GASB state 34 Essay

This essay has a total of 784 words and 5 pages.

GASB state 34



On June 30, 1999 the GASB passed statement number 34. Statement 34 establishes new
accounting requirements for state and local governments that are scheduled to begin on
June 15, 2002. There are three phases scheduled for the implementation of statement 34,
each depending on the size of the government. The largest governments must meet the
requirement first while the smaller governments have more time to comply with the
statement.

Statement 34 will improve the governmental accounting system in many ways. First,
statement 34 will create easier to understand financial statements. This will allow
people other than accountants to understand the information within a government financial
statement. Secondly, statement 34 will help city officials keep track of fixed assets
that need to be replaced or improved. This addition is important because city officials
often forget that assets have been in use for too long, resulting in costly improvements
that could be avoided. Furthermore, statement 34 will allow readers to determine whether
the government has improved since the last fiscal year.

These goals will be accomplished in several ways. First, a management discussion and
analysis (MD&A) statement will be required. Within this statement, managers will discuss
the financial achievements of the governmental entity during the fiscal year. In this
discussion, managers will compare the current and previous years-financial statements, and
inform the reader if there has been an improvement or deterioration financially. The
managers preparing the MD&A must also explain any significant fluctuation within any major
accounts, as well as, any future event expected to have a major impact upon the said
government.

Another notable change made by statement 34 is the adoption of the full accrual method.
This will greatly change the bottom line of many governmental entities. Under this
system, governments will report all revenues earned in a given period. This change will
give financial statement readers a better idea of the actual financial position of the
government, because all revenues earned within a given period will be reported. The full
accrual method will help government officials determine if citizens have paid for the
benefits that have been received and if the government’s financial position has changed
since the previous year.

A third important change that statement 34 will usher in is the way governments report
activity in their major funds. Governments will no longer report their funds in aggregate
form. The new model will reclassify funds into more specific individual fund listings.
This change will make it easier to track specific expenditures while increasing government
accountability.

Another substantial change brought about by statement 34 is asset management. Governments
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