2400: Governmental Accounting & Reporting Flashcards

Question

What are the 2 Deferred Accounts employed in Governmental Funds?

Answer 1

1. Deferred Outflows | 2. Deferred Inflows

Answer 2

Fund Balance Classifications: 1. Nonspendable (inventory, supplies, prepaids) 2. Restricted (externally enforceable) 3. Committed (by formal action) 4. Assigned (intent) 5. Unassigned (residual amount in General and may be negative, only used when negative in other than general funds)

Answer 3

It is used to prevent overexpenditure of appropriations and demonstrate compliance with legal requirements. PO issued/K approved: Encumbrances (Control) DR (expected expense) Encumbrances Outstanding (Reserve) CR (Reversed upon receipt of goods/services. Separate transaction to record actual expense.) Encumbrances = Encumbrances Outstanding (Any difference is attributable to error.) Unencumbered appropriations = Appropriations - (Encumbrances + Expenditures)

Answer 4

1. Economic Resources Measurement focus/Accrual Basis used where revenues and expenses are recorded i.e. in Government Wide, Proprietary Funds (Enterprise/Internal Service) and Fiduciary (Agency/Trust): operating income, changes in net position (cost recovery), financial position and cash flows 2. Current Financial Resources measurement focus/Modified Accrual Basis used where revenues and expenditures are recorded i.e. in Governmental Funds (General, Special Revenue, Capital Projects, Debt Service and Permanent): changes in financial position (flow of resources) and financial position

Answer 5

1. Recognize Revenue when susceptible to accrual i.e measurable (levy approved) and AVAILABLE (legally and within the current period or "early enough"/usually 60 days into the next) 2. Record Expenditures when liabilities incurred/assets expended except: Inventory/Prepayments allowable when purchased (normal) or consumed (modification permitted) Debt Service Fund Interest/Retirement of Principal at due date (modification required) Unmatured noncurrent liabilities are long-term until recognized/recorded in year due (modification required) when acquired unless exception/modification for consumed/ due

Answer 6

Governmental Funds - Statement of Revenues, Expenditures and Changes in Net Position (GAAP basis/Budgetary Basis - if budget non-GAAP, reconciliation is supplemental): 1. Operations, capital outlay, debt service 2. Other financing sources/uses (interfund transfers) 3. Special Items (unusual or infrequent, controlled by mgmt) 4. Extraordinary Proprietary Funds - Statement of Revenues, Expenses and Changes in Net Position: 1. Operating Rev/Exp 2. Nonoperating Rev/Exp - includes operating grants/contributions 3. Capital/Endowment grants/contributions 4. Special Items 5. Interfund transfers (w/o requirement for repmt.) Fiduciary Funds - Changes in Net Position

Answer 7

Required: Participating interest-earning contracts (CDs affected by interest rate changes) External Investment Pools Open-end Mutual Funds Debt Securities (Treasury Bills) Equity Securities (C/S, warrants, options, rights) Exempt (optinal) = nonparticipating (most cd's), money market or participating with maturity <= 1 year

Answer 8

1. Net investment in capital assets CA - Accum Depr + Dfrd Out - Related Debt - Dfrd In 2. Restricted net position RA - Liab - Dfrd In (Separate Expendable & Nonexpendable/Permanent) 3. Unrestricted net position UA - noncap Debt + Dfrd Out - Dfrd In

Answer 9

1. Introductory (not required for MEFRR*) 2. Financial (MEFRR + additional CAFR requirements) 3. Statistical (not required for MEFRR*) *Minimum External Financial Reporting Requirements

Answer 10

Requisite: 1. Table of contents 2. Letter(s) of transmittal 3. Items deemed appropriate by mgmt Common: Officials List Org Chart GFOA Award

Answer 11

``` Mgmt Discussion & Analysis (MD&A) Government-Wide Financial Stmts (GWFS) Governmental Fund Fin Stmts (GFFS) Proprietary (PFFS) Fiduciary (FFFS) Notes to Fin Stmts (NFS) Other required supplementary info (RSI) ```

Answer 12

1. Auditor's Report 2. MEFRR 3. Combining Financial Statements (Nonmaj Gov, Nonmar Enterprise, Internal Svc, Trust, Agency individual stmts presented side by side) 4a. Individual Fund Statements (one fund in more detail due to materiality or need to present budget/actual) 4b. Schedules 5. Narrative Explanations (Notes to Combining/Indiv)

Answer 13

Statistical Tables, generally for the last 10 years) about: 1. Financial Trends (GW net position/changes, GF balances/changes) 2. Revenue Capacity (Bases, Rates, Payers, Property Tax) 3. Debt Capacity (Outstanding/Bonded Ratios, Direct/Overlapping Debt, Limitations) 4. Demographic/Economic (Indicators/Employers) 5. Operating (Employees, Indicators, CA)

Answer 14

Presented prior to basic financial statements (BFS), required to accompany BFS, relates only to BFS, basis is strictly KNOWN facts, conditions, decisions. Focus is PG, distinguishes for components Includes L/T and S/T analysis Compares current year to prior Requisite/Only Topics: 1. discuss BFS 2. present GW fin info 3. analysis of GW fin pos and results ops 4. analysis of bals/trans individual funds 5. analysis sig var Gen Fund budget/budget changes/actuals 6. CA and LT Debt activity 7. conditions & act/est mtnce/preservation of infrastructure CA 8. known facts, cond, dec material effect on net pos/res ops

Answer 15

1. Budgetary Comparison for General/Major Special Rev Funds 2. Infrastructure CA info (modified approach*) 3. Pension/Postemployment benefits schedules * unlimited life assets with no depreciation, capitalize only additions/improvements, expense otherwise * include 3 most recent condition assessments, est amt to maintain/preserve beg FY and actuals last 5 yrs

Answer 16

1. levied (taxes) or result from other nonexchange transactions 2. related financial resources must be legally and physically available for use to be recognized (otherwise liability exists for deferred revenues)

Answer 17

If the receivable is collected or recognized in advance of being levied.

Answer 18

At estimated historical cost

Answer 19

Debit Estimated Revenues and credit Appropriations (approved expenses) and debit/credit Budgetary Fund Balance account for the difference. Periodically compare debit balance in Estimated Revenues with credit balance in Revenues.

Answer 20

Using proceeds of new debt to retire old debt. Proceeds are not revenue. Payment of old debt not expenditure. Net proceeds (less any attorney or uw) are other financing sources Record in GWFS: Deferred Interest - Difference between reacquisition costs (call premium and issuance costs) of old debt and net carrying value of new (net of premium/discount) are amortized over the shorter of the life remaining on the old or the new as a component of interest. Premium/discount on new amortized over life of the new.

Answer 21

Deferred Inflows These are substracted from each category of net position (net investment in capital assets, restricted and unrestricted) Deferred outflows are added back to net inv in cap ass and unrestricted np

Answer 22

a) unusual and infrequent transaction* b) significant transaction under mgmt's control * if only a not b, then Extraordinary Item Both items are reported separately at the bottom of Statement of Activities

Answer 23

Directly on statements, divider pages or separate section. NOT Notes, RSI or MD&A

Answer 24

A decrease in the financial resources of a governmental entity Recorded under Modified Accrual Basis when measurable, related liability incurred except for unmatured interest and principal on l/t debt which is recognized when due (Current financial resources measurement) Unlike expenses, include capital outlays for general assets and repayment of principal of general l/t liabilities Assets are recorded, capitalized or depreciated within any fund

Answer 25

Expenditures* From governmental fund such as general fund *reciprocal interfund activity if trust fund is part of the government rather than independent payee

Answer 26

routine or recurring operating transfer between funds, not a loan intending to be repaid "other financing use (donor) / source (recipient)" general fund contributes capital to enterprise fund general fund transfer to capital projects fund general fund operating subsidy to enterprise fund

Answer 27

taxes assessed on Exchange transactions

Answer 28

General Fund (ALWAYS major) Funds in which the following of any fund are 10% or more of the corresponding total of that category for relevant governmental or enterprise funds AND > 5% of the combined governmental/enterprise total by category: assets & deffered outflows liabilities & deferred inflows revenues expenditures (expenses) >= 10% G Total for G funds OR >= 10% E Total for E funds AND >= 5% Overall Totals by Category Does not apply to Internal Service Funds (combined for financial reporting and presented individually with combining statements)

Answer 29

sources, uses and balances of financial resources (current financial resources management) compliance (legal/contractual) Financial Control/Legal Restrictions

Answer 30

The earlier of: Period when enforceable legal claim arises Period received ( equate to period FOR which tax is levied not actual date of levy)

Answer 31

Government funds do not capitalize or depreciate assets only recognize expenditures. In the case of a contributed assets, no asset or expenditure is recognized.

Answer 32

As assets and liabilities. They are not netted.

Answer 33

As a direct expense of the program Remaining interest is reported as a separate line as an indirect expense Indirect expense is not reported at the bottom (?), may be allocated but allocation not required. Interest from long term debt is generally indirect, reported separately and not allocated.

Answer 34

Report revenue in a single amount net of discounts or allowances (with discounts and allowances parenthetically disclosed on the face).

Answer 35

Capital assets are not reported in general funds due to reporting from current financial resources perspective Reported as a Program Expense in the Statement of Activities in Government-Wide statements unless stated separately as an Extraordinary (unusual and infrequent) or Special (unusual, infrequent and sig trans under mgmt control) item.

Answer 36

As expenditures or expenses in the operating statements NOT netted with interest revenue or income

Answer 37

Original budget Final budget Actual inflows, outflows and balances (Variance presentation is encouraged but not required)

Answer 38

Governmental Funds - Principal - Permanent (Gov) Fund - Statement of revenues, expenditures and changes in fund balance Included in Statement of Net Position (GW) Earnings - Special (Gov) Fund - Statement of revenues, expenditures and changes in fund balance Included in Program Revenues* on Statement of Activities (GW) *since purpose is specified

Answer 39

Estimated Revenues DR Appropriations CR Budgetary Fund CR/DR (plug) (Estimated Transfers CR)

Answer 40

Unencumbered Appropriations = Appropriations - Expenditures - Encumbrances

Answer 41

Nonspendable - nonmonetary (prepaids, inventory) Restricted - externally designated Committed - designated by highest authority (legislature) Assigned - designated by management Unassigned - undesignated (only used in General Fund)

Answer 42

Deferred revenue upon receipt of actual cash advances if receipt is in a prior period (prior to expenditures). Move to revenue as expenditures are made in the applicable period. If expenditures exceed advances in the applicable period, no deferred revenue remains even if more has been promised and will be transferred.

Answer 43

Hierarchical: 1. by fund 2. by program 3. by organizational unit 4. by activity 5. by character 6. by object (what is ultimately acquired e.g. Salaries & Wages)

Answer 44

Required on the face or as a separate schedule for governmental funds (BS and SRE&CFB) and proprietary funds statements (SNP and SRE&CFNP)

Answer 45

ALL 3 criteria: 1. Separately elected governing body 2. Legally separate 3. Fiscally independent (other state/local govt's)

Answer 46

``` fiscal and accounting ENTITY w/a self-balancing set of ACCOUNTS RECORDING cash and other financial RESOURCES which are SEGREGATED for the PURPOSE of carrying on specific ACTIVITIES or attaining certain OBJECTIVES ```

Answer 47

GW - Timing and collection does not affect GW. Recognized net of estimated UC (NRV current year) Funds - must also be "available"

Answer 48

types of employees covered | employee/employer obligations to contribute

Answer 49

then the unassigned fund balance increases at year end (where budgeted decreases/increases are debited/credited direct to unassigned fund balance)* *alternatively the budgetary fund balance account is used and unassigned fund balance is unaffected

Answer 50

Used to account for resources that are either restricted or committed for specific purpose (other than Capital outlay or Debt Service) Examples: gas tax to finance street mtnce, hotel tax for development, expendable trust gift to fund a program

Answer 51

Encumbrances are executory (unperformed) contracts for goods or services (from issue of PO or approval of K's) and are not liabilities because goods/services not received. It is an ESTIMATE of EXPENDITURE that will result. Categorize Encumbrances as: Committed/Assigned Fund Balance (unless already restricted) Unencumbered Appropriations = Appropriations - Expenditure - Encumbrances

Answer 52

1. item has to be held for public exhibition, education, or research as a public service 2. it is protected, cared for, and preserved 3. a policy has to be in place requiring the proceeds from any future sale to be used to acquire other items for the government's collection If any of the criteria is not met, the cost (or fair value if received by donation) must be recorded as an asset.

Answer 53

1. Show net financial burden or benefit per each separate function of government (education, public safety) which produces a net financial burden. 2. Show general revenues (property, sales, income taxes) to show major funding to offset net financial burden.

Answer 54

Similar: Private (NFP) follow FASB, therefore accrual Public (GOV) follow GASB, but for simplicity report as a single enterprise fund (Proprietary) so also accrual. Different: Private NFP must report on Unrestricted, Temporarily Restricted and Permanent while Public GOV do not.

Answer 55

Refers to whether revenues and spending align each period. If revenues are higher (a surplus), then money is carried forward to be used in future years. If spending is higher, then a deficit occurs that must be paid for in the future. Budget entry shows whether the budget is balanced or whether a surplus or deficit is projected.