Reporting of Governmental Activities: Two Levels of Basic Financial Statements

Since the accounting and reporting standards for state and local governments need to meet the financial information needs of many diverse groups (citizen groups, legislative and oversight officials, and investors and creditors), we have two levels of basic financial statements to meet the different reporting objectives. 

Fund-Basis Financial Statement

The first type is the fund-basis financial statement. Fund-basis statements are presented for three categories of activities: governmental, proprietary (bussiness-type), and fiduciary (proprietary and fiduciary are discussed later). Because the fund-basis statements present an in-depth record of individual activities of the government, these statements make it challenging for the user to pull the disaggregated information together and form an overall view of the government’s finances.

Government-Wide Financial Statement

The second type is the government-wide financial statement, which governments are also required to provide. Government-wide financial statements combine the governmental and business-type activities of the government for the purpose of presenting an overall picture of the financial position and the results of operations.