Provide Input to GASB on Changes to the Governmental Fund Financial Statements Reporting Model

In December 2016, the Governmental Accounting Standards Board (GASB) issued an Invitation to Comment (ITC) as part of phase one of its project to reexamine the financial reporting model for preparing governmental financial statements established under GASB Statement No. 34. The ITC requests feedback on potential improvements to:

  • The measurement focus and basis of accounting for governmental funds
  • The presentation of governmental fund financial statements

This is a great opportunity for tribal finance leaders to influence how information is presented in governmental fund financial statements. The deadline for submitting written comments is March 31, 2017.

Comments should be addressed to the director of research and technical activities, Project No. 3-25I, and emailed to For more information on the ITC and future phases of the project, see our Alert.

Based on preliminary discussions, the GASB appears set on changing the accounting method for governmental funds. The options presented in the ITC eliminate the current financial resources as the measurement focus and modified accrual as the basis of accounting.

The three alternative recognition approaches for governmental funds introduced by the GASB fall on a continuum between pure cash and full accrual. Two of the approaches set forth a cash flow statement that could have a dramatic effect on how financial statements of governmental funds are presented.

Alternative Recognition Approaches

The ITC is requesting feedback on three alternative recognition approaches to financial statement reporting for governmental funds: near-, short-, and long-term.


The near-term approach has a shorter time perspective—generally 30–60 days—and is the most similar to cash reporting. It may present information that more closely aligns with budgetary information.

Under this approach, near-term receivables are recognized as assets, and prepaid items and inventory aren’t reported in the governmental fund financial statements. Reportable liabilities include those that are payable at period-end and are normally due within the near term.


The short-term approach provides information focused on a tribe’s one-year fiscal period. The financial statements present financial resource inflows and outflows for the period as well as period-end balances related to short-term (defined as one year) financial assets and liabilities.

Any short- or long-term receivables due in the subsequent fiscal year—as well as prepaid and inventory items—are reported as an asset. Reportable liabilities include:

  • Items payable within the subsequent fiscal year
  • Current portions of compensated absences
  • Current portions of long-term capital and operating debt
  • Net pension and other postemployment benefit liabilities

Because the short-term approach is further from the current financial resources measurement focus, a governmental fund statement of cash flows needs to be included in the basic financial statements.


The long-term approach recognizes the effects of transactions or events on financial resources when they take place, regardless of when cash is received or paid. This approach reports all assets and liabilities other than capital assets and capital-related debt.

Capital-related debt is included in the calculation of net investment in the capital assets component of net position. The balances of long-term operating debt, compensated absences, and pension and other postemployment benefit liabilities would be reported in the governmental fund financial statement.

This approach requires the balance sheet to be presented in a classified format that presents current (defined as one year) assets and liabilities separately from noncurrent items. This approach also requires a governmental fund statement of cash flows be included in the basic financial statements.

Financial Statement Format Changes

The ITC introduces a potential improvement to reconciliations from information provided in governmental fund financial statements to information disclosed in governmentwide financial statements. It also considers new format options for the governmental funds resource flows statement.

We encourage you to read the ITC and review the illustrations of these potential changes to the financial statements of governmental funds.

How to Prepare

It’s important to consider the impact each of the three proposed recognition approaches could have on preparers and users of tribal financial statements. If the measure focus changes, tribes will want to think through the additional impact it could have on:

  • Internal management reports
  • Budget process and budget to actual reporting
  • Reporting grant activities to funding agencies
  • Debt covenant calculations

The outcome of this project could also impact tribes’ day-to-day accounting functions and processes. Tribes should:

  • Assess whether their current accounting systems have the ability to easily generate the required information
  • Determine what additional information might be needed
  • Calculate how much additional time will be required to assemble it

The GASB is seeking input to make the financial statements of governmental funds more useful to your stakeholders. Discuss these changes with your council, bank contacts, key tribal members, and management so that you can advocate for the best approach to governmental funds reporting for your tribe.

We're Here to Help

If you have questions about how to interpret the information in the ITC, or to understand and address recent regulatory and policy changes or other tribal issues, contact your Moss Adams professional.

Contact Us with Questions

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