At the 2026 Government Finance Officers Association (GFOA) Annual Conference, one of the most practical sessions for finance officers and financial reporting professionals was “I Want You to Have It All: Avoiding Common Deficiencies in Financial Reporting,” presented by Forvis Mazars.1 The session, which featured insights from Forvis Mazars, focused on recurring issues identified through the GFOA Certificate of Achievement for Excellence in Financial Reporting Program (COA) review process and provided valuable reminders for governments striving to help enhance transparency, improve financial statement quality, and maintain eligibility for excellence awards.
The following summarizes key areas where governments frequently encounter reporting deficiencies and practical considerations for avoiding them.
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Budgetary Comparison Schedules: Remember the Purpose of Fiscal Accountability
Budgetary comparison schedules continue to be a common area of deficiency despite their importance in demonstrating fiscal accountability. Governments should remember that with the implementation of GASB Statement No. 103, Financial Reporting Model Improvements (GASB 103), budgetary comparison schedules are presented as Required Supplementary Information (RSI) and are limited to the General Fund and major Special Revenue Funds.
Nonmajor special revenue funds, debt service funds, capital projects funds, permanent funds, and proprietary funds are not included in RSI budgetary comparisons, although governments may choose to present budget information for these funds as Other Supplementary Information (OSI). In addition, standalone business-type activities that issue their own financial statements are not required to include any budgetary comparison schedules.
Another frequent issue involves the level at which budgetary comparisons are presented. Schedules must be prepared at the government’s legal level of budgetary control, the level at which management cannot exceed appropriations without approval from the governing body. Governments should ensure this level is consistently communicated in the letter of transmittal, notes to budgetary RSI, and the GFOA COA application.
Consistency across these sections can help avoid unnecessary reviewer comments.
Long-Term Liabilities: Ensure Consistency Across the Annual Report
GFOA reviewers frequently identify inconsistencies between the Managements Discussion and Analysis (MD&A), the Statement of Net Position, and debt-related note disclosures.
One common issue occurs when governments exclude portions of long-term debt due within one year from discussions of outstanding long-term liabilities. Amounts due within one year remain part of total long-term obligations and should be included when discussing total debt outstanding.
Governments should also carefully evaluate pension and other postemployment benefits (OPEB) liabilities. For plans that are not administered through a trust, if inactive plan members are currently receiving benefits or benefit payments have begun, amounts due within one year may need to be separately disclosed.
For governmental funds, debt issuance and refunding transactions should be clearly connected between the fund financial statements and note disclosures. When applicable, governments should appropriately describe transactions such as:
- Refunding bonds issued
- Premiums on refunding bonds issued
- Payments to refunded bond escrow agents
Finally, governments should pay close attention to debt capacity schedules presented in the statistical section. GFOA expects “debt” to encompass all debt instruments, including:
- Bonds
- Notes
- Direct borrowings and loans
- Leases
- Subscription-Based Information Technology Arrangements (SBITAs)
Debt should generally be reported net of premiums, discounts, and other related adjustments and organized by major debt category. Pension or OPEB liabilities should not be included in the debt capacity schedule.
Net Position Classifications Continue to Generate Deficiencies
Net position presentation remains one of the most frequently cited reporting issues. On the government-wide Statement of Net Position, governments should report significant categories of restricted net position separately rather than presenting a single aggregated restricted balance. Examples may include restrictions for:
- Debt service
- Housing programs
- Public safety
- Capital projects
- Other specific purposes
Smaller balances may be combined into an “other purposes” category; however, governments should assess materiality carefully. If a category becomes significant, then separate presentation is generally appropriate.
Importantly, while detailed restricted fund balance classifications may be disclosed in the notes for governmental funds, the same approach is not acceptable for government-wide net position reporting. Significant restrictions must appear directly on the face of the Statement of Net Position.
In addition, the session highlighted Net Investment in Capital Assets (NICA) as one of the leading reasons that governments are denied a Certificate of Achievement.
According to session presenters, NICA calculations remain one of the most common reasons that governments fail to achieve the Certificate of Achievement.
Common NICA issues include:
- Incorrect treatment of unspent bond proceeds
- Excluding liabilities directly related to capital assets
- Omitting deferred inflows or deferred outflows associated with refunding
- Excluding accounts payable associated with capital asset acquisition or construction
A particularly important reminder is that unspent bond proceeds are treated differently at the governmental fund level versus government-wide statements. While they may be reported as restricted fund balances at the governmental fund level, they should be reported against the related long-term debt balance at the government-wide level. If the unspent bond proceeds are from capital-related debt, the unspent bond proceeds and related long-term debt balance would generally be included in net investment in capital assets. Otherwise, they would be a part of restricted or unrestricted net position.
The GFOA provides a NICA calculation template that governments may find useful when preparing their annual reports.
Capital Asset Disclosures: Focus on Completeness
With the adoption of GASB Statement No. 104, Disclosure of Certain Capital Assets, (GASB 104) governments should carefully review whether all required disclosures have been included. GASB 104 now requires governments to include lease and subscription assets in the same note disclosure as other capital assets.
Reviewers frequently note omissions involving:
- Lease assets by major class of underlying asset
- Subscription assets
- Estimated useful lives used for each major class of depreciable capital asset
- Estimated useful lives for lease assets by major class
- Estimated useful lives for SBITA assets
Providing complete capital asset disclosures not only improves transparency, but also helps demonstrate compliance with GASB’s increasingly detailed reporting requirements.
Proprietary Fund Reporting: Understanding the Impact of GASB 103
Proprietary fund financial statements, particularly the Statement of Cash Flows, remain a significant source of classification errors.
One key reminder from the session was that the default classification on the Statement of Cash Flows is operating activity unless a transaction meets the definition of a noncapital financing, capital and related financing, or investing activity.
Similarly, under GASB 103, the default classification on the Statement of Revenues, Expenses, and Changes in Fund Net Position is operating. Governments should carefully evaluate transactions before classifying them as nonoperating, as GASB 103 clearly defines what can be considered as nonoperating revenues and expenses.
Although GASB 103 does not change the major fund determination framework itself, it may affect the calculations used in applying the major fund tests. Under GASB 103, transfers in and transfers out are reported as nonoperating revenues or expenses in proprietary funds and now affect the major funds determination. Because these amounts become part of the proprietary fund revenue and expense totals used in major fund calculations, governments may experience changes in what funds are considered major.
If implementation of GASB 103 results in a change in major fund presentation, governments should also evaluate the requirements of GASB Statement No. 100, Accounting Changes and Error Corrections, to determine what related disclosures are necessary.
Final Thoughts
The session reinforced a recurring theme for both financial statement preparers and reviewers: many reporting deficiencies arise from inconsistencies, incomplete disclosures, or a lack of alignment across various sections of the Annual Comprehensive Financial Report (ACFR).
As governments continue implementing GASB 103 and 104, now is an ideal time to revisit reporting templates, major fund determination tools, NICA calculations, and disclosure checklists. Addressing these common issues proactively can help improve financial reporting quality, reduce review comments, and enhance the likelihood of achieving or maintaining GFOA’s Certificate of Achievement for Excellence in Financial Reporting.
For governments relying on spreadsheets or disconnected documents, maintaining consistency across the ACFR can be challenging. Financial report preparation software, like The Reporting Solution from Forvis Mazars, can help centralize financial data, narrative content, and collaboration to reduce mismatches and support a more aligned, review-ready report.
If you have any questions or need assistance, please reach out to a professional at Forvis Mazars. For additional resources, please explore our Government Outsourced Accounting Services and refer to the following FORsights on our website:
- GASB 103 Implementation & Financial Reporting Insights
- Streamlining GASB 103 with the Reporting Solution
- GASB 103 Implementation Checklist
- 1“I Want You to Have It All: Avoiding Common Deficiencies in Financial Reporting,” gfoa.org, July 2026.