GASB 9, 34 and 35
GASB 9 establishes standards for reporting cash flows for governmental entities that use proprietary fund types, as well as governmental entities that use proprietary accounting.
Considering the differences between the public and private sectors and the existence of unique transactions in the governmental environment (such as contributed capital), GASB agreed on a four-category format.
The four categories are:
- Cash flows from Operating Activities
- Cash flows from Noncapital Financing Activities
- Cash flows from Capital and Related Financing Activities
- Cash flows from Investing Activities
The definitions of the four categories are different from the three categories of FASB 95, which creates fundamental differences between GASB 9 and FASB 95. However, in most respects, they are similar. Both statements rely on a uniform definition of cash equivalents, and both stress the importance of gross cash flow information.
In June 1999, GASB issued Statement No. 34, Basic Financial Statements – and Management's Discussion and Analysis – for State and Local Governments. This statement fundamentally changes the manner in which governments present financial information.
In November 1999, GASB went further and incorporated the new reporting model above for public colleges and institutions by issuing Statement No. 35, Basic Financial Statements – and Management's Discussion and Analysis – for Public Colleges and Universities. Since fiscal year 2002, higher education institutions report financial information using the same reporting model as agencies.
GASB 34 and 35 only require that proprietary funds follow the provisions of GASB 9, except in the few instances where GASB 34 and 35 amend GASB 9. Therefore, the statement of cash flows will stay virtually the same as the result of GASB 34 and 35 with only a few exceptions:
- Use of the direct method
- More funds are classified as proprietary and disclosed in the statement of cash flow