18.1 Required Supplementary Information (RSI Other than MD&A)

4. Required Supplementary Information (RSI Other than MD&A)

Following the notes to the financial statements, governments must present mandated RSI schedules:

A. Budgetary Comparison Schedules

Mandated for the General Fund and for each major special revenue fund that has a legally adopted annual budget. Governments may report these as basic financial statements or as RSI (most ACFRs report them in RSI). The schedule must present four distinct data columns:

1. The Original Budget (the officially adopted budget prior to amendments);
2. The Final Amended Budget (incorporating all legally approved transfers and supplemental appropriations);
3. Actual Inflows and Outflows on the Budgetary Basis; and
4. A Variance Column (optional under GAAP, but standard practice) comparing final budget to actual results.

Crucial GAAP Rule: The schedule must include note disclosures explaining the budgetary basis of accounting (which often differs from GAAP, e.g., cash basis or encumbrance basis) and providing an explicit mathematical reconciliation between the budgetary basis excess/deficiency and the GAAP-basis net change in fund balance.

B. 10-Year Pension and OPEB Schedules (GASB 68 & 75)

Governments participating in defined benefit pension and OPEB plans must present 10-year historical trend schedules:

• Schedule of changes in the net pension/OPEB liability and related ratios;
• Schedule of government employer contributions (comparing actuarially determined contributions to actual contributions made); and
• Schedule of investment returns (money-weighted rate of return for trust funds).

C. Modified Approach Infrastructure Condition Schedules (GASB 34)

If a government chooses not to depreciate eligible infrastructure assets (e.g., roads and bridges) under the modified approach, it must report:

• The physical condition assessment results from the three most recent condition assessments; and
• A comparison of estimated maintenance/preservation costs versus actual amounts spent for the past five fiscal years.

5. Combining and Individual Fund Financial Statements and Schedules

This section represents Supplementary Information (SI). It provides granular accounting data for nonmajor funds and complex operational areas:

• Combining Balance Sheet and Combining Statement of Revenues, Expenditures, and Changes in Fund Balances for nonmajor governmental funds;
• Combining statements for nonmajor enterprise funds;
• Combining statements for internal service funds;
• Combining statements for fiduciary funds (pension, investment, private-purpose trusts, custodial funds); and
• Combining statements for nonmajor discretely presented component units (if not detailed in basic statements or notes).

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Section III: The Statistical Section (GASB Statement No. 44)

The statistical section provides multi-year historical trend data, economic indicators, and demographic profiles to assist users in assessing the government's fiscal health, revenue sustainability, and borrowing capacity. Under GASB Statement No. 44, Economic Condition Reporting: The Statistical Section, information is presented for the past 10 consecutive years across five mandated categories:

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Popular Annual Financial Reports (PAFR) and Citizen-Centric Reporting

Recognizing that the ACFR can exceed several hundred pages of complex technical accounting schedules, many state and local governments publish condensed reports tailored to citizens, taxpayers, and civic organizations.

Popular Annual Financial Reports (PAFR)

A PAFR is a concise, visually engaging summary of governmental financial performance. It extracts high-level data from the ACFR, utilizing graphical charts, plain-language prose, and infographics.

• Non-GAAP Nature: PAFR documents are explicitly non-GAAP. They do not present complete fund statements or the full dual-perspective reconciliations.
• GFOA PAFR Award Program: The GFOA administers the Award for Outstanding Achievement in Popular Annual Financial Reporting, evaluating reports on readability, visual appeal, accessibility, and consistency with the underlying ACFR.

AGA Citizen-Centric Reporting (CCR)

The Association of Government Accountants (AGA) created the Citizen-Centric Reporting (CCR) initiative to foster civic transparency. A standard CCR adheres to a strict four-page standardized format:

• Page 1: Strategic Vision & Community Profile: Demographic snapshot, primary leadership, strategic priorities, and geographic overview.
• Page 2: Operational & Mission Performance: Detailed service accomplishments, core public safety or education metrics, and program progress.
• Page 3: Financial Summary: High-level revenues and expenditures, cost of services per resident, and clear explanations of revenue sources.
• Page 4: Economic Outlook & Future Challenges: Discussion of pending economic threats, infrastructure needs, unfunded liabilities, and citizen feedback channels.

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Practical Public Finance Scenario: ACFR Assembly and Review

To illustrate the audit and reporting dynamics of the ACFR, consider the following county audit scenario:

Scenario: Highland County is finalizing its ACFR for the fiscal year ended December 31, 2025. The finance director drafts the Introductory Section, including a transmittal letter discussing a planned $150 million bond referendum for regional park acquisition in November 2026. In the Financial Section, the county reports a legally adopted annual budget for its General Fund and its Road & Bridge Special Revenue Fund. The external CPA firm completes field audit procedures on the basic financial statements, issuing an unmodified audit opinion. During review, a junior auditor notes that the statistical section includes population and top-employer data sourced from county chamber of commerce estimates rather than audited records, and questions whether the audit opinion extends to the budgetary comparison schedules presented in RSI.

Professional Financial Analysis

1. Audit Scope on Budgetary Comparison: Under GASB standards, budgetary comparison schedules for the General Fund and major special revenue funds with legally adopted annual budgets are classified as Required Supplementary Information (RSI) when presented outside the basic financial statements. The independent auditor applies limited testing procedures (inquiries of management, verifying mathematical accuracy, and checking consistency with adopted budget ordinances), but the audit opinion does not cover RSI. The auditor's report includes an explanatory paragraph delineating that RSI is not part of the basic financial statements.
2. Inclusion of Future Initiatives in Transmittal Letter: The finance director's discussion of the November 2026 park bond referendum is completely appropriate in the Letter of Transmittal (Introductory Section), which is designed for broad policy discussions, economic outlooks, and executive priorities. Conversely, if management attempted to include this speculative future bond initiative in the MD&A, it would violate GASB Statement No. 34 rules restricting MD&A strictly to currently known facts, enacted decisions, or existing conditions.
3. Unaudited Statistical Data Integrity: Under GASB Statement No. 44, the Statistical Section is explicitly unaudited. Sourcing demographic and economic indicators (such as population, per capita income, and principal employers) from reputable secondary sources like chambers of commerce, the U.S. Census Bureau, or state labor departments is standard and fully compliant with GAAP. The auditor verifies only that the statistical data does not directly contradict information in the audited basic financial statements.