What Is a Budgetary Comparison Schedule?
Understand how governments use a budgetary comparison schedule to demonstrate legal compliance and financial accountability by comparing planned to actual results.
A budgetary comparison schedule is a financial document used by government entities to show how their actual financial results compare to the budgeted amounts. Its main purpose is to provide transparency and demonstrate accountability to the public, oversight bodies, and other stakeholders. By presenting a side-by-side comparison of planned versus actual revenues and expenditures, the schedule shows whether the government entity has adhered to its legally adopted budget. This comparison is a part of governmental financial reporting, offering a view of the entity’s financial stewardship.
Required Presentation of the Schedule
The Governmental Accounting Standards Board (GASB) provides the standards for financial reporting for state and local governments. A budgetary comparison schedule is required for the general fund and for each major special revenue fund that has a legally adopted annual budget. This means any government unit, such as a city or school district, that formalizes its annual budget into law must prepare this schedule.
This schedule is presented as Required Supplementary Information (RSI) within the government’s annual comprehensive financial report. Information presented as RSI is subject to a lower level of auditor scrutiny than the basic financial statements. While auditors do perform certain procedures on RSI, it does not receive the same level of assurance as a full audit opinion.
Previously, under GASB Statement No. 34, governments could present the budgetary comparison as a basic financial statement. However, GASB Statement No. 103 eliminated this option, and the schedule must now be presented as RSI. This change standardizes the presentation for users of financial statements.
Information Required for the Schedule
The schedule requires columns that detail the budget at two different points in time, as well as the actual results for the fiscal year. The first required component is the original budget. This represents the first complete appropriated budget that was adopted by the governing body for the fiscal year. It is the initial financial plan and serves as a baseline for the government’s intentions.
Next, the schedule must include the final appropriated budget. This is the original budget after it has been adjusted for all legally authorized changes that occurred during the year. These changes can include amendments and supplements. This column reflects the most current version of the legally authorized financial plan and is the basis against which actual performance is formally measured.
The third piece of information is the actual amounts, which represent the real financial transactions that occurred during the year. The amounts in this column must be presented on the government’s budgetary basis of accounting. This basis is the method of accounting used to create and manage the budget, which may not be the same as Generally Accepted Accounting Principles (GAAP).
The budgetary basis of accounting is the set of rules a government uses for its budget, often defined by law or policy. It can differ from GAAP in areas such as the timing of revenue and expenditure recognition. For example, a government might budget on a cash basis, while GAAP requires a modified accrual basis for governmental funds. If the budgetary and GAAP bases are different, a reconciliation between the two must be provided.
Preparing the Budgetary Comparison Schedule
The schedule is formatted with columns for the original budget, the final appropriated budget, and the actual amounts on a budgetary basis. In addition to these columns, the schedule must also present variances. A column showing the variance between the original and final budgets is required, as is another column showing the variance between the final budget and the actual results. These calculations highlight where the budget was amended and where the government overspent or underspent.
The final step is to include notes that provide additional context and explanation. These notes are a required part of the presentation and must disclose any expenditures that exceeded the legal appropriations. The notes must also explain the reasons for any significant variances between the original and final budgets, as well as between the final budget and the actual results.
Finally, the notes must explain if the government’s budgetary basis of accounting is different from GAAP. If a difference exists, the notes should provide a narrative explanation of the differing bases. This disclosure is important for users to understand how the schedule’s amounts relate to the amounts in the GAAP-based financial statements.