Ch 9 Hw Flashcards
Name the three users considered by the GASB to be the major external users of governmental financial reports.
Citizens
Legislative and oversight bodies
Lenders and creditors
List the three ways in which financial reporting can assist users in assessing the level of services that can be provided by a government and its ability to meet its obligations as they come due.
- Providing information about its financial position and condition (balance sheet)
- Providing information about physical information and other nonfinancial resources that have useful lives extending beyond the current year (fixed or leased assets)
- Disclosing legal or contractual restrictions on resources and the risk of potential loss of resources
What are the minimum requirements established by GASB for general purpose external financial reports?
- Managements discussion and analysis (MD&A)
- Government-wide statements
- Fund financial statements
- Notes to the financial statements
- Required supplementary information
What is a primary government?
Any state government and general-purpose local governments, including counties, cities, towns, and villages
When is a special purpose government considered a primary government?
When it is:
1. Separately elected governing body
2. Legally separate
3. Fiscally independent of other state and local governments
Ex. School Districts, Hospitals, etc.
What does it mean to be fiscally independent?
The organization must have the authority to determine its budget, levy taxes, and issue bonded debt
What is a component unit?
Legally separate organizations for which the elected officials of the primary government are financially accountable
Can also be other organizations, given the relationship and significance to the primary government, that would cause the financial statements to be misleading if excluded
What is the purpose of the Management’s Discussion and Analysis?
To provide an objective analysis of the government’s financial operations and financial position based on known facts
Should be easily readable and should help the reader understand the information reported in the government’s financial statements
What are the minimum requirements for the Management’s Discussion and Analysis?
- Brief discussion of basic financial statements
- Condensed financial information from the government-wide statements, comparing the current and prior years
- Analysis of the government’s overall position and results of operations
- Analysis of balances and transactions of individual funds
- Analysis of budgetary variations
- Capital asset and long-term debt activity
- Infrastructure assets
- Future effects
What are the requirements for a fund to be classified as a major fund in the financial statements?
What is a special item in financial reporting?
Significant transactions or events within the control of management that are either unusual in nature or infrequent in occurrence.
Describe and illustrate the kind of information that should be reported in notes to the financial statements.
Descriptions of the accounting and finance-related policies underlying amounts recognized in the financial statements
Detail about or explanations of the amounts recognized in the financial statements
Additional information about financial position or inflows and outflows of resources that do not meet criteria for recognition in the statements
What kind of information is compared in a budgetary comparison schedule?
- Original appropriated budget
- Final appropriated budget
- Actual inflows, outflows, and balances for the year on the budgetary basis of accounting
Showing the variance between the final budget and actual amounts may be shown but it is NOT required
