Summary of Statement No. 44
Statement No. 44
Economic Condition Reporting: The Statistical Section—an amendment of NCGA Statement 1
This Statement amends the portions of NCGA Statement 1, Governmental Accounting and Financial Reporting Principles, that guide the preparation of the statistical section. The statistical section presents detailed information, typically in ten-year trends, that assists users in utilizing the basic financial statements, notes to basic financial statements, and required supplementary information to assess the economic condition of a government.
Three shortcomings have been identified in the statistical section since NCGA Statement 1 was issued in 1979. First, NCGA Statement 1 presented a list of fifteen required schedules with no additional explanation of the nature of the information they were to contain. As a result, some governments prepared their statistical sections differently from others, thereby diminishing the usefulness and comparability of the information. Second, the statistical section requirements were oriented to general purpose local governments. Consequently, other types of governments had little guidance on how to adapt the requirements to their circumstances, resulting in incomplete and inconsistent application of the standards and, therefore, additional loss of comparability and usefulness.
Third, the requirements for the statistical section did not encompass the new information that governments are presenting as a result of GASB Statement No. 34, Basic Financial Statements—and Management’s Discussion and Analysis—for State and Local Governments.
The statistical section is a required part of a comprehensive annual financial report (CAFR), although governments are not required to prepare a statistical section if they do not present their basic financial statements within a CAFR. These circumstances are not altered by this Statement. However, this Statement does apply to any statistical section that accompanies a government’s basic financial statements. The provisions of this Statement are effective for statistical sections prepared for periods beginning after June 15, 2005.
How the Changes in This Statement Improve Financial Reporting
This Statement improves the understandability and usefulness of statistical section information by addressing the comparability problems that have developed in practice and by adding information from the new financial reporting model for state and local governments required by Statement 34. In order to clarify that the requirements are applicable to all types of state and local governmental entities that prepare a statistical section, this Statement establishes the objectives of the statistical section and the five categories of information it contains—financial trends information, revenue capacity information, debt capacity information, demographic and economic information, and operating information. The more specific requirements of this Statement should be adapted by each type of government in order to meet the overarching objectives.
The more specific requirements of this Statement explain more clearly than prior standards the types of information that should be presented in each category of statistical section information. The prior requirements are clarified and updated to better meet user needs. For example, whereas NCGA Statement 1 required a schedule of “miscellaneous statistics,” this Statement specifies that a statistical section should include ten-year trends in three types of operating information—government employment levels, operating statistics, and capital asset information. This Statement also clarifies certain features of previously required information, such as which governmental funds to include in information about trends in changes in fund balances.
This Statement adds new information that users have identified as important and eliminates certain previous requirements. For instance, a government’s statistical section should now include trend information on governmental fund balances and principal employers. On the other hand, governments are no longer required to present in their statistical sections information that users have identified as less useful, such as special assessment levies and collections, construction activity, and bank deposits. Additionally, statistical sections do not have to include a separate schedule of debt service ratios; the most useful information from that schedule will be presented with the changes in fund balances information. The most significant new information added to the statistical section is the government-wide, accrual-based information required by Statement 34. The statistical section will include ten-year trend information about net assets and changes in net assets. The debt information presented in the statistical section will also be more comprehensive due to the inclusion of information from the government-wide financial statements and notes. Finally, this Statement further improves the understandability and usefulness of statistical section information by requiring governments to augment their schedules with notes regarding sources, methodologies, and assumptions, and to provide narrative explanations of (a) the objectives of statistical section information, (b) unfamiliar concepts, (c) relationships between information in the statistical section and elsewhere in the financial report, and (d) atypical trends and anomalous data that users would not otherwise understand.
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; and public utilities, hospitals and other healthcare providers, and colleges and universities. Paragraph 2 discusses the applicability of this Statement.