15. State And Local Government Concept Flashcards
What are the 5 characteristics of governmental organizations?
Not profit motive Lack of clear ownership Non exchange service: contribution of resources do not receive proportionate share of benefits Compliance with laws and regulations Formal budget process
What are the 3 types of governmental organizations?
State and local government: city, towns, county..
Special purpose government: school district, transit authority
Agencies and commissions: economic development, convention bureau
What are the level of authority for Standards?
What used to be?
Category A: GASB stmts and interpretations (officially established accounting principles)
Category B: GASB technical bulletins, GASB implementation guides (used to be D), AICPA literature created by GASB
Level A to D.
Is GASB concept stmt authoritative (like GAAP)?
What’s the purpose?
No.
Provide a framework for GASB in developing and revising standards
What are the 6 concept stmts?
Objectives of financial reporting
Service efforts and accomplishments
Financial reporting
Elements of financial reports
Service efforts and accomplishments (amendment to 2)
Measurement of elements in financial stmts
What are the two primary objectives for financial reporting?
Accountability
Interperiod equity: are current yr resources sufficient to pay current yr services?
6 Characteristics of financial reporting?
TRUCCR
Timeliness, relevance, understandability, comparability, consistency, reliability
Service efforts and accomplishments: explain
Voluntary Efforts (input): cost of fire department
Accomplishments:
Output: # of fire alarms responded to
Outcome: % of fire alarms responded within 5 min
Financial reporting 4 hierarchy?
Recognition in basic financial stmts
Note disclosure
Required supplemental information (RSI)
Supplemental information (optional)
What are 5 elements of financial stmts?
Assets Liab Deferred outflow of resources Deferred inflow of resources Net position
What are two approaches for measurement and 4 attributes? Two types of measurement focus to determine either for modified accrual or full accrual?
Initial amounts. Remeasure amounts.
Historical cost, FV, Replacement costs, Settlement costs
Flow of current expendable financial resources (CF type) and change in economic resources (income type). If net income focused, accrual (proprietary and agency funds). If source/use focused, modified accrual (governmental funds).
What are 4 financial reporting implications?
Expression of public policy
Expression of financial intent
Formal control
Provide basis for evaluating performance
Who are the primary users of financial stmts?
Citizens, legislative and oversight board, investors and creditors
What are the two definitions of a fund?
A fiscal entity (account for cash and non cash)
An accounting entity (debts = credits)
What are 3 categories of funds?
Governmental funds, proprietary funds, fiduciary funds
What are 5 funds under governmental funds?
General funds Special revenue funds Capital project funds Debt service funds Permanent funds
What are two funds under proprietary funds?
Enterprise funds
Internal service funds
What are 4 funds under fiduciary funds?
Pension trust funds
Private purpose trust funds
Investment trust funds
Agency funds
What are two purposes of a fund?
To improve management accountability and control
To meet legal requirements
What are included in government wide statements?
What is the measure basis?
Governmental funds Proprietary funds (except internal service fund)
Full accrual
What are two groups that are not GASB No 34 and not in fund report, but still reported in government wide stmt?
General fixed asset account group
General LT debt account group
What are two measurement focus?
Accounting objectives and measuring basis for each?
Flow of financial resources: source/use of current financial resources - modified accrual.
Flow of economic resources: NI - accrual
What is the formula for flow of current financial resources measurement focus?
CA - CL = fund balance
What are the financial sources and uses?
S: taxes, license/fees, grant revenues, transfer from other funds, process from bonds
U: salaries, utilities, capital expenditures, pmt on debts, transfer out to other funds
Modified accrual: when is revenue recognized?
Measurable, legally available (legal right and collected in the current period or within 60days), succeptable to accrual (both measurable and available prior to cash receipt)
If it’s not available, but collected, how should it be classified?
As deferred inflow of resource in current yr
What is the recognition approach for property taxes?
Accrual: both measurable and available
For licenses and fees?
Cash: not measurable or available
For intergovernmental grants?
Measurable but not available: when grant provisions are met
For charges for services?
Accrual: both measurable and available
For fines and forfeits?
Cash: not measurable or available
What is spending called for modified accrual basis?
Expenditures (use of “expense” not allowed)
When does expenditure recognized?
When incurred or due to be paid (due date)
Is expenditure account carried over to a new yr?
No. Closed.
What’s the measurement basis for interest in general LT debt?
On general ST debt?
L: modified accrual
S: accrual
What is the purpose of budgetary accounting?
Planning and control
What are the 3 elements of budgetary accounting?
Appropriation: authorized spending
Estimated revenues
Estimated other financing sources and use (interfund transfers, proceeds from bonds..)
JE for balanced badger?
For surplus?
For deficit?
Dr: estimated revenues 100
Cr: appropriations. 100
Dr: Estimated revenue 110
Cr: appropriations. 100
Cr: Fund balance. 10
Dr: estimated revenue 90
Dr: fund balance. 10
Cr: appropriations. 100
JE when there are other financing sources (transfer in and out)?
Dr: estimated revenue 110
Dr: estimated other financing sources 10
Cr: appropriations 100
Cr: estimated other financing sources 20
How to treat budgetary account and actual operating accounts (revenue, exp)?
B: reverse the original entry
A: close
Which items are required to report on budgetary results?
General funds
Each major annually budgeted special revenue funds
What are 3 purposes of budgetary result reporting?
Report budget to actual results
Demonstrate compliance with related laws
Assist in evaluating performance
What are two optional placement for budgetary result reporting?
As a part of basic fund level financial stmts
As a part of Required supplemental information after the note to the financial stmts (will be called schedule).
What are 6 format for budgetary reporting?
Original budget Final budget Actual on budgetary basis If non GAAP basis, include reconciliation Variance column (optional)
Encumbrance JE for recording a PO issued, PO filled, and invoice for goods received: explain.
Dr: encumbrance
Cr: budgetary fund balance
Dr: budgetary fund balance
Cr: encumbrance
Dr: expenditures
Cr: Cash/ vouchers payable
How to close OS encumbrance at yr end?
If will be used:
Reverse: Dr: budgetary fund balance. Cr: encumbrance
Dr: fund balance - unassigned. Cr: fund balance - assigned or committed (governmental authority) or restricted (external)
How to open closed encumbrance in the beg of yr?
Dr: encumbrance - prior yr
Cr: budgetary fund balance
Dr: fund balance - assigned
Cr: fund balance - unassigned
Are regularly scheduled items get encumbered?
Like payrolls, petty cash, interfund transactions
No
What are the 3 net position categories?
Net investment in capital assets (BV - Depr. - Capital asset related debt used)
Restricted
Unrestricted
Classify Board designated fund.
Unrestricted
What are 5 types of governmental fund types?
Nonspendable
Restricted: by external parties, enabling legislation
Committed: internal highest level of decision making authority
Assigned (based on intent of use)
Unassigned
What kind of resources will be in assigned fund?
Residual amounts in other governmental funds beside general fund
Who can have a positive unassigned fund balance?
Only general fund
Can other governmental funds beside general fund have a negative unassigned fund balance?
Yes
What’s the possible classification of rainy day fund?
Restricted, committed, or unassigned
What are the 3 required financial stmts for governmental funds?
BS
Stmt of revenues, expenditures, and changes in fund balance
Revenues, expenditures, and changes in fund balance - budget to accrual (can be either a part of stmts or schedule in RSI).
Is having general fund required? Which accounting does general fund use?
Yes.
Budgetary and encumbrance accounting.
Can a government have more than one general fund?
No
Which fund requires budgetary accounting?
General fund
Does permanent fund serve government or public or both?
Government
Which fund record earning (interest revenue) of permanent endowment?
Permanent fund
How does the permanent fund handle the interest earned on the permanent endowment? JE?
Dr: Other financing uses - Transfer to GF
Cr: Cash
Classify the capital asset sale proceed?
Other financing source
What are 3 required financial stmts for Proprietary Fund?
Stmt of net position
Stmt of revenues, expenses, and change in fund net position
Stmt of CF
Who are the primary users for enterprise fund?
Public
What are 4 categories of Stmt of CF for proprietary fund?
Operating
Non capital related financing
Capital related financing
Investing
What kind of method is required for stmt of CF for proprietary fund?
Direct method
Where should non cash transactions (donations, capital leases, unrealized g/l…) be reported on stmt of CF?
At the bottom
Is Fiduciary fund included in government wide stmts?
No
What are the 2 required financial stmts for fiduciary funds?
Stmt of fiduciary net position
Stmt of changes in fiduciary net position (uses additions and deductions rather than revenues and expenses)
What are 4 required RSI for fiduciary fund?
Schedule of funding progress
Schedule of employer contributions
Actuarial information
10 yr schedule
What are 3 pension ratios required in RSI?
Plan net position as a % of total pension liab
Net pension liab as a % of covered payroll
Contribution as a % of covered payroll
Investment trust fund: what does a hosting government record?
Just the portion other governments are investing. Not their own
Tax agency fund: JE for hosting tax agency fund? JE for a general fund for the hosting government? JE when taxes are received? JE when it is distributed?
Dr: Tax receivable Cr: due to other governments. Cr: due to general fund
Dr: Taxes receivable. Cr: Estimated uncollectible property taxes. Cr: Revenues - property taxes.
Dr: Cash. Cr: Property taxes receivable.
Dr: Due to …. Cr: Cash.
What happens to the remaining of the capital project fund (which gets closed after the project)?
Transfer out and transfer into the debt service fund.
Dr: transfer out - other financing source. Cr: Cash.
Dr: Cash. Cr: transfer in - other financing source.
What is the classification of grants? Interest pmt on short-term note? Bond proceeds?
Revenue. Expenditures. Other financing source.
Proprietary fund: When adjusting net investment in capital asset, what would other account that must be contra adjusted?
Unrestricted.
User charges based on what for enterprise fund and internal service fund? Where are they presented on the fund stmt?
E: Capital maintenance. I: Cost reimbursement.
E: Basic financial stmt. I: RSI.
What are three categories that requires enterprise fund?
Revenue bonds. Laws and regulations establish fees. Pricing policies based on capital maintenance.
Enterprise fund: Stmt of CF: Which method required; direct or indirect? How many sections? Where are non cash transactions reported?
Direct.
Four: operating (based on operating income rather than net income. Interest revenue and expenses excluded), noncapital financing activities, capital and related financing activities (must be clearly related to capital projects), investing activities (acquisition and sale of investment, interest and dividends, loans made and collect).
Face of stmt at the bottom.
Enterprise fund stmt of CF: what are items that included in non cash items?
Donated assets, capital leases, unrealized gains/losses on investment, debt issued to acquire capital assets.
Fiduciary fund: What is the category for net position (equity)?
Restricted.
What are three items that are not included in private-purpose trust funds?
Pension plans. Investment pools. Permanent funds.
Agency fund: Does it have additions, deductions, equity account?
No. Current asset = current liability.
When tax agency fund collects fee, where is it recorded? JE? JE of other government?
In general fund.
Agency fund: Dr: Due to other government. Cr: Cash. Cr: Due to general fund (Collection fee).
Same, general fund: Dr: cash. Cr: property tax receivable. Cr: revenue - tax collection fee.
Other, general fund: Dr: Cash. Dr: Expenditures - tax collection fees. Cr: Property tax receivable.
