You Are Doing WHAT to the Governmental Funds?? – Part 2, The Short-Term Approach

In our last chapter, You Are Doing WHAT to the Governmental Funds?? – Part 1, The Near-Term Approach, we explored one of the three new measurement focus and basis of accounting (MFBA) options being considered for the governmental funds.  These approaches are presented in the Governmental Accounting Standards Board’s recent Invitation to Comment (ITC), Financial Reporting Model Improvements – Governmental Funds.  And you thought it was a scary chapter!?? The suspense continues with the second MFBA proposal – the short-term (or working capital) approach.  One spoiler alert (but it is for your own good) – each approach goes further away from the current resource measurement focus and modified accrual basis of accounting currently used by the governmental funds.  (Just wait until you read Part 3….) The Short-Term Approach Philosophy To begin with, the terminology used for both the balance sheet and operating statement elements as described in Part 1 of this fascinating trilogy, You Are Doing WHAT to the Governmental Funds?? – Part 1, The Near-Term Approach, remains the same.  From there it is downhill.  The short-term approach moves the governmental funds closer and closer to accrual-based accounting, yet stops short of actually making the leap.  It focuses on the