Which of the following describes the item GASB uses to supplement basic financial statements and help place them in context?

• A. Notes to the financial statements
• B. Auditor's report
• C. Required supplementary information
• D. Budgetary statements

Answer: (C)

GASB relies on information that sits alongside the basic financial statements to give readers context and help them interpret the numbers. This is called Required supplementary information. It includes items GASB requires to provide context, such as management’s discussion and analysis and schedules that show budgets or pension/other postemployment benefits information. The purpose is to help users evaluate trends, financial condition, and obligations beyond what’s in the statements themselves. The notes to the financial statements are part of the statements, giving details on accounting policies and disclosures; the auditor’s report is the independent opinion on those statements; and while budgets may be shown, they aren’t the defined term for the supplemental data GASB designates to place the statements in context.