Remember that the “governmental” activities on both the government-wide financial statements and the fund financial statements represent the same activities presented on two different accounting bases and measurement focuses. Statement No. 34 of the GASB requires that governments reconcile these two sets of statements. Basically, the reconciliations detail all of the areas where the different accounting bases and measurement focuses cause the numbers to be different on the governmentwide statements and the fund financial statements for the governmental activities. Most of the reconciling items have to do with the fact that the funds do not record long-term assets and long-term liabilities related to the governmental activities, whereas the government-wide financial statements do record these items. An example of the reconciliation of the governmental fund balance sheet fund balance amounts to the net assets of the “governmental activities” column of the government-wide statement of net assets is presented as Exhibit 4.5. An example of the reconciliation of the net change in fund balances reported on the governmental fund statement of revenues, expenditures, and changes in fund balance to the change in net assets for governmental activities reported on the government-wide statement of activities is presented as Exhibit 4.6.

These examples of reconciliations also provide the reader with some of the more common reasons why the different accounting bases and measurement focuses cause differences for governmental activities between the government-wide and fund financial statements.

Taken From : Governmental Accounting Made Easy

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