Required supplementary information (RSI) provides operational, economic, and historical context for the basic financial statements of state and local governments. Its schedules help readers assess funding trends, resource stewardship, and infrastructure preservation that individual statement balances cannot fully explain.
The Governmental Accounting Standards Board (GASB) requires these presentations when the relevant circumstances exist. In an annual comprehensive financial report, management's discussion and analysis (MD&A) introduces the basic financial statements; the remaining RSI follows the basic notes.
RSI supplements both fund financial statements and government-wide financial statements without changing their measurement focus or accounting basis. For local governments, the distinction explains why a long-term benefit obligation and current contribution spending provide different information.
- Governmental fund statements use the current-financial-resources focus and modified accrual. They emphasize current financing and expenditures.
- Government-wide financial statements use the economic-resources focus and accrual. Pension, benefit, and infrastructure RSI provides context for obligations and assets reported there.
- Proprietary and fiduciary fund statements also use economic resources and accrual. Fiduciary activities remain outside government-wide financial statements.
Common mistakes
- Treating RSI as basic statements. Placement near the financial statements does not change the schedules' classification.
- Copying the plan's entire package. A cost-sharing employer's allocation schedule differs from the plan's collective liability and investment-return schedules.
- Inventing earlier history. Cedar's missing Year 2 must be restored; unavailable pretransition amounts cannot be fabricated.
Bottom line
- RSI provides essential context while remaining outside the basic financial statements; MD&A precedes them and other RSI follows their notes.
- Single and agent employers present liability changes and related ratios; cost-sharing employers present proportions, allocated liabilities, and related ratios.
- Employer and plan contribution requirements differ, and qualifying defined benefit plans present their own investment-return RSI.
- OPEB without a qualifying trust uses total liability information and related payroll ratios.
Exam shortcut
Identify the reporting perspective first: employer, benefit plan, or government reporting infrastructure. An employer's participation in a pooled plan does not make every plan schedule its own requirement. Circle the arrangement signals: separate employer accounts, pooled obligations, qualifying trust, contractual contribution, or depreciation. Match the schedule family before considering amounts. For a missing-history question, distinguish unavailable transition information from an omitted available year.
The full lesson (about 3,325 words, 22 min read) adds 2 worked examples, all 5 common mistakes, a self-check, free in the app.
Learning objectives
- III.A8
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