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City of Elk River <br />Emerging Issues <br /> <br /> <br />26 <br />Accounting Standard Update – GASB Statement No. 103 – Financial Reporting Model <br /> Improvements <br />The objective of this Statement is to improve key components of the financial reporting model to <br />enhance its effectiveness in providing information that is essential for decision making and assessing <br />a government's accountability. This Statement also addresses certain application issues. <br /> <br />This Statement addresses 5 areas of the financial statements (1) Management's Discussion and <br />Analysis (MD&A), (2) Unusual or Infrequent Items, (3) Presentation of the Proprietary Fund Statement <br />of Revenues, Expenses, and Changes in Fund Net Position, (4) Major Component Unit Information, <br />and (5) Budgetary Comparison Information. <br /> <br />This Statement continues the requirement that the MD&A precede the basic financial statements as <br />part of the Required Supplementary Information (RSI). This Statement requires that the information <br />presented in MD&A be limited to the related topics discussed in five sections: (1) Overview of the <br />Financial Statements, (2) Financial Summary, (3) Detailed Analyses, (4) Significant Capital Asset and <br />Long-Term Financing Activity, and (5) Currently Known Facts, Decisions, or Conditions. The <br />Statement stresses that detailed analyses should explain why balances and results of operations <br />changed, rather than stating amounts and "boilerplate" discussions. <br /> <br />This Statement describes unusual or infrequent items as transactions and other events that are either <br />unusual in nature or infrequent in occurrence. Furthermore, governments are required to display the <br />inflows and outflows related to each unusual or infrequent item separately as the last presented <br />flow(s) of resources prior to the net change in resource flows in the government-wide, governmental <br />fund, and proprietary fund statements of resource flows. <br /> <br />This Statement requires that the proprietary fund statement of revenues, expenses, and changes in <br />fund net position continue to distinguish between operating and nonoperating revenues and <br />expenses. The Statement provides clarification regarding operating and nonoperating revenues and <br />expenses. Also, this Statement requires that a subtotal for operating income (loss) and noncapital <br />subsidies be presented before reporting other nonoperating revenues and expenses. <br /> <br />This Statement requires governments to present each major component unit separately in the <br />reporting entity's statement of net position and statement of activities if it does not reduce the <br />readability of the statements. If the readability of those statements would be reduced, <br />combining statements of major component units should be presented after the fund financial <br />statements. <br /> <br />This Statement requires governments to present budgetary comparison information using a single <br />method of communication - RSI. Governments also are required to present (1) variances between <br />original and final budget amounts and (2) variances between final budget and actual amounts. An <br />explanation of significant variances is required to be presented in notes to RSI. <br /> <br />GASB Statement No. 103 is effective for fiscal years beginning after June 15, 2025. Earlier <br />application is encouraged. <br /> <br />Information provided above was obtained from www.gasb.org. <br /> <br />Page 401 of 637