Required Supplementary Information, or RSI, is financial data that the Governmental Accounting Standards Board (GASB) or the Financial Accounting Standards Board (FASB) requires an entity to present alongside its basic financial statements, but that sits outside those statements for audit purposes.1National Center for Education Statistics. IPEDS Finance Data FASB and GASB – What’s the Difference? It exists to give readers the historical trends, narrative analysis, and budgetary context that a balance sheet alone cannot show. Management has no discretion about whether to include it; the standard-setters consider it essential to placing the basic statements in appropriate context. Auditors, however, apply only limited procedures to RSI under AU-C Section 730 and explicitly state they express no opinion on it.2eGrove (University of Mississippi). Amendments to AU-C Sections 725, 730, 930, 935, and 940 to Incorporate Auditor Reporting Changes From SAS Nos. 134 and 137
How RSI Differs From Other Supplementary Information
A report can contain three tiers of information, and they receive very different levels of scrutiny. The basic financial statements are audited. RSI is required by GASB or FASB but only reviewed through limited procedures. Other supplementary information, often called “SI,” is anything management chooses to add or that a grantor or regulator requests outside the accounting framework.
The audit gap between the second and third tiers cuts the other direction from what many readers assume. For RSI, auditors perform limited procedures under AU-C Section 730 and state they are not providing any assurance. For other supplementary information under AU-C Section 725, auditors can actually opine that the information is “fairly stated in all material respects in relation to the financial statements as a whole.”2eGrove (University of Mississippi). Amendments to AU-C Sections 725, 730, 930, 935, and 940 to Incorporate Auditor Reporting Changes From SAS Nos. 134 and 137 Required does not mean more assured. It means mandated.
What Governmental Entities Must Include as RSI
Management’s Discussion and Analysis
Management’s Discussion and Analysis (MD&A) is the most visible piece of RSI. GASB Statement No. 34 requires it to provide an objective, readable analysis of the government’s financial activities based on currently known facts, decisions, and conditions.3Governmental Accounting Standards Board. Summary of Statement No. 34 – Basic Financial Statements and Management’s Discussion and Analysis for State and Local Governments The analysis compares the current year to the prior year using government-wide data, addresses the overall financial position, explains significant changes in individual funds, and describes capital asset and long-term debt activity for the year.
MD&A must conclude with a discussion of currently known facts, decisions, or conditions expected to have a significant effect on the entity’s financial position or results of operations. This forward-looking section is what balance-sheet data cannot supply on its own.
Budgetary Comparison Schedules
Budgetary comparison schedules show whether a government obtained and spent resources in line with its legally adopted budget. GASB 34 requires them for the general fund and for each major special revenue fund with a legally adopted annual budget. Each schedule presents three columns: the original appropriated budget, the final amended budget, and the actual inflows, outflows, and balances stated on the government’s budgetary basis. The variances tell readers where spending stayed within authorization and where it did not.
Pension and OPEB Schedules
Pension schedules under GASB Statement No. 68 are among the most data-intensive RSI items. Single and agent employers must present, for each of the ten most recent fiscal years, the sources of changes in the net pension liability, the components of that liability and related ratios, the pension plan’s fiduciary net position as a percentage of the total pension liability, and the net pension liability as a percentage of covered-employee payroll.4Governmental Accounting Standards Board. Summary of Statement No. 68 – Accounting and Financial Reporting for Pensions Where contributions are actuarially determined, a separate ten-year contribution schedule is also required. Cost-sharing employers present similar ten-year schedules.
GASB Statement No. 75 imposes parallel requirements for other post-employment benefits, such as retiree health insurance. The required schedules mirror the pension structure across the ten most recent fiscal years: sources of change in the net OPEB liability, fiduciary net position as a percentage of the total OPEB liability, and the net OPEB liability as a percentage of covered-employee payroll.5Governmental Accounting Standards Board. GASB Statement No. 75 – Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions A decade of data lets readers see the trajectory, not just the current balance.
Infrastructure Condition Reports Under the Modified Approach
Governments that use the modified approach for reporting infrastructure assets must present RSI about the condition of those assets. Under the modified approach, assets in a network or subsystem are not depreciated as long as the government uses an asset management system and can document that assets are preserved at or above a disclosed condition level. The RSI covers condition assessment results and estimated-versus-actual spending to maintain those assets. A government that cannot keep up with these reporting demands must switch back to standard depreciation.
What Changes Under GASB Statement No. 103
GASB Statement No. 103 takes effect for fiscal years beginning after June 15, 2025, meaning most governments with a June 30 year-end will first apply it in fiscal year 2026. Early adoption is permitted.6Governmental Accounting Standards Board. GASB Statement No. 103, Financial Reporting Model Improvements
Under GASB 103, MD&A is organized into five required sections: an overview of the financial statements, a financial summary, a detailed analysis of financial position and changes in financial position, a discussion of significant capital asset and long-term financing activity, and currently known facts, decisions, or conditions. The topics largely carry over from prior guidance, but GASB 103 eliminates certain previously required MD&A content, including budgetary analysis within the MD&A and information related to the modified approach for capital assets. Preparers who have long included that content will need to remove it on adoption.
GASB 103 also refines how the financial summary within MD&A disaggregates revenues and expenses, and it clarifies that capital asset discussions should cover most intangible assets, including right-to-use assets under lease and subscription arrangements. For finance teams, the practical work is restructuring a document many governments have written essentially the same way since GASB 34.
How Auditors Treat RSI
Auditors do not audit RSI. They apply limited procedures under AU-C Section 730: inquiries of management about how the information was prepared and whether methods changed from the prior period, comparisons for consistency with the audited basic financial statements and other audit knowledge, and written representations from management about the preparation and presentation of the RSI.2eGrove (University of Mississippi). Amendments to AU-C Sections 725, 730, 930, 935, and 940 to Incorporate Auditor Reporting Changes From SAS Nos. 134 and 137 If an inconsistency shows up, the auditor may ask management to revise the information or expand the inquiries. These steps are designed to catch obvious inconsistencies and material departures, not to provide the detailed testing that supports an opinion on the basic financial statements.
Under current auditing standards, the auditor’s report includes a separate section headed “Required Supplementary Information.” That section identifies the RSI, states that it is management’s responsibility, notes that the applicable standard-setter requires it, and explains that the auditor applied limited procedures but does not express an opinion or provide any assurance on the information.
When RSI Is Missing or Materially Misstated
If management omits some or all of the RSI, the auditor’s report must flag it. The report names the missing information, states that the standard-setter considers it essential to placing the basic financial statements in appropriate context, and confirms that the opinion on the basic financial statements is not affected.2eGrove (University of Mississippi). Amendments to AU-C Sections 725, 730, 930, 935, and 940 to Incorporate Auditor Reporting Changes From SAS Nos. 134 and 137 If the RSI is present but departs materially from the prescribed guidelines, the report describes the departures. And if the limited procedures leave unresolved doubts about whether material modifications should be made, the report has to say so explicitly.
The audit opinion on the basic statements survives all three scenarios, but the disclosure itself tends to attract attention from oversight bodies, bondholders, and credit rating agencies. That is where limited procedures have real bite, even without a full audit standard behind them.
Where RSI Sits in the Annual Comprehensive Financial Report
RSI has designated positions within the Annual Comprehensive Financial Report (ACFR). GASB Statement No. 98 established that name for fiscal years ending after December 15, 2021, replacing the former label.7Governmental Accounting Standards Board. GASB Changes Name of Report to Annual Comprehensive Financial Report MD&A appears before the basic financial statements, giving readers the narrative context first. The remaining RSI schedules, including budgetary comparisons, pension and OPEB schedules, and infrastructure condition data where applicable, follow the basic financial statements and their notes. The separate RSI section in the auditor’s report identifies which schedules fall into this category, so readers do not confuse them with the audited statements or with other supplementary information that receives a different level of review.