A county finance director presents the annual report to the board of commissioners. The general fund finished the year with revenues exceeding expenditures by $2.4 million, but the original budget projected a $1.8 million surplus. The commissioners want to know what changed. The budgetary comparison schedule answers that question by placing original budget, final budget, and actual results side by side, exposing every amendment and variance along the way.
AICPA Representative Tasks (verbatim). "Remembering & Understanding, Recall the objectives and components of budgetary comparison reporting in the annual comprehensive financial report for state and local governments."
Governments operate under legal budgets that carry the force of law. Expenditures exceeding appropriations can trigger legal sanctions, audit findings, and political consequences. Budgetary comparison reporting exists to:
- Demonstrate legal compliance. Citizens, oversight bodies, and auditors need assurance that the government spent within authorized limits.
- Explain variances. Budget amendments during the year, and deviations from even the amended budget, tell the story of how conditions changed.
Common mistakes
- Omitting the original budget column. GASB 34 requires three columns: original, final, and actual. A schedule showing only final versus actual fails the standard and will be flagged as a departure from GAAP.
- Presenting budgetary comparisons for nonmajor funds. The requirement applies to the General Fund and major special revenue funds with legally adopted budgets. Including nonmajor funds is permitted but not required, and confusing them with required presentations is a trap.
- Failing to reconcile budgetary basis to GAAP. When the budgetary basis differs from GAAP (encumbrances, inventory, fund structure), a reconciliation is mandatory. Exam questions often test whether you can convert budgetary actual to GAAP actual by reversing encumbrances and adjusting for inventory methods.
Bottom line
- Budgetary comparison reporting demonstrates legal compliance with the appropriated budget and explains variances between planned and actual results.
- Three columns minimum: original budget, final amended budget, and actual results (a fourth variance column is optional but common).
- Required for the General Fund and each major special revenue fund that has a legally adopted annual budget.
- Governments may present the comparison as required supplementary information (RSI) or as a basic financial statement within the governmental fund statements.
Exam shortcut
When a question asks whether a budgetary comparison is required, check two gates: (1) Is it the General Fund or a major special revenue fund? (2) Does it have a legally adopted annual budget? Both must be yes. Capital projects, debt service, and proprietary funds are not required regardless of budget existence.
The full lesson (about 2,717 words, 18 min read) adds 2 worked examples, all 6 common mistakes, a self-check, free in the app.
Learning objectives
- III.A7
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