Evaluation of GASB-34 modified approach requirements to identify strengths and weaknesses in current municipal asset management systems for sewer and water infrastructure

Asset management is becoming a necessary means of conducting business. With rising costs and decreasing funds, making the most out of the available funds is essential, and asset management is an important tool for achieving this. The Government Accounting Standards Board statement number 34 (GASB-34) recognizes this problem, and allows for a financial reporting method which takes asset management practices into account. This method is called the modified approach. The Association of Metropolitan Sewerage Agencies (AMSA) suggests that using the modified approach will eventually be required by lending agencies and other monitors. This research surveyed several cities in the state of Michigan to determine what asset management practices were currently being used. Recommendations were then made on the essential steps needed to achieve compliance with the GASB-34 modified approach requirements. These recommendations can be used to help municipalities and other agencies wishing to use the modified approach for GASB-34 reporting.