MD&A requirements are general rather than specific.
Financial managers are encouraged to disclose the most relevant information
and to avoid "standard" statements. Avoid repeating information
presented in the letter of transmittal.
At a minimum, GASB No. 34 requires the following information
as adapted from the GASB No. 34 Implementation Guide and amended by GASB
Statement No. 37. Note the information presented within the MD&A should
be confined to the topics presented by GASB and discussed in A through
H below. Information that does not address the required topics should
not be included in MD&A, but may be provided elsewhere in the CAFR.
At a minimum, MD&A should include:
A) A brief discussion of the basic financial statements,
including their individual purpose. The discussion should assist the
reader in understanding the nuances of each of the statement formats.
Provide the reader with a discussion on the basic financial statements
presented, their relationship to one another, and the significant differences
in the information they provide.
B) Condensed financial information derived from district-wide
financial statements comparing the current year to the prior year. Charts
and graphs may be used to supplement information presented in the MD&A
but should not be used in place of condensed financial statements. At
a minimum, districts should present the information needed to support
their analyses of financial position and results of operations to include
1) Total assets, including a distinction between
capital and other assets.
2) Total liabilities, including a distinction between
long-term liabilities and other liabilities.
3) Total net assets, distinguished among amounts
invested in capital assets, net of related debt; restricted amounts;
and unrestricted amounts.
4) Program revenues, by major source.
5) General revenues, by major source.
6) Total revenues.
7) Program expenses, by function.
8) Total expenses.
9) Excess (deficiency) before contributions to term
and permanent endowments or permanent fund principal, special and
extraordinary items, and transfers.
11) Special and extraordinary items.
13) Change in net assets.
14) Ending net assets.
C) An analysis of the districts overall financial
position, including the impact of the current years results and
a comparison of those results with the prior year. Go beyond the reporting
of figures to include a discussion of the reasons for the significant
changes. Address governmental and business-type activities separately
in order to best inform the reader. First year implementing districts
may consider the following provision of GASB 34 paragraph 145:
"In the first period that this Statement is
applied, governments are not required to restate prior periods for
purposes of providing the comparative data for MD&A as required
in paragraph 11. However, governments are encouraged to provide comparative
analyses of key elements of total governmental funds, and total enterprise
funds in MD&A for that period. Also in the first year of implementation,
MD&A should include a statement that, in future years, when prior-year
information is available, a comparative analysis of government-wide
data will be presented."
D) An analysis of balances and transactions of individual
funds. The analysis should include the reasons for material changes
in fund balances or fund net assets and whether restrictions, commitments,
or other limitations significantly affect the availability of fund resources
for future use.
E) An analysis of significant variations between original
and final budget amounts and between final budget amounts and actual
results for the general fund.
F) A description of significant capital asset and long-term
debt activity during the year, including a discussion of commitments
made for capital expenditures, changes in credit ratings, and debt limitations
that may affect the financing of planned facilities or services.
G) A discussion by governments that use the modified
approach to report some or all of their infrastructure assets.
H) A description of currently known facts, decisions,
or conditions that are expected to have a material effect on financial
position (net assets) or results of operations (revenues, expenses,
and other changes in net assets). The discussion should include only
events or decisions that have occurred, been enacted, adopted, agreed
upon, or contracted as of the date of the auditors report. Reference
should be made to the expected effect on both governmental and business