Which change did GASB 34 introduce regarding financial statements?

• A. A shift to cash basis reporting.
• B. Government-wide accrual-based financial statements and reconciliation with fund financials.
• C. Elimination of all fund financial statements.
• D. A requirement to prepare only budgetary comparison schedules.

Answer: (B)

GASB 34 centers on providing a broader, more transparent view of a government’s finances by requiring government-wide statements that use accrual accounting and by tying those to the traditional fund statements. The government-wide financial statements present the overall financial position and changes in the government as a whole, using accrual basis—so they recognize long-term assets and liabilities, such as capital assets and debt. Because fund financial statements under the older approach use a different basis (often modified accrual) and focus on individual funds, GASB 34 also requires a reconciliation to connect the fund numbers with the government-wide numbers. This link helps readers see how the activities in the funds affect the overall financial position and performance of the government.

So the best answer reflects the move to government-wide accrual-based financial statements and the reconciliation with fund financials, which is exactly what GASB 34 introduced. The other options aren’t correct because cash basis reporting isn’t adopted for the government-wide statements, fund statements aren’t eliminated, and the requirement isn’t to prepare only budgetary comparison schedules.