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Vadnais Lake Area Water <br />Management Organization <br />Management Information <br />GASB 34 — The Reporting Model <br />In June, 1999, GASB issued Statement No. 34, Basic Financial Statements — and <br />Management's Discussion and Analysis — for State and Local Governments. The statement is the <br />most comprehensive governmental accounting rule ever developed. The new standard will <br />significantly change the way state and local governments report their financial activity to the <br />public. In general, the new standards make government fmancial reporting more like the private <br />sector. To understand the impact of the new statement, it is helpful to highlight the current <br />differences between private sector and government financial reporting: <br />• Governmental reporting focuses on groupings of various funds that segregate resources <br />for specific activities. In the private sector, even the most complex business is presented <br />as a single reporting entity; <br />• The private sector's fmancial reporting focuses on earnings and changes in total business <br />resources, including long-term assets and liabilities. This contrasts to government's more <br />short-term focus on current resources available for appropriation and spending; and, <br />• The budget functions more as a financial plan in the private sector; whereas in <br />government, the budget is more important in demonstrating compliance by comparing <br />actual financial results to the budget. <br />7 <br />