Financial statement concepts provide a resource concerning financial reporting standards.
According the the National Association of Colleges and University Business Officers, the Government Accounting Standards Board (GASB) has issued a concepts statement to define basic elements of state and local government financial reporting standards. This document provides a resource as a general overview of accounting definitions, concepts and ideas. The GASB statement assists preparers, auditors and users in better understanding financial reporting standards when evaluating transactions. GASB created the Concepts Statements No 4, Elements of Financial Statements to define the seven reporting elements: assets, liabilities, deferred outflow of resources, deferred inflow of resources, net position, inflow of resources and outflow of resources.
Assets and Liabilities
The elements of the statement consist of assets and liabilities. Presently controlled government assets are resources with present service capacity. Liabilities consist of the present obligations that the government has little or no discretion to avoid concerning sacrifice resources.
Deferred Resources
Applicable to the future reporting period, the government has deferred outflow of resources and a deferred inflow of resources. These concern the net assets by the government. A deferred outflow of resources deals with the consumption of net assets and a deferred inflow of resources deals with the acquisition of net assets.
Resource Flow Statements
Applicable to the reporting period, the Concepts Statement also defines assets of resource flow statements. Similar to deferred resources, the outflow of resources involves the consumption of net assets, and the inflow of resources deals with the acquisition of net assets.
Net Position
The Concepts Statement by the Government Accounting Standards Board further defines the fundamental concepts of financial statements by another element called net position. Net position presented in the statement of a financial position involves the residual of all other elements as stated by the Government Accounting Standards Board.
Improved Reporting
With the concepts defined as elements on the statement, the reports will have enhanced reporting standards to benefit consistency in future standard reporting. This allows for better presentation of inter-period equity along with understanding the definitions that identify the items and events reported as specific elements of financial statements, according to the Government Accounting Standards Board.
Tags: inflow resources, outflow resources, Accounting Standards, Accounting Standards Board, Government Accounting, Government Accounting Standards