GASB 34GASB 34And theAnd the

Public Schools of Public Schools of PetoskeyPetoskey

GASB 34: Basic Financial GASB 34: Basic Financial Statements – and Statements – and Management’s Discussion Management’s Discussion and Analysis – for State and and Analysis – for State and Local GovernmentsLocal Governments

10 Years in the Making.10 Years in the Making. Arguably the most significant Arguably the most significant

change in the history of change in the history of governmental accounting.governmental accounting.

Implemented at the Public Schools Implemented at the Public Schools of Petoskey effective with Year of Petoskey effective with Year Ended June 30, 2003.Ended June 30, 2003.

Prior to GASB 34Prior to GASB 34 Current system has been in place for 20 Current system has been in place for 20

years.years. Recent emerging consensus regarding Recent emerging consensus regarding

the need for public schools to institute the need for public schools to institute financial reporting that promotes fiscal financial reporting that promotes fiscal and operational accountability.and operational accountability.

Pressure to provide annual reports that Pressure to provide annual reports that were easier to read for investors and were easier to read for investors and creditors.creditors.

Objectives of GASB 34Objectives of GASB 34 Fiscal AccountabilityFiscal Accountability

Compare actual financial results with legally Compare actual financial results with legally adopted budget.adopted budget.

Determine compliance with finance-related Determine compliance with finance-related laws, rules and regulations.laws, rules and regulations.

Operational AccountabilityOperational Accountability Assess financial condition and results of Assess financial condition and results of

operations.operations. Evaluate efficiency and effectiveness.Evaluate efficiency and effectiveness. Interperiod equity.Interperiod equity.

Interperiod EquityInterperiod Equity Definition: Whether current-year Definition: Whether current-year

revenues are sufficient to pay for revenues are sufficient to pay for current-year services.current-year services.

So What Changed?So What Changed? Management’s Discussion and Management’s Discussion and

Analysis (MD&A).Analysis (MD&A). Focus on the District as a “Whole”.Focus on the District as a “Whole”. Focus on long-range activities.Focus on long-range activities. Budget to actual comparisons.Budget to actual comparisons.

What Do the Financial What Do the Financial Statements Look Like?Statements Look Like?

R e qu ire d S up p lem en ta ry In fo rm a tion

N o tes to th e F in an c ia l S ta te m e n ts

M a n ag e m en t's D iscu ss io n an d A na lys is

Government-wide Fund Financial Financial statements Statements

Management’s Discussion Management’s Discussion & Analysis (MD&A)& Analysis (MD&A)

Purpose: Purpose: Narrative introduction and overviewNarrative introduction and overview Analysis of key dataAnalysis of key data An objective and easily readable analysis of An objective and easily readable analysis of

the district’s financial activities based on the district’s financial activities based on currently known facts, decisions, or currently known facts, decisions, or conditionsconditions

Provides district an opportunity to present Provides district an opportunity to present both long and short term analysis of the both long and short term analysis of the district’s activitiesdistrict’s activities

Management’s Discussion Management’s Discussion & Analysis (MD&A)& Analysis (MD&A)

Oh yeah, its required by GASB 34 Oh yeah, its required by GASB 34 also!!also!!

Management’s Discussion Management’s Discussion & Analysis (MD&A)& Analysis (MD&A)

What can I expect from this report?What can I expect from this report? Discussion of current year resultsDiscussion of current year results Focused on General FundFocused on General Fund Very condensed financial informationVery condensed financial information Comparisons to prior year and to budget, Comparisons to prior year and to budget,

and discussion of variances.and discussion of variances. An assessment whether the district’s An assessment whether the district’s

financial position has improved or financial position has improved or deteriorated as a result of this year’s deteriorated as a result of this year’s operationsoperations

District Wide Financial District Wide Financial StatementsStatements

Purpose:Purpose: Focused on District financial Focused on District financial

information reported “As a Whole”, information reported “As a Whole”, versus by fundversus by fund

Include all district resources, both Include all district resources, both capital and financial, current and long-capital and financial, current and long-termterm

Concentrates on the long-term Concentrates on the long-term performance of the districtperformance of the district

District Wide Financial District Wide Financial StatementsStatements

Consists of Two StatementsConsists of Two Statements Statement of Net AssetsStatement of Net Assets Statement of ActivitiesStatement of Activities

Statement of Net AssetsStatement of Net Assets Some would call this a “Balance Some would call this a “Balance

Sheet” of the District in its entiretySheet” of the District in its entirety Captures a snapshot of the Captures a snapshot of the

district’s assets, liabilities and district’s assets, liabilities and equity at a point in timeequity at a point in time

Statement of Net AssetsStatement of Net Assets Includes ALL assets, including land, Includes ALL assets, including land,

buildings, and improvementsbuildings, and improvements Also includes accumulated Also includes accumulated

depreciationdepreciation Includes ALL debt, including long-Includes ALL debt, including long-

term bonded debtterm bonded debt Also includes accumulated leave bank Also includes accumulated leave bank

liabilityliability

Statement of ActivitiesStatement of Activities Some would call this an “Income Some would call this an “Income

Statement”Statement” Captures a record of the financial Captures a record of the financial

activity of the district for a defined activity of the district for a defined period of time (one year, in this period of time (one year, in this case)case)

Uses the Net Cost Format – to show Uses the Net Cost Format – to show the financial burden of programs on the financial burden of programs on taxpayerstaxpayers

Statement of ActivitiesStatement of Activities Depreciation of fixed assets is shown Depreciation of fixed assets is shown Expenses are shown by programExpenses are shown by program Revenues are shown by the program Revenues are shown by the program

that generates themthat generates them Or another way to say this: Programs Or another way to say this: Programs

that generate revenue are shown by the that generate revenue are shown by the amount of revenue they generated, and amount of revenue they generated, and the amount of expense they incurredthe amount of expense they incurred

Fund Financial StatementsFund Financial Statements Purpose:Purpose:

Focus on most important, or “Major” Focus on most important, or “Major” fundsfunds

Assess compliance with rules and Assess compliance with rules and regulationsregulations

Compares inflows of the district with its Compares inflows of the district with its outflowsoutflows

Concentrates on the short-term Concentrates on the short-term performance of the districtperformance of the district

Fund Financial StatementsFund Financial Statements Consists of Four StatementsConsists of Four Statements

Balance SheetBalance Sheet Reconciliation of Balance Sheet of Reconciliation of Balance Sheet of

Governmental Funds to Net AssetsGovernmental Funds to Net Assets Statement of Revenues, Expenditures and Statement of Revenues, Expenditures and

Changes in Fund BalancesChanges in Fund Balances Reconciliation of Statement of Revenues, Reconciliation of Statement of Revenues,

Expenditures and Changes in Fund Balances Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of of Governmental Funds to the Statement of ActivitiesActivities

Which Funds are Shown?Which Funds are Shown? Or where the heck is the Capital Or where the heck is the Capital

Projects Fund??Projects Fund??

Only Major funds are shown. These Only Major funds are shown. These are determined by a formula.are determined by a formula.

Non-major funds are then lumped Non-major funds are then lumped together (though each fund has its’ together (though each fund has its’ own statements further on in the own statements further on in the report)report)

But I Like the Way the But I Like the Way the Funds Used to Be Shown !Funds Used to Be Shown !@#$%^!@#$%^!

And for that reason, the fund by And for that reason, the fund by fund financial statements that you fund financial statements that you have come to know and love, are have come to know and love, are sitting in the back of the financial sitting in the back of the financial report!!report!!

What the heck are Net What the heck are Net Assets?Assets?

Theoretically, net assets represent the Theoretically, net assets represent the resources the district has left over for resources the district has left over for providing services after all its debts are providing services after all its debts are settled.settled.

Some resources may only be used for Some resources may only be used for designated purposes, and these are designated purposes, and these are shown as “Restricted”shown as “Restricted”

Finally, some forms of resources are not Finally, some forms of resources are not in a spendable form (i.e. buildings)in a spendable form (i.e. buildings)

What the heck are Net What the heck are Net Assets?Assets?

An increase or decrease in Net An increase or decrease in Net Assets is a very good indicator of Assets is a very good indicator of improving or declining financial improving or declining financial health.health.

So Why the So Why the Reconciliations?Reconciliations?

Net Assets includes things that we Net Assets includes things that we are not used to seeing in the fund are not used to seeing in the fund financial statementsfinancial statements

Net Assets includes:Net Assets includes: All funds fund balanceAll funds fund balance All debt and long-term liabilitiesAll debt and long-term liabilities All capital assetsAll capital assets Accumulated depreciationAccumulated depreciation

Notes to the Financial Notes to the Financial StatementsStatements

The Notes are an integral part of the The Notes are an integral part of the Financial Statements. You cannot Financial Statements. You cannot get a complete picture of the get a complete picture of the finances of the district without finances of the district without reading the Notes.reading the Notes.

Highlights include:Highlights include: Capital Asset SummaryCapital Asset Summary Long Term Debt SummaryLong Term Debt Summary Subsequent EventsSubsequent Events

The Stuff in the Back….The Stuff in the Back…. Includes:Includes:

Individual Funds financial statementsIndividual Funds financial statements Budget-to-Actual comparisonsBudget-to-Actual comparisons Debt SchedulesDebt Schedules Student Activity Funds line item Student Activity Funds line item

balancesbalances Federal Grant informationFederal Grant information

Thank You!!Thank You!!