Governmental Accounting and Financial Reporting Model Legislation
The Government Finance Officers Association, as a matter of policy, has supported the expanded use of generally accepted accounting principles (GAAP) in state and local government accounting and financial reporting and the efforts of the Governmental Accounting Standards Board (GASB) in establishing GAAP.
Model legislation has been developed by the Governmental Accounting Standards Advisory Council (GASAC) for governmental accounting and financial reporting to promote uniformity at a basic level in this area. Conversion to GAAP, as established by the GASB or its successor bodies, provides important benefits to state and local government. These benefits include the ability to present fairly the financial position and results of operations for state and local governments and to demonstrate accountability to the government's constituency.
The Government Finance Officers Association supports the concepts embodied in the GASAC's model legislation dated April 21, 1987.
Adopted: June 2, 1987
Governmental Accounting Standards Advisory Council Model Legislation
Section 1: STATEMENT OF INTENT
It is intent of this legislation to establish uniform requirements for (state, local, special district, public authority, etc.) financial accounting and reporting, so that the financial position and results of operations of each (state, local, special district, public authority, etc.) government can be publicly available to citizens, legislators, financial institutions, and others interested in such information. (Note: The desired result of this section of the legislation is to ensure that financial reports prepared in accordance with generally accepted accounting principles promulgated by GASB are issued by all state and local general and special purpose governments and their agencies, boards, departments, branches, districts, commissions, or authorities, or other political subdivisions, whether issued separately or included as a dependent unit of another, depending on the provisions of state law or local ordinance. Therefore, the statement of intent section should clearly define what is meant by the terms "local government" or "state government" when used in these sections. Further, the legislation is also intended for implementation by home rule units of local government where appropriately enacted by such units instead of or in addition to state government legislation. Appropriate modifications should be made by the enacting body in such circumstances.)
Section 2: FINANCIAL ACCOUNTING AND REPORTING STANDARDS
All (state, local, special district, public authority, etc.) governments shall issue annual financial reports prepared in accordance with generally accepted accounting principles (GAAP) promulgated by the Governmental Accounting Standards Board (GASB), or its successor bodies. The governing body of each (state, local, special district, public authority, etc.) government shall provide for and cause to be made an annual audit of the financial affairs and transactions of all funds and activities of such government (and of any entity that constitutes part of the reporting entity in accordance with generally accepted accounting principles) for each fiscal year of such government.
Section 3: CONTENTS OF ANNUAL FINANCIAL REPORTS
All annual financial reports shall contain at least the following:
(a) Financial statements prepared in accordance with generally accepted accounting principles promulgated by the GASB or its successor bodies, setting forth the financial condition and results of operations.
(b) Any additional information that may be required by the GASB or the State Auditor (or other appropriate state official or department) or that may be deemed appropriate by the (state, local, special district, public authority) government.
(c) The opinion of the auditor with respect to the conformity of the financial statements with generally accepted accounting principles.
Section 4: SUBMISSION OF ANNUAL FINANCIAL REPORTS
Each annual financial report shall be completed within (120) days after the close of the respective government's fiscal year. A copy of the report shall be maintained as public record for public inspection at all reasonable times at the principal office of the government. A copy of the report shall also be submitted to each member of the governing body of the government [and a copy shall be sent to the State Auditor (Comptroller, etc.)] within 30 days of its completion. (Note: the intent of this section is to establish a timely reporting deadline. There may be circumstances that make it difficult for a particular government to meet the 120 day deadline for completion set forth in the model legislation, such as a government's participation in a private joint venture or the existence of a complex reporting entity. The appropriate government official should be responsible for considering these circumstances.)
Section 5: EFFECT
The requirements of this [chapter] supersede all other requirements of law in conflict with this [chapter].
April 21, 1987