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Unformatted text preview: 13-1Instructors ManualforFinancial Management for Public, Health, and Not-for-Profit Organizations, 3EChapter 13UNIQUE ASPECTS OF ACCOUNTING FOR STATE ANDLOCAL GOVERNMENTSPART II: REPORTING FINANCIAL RESULTS QUESTIONS FOR DISCUSSION13-1.Governmental financial reporting attempts to keep the government accountable for its actions. An element of accountability is to assure that information is provided that is helpful for making not only economic decisions, but also social and political decisions. Additionally, financial reporting by state and local governments should provide information that allows the user to determine if interperiod equity has been achieved. Interperiod equityrefers to whether the government has used revenues from the current period to pay for services provided in the current period. 13-2.Many government bodies prepare a Comprehensive Annual Financial Report (CAFR). Included in that CAFR are the Basic Financial Statements, Managements Discussion & Analysis (MD&A), and other Required Supplementary Information (RSI) including a budgetary comparison schedule. The information contained in the financial statements must serve not only the needs of lenders and vendors, but of the public as well. 13-3.According to GASB:MD&A should provide an objective and easily readable analysis of the governments financial activities based on currently known facts, decisions, or conditions. MD&A should include comparisons of the current year to the prior year based on the government-wide information. It should provide an analysis of the governments overall financial position and results of operations to assist users in assessing whether that financial position has improved or deteriorated as a result of the years activities. In addition, it should provide an analysis of significant changes that occur in funds and significant budget variances. It should also describe capital asset and long-term debt activity during the year. MD&A should conclude with a description of currently known facts, decisions, or conditions that are expected to have a significant effect on financial position or the results of operations.11Governmental Accounting Standards Board, Statement No. 34 of the Governmental Accounting Standards Board, Basic Financial Statementsand Managements Discussion and Analysisfor State and Local Governments, (Norwalk, Conn.: Financial Accounting Foundation, 1999), Summary.Chapter 13: Unique Aspects of Accounting for State and Local Governments Part II: Reporting13-2To make the MD&A as useful as possible, the inclusion of graphs, charts, and tables would be appropriate. It is up to the managers who are preparing the document to include the most relevant information and to be creative in providing an MD&A that achieves the goals of the document rather than following a rigid format that might exclude important information.document rather than following a rigid format that might exclude important information....
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This note was uploaded on 02/22/2012 for the course FINANCE 390:300:03 taught by Professor Palmon during the Fall '10 term at Rutgers.
- Fall '10