F8: Governmental Accounting Overview Flashcards
What are restricted fund balances?
Resources whose use has been limited by external sources as creditors (ex: debt convenants), contributors, other governments, laws, constitutional provisions or enabling legislation
EXTERNAL AUTHORITIES
What are non-spendable fund balances?
Non-spendable fund balances represent resources in a form that cannot be spent (ex: inventories or prepaid expenditures) or are legally or contractually required to remain whole (ex: perm fund principal)
PREPAID EXPENSES, INVENTORIES
What are committed fund balances?
Committed fund balances represent resources that only can be used for specific purposes pursuant to constraints imposed by formal action of the government’s highest level of decision-making authority
RESOLUTIONS, ENCUMBERED APPROPRIATIONS
What are assigned fund balances?
Assigned fund balances are constrained by the government’s intent to be used for specific purposes but are neither restricted nor committed.
GOVERNMENT INTENDS TO OBLIGATE (DESIGNATE)
What fund would show a positive amount in the unassigned fund balance?
The general fund.
What are unassigned fund balance?
Unassigned fund balance is the residual classification for the general fund. This classification represents fund balance that has not been assigned to other funds and has not been restricted, committed, or assigned to specific purposes within the general fund.
ONLY GENERAL FUND SHOULD HAVE POSITIVE UNASSIGNED FUND BALANCE
Why would there be a negative unassigned fund balance?
Over expenditure of resources in other funds (special revenue, debt service, capital projects, perm)
What is GRaSPP?
These are government funds. Modified accrual basis of accounting. Current economic resources focus. Consists of: General fund, Special Revenue, Debt Service, Capital Projects, Permanent
What are the proprietary funds?
SE: Internal Service, Enterprise
What are the fiduciary funds?
PAPI: Pension, Agency, Private Purpose, Investment Trust Funds
What is a fund?
A fund is a fiscal & accounting entity with a self balancing set of accounts recording cash and other financial resources, together with all related liabilities and residual equities or balances, and changes therein. Fund resources are segregated for the purpose of carrying out specific activities or attaining certain objectives.
What is the order of restrictive classification of governmental fund balances?
From most to lease restrictive:
1) Non-spendable
2) Restricted
3) Committed
4) Assigned/Unassigned
What are permanent funds?
Perm funds are used to report resources that are legally restricted to the extent income, and not principal, will be used for purposes supporting by a gift endowment and the library is intended to support the needs of the general community, not a specifically identified individual.
What are private purpose trust funds?
These are fiduciary relationships that do not meet the definition of a pension, agency , or investment trust fund and are intended for the benefit of SPECIFIC individuals, private organizations, or other governments.
What are investment trust funds?
Investment trust funds are used to account for external investment pools.
What are special revenue funds?
Special revenue funds account for revenues from specific taxes or other earmarked sources that (by law) are restricted or committed to finance particular activities of a government.
What is the paramount objective of financial reporting for state and local governments?
ACCOUNTABILITY. Government (and NFP) organization reporting is designed to demonstrate the accountability of each organization for the stewardship of the resources in their care. Governments do NOT measure net income or increase in wealth as businesses do but are focused on providing efficient and effective DELIVERY of services with public resources. BOTH operational and fiscal accountability are important.
What are secondary objectives of financial reporting for governments?
Comparability, reliability, timeliness, and consistency.
What is the measurement focus and basis of accounting for government-wide F/S?
Gov-wide F/S are presented using the economic resources measurement focus using the accrual basis of accounting, similar to commercial enterprises.
What is the measurement focus of governmental fund accounting?
Current financial resources. (GRaSPP)
What is the hierarchy of GAAP as it relates to GOVERNMENTS (GASB) ?
1) GASB statements and interpretations
2) GASB technical bulletins, AICPA industry audit guides, and AICPA statements of position
3) AICPA practice bulletins
4) GASB implementation guides
What is categorized under the accounting principles and standards for not for profit organizations:?:
1) financial accounting standards board (FASB)
2) audit and accounting guides
3) industry-specific literature
what is government accountability office (GAO)?
the GAO prescribes “government auditing standards” - Yellow Book standards for audits of governmental organizations and federal assistance programs, activities, and functions.
SINGLE AUDIT ACT - an audit based on federal financial assistance awarded to governments and NFP organizations - requires compliance with government auditing standards as well as specific single audit rules
governmental accounting generally tested in the following three items:
1) fund structure
2) fund accounting
3) external reporting
what is related to these three items?
1) fund structure
- eleven fund types in three categories: governmental funds, proprietary funds, fiduciary funds
- fund F/S should be separately presented for governmental, proprietary, and fiduciary funds to report additional and detailed information about the primary government
2) fund accounting - (modified accrual / full accrual), measurement focus
3) external reporting
- reporting requirements include fund-based and government wide presentations supported by notes by the F/S and a variety of required supplementary information
- presentation of a recon of fund F/S to government-wide F/S to fully integrate reporting objectives required
