FEATURE
PAPER
Is This
Really Special or Extraordinary? A Study of How Goverments
Report These and Other Items
The
following paper was presented at the 2007 Allied Academies
International Conference - Jacksonville. It was written
by Bruce W. Chase of Radford University.
Abstract
Governmental
Accounting Standards Board Statement No. 34, Basic Financial
Statements –
and Management’s Discussion and Analysis – for
State and Local Government (GASB 34)
required governments to produce new business-type financial
statements. Two new financial
reporting items, special and extraordinary items, were included
in the operating statement under
GASB 34. These reporting categories provide governments the
ability to report certain significant
items separately from normal operations. Gains and losses from
the sale of capital assets are also
recorded in the operating statement. In the operating statement,
GASB has adopted an all inclusive
approach.
This study examines the June 30, 2005 statements of activities
for the 95 counties and 34
cities in Virginia. One purpose of this study is to examine
how often and what types of events local governments are
reporting as special and extraordinary items. A second
purpose of this
study is to
examine how gains and losses from the sale of capital assets
are being reported by local
governments. The study identified certain problem in reporting
these items.
Introduction
The
purpose of the statement of activities under Governmental
Accounting Standards Board
Statement No. 34, Basic Financial Statements – and Management’s
Discussion and Analysis – for
State and Local Government (GASB 34) is to report the results
of operations for the government.
Two new financial reporting items, special and extraordinary
items, were included in the statement
of activities under GASB 34. These reporting categories provide
governments the ability to report
certain significant items separately from normal operations.
In
the statement of activities, GASB has adopted an all inclusive
approach. Under this
approach, all transactions that affect net assets are reported
in the statement of activities. As it
relates to revenues, GASB 34 lists the following reporting
categories: program revenues, general
revenues, contribution to term and permanent endowments, contributions
to permanent fund
principal, special and extraordinary items and transfers.
All revenues should be reported as part of one of these categories.
This
study examines the June 30, 2005 statements of activities
for the 95 counties and 34
cities in Virginia. One purpose of this study is to examine
how often and what types of events local
governments are reporting as special and extraordinary items.
A second purpose of this study is to
examine how gains and losses from the sale of capital assets
are being reported by local
governments.
Read
the Entire Paper...
.
TIP
OF THE WEEK
When a Low-Cost Provider Strategy Works Best
A
competitive strategy predicated on low-cost leadership is
particularly powerful when: 1. Price
competition among rival sellers is especially vigorous---Low-cost
providers are in the best position to complete offensively
on the basis of price, to use the appeal of lower price to
grab sales (and market share) from rivals, to win the business
of price-sensitive buyers, to remain profitable in the face
of strong price competition, and to survive price wars.
2. The
products of rival sellers are essentially identical and
supplies are readily available from any of several eager
sellers---Commodity-like products and/or ample supplies set
the stage for lively price competition; in such markets, it
is less efficient, higher-cost companies whose profits get
squeezed the most.
3. There
are few ways to achieve product differentiation that have
value to buyers---When the differences between brands
do mot matter much to buyers, buyers are nearly always very
sensitive to price differences and shop the market for the
best price.
4. Most
buyers use the product in the same ways---With common
user requirements, a standardized product can satisfy the needs
of buyers, in which case low selling price, not features or
quality becomes the dominant factor in causing buyers to choose
one seller's product over another's.
5. Buyers
incur low costs in switching their purchases from one seller
to another---Low switching costs give buyers the
flexibility to shift purchases to lower-priced sellers having
equally good products or to attractively priced substitute
products. A low-cost leader is well positioned to use low price
to induce its customers not to switch to rival brands or substitutes.
6. Buyers
are large and have significant power to bargain down prices---Low-cost providers have partial profit-margin
protection in bargaining with high volume buyers, since powerful
buyers are rarely able to bargain price down past the survival
level of the next most cost-efficient seller.
7. Industry
newcomers us introductory low prices to attract buyers
and build a customer base---The low-cost leader can
use price cuts of its own to make it harder for a new rival
to win customers; the pricing power of the low-cost provider
acts as a barrier for new entrants.
As a rule, the more price-sensitive buyers are, the more
appealing a low-cost strategy becomes. A low-cost company's
ability to set the industry's price floor and still earn a
profit erects protective barriers around its market position.
Arthur
A. Thompson Jr., A.J. Strickland III, John E. Gamble.Crafting
and Executing Strategy. 2007. McGraw-Hill.
pg 143-144.
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CONFERENCES
FPB
|
| Who: |
The Forum of Private
Business
|
| What: |
Small
Firms’ Summit
|
| Where: |
Westminster,
London |
| When: |
October
17,
2007 |
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ASBE
|
| Who: |
Association
for Small Business and Entrepreneurship
|
| What: |
2007
Conference
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| Where: |
Austin,
Texas, USA |
| When: |
October
10-12, 2007 |
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SWAM
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| Who: |
Southwest Academy of Management |
| What: |
2008 Annual Meeting and 50th Reunion
Southwest Acadmeny of Management
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| Where: |
Hyatt Regency - Houston, TX |
| When: |
March 4-8, 2008 |
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ALLIED
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Allied
Academies |
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Fall International Conference |
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Reno, Nevada, USA |
| When: |
October 4-5, 2007 |
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CADMEF
and DMEF
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Chicago
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2007
Case Writers’ Workshop
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Chicago, Illinois, USA |
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October 13, 2007 |
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CALLS FOR PAPERS
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Management, Engineering
and Informatics
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| What: |
The 4th International Symposium
on Management, Engineering and Informatics 2008
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| Where: |
Orlando, Florida, USA |
| When: |
June 29-July 2, 2008 |
Submission
Deadline:
October 24, 2007
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WUF
|
| Who: |
|
| What: |
The
2008 World Universities Forum
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| Where: |
Davos,
Switzerland
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| When: |
Jan 31-Feb 2, 2008 |
Submission
Deadline:
October 13, 2007
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