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On June 30 1999 the GASB passed statement number 34 Statement 34 establishes new accounting requirements for state and local governments that are scheduled to begin on June 15 2002 There are three phases scheduled for the implementation of statement 34 each depending on the size of the government The largest governments must meet the requirement first while the smaller governments have more time to comply with the statement Statement 34 will improve the governmental accounting system in many ways First statement 34 will create easier to understand financial statements This will allow people other than accountants to understand the information within a government financial statement Secondly statement 34 will help city officials keep track of fixed assets that need to be replaced or improved This addition is important because city officials often forget that assets have been in use for too long resulting in costly improvements that could be avoided Furthermore statement 34 will allow readers to determine whether the government has improved since the last fiscal year These goals will be accomplished in several ways First a management discussion and analysis MDA statement will be required Within this statement managers will discuss the financial achievements of the governmental entity during the fiscal year In this discussion managers will compare the current and previous years-financial statements and inform the reader if there has been an improvement or deterioration financially The managers preparing the MDA must also explain any significant fluctuation within any major accounts as well as any future event expected to have a major impact upon the said government Another notable change made by statement 34 is the adoption of the full accrual method This will greatly change the bottom line of many governmental entities Under this system governments will report all revenues earned in a given period This change will give financial statement readers a better idea of the actual financial position of the government because all
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