Overview
GASB Statement No. 103, Financial Reporting Model Improvements, represents the most significant revision to governmental financial reporting since GASB 34 was issued in 1999. Effective for fiscal years beginning after June 15, 2025, this standard touches nearly every aspect of how state and local governments present their financial information.
For finance directors and auditors, GASB 103 is not a minor update — it is a fundamental restructuring of the financial statements that will require changes to accounting systems, report templates, audit procedures, and training.
Key Changes
Government-Wide Operating Statement
The current Statement of Activities — with its program revenue columns and net expense format — is replaced by a redesigned operating statement. The new format presents revenues and expenses in a more conventional structure that is easier for non-accountants to understand.
Notably, the operating statement will distinguish between operating and non-operating revenues and expenses, a concept familiar to enterprise fund accounting but new to government-wide reporting.
Budgetary Comparison Information
GASB 103 moves budgetary comparison schedules from Required Supplementary Information (RSI) to the basic financial statements. This is a significant upgrade in prominence and auditability.
The budgetary comparison will now be presented at the fund level rather than as a separate schedule, making it easier for readers to compare actual results against the adopted budget.
MD&A Restructuring
Management's Discussion and Analysis undergoes substantial revision. The new requirements aim to make MD&A more analytical and less boilerplate, with specific requirements for:
- Analysis of significant changes in fund balances
- Discussion of budgetary variances
- Known facts and conditions that may affect future periods
- Reduced repetition of financial statement data
Major Fund Determination
The criteria for identifying major funds are revised. The changes affect which funds are individually reported in the financial statements versus aggregated in an "other" column.
Implementation Timeline
| Milestone | Recommended 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 |
Impact by Entity Type
Cities and Counties
The greatest impact will be on general-purpose governments with multiple governmental funds. The budgetary comparison integration and operating/non-operating distinction will require significant template redesign.
Special Districts
Single-purpose entities like water districts and fire districts may see relatively less change, particularly if they already report as enterprise funds.
Airport and Transit Authorities
Enterprise fund entities will see changes in the government-wide presentation but may experience less disruption at the fund level, where the operating/non-operating distinction is already established.
Preparing Now
Finance teams should begin GASB 103 planning now. Early movers will have the advantage of working through implementation questions before the standard becomes effective, rather than scrambling during busy season.
GovtIntel will be publishing detailed implementation guides, template comparisons, and sector-specific guidance as we approach the FY2026 effective date.