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GASB 103: Overview and MD&A reimagined | Baker Tilly

U.S. Capitol Building at sunset | GASB 103

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GASB 103: Overview and MD&A reimagined

Oct. 10, 2025 · Authored by Jodi Dobson

The Governmental Accounting Standards Board (GASB) issued statement no. 103, financial reporting model improvements in April 2024. At the time, the biggest news was what was not included in the standard.

In 2015 when GASB first started the project—15 years after the issuance of GASB statement no. 34 introduced the current reporting model—the project’s scope included topics such as measurement focus for governmental funds, presentation formats and terminology, and the concept of a statement of cash flows for governmental funds.

GASB devoted nine years to the research and work on this project. They received more than 500 written comments throughout the due process period and conducted 20 public hearings and user forums. The overwhelming participation by preparers, auditors and users of governmental financial statements influenced the final standard and its focus on these improvements:

Refined focus of the management’s discussion and analysis (MD&A) section including an emphasis on the analysis
Simplification of reporting by replacing extraordinary and special items with unusual and infrequent items
Revisions to the proprietary fund presentation with the statement of revenues, expenses and changes in fund net position
Disaggregation within the major component unit presentation
Enhanced consistency within budgetary comparison presentation

GASB 103 is effective for periods beginning after June 15, 2025, or for June 30, 2026, financial statements and after. Any changes resulting from implementation should be presented and disclosed following the guidance in GASB statement no. 100 and restatement of prior periods in comparative financial statements would be required.

Understanding the changes to MD&A

During the research portion of the project, GASB received feedback from various stakeholders related to desired improvements to the MD&A within the financial statements. The basis for conclusions within the standard provides a summary of the feedback noting four primary goals to be addressed:

Jodi Dobson

Jodi Dobson

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GASB 103 also outlines five areas that are required to be covered within the MD&A. The standard states “Information that does not relate to the required topics should not be included in MD&A but may be provided elsewhere, such as in the letter of transmittal or in other forms of supplementary information.”

Overview of the financial statements, including the relationships between the various statements and the differences in the information provided in each.
Summary financial statement information from the government-wide statements including both governmental and business type activities. Paragraph 8.b. provides a list of the minimum level of detail required, as applicable. These categories are not significantly different from historical guidance but have been updated for other terminology changes within this statement and other recent standards.
Detailed analysis of the financial information, noting here:

This should address the governmental and business type activities as well as each major fund
The discussion should focus on the reasons for the change, not just the amount or percentage
References to reasons previously discussed or the discussion of capital assets and debt activity required below are recommended to avoid duplication of information within the MD&A
Elimination of discussion in MD&A of budget to actual variations as that will now be part of the footnotes to required supplemental information

4. Discussion of significant capital assets and long-term debt activities including:

Additions, disposals, changes to commitments and policy changes or economic factors related to capital assets (including intangible assets such as right to use assets under GASB statements no. 87, no. 94 or no. 96)
Current year activities related to debt, leases, public-private and public-public partnerships (PPPs), subscription-based information technology arrangements (SBITAs), as well as changes in credit ratings, debt limits, policies or economic factors related to long-term debt activities
Management can leverage the information presented in the footnotes to the financial statements and reference that here rather than duplicating it within the MD&A

Currently known facts, decisions or conditions which are anticipated to result in revenues, expenses, net position or other balances that are significantly different from the current year’s balances. Paragraph 8.e. of GASB 103 provides examples of such factors, but it is not a comprehensive list, and the intended focus is on information that could result in a significant difference from the current period balances or activities.

Reviewing the existing MD&A of your organization to identify areas for enhancement or where changes will be needed now allows for a smoother transition, advanced preparation and planning, and if you present comparative financial statements efficient retroactive application in the year of implementation.