16. Format/contents Of CAFR, Typical Items/specific Type Of Transactons/events Flashcards
What are 3 sections of the Comprehensive annual financial report (CAFR)?
Introductory
Financial
Statistical
What’s included in the introductory section?
Letter of transmittal
Organization chart
Principal officers
Other
What’s included in the financial section?
Independent auditor's report MD&A Basic financial stmts RSI Combining stmts and individual fund stmts
What’s included in the statistical section?
Financial trend Revenue capacity Debt capacity Demographic and economic Operating information Other
What are the minimum required financial reporting?
MD&A
Basic financial stmts
RSI
What’s included in the basic financial stmts?
Government wide financial stmts
Fund financial stmts
Notes
What are 2 financial stmts for government wide stmts?
Stmt of net position
Stmt of activities
What’s included in stmt of net position?
Governmental activities
Business activities
Net position: net investment in capital assets, restricted, unrestricted
What are 2 sections in the stmt of activities and 4 sections within each of the 2?
Governmental activities
Business activities
Program expenses
Program revenues
Net program (expenses) revenues
General revenues
How to handle internal service funds?
Blends in governmental activities section (most) and business type activities section (a few).
Which fund is included in business activities?
Enterprise fund
How to handle capital outlay expenditures? Depreciation expense? Debt principal pmt expenditures? Interest expenditures?
Eliminate and establish capital assets.
Record (it was not recorded).
Eliminate and establish debt principal.
Convert to interest expense.
How to handle interfund payable/receivable, transfers?
Eliminate
What are 2 financial reporting units?
Primary government
Component unit
Elected governing body
Separate legal entity
Fiscal independence
Which reporting unit?
PG
What are 2 characteristic of a component unit?
Financially dependent
Financially accountable to primary government.
List 3 cases of financial accountability
Appointing authority + financial benefits/burdens
Appointing authority + ability to impose will
Fiscal dependence + financial benefits/burdens
What are 3 characteristics of financial dependence?
Establish its budget
Levy tax or set rates or charge
Issued bonded debt
Can tax exempt organization a component unit? When?
Yes. When it raises or holds economic resources for the direct benefits of the PG
What are 2 presentation approach for CP?
Blended (when PG/CU activities similar) Discretely presented (separate column)
When can the blended approach be used?
CU’s and PG’s governing body are substantially the same
CU provides services only for the PG
CU benefits PG exclusively
PG has a fiduciary responsibility for CU (pension plan)
What are two major fund rules?
Total assets and deferred outflow of resources, liab and deferred inflow of resources, revenues, or expenditures/expenses of any individual governmental fund or enterprise fund are at least:
10% of the total corresponding amounts for all funds of the category, and
5% of the corresponding amounts for that element (ex: revenue) for all governmental and enterprise fund combined
Is general fund major or non major fund?
Always major fund
How to report all non major funds?
Aggregate
Which funds require budgetary comparisons for reporting?
General fund
Annually budgeted major special revenue
Is internal service fund major or non major? How are they reported?
Neither. Aggregated in one column
Are fiduciary funds major or non major?
Never major fund
What are 4 types of interfund transactions?
Quasi-external transactions (fee involved services between funds)
Reimbursements
Transfers
Loans
If a fund pays for a vender for another fund in error, how should reimbursement recoded?
Reduction of expenditure/expense
What are the account names for ST and LT loans?
Due to, due from
Advance to, advance from
What are examples of infrastructure (systems of things) assets?
Highways, bridges, streets, sidewalks, sewerage systems, drainage systems, lighting systems
Infrastructure assets should be capitalized and depreciated unless modified approach is taken. Explain
Elect not to capitalize the asset and not to depreciate if:
The government preserves the asset in a condition equal to or above the original condition
Expenditures to preserve the condition are expensed as a substitute for depr.
Must: Record keeping and documentation of condition status
R: up to date inventory, condition assessment, estimate of cost to maintain/preserve
D: complete assessment every 3 yrs, evidence of ok in most recent document
List 4 new terminology for pension accounting.
Accounting base approach
Net pension liab
The entry-age actuarial cost method
Biennial actuarial valuations required
Pension and Other post-employment benefits (OPEB):
Governmental Funds: net pension liab and pension expenditure?
The amount expected to be liquidated with expendable available financial resources
The total of amounts to be pd to the pension and the change in the beg/end net pension liab
Pension and OPEB: proprietary funds:
Net pension liab and pension expense
Residual amount
Changes in net pension liab
Capital lease criteria and treatment for government wide and proprietary funds? Governmental funds?
Same as for profit
Asset value: PV of minimum pmt + initial cash pmt
No asset reported. Recognize pmts as expenditures as it pays
Municipal landfill: usually which fund?
Allocation method?
Proprietary fund
Units of production method
What are 6 classification for expenditures?
By fund, program/function, activity under the program, organizational unit, character, object
Character classification: identify expenditures based on what?
List 4 types
Period benefited
Current
Capital outlay
Debt service
Intergovernmental
Object (names) classification examples
The names
Supplies, land, building ….
Revenue classification is often based on what?
On sources
What are 4 types of non exchange transactions?
Derived tax revenues (from exchange transactions such as fuel tax)
Imposed tax revenue (from assessment or levy)
Government mandate (abuse program in exchange of grant…)
Voluntary (legislative/contractual agreements between willing parties)
Tax abatement: should it be reported individually or aggregated?
Both ok
Tax abatement disclosures?
Brief description Gross dollar amounts Amounts receivable from other government Any other commitments If disclosed individually, describe threshold to determine which to disclose Describe when it can't disclose info
Pollution remediation: obligation recognized when?
Government knows or reasonably believe a site is polluted
Obligating events occur
1. Imminent danger
2. Government violation
3. Government responsible for clean up
4. Government named in lawsuit
5. Commence or legally obligated to clean up
How to calculate estimated liab for pollution remediation
A probability-weighted procedure
Estimate amount x %. Add all
Intangible assets, internally generated computer software. 3 stages? What should be capitalized?
Preliminary project stage
Application development stage
Post-implementation/operation stage
Only application development stage
Software modification later. When can it be capitalized?
Increased functionality
Increased efficiency
Extend its useful life
Land held as investment by endowment: how to treat change in FV?
Investment income
Derivatives: how to treat change in FV?
If investment derivative: as income
If hedging derivatives: deferred inflow of resources
External investment pools: when can it be reported at amortized cost? (if doesn’t meet, FV).
Transact at a stable net asset value of $1 per share
Meets portfolio requirements
Meets shadow pricing requirements
List 5 portfolio requirements
Maturity: mature less than 13 mo. Weighted average maturity less than 60days or less
Quality: By highest credit rating. No more than 3% in second highest category
Diversification: no more than 5% from one issuer (10% if there is credit support)
Liquidity: 10% in daily liquid assets. 30% in weekly
Shadow pricing
Irrevocable split interest agreement: how to treat changes in FV. In case of government=intermediary and not.
+/- in remainder interest
+/- in deferred inflow
Lead interest or remainder interest.
What are items that needs to be adjusted for government-wide stmt?
BS: Add Capital asset, accumulated depreciation, LT liabilities.
Dissolve internal service fund (don’t forget assets/LT liability has been already taken care of above. Just take Current assets/liabilities).
Eliminate internal balance.
Stmt of activities: Eliminate capital outlay expenditures. Add depreciation exp.
Eliminate transfers (other financial sources and uses).
Convert expenditures to expense, revenue to accrual basis.
Dissolve internal service fund profit (loss) to decrease (increase) expenses.
Is transfers and internal loans recorded in the government wide stmt?
No.
Bonds approved by voters for capital project. JE? Sold a bond and received cash: JE for fund level and G level?
Construction takes place: JE?
No entry.
F: Dr: Cash. Cr: Other financing source.
G: Dr: Cash. Cr: Bonds payable.
F: Dr: Expenditures. Cr: Cash or payable.
G: Dr: Building. Cr: Cash or payable.
Pay loans: JE under debt service fund and G level?
F: Dr: Expenditure - Interest. Dr: Expenditure - Principal. Cr: Cash.
G: Dr: Interest expense. Dr: Bonds payable. Cr:Cash.
