MANAGEMENT’S DISCUSSION
& ANALYSIS
NMASBO Fall Conference 2012
Taos, New Mexico
Presented by Leslie Smith, Retired Business Manager
GASB 34 – Financial Reporting
Standards
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In June 1999, the Governmental Accounting
Standards Board (GASB) established new financial
reporting standards that for state and local
governments to report their financial results.
Public Schools are required to follow these
standards.
Overview of the Financial Statements
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This report consists of three parts
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Management’s Discussion & Analysis
Basic Financial Statements
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Government-wide financial statements which provide
long and short term information about the school’s
overall financial status
Fund financial statements that focus on individual parts
of the school district operations in more detail
Required Supplementary Information & Notes
What Is the M D & A?
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The MD&A is a nontechnical presentation of information
contained the district’s audited Financial Statements.
This portion is unaudited.
The discussion
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Offers insights on the district’s overall financial standing
Explains the reasons for significant change in financial
position relative to the last reporting period, and
Identifies current factors with the potential to influence
the district’s future financial position
May contain other relevant information regarding the
district
Consider These Topics for Discussion
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Mission and Organizational Structure
Discussion and Analysis of the Financial Statements
Financial Results
Budgetary Integrity
Current Demands
Risks, Uncertainties, Events, Conditions, and Trends
Future Effects of Current Demands, Risks, Uncertainties, Events,
Conditions and Trends
Understanding Financial Reporting
Discussion and Analysis of Systems, Controls and Legal Compliance
Discussion and Analysis of Performance
Model MD & A
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Template in this presentation is from a school district in
South Dakota
 Overview of Financial Statements
 Financial Analysis
 Explanation of Significant Differences
 Governmental & Business-Type Activities
 Governmental Activities
 Financial Analysis of the School District’s Funds
 General Fund Budgetary Highlights
 Capital Asset Administration
 Long-term Debt
 Economic Factors
Preparation Process
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The preparation of MD&A requires significant
coordination among district personnel to
 Analyze,
identify and disclose the reasons for changes
in the financial statements,
 Analyze relevant global and local economic issues, and
discuss future financial plans with district management.
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Use charts, graphs, and tables to enhance the
understandability of the information presented.
Government-wide Financial Statements
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The government-wide statements include a statement of net
assets and a statement of activities.
These statements focus on the school district as a whole and
report all assets (including infrastructure), liabilities, revenues,
and expenses of the school district.
These statements follow the flow of economic resources method
using full accrual basis accounting.
Accrual accounting means that transactions are
recorded when they occur, rather than when cash is
disbursed or received.
Statement of Net Assets
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The statement of net assets includes the district’s
assets and liabilities at a given point in time. Net
assets are simply the difference between assets and
liabilities.
All financial and capital resources are reported.
Capital assets that are being or have been
depreciated are reported at historical cost (or
estimated historical cost, at transition), less
accumulated depreciation.
Statement of Activities
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The statement of activities reports school district operating
revenues and expenses. Expenses are reported by function
and program, such as transportation, administration,
regular & special education and any revenue (except taxes)
attributable to that function or program is reported with the
function or program and net expense or revenue presented.
A review of this statement will indicate which programs
contribute to and which draw from general revenues.
Annual depreciation expense is generally reported with
each program or function.
Fund Financial Statements
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Fund financial statements provide more detailed
information about the school district’s most significant
funds – not the district as a whole.
Funds are used only in governmental accounting to keep
track of certain sources of funding and spending for a
particular purpose. Measurement focus, and basis of
accounting of funds did not change with GASB 34.
Fund accounting continues alongside the governmentwide statements.
Reconciliation of the fund statements with the
government-wide statements is required.
Fund Financial Statements
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The school district’s basic activities are reported in
the “governmental fund” statements. These fund
statements are prepared using the current financial
resources measurement focus and a modified, as
opposed to full, accrual basis of accounting.
Governmental funds do not report capital assets,
and therefore do not have depreciation expense.
Further, they do not show long-term debt.
Analysis of Fund Financial Statements
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An analysis of balances and transactions of individual
funds - The analysis should address the reasons for significant
changes in fund balances or fund net assets and whether
restriction, commitments, or other limitations significantly affect
the availability of fund resources for future use.
An analysis of significant variations between original and
final budget amounts and between final budget amounts
and actual budget results for the general fund (or its
equivalent) - The analysis should include any currently known
reasons for those variations that are expected to have a
significant effect on future services or liquidity.
Comprehensive Variance Analysis
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In order to facilitate the identification of significant
changes and determining the reasons for such changes,
the comprehensive variance analysis must include the
following information:
Statement of Net Assets:
Current year vs. prior year balances – dollar and percent
changes
 Balances for the current year and two preceding years –
comparison of balances as a percentage of total assets (for
assets) and as a percentage of total net assets (for liabilities
and net assets) for each year.
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Comprehensive Variance Analysis
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Statement of Revenues, Expenses, and Changes in Net
Assets:
 Current
year vs. prior year balances – dollar and percent
changes
 Current year vs. prior year balances – dollar and percent
changes for expenses by natural classification
General Fund Budgetary Highlights
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Any significant budget adjustments made during the
year
 Change
in Unit Value
 Change in T & E Index
 Increase or Decrease in Student Membership
 Reduction in force
 Hiring freeze
Other Topics
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Capital Asset Administration
Long Term Debt
Economic Factors and Next Year’s Budgets
Contacting the District’s Financial Management
Questions??
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Thank you for your attendance!
Contact Information
Leslie Smith dba
gFund Solutions
575 420-6269