GASB Statement No. 103 (GASB 103), Financial Reporting Model Improvements, refines the financial reporting model established by GASB 34, Basic Financial Statements—and Management’s Discussion and Analysis—for State and Local Governments, tightening expectations around clarity, consistency, and analysis across the financial report.
While GASB 103 is not a complete overhaul, it introduces changes that require careful attention from government leaders responsible for financial oversight and reporting. The standard is effective for fiscal years beginning after June 15, 2025, meaning most governments will likely begin GASB 103 implementation in fiscal year 2026.
What Changes in Management’s Discussion & Analysis (MD&A)?
GASB 103 provides a more structured framework for MD&A, placing greater emphasis on explaining why financial changes occurred rather than simply stating what changed. Preparers are expected to connect their analysis with significant transactions, events, and fiscal policies.
Key updates include the elimination of aggregate nonmajor fund analysis, a sharper focus on significant changes within each major fund, and expanded guidance on “currently known facts, decisions, or conditions.” Notably, the standard defines “currently known” as information management is aware of at the financial statement issuance date, not just at fiscal year-end. General fund and major special revenue funds budgetary comparison analysis also moves from MD&A to the notes to required supplementary information (RSI), keeping MD&A focused on information within the basic financial statements.
How Do Proprietary Fund Requirements Change?
Among the more consequential changes under GASB 103 are those affecting proprietary fund reporting. GASB 103 replaces the prior flexibility that allowed management to set its own operating and nonoperating policies with defined presentation categories and new subtotals on the statement of revenues, expenses, and changes in fund net position.
Central to this change is a new, formal definition of subsidies. Under GASB 103, subsidies are resources received (or provided) where the proprietary fund does not exchange goods or services in return, and that directly or indirectly affect future fees and charges. Subsidies are classified as either noncapital or capital, and that classification is driven by provider restrictions, not by how funds are ultimately used or by historical labels.
Revenue streams such as payments in lieu of taxes (PILOTs), interfund transfers, state appropriations, and certain grant revenues may require reevaluation. Notably, subsidy classification will be facts-and-circumstances based, and it is important to consider that one entity’s conclusion may differ from another’s depending on the substance and structure of its transactions.
GASB has issued an exposure draft focused on subsidies, signaling that guidance in this area continues to develop. The final implementation guide containing this guidance is expected from GASB later this year. Governments should document their evaluation and conclusions for each revenue stream.
An additional aspect is that proprietary fund transfers, now reported as nonoperating revenues and expenses, will factor into the calculation for major fund determinations for proprietary funds. This is a change from prior practice. Governmental fund transfers continue to be excluded from major fund calculations.
What Additional Presentation Changes Does GASB 103 Introduce?
GASB 103 introduces several cross-cutting presentation changes designed to help improve transparency and comparability, including:
- Replacing extraordinary and special items with unusual or infrequent items, separately displayed and disclosed
- Requiring major component units to be presented separately in government-wide statements when readability allows
- Mandating that general fund and major special revenue funds budgetary comparison information be presented exclusively as RSI, with two variance columns (original‑to‑final and final‑to‑actual)
- Aligning statistical section revenue classifications with the new operating and subsidy distinctions where applicable
While each of these updates may seem incremental, together they require coordination across statements, notes, RSI, and statistical sections.
Supporting GASB 103 Implementation With The Reporting Solution
As governments work through GASB 103’s presentation and disclosure changes, many are evaluating whether their existing reporting processes can scale efficiently. The Reporting Solution (TRS) from Forvis Mazars can support implementation by:
- Incorporating GASB 103 presentation requirements—such as new proprietary fund subtotals and subsidy classifications—directly into the reporting framework
- Centralizing financial data, adjustments, and narratives so changes flow consistently throughout the Annual Comprehensive Financial Report (ACFR)
- Reducing reliance on manual spreadsheet rework and version‑control risks
- Enabling collaboration through multiuser access, workflow tools, and built‑in verification
While GASB 103 raises expectations for financial reporting clarity, ACFR preparation software like TRS can help governments adapt to those expectations without rebuilding reports from scratch, so teams can focus more on analysis and less on mechanics.
How Forvis Mazars Can Help
Changing standards like GASB 103 call for more than technical compliance. They require sound professional judgment and reporting processes that support consistency and clarity. Public sector entities face growing expectations for transparency while navigating limited resources and compressed timelines. Our public sector team has deep industry insight and practical experience to help governments apply new guidance, enhance ACFR quality, and prepare for what’s next.
Watch our webinar recording, Navigating GASB 103: Implementation & Best Practices, and download our Public Sector Priorities for additional insights on embracing change and preparing for the future.
Interested in seeing how TRS can support your ACFR preparation? Request a demo or connect with a professional at Forvis Mazars to learn more.