4B - Format and Content of the Financial Section of the Annual Comprehensive Financial Report (ACFR) Flashcards
Which of the following is one of the three standard sections of a governmental annual comprehensive financial report?
Single audit
Actuarial
Investment
Statistical
Statistical
The ACFR (annual comprehensive financial report) of a government includes three sections: Introductory, Financial, and Statistical.
An investment is a type of asset. “Actuarial” describes the process of estimating future liabilities based on expected life spans. A “single audit” is an entity-wide audit meeting specific federal guidelines for entities that receive and expend certain federal grants or other resources.
Which of the following are included in a local government’s government-wide financial statements?
Statement of net position; statement of revenues, expenditures, and changes in fund balances; and statement of activities
Statement of net position and statement of revenues, expenditures, and changes in fund balances
Statement of activities
Statement of net position and statement of activities
Statement of net position and statement of activities
The government-wide financial statements consist of a statement of net position and a statement of activities. A statement of revenues, expenditures, and changes in fund balances is a required financial statement for the governmental funds, but not a government-wide financial statement.
Which of the following accounts would never be included in the statements prepared for a fiduciary fund?
Additions
Net position
Fund balance
Cash
Fund balance
Fiduciary funds use the economic resource measurement focus and the accrual basis of accounting. Revenues and expenses are not reported. The difference between assets plus deferred outflows and liabilities plus deferred inflows is referred to as “net position.” A change in net position is calculated as the difference between additions and deductions.
Fiduciary funds do not report fund balance.
At the end of the fiscal year, a state government reported capital assets of $20 million, accumulated depreciation of $5 million, restricted assets of $3 million, and liabilities of $7 million. What amount should the government report as the total net position in its government-wide financial statements?
$18 million
$11 million
$15 million
$8 million
$11 million
Net position is the residual of all other elements presented in a statement of financial position. The basic premise applies to full accrual accounting statements. To avoid confusion, the GASB does not use the terms “net assets” or “fund balance.” The increase or decrease in net position from one period to another should match that net change in the resources flows statement.
The accounting equation for net position is Financial assets + Deferred outflows – Related liabilities – Deferred inflows, or $20 million + $3 million – $5 million – $7 million = $11 million.
A city government levies a tax on its citizens for improvements to roads. How should the city report the tax in its statement of activities?
By type of tax in program revenues
In special items reported separately from general revenue
As program-specific contributions in program revenues
By type of tax in general revenues
By type of tax in general revenues
All taxes of the reporting government, even if restricted to a specific program, are general revenues.
The format of the government-wide statement of activities should be viewed as having two distinct parts. The upper portion of the statement focuses on cost of services and reports both the total expenses and the net revenues or net expenses of the government by function. The lower portion of the statement intends to report how the net program expenses incurred during the year compare with general revenues. The statement is not intended to report net income, and no net income number is presented
A town’s basic financial statements include information for major and nonmajor governmental funds. There were no internal service or enterprise funds. One of the nonmajor funds is the Road Tax fund, which accounts for a share of tax moneys remitted by the state on a prorated basis. Individual fund statements with prior-year comparative data would have to be presented for the Road Tax fund if:
every governmental fund must be reported individually.
the town has opted to present budgetary data as required supplementary information rather than as part of the basic financial statements.
the Road Tax fund is the town’s only special revenue fund.
state law requires prior-year comparative data for any individual fund receiving a prorated share of state tax collections.
state law requires prior-year comparative data for any individual fund receiving a prorated share of state tax collections.
As a nonmajor fund, the financial information for the Road Tax fund is combined with other nonmajor funds in the basic financial statements. Individual fund financial statements would be required to demonstrate compliance with state law in this case. Whether shown in RSI or as part of the basic financial statements, the budgetary data would not otherwise show the details of individual, nonmajor funds.
In combining nonmajor funds, it does not matter if only one of the governmental funds was a special revenue fund. Because the focus of fund financial reporting is on major funds, nonmajor funds should be aggregated and do not need to be shown individually.
Which of the following is true about the statement of changes in net position for fiduciary funds other than pension/OPEB funds?
Additions and deductions can be aggregated if the resources are normally held and disbursed within a year for custodial funds.
Private-purpose trust funds are not required to present a statement of changes in net position in the fund financial statements.
Revenue and expenditures must be presented in detail.
Additions must be disaggregated and shown by source and deductions disaggregated and shown by type.
Additions must be disaggregated and shown by source and deductions disaggregated and shown by type.
GASB Statement 84 requires additions to be disaggregated and shown by source. Deductions must be disaggregated and shown by type. Additions and deductions can be aggregated in custodial funds if the resources are normally held and disbursed within a three-month period. Specific categories include investment income, investment expense, administrative costs, and net investment income.
Valley Town’s public school system is administered by a separately elected board of education. The board of education is not organized as a separate legal entity and does not have the power to levy taxes or issue bonds. Valley’s city council approves the school system’s budget. How should Valley report the public school system’s annual financial results?
Discrete presentation, no; Blended, yes
Discrete presentation, yes; Blended, yes
Discrete presentation, yes; Blended, no
Discrete presentation, no; Blended, no
Discrete presentation, no; Blended, yes
Blending of financial results is allowed as the public school system and the city are not separate legal entities. The city is responsible for the finances of the school system (the school board has no authority to levy taxes or issue bonds).
Discrete presentation is for affiliated entities whose resources are entirely for the benefit of the primary government. The school system does not operate for the sole benefit of the town.
On the budgetary comparison schedule, a variance should be calculated between the final budget and:
actual expenditures plus outstanding encumbrances.
the original budget.
actual appropriations.
the original budget expressed on a GAAP basis.
actual expenditures plus outstanding encumbrances.
A city government would report each of the following categories in its government-wide statement of net position except:
fiduciary activities.
business-type activities.
governmental activities.
component units.
Fiduciary
The government-wide financial statements report governmental activities, business-type activities, the primary government totals, and discretely presented component units. Fiduciary funds and fiduciary component units are not included in these statements.
A city government reported a $9,000 increase in net position in the motor pool internal service fund, a $12,000 increase in net position in the water enterprise fund, and a $7,000 increase in the employee pension fund. The motor pool internal service fund provides service primarily to the police department. What amount should the city report as the change in net position for business-type activities in its statement of activities?
$12,000
$21,000
$9,000
$28,000
$12,000
Only the water enterprise fund is a business-type activity which provides services to the general public for a fee; the pension fund and the internal service fund are not business-type activities. The city should report $12,000 as the change in net position.
Civic Town’s basic financial statements included information for the nonmajor governmental funds in combined form. The aggregated data included expenditures summarized by major functional classifications. Narrative explanations are needed to accompany the combining statements of revenues, expenditures, and changes in fund balances to provide greater detail and assure the reader’s understanding of the statements. The narrative should appear:
directly on the combining statements, on divider pages or in a separate section.
in a separate section of management’s discussion and analysis.
in the notes to the financial statements.
in the required supplementary information following the financial statements.
directly on the combining statements, on divider pages or in a separate section.
Narrative explanations of combining and individual fund statements should be presented on divider pages, directly on the statements and schedules, or in a separate section according to GASB 2200.211.
Notes to the financial statements, RSI (required supplementary information), and MD&A (management’s discussion and analysis) are not options for locating these narratives.
Which of the following is a minimum required report for the basic financial statements of a government entity?
Fund financial statements
Required supplementary information
Management’s discussion and analysis
Budgetary comparison schedules
Fund financial statements
A special-purpose unit of government such as a school board is considered a primary government if it meets which of the following criteria?
I. It has a separately elected governing body.
II. It is legally separate.
III. It is fiscally independent of other state and local governments.
I or II or III
I and II or III
I or II and III
I , II, and III
I , II, and III
In order for an entity to be considered a primary government it must meet all three of the following criteria:
I. It has a separately elected governing body.
II. It is legally separate.
III. It is fiscally independent of other state and local governments.
Metro General is a municipally owned and operated hospital and a component unit of Metro City. Where should the information for Metro General be presented in the government-wide financial statements?
In the governmental activities column
It should not appear in the government-wide financial statements.
In the component units column after the primary government totals
In the business-type activities column
In the component units column after the primary government totals
$10,000,000
While many governments fund their OPEB plans primarily on a pay-as-you-go basis, they are required to report the true liability for those benefits in their government-wide financial statements. If a government’s OPEB plan is administered through a trust that meets specified criteria in GASB Statement 75, the net OPEB liability will be reported. However, if the criteria is not met, the total OPEB liability will be reported ($10,000,000) and any assets set aside for OPEB benefits will continue to be reported as assets of the government.
