The Statement of Net Aseets - Balance Sheet Info

The Statement of Net Aseets - Balance Sheet Info - Touring...

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Touring the Financial Report, Part I: The Statement of Net Assets http://www.gasb.org/newsletter/statement_of_net_assets_may2007.html 1 of 4 10/2/2008 1:54 PM - MS K.O. The User's Perspective May 2007 Touring the Financial Report, Part I: The Statement of Net Assets GASB Statement No. 34, Basic Financial Statements—and Management’s Discussion and Analysis—for State and Local Governments, introduced a number of financial reporting innovations, foremost of which may be the government-wide financial statements. These statements—the statement of net assets and the statement of activities—bring together information that previously had been spread among various funds and reported on different accounting bases. This article explores the statement of net assets and the information it contains. ( A separate article in this issue looks at the statement of activities.) The Government-wide Financial Statements Traditionally, state and local government financial reports contained financial statements arranged around funds—the governmental funds, proprietary funds, and fiduciary funds. Although the fund financial statements were widely used, they did not allow financial statement users to get an overall view of a government’s finances for two reasons. First, the funds could not simply be added together, because doing so would double-count any financial activity occurring between funds. In other words, an amount owed from one fund to another would show up as both an asset and a liability, overstating both. Second, the funds reported very different information. The proprietary and fiduciary funds report information using an accrual basis and economic resources measurement focus, similar to the type of information reported in the financial statements of not-for-profit organizations and corporations. This form of reporting includes all economic transactions and presents both long- and short-term consequences. The governmental funds, however, report information using the modified accrual basis and current financial resources measurement focus. The governmental funds focus on the short run and generally do not include assets lasting more than one year (such as infrastructure) or liabilities that are not due and payable (such as bonds). Consequently, for the bread-and-butter activities accounted for in the governmental funds, such as public safety and education, major pieces of financial information were missing. The government-wide statements ignore the partitions created by the funds, bringing the financial activity together in one place and using just one type of information—accrual-based economic resources. As a result, all assets and liabilities are accounted for, as well as all inflows and outflows of resources. The government-wide statements organize information by whether it relates to governmental activities or business-type activities. Generally, the governmental activities are those accounted for in the governmental funds and the internal service funds (one of the two types of proprietary funds). The business-type activities are
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The Statement of Net Aseets - Balance Sheet Info - Touring...

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