This Statement provides that governmental entities that heretofore have applied not-for-profit accounting and financial reporting principles by following the American Institute of Certified Public Accountants' (AICPA) Statement of Position (SOP) 78-10, Accounting Principles and Reporting Practices for Certain Nonprofit Organizations, or Industry Audit Guide, Audits of Voluntary Health and Welfare Organizations, should apply the Governmental model or the AICPA Not-for-Profit model. The AICPA Not-for-Profit model consists of the accounting and financial reporting principles contained in SOP 78-10 or Audits of Voluntary Health and Welfare Organizations-except for the provisions relating to the joint costs of informational materials and activities that include a fund-raising appeal-as modified by all applicable Financial Accounting Standards Board (FASB) pronouncements issued through November 30, 1989, and as modified by most applicable GASB pronouncements.
This Statement also provides guidance for proprietary activities-that is, proprietary funds and other governmental entities that use proprietary fund accounting-that apply the provisions of paragraph 7 of GASB Statement No. 20, Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entities That Use Proprietary Fund Accounting. It provides that those activities should apply only those FASB Statements and Interpretations issued after November 30, 1989, that are developed for business enterprises. They should not apply FASB Statements and Interpretations whose provisions are limited to not-for-profit organizations or address issues concerning primarily such organizations (such as FASB Statements No. 117, Financial Statements of Not-for-Profit Organizations, and No. 116, Accounting for Contributions Received and Contributions Made, respectively).
The provisions of this Statement generally are effective for financial statements for periods beginning after December 15, 1994; the modification of the AICPA Not-for-Profit model for certain GASB pronouncements is effective for entities that previously have not applied those pronouncements for periods beginning after December 15, 1995. Earlier application is encouraged.
Unless otherwise specified, pronouncements of the GASB apply to financial reports of all state and local governmental entities, including general purpose governments, public benefit corporations and authorities, public employee retirement systems, utilities, hospitals and other healthcare providers, and colleges and universities. Paragraph 4 discusses the applicability of this Statement.