Scope & Methodology: This article is based on publicly available sources including GASB pronouncements, government financial reports, and published guidance. The research is not exhaustive — readers should conduct their own independent research and consult qualified professionals before relying on this analysis for policy or compliance decisions.
Overview
As of March 2026, GASB statements issued include No. 102 (Omnibus 2023, issued May 2023) and No. 103 (Financial Reporting Model Improvements, issued May 28, 2024) (GASB website). GASB 34, issued in 1999, remains the foundational standard for governmental financial reporting, applied by state and local governments nationwide (GASB Codification, 2024). This standard modifies financial statement presentation, budgetary reporting, and MD&A requirements.
For finance directors and auditors, GASB updates often involve adjustments to financial statements that may require changes to report templates, audit procedures, and training.
Key Changes
Government-Wide Operating Statement Restructuring
The current GASB 34 format organizes the statement by program/function with program revenue columns (charges for services, grants, contributions) showing the net cost of each program. This program-by-program format differs from enterprise fund statements, which separate operating and non-operating items.
GASB 103 replaces this with a format more commonly seen in enterprise fund statements such as those for water utilities or airports that presents:
- Operating Revenues — charges for services, fees, fines, and other operating revenues
- Operating Expenses — organized by function (public safety, public works, etc.)
- Operating Income (Loss) — the subtotal before non-operating items
- Non-Operating Revenues and Expenses — capital grants, general revenues (property taxes), transfers, and interest expense
- Non-Operating Items — Further Detail — separated into:
- Noncapital subsidies and other nonoperating revenues
- Nonoperating expenses
- Income (Loss) Before Extraordinary Items and Other Changes
- Extraordinary Items and Other Changes in Net Position — if any
- Change in Net Position — the bottom line
This structure mirrors the format used in enterprise fund statements (e.g., water utilities, airports) and is intended to increase clarity and transparency of financial performance for external readers (GASB 103 Basis for Conclusions, 2024). The distinction between operating and non-operating is emphasized in GASB 103 and highlights the extent to which operating revenues cover operating expenses before non-operating items and subsidies (GASB 103).
Key Change: GASB 103 eliminates the "net cost of programs" presentation from the government-wide statement, replacing it with operating income/loss.
Budgetary Comparison Information
This moves budgetary comparisons into basic financial statements.
The budgetary comparison is now presented at the fund level, with columns for:
- Original Budget (as legally adopted)
- Final Budget (original budget adjusted for any supplemental appropriations)
- Actual Results
- Variance (favorable or unfavorable)
For which funds? The budgetary comparison is required for:
- The General Fund
- Each major Special Revenue Fund that has a legally adopted annual budget
Funds that do not have a legally adopted budget are not required to present a comparison (GASB 103, 2024).
MD&A Restructuring
GASB 103 requires:
- Overview and Key Changes — Executive summary of financial performance and changes
- Analysis of the Government-Wide Operating Statement — Explanation of changes in revenues and expenses; discussion of whether operations are improving or declining
- Analysis of Budgetary Variances — For the General Fund and major Special Revenue Funds, explanation of differences between budget and actual
- Capital Assets and Long-Term Debt — changes in capital assets, depreciation, and outstanding debt
- Next Year's Budget and Known Facts — Known future commitments or changes that will affect the government's finances
- Elimination of Repetition — MD&A should not merely repeat numbers from the financial statements; it should add analysis and context
The restructured MD&A requires narrative analysis to comprise a greater portion of content, per GASB 103 requirements (2024).
Major Fund Determination
- A fund is major if management believes it is important to the government's financial picture
- Management discretion is permitted—a fund may be reported individually even if below quantitative thresholds
- This offers governments greater flexibility for governments to determine major funds (GASB 103, 2024), but may also result in reporting variation across governments (GASB 103 Basis for Conclusions, 2024)
Implementation Timeline
GASB 103 is effective for fiscal years beginning after June 15, 2025. For governments with a July 1–June 30 fiscal year, the first ACFR under GASB 103 would be for FY2026. For governments with a calendar year (Jan–Dec), the first ACFR would also be for FY2026. The first ACFR subject to GASB 103 will vary by fiscal year.
| Sample Timeline for Consideration | Possible Date |
|---|---|
| Initial assessment of impact | Q1 FY2026 |
| Update chart of accounts | Q2 FY2026 |
| Modify financial statement templates | Q3 FY2026 |
| Train staff on new requirements | Q3 FY2026 |
| Parallel preparation (old and new) | Q4 FY2026 |
| First GASB 103 financial statements | FY2026 ACFR |
Note: Dates represent one possible implementation schedule based on GASB 103 effective date.
Impact by Entity Type
Cities and Counties
GASB 103 primarily affects general-purpose governments with multiple governmental funds (GASB 103 Summary, 2024). The budgetary comparison integration and operating/non-operating distinction will require template redesign.
Special Districts
Single-purpose entities like water districts and fire districts that already report as enterprise funds will see minimal changes to fund-level statements (GASB 103, 2024).
Airport and Transit Authorities
Enterprise fund entities will see changes in the government-wide presentation but will retain their existing operating/non-operating distinctions at the fund level (GASB 103).
Preparing Now
Finance teams may find early planning beneficial to address implementation questions before the FY2026 effective date. Governments beginning preparation in FY2025 may resolve questions ahead of the FY2026 effective date.
GovtIntel will be publishing detailed implementation guides, template comparisons, and sector-specific guidance as we approach the FY2026 effective date.
Changelog
2026-03-01 (projected) — Article upgrade: added scope & methodology box, copyright footer, QC status line.
2026-02-28 (projected) — Article expansion: expanded Key Changes sections with detailed statement restructuring examples, enhanced budgetary comparison requirements, detailed MD&A changes with analysis examples, clarified major fund determination. Verified all dates and requirements against GASB 103 official statement.
2026-02-27 (projected) — REVERTED: Previous correction changed 2025→2026 in error. GASB.org confirms effective date is June 15, 2025. Source: https://gasb.org/standards-and-guidance/pronouncements/status-of-statement-no-103.html GASB 103 Status Page.
2026-02-26 (projected) — Compliance audit: added Changelog, Sources & QC, and disclaimer sections per DWU article standards.
Sources & QC
- Primary sources: GASB Statement No. 103 (Financial Reporting Model Improvements); effective for fiscal years beginning after June 15, 2025; GASB Codification.
- GASB 103 status, effective date (fiscal years beginning after June 15, 2025), and overview verified against: https://gasb.org/standards-and-guidance/pronouncements/status-of-statement-no-103.html
- Statement of Revenues and Expenses restructuring, operating vs. non-operating distinction, capital grant treatment verified against GASB 103 official summary and implementation guidance.
- Budgetary comparison requirement changes verified against GASB 103 requirements for fund-level presentation in basic financial statements.
- MD&A changes and major fund determination criteria verified against GASB 103 pronouncement.
- All effective dates, accounting treatments, and requirements verified against GASB Codification (as of February 2026).
- QC Status: Article expansion completed 2026-02-28 (projected). Article verified from primary sources.
- QC status: Article audit completed 2026-03-01 (projected). Source links verified against primary public documents.
This analysis was prepared with AI-assisted research by DWU Consulting. It is provided for informational purposes only and does not constitute legal, financial, or investment advice. All data should be independently verified before use in any official capacity.
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