
accountability.
 Pressure to provide annual reports that were
easier to read for investors and creditors.

Objectives of GASB 34

Fiscal Accountability



Compare actual financial results with legally
adopted budget.
Determine compliance with finance-related laws,
rules and regulations.
Operational Accountability



Assess financial condition and results of
operations.
Evaluate efficiency and effectiveness.
Interperiod equity.
Interperiod Equity

Definition: Whether current-year
revenues are sufficient to pay for
current-year services.
So What Changed?
Management’s Discussion and Analysis
(MD&A).
 Focus on the District as a “Whole”.
 Focus on long-range activities.
 Budget to actual comparisons.

What Do the Financial
Statements Look Like?
Management's Discussion and Analysis
Government-wide
Financial statements
Fund Financial
Statements
Notes to the Financial Statements
Required Supplementary Information
Management’s Discussion &
Analysis (MD&A)

Purpose:




Narrative introduction and overview
Analysis of key data
An objective and easily readable analysis of the
district’s financial activities based on currently
known facts, decisions, or conditions
Provides district an opportunity to present both
long and short term analysis of the district’s
activities
Management’s Discussion &
Analysis (MD&A)

Oh yeah, its required by GASB 34 also!!
Management’s Discussion &
Analysis (MD&A)

What can I expect from this report?





Discussion of current year results
Focused on General Fund
Very condensed financial information
Comparisons to prior year and to budget, and
discussion of variances.
An assessment whether the district’s
financial position has improved or
deteriorated as a result of this year’s
operations
District Wide Financial
Statements

Purpose:
Focused on District financial information
reported “As a Whole”, versus by fund
 Include all district resources, both capital
and financial, current and long-term
 Concentrates on the long-term
performance of the district

District Wide Financial
Statements

Consists of Two Statements
Statement of Net Assets
 Statement of Activities

Statement of Net Assets
Some would call this a “Balance Sheet”
of the District in its entirety
 Captures a snapshot of the district’s
assets, liabilities and equity at a point in
time

Statement of Net Assets

Includes ALL assets, including land,
buildings, and improvements


Also includes accumulated depreciation
Includes ALL debt, including long-term
bonded debt

Also includes accumulated leave bank
liability
Statement of Activities
Some would call this an “Income
Statement”
 Captures a record of the financial
activity of the district for a defined
period of time (one year, in this case)
 Uses the Net Cost Format – to show the
financial burden of programs on
taxpayers

Statement of Activities
Depreciation of fixed assets is shown
 Expenses are shown by program
 Revenues are shown by the program that
generates them
 Or another way to say this: Programs that
generate revenue are shown by the amount
of revenue they generated, and the amount
of expense they incurred

Fund Financial Statements

Purpose:
Focus on most important, or “Major” funds
 Assess compliance with rules and
regulations
 Compares inflows of the district with its
outflows
 Concentrates on the short-term
performance of the district

Fund Financial Statements

Consists of Four Statements




Balance Sheet
Reconciliation of Balance Sheet of Governmental
Funds to Net Assets
Statement of Revenues, Expenditures and
Changes in Fund Balances
Reconciliation of Statement of Revenues,
Expenditures and Changes in Fund Balances of
Governmental Funds to the Statement of Activities
Which Funds are Shown?

Or where the heck is the Capital
Projects Fund??
Only Major funds are shown. These are
determined by a formula.
 Non-major funds are then lumped
together (though each fund has its’ own
statements further on in the report)

But I Like the Way the Funds
Used to Be Shown [email protected]#$%^!

And for that reason, the fund by fund
financial statements that you have
come to know and love, are sitting in
the back of the financial report!!
What the heck are Net Assets?
Theoretically, net assets represent the
resources the district has left over for
providing services after all its debts are
settled.
 Some resources may only be used for
designated purposes, and these are shown as
“Restricted”
 Finally, some forms of resources are not in a
spendable form (i.e. buildings)

What the heck are Net Assets?

An increase or decrease in Net Assets is
a very good indicator of improving or
declining financial health.
So Why the Reconciliations?
Net Assets includes things that we are
not used to seeing in the fund financial
statements
 Net Assets includes:

All funds fund balance
 All debt and long-term liabilities
 All capital assets
 Accumulated depreciation

Notes to the Financial
Statements
The Notes are an integral part of the
Financial Statements. You cannot get a
complete picture of the finances of the
district without reading the Notes.
 Highlights include:

Capital Asset Summary
 Long Term Debt Summary
 Subsequent Events

The Stuff in the Back….

Includes:
Individual Funds financial statements
 Budget-to-Actual comparisons
 Debt Schedules
 Student Activity Funds line item balances
 Federal Grant information

Thank You!!

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