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Business and Policy Areas
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GASB Issues Concept Defining Elements of Financial Statements

June 26, 2007

The Governmental Accounting Standards Board (GASB) has issued Concepts Statement No. 4, Elements of Financial Statements, defining the basic elements of state and local government financial statements. The GASB’s Concepts Statements are intended to provide a foundation to guide the Board’s development of accounting and financial reporting standards.

In the new Concepts Statement No. 4, the notion of a resource is central to all element definitions.  The GASB characterizes a resource as an item with a present capacity to provide service. Accordingly, the following elements defined in the concept statement are anchored in the GASB’s delineation of a resource:

  • Assets - resources with present service capacity that the government presently controls
  • Liabilities - present obligations to sacrifice resources that the government has little or no discretion to avoid
  • A Deferred Outflow of Resources - a consumption of net assets by the government that is applicable to a future reporting period
  • A Deferred Inflow of Resources - an acquisition of net assets by the government that is applicable to a future reporting period
  • Net Position - the residual of all other elements presented in a statement of financial position.

The Concepts Statement also defines elements of resource flows statements as:

  • Outflow of Resources - a consumption of net assets by the government that is applicable to the reporting period
  • Inflow of Resources - an acquisition of net assets by the government that is applicable to the reporting period.

Concepts Statement 4 can be ordered through the GASB’s website. The NACUBO staff resource is Sue Menditto, director, accounting policy.