F9 and 10 Flashcards
What are the 3 requirements for an Enterprise fund?
When fees support debt financed by pledged fees; laws and regulations require costs be defrayed by fees ( sewage/water) ; pricing policies require recovery cots with fees (amusement park)
What is the basic criteria for a reporting entity for govt unit? (5)
- Financial interdependency
- Selection of governing authority
- Designation of mgmt
- ability to sig influence operations
- accountability of fiscal matters
How are interfund transfers reported?
Other financing sources (uses)
What fund would be a govt unit not obligated in any manner for special assessment debt?
Custodial fund
At what value are donated capital assets recorded at?
Fair value when received
What is the “Unassigned Fund”
Residual classification of the general fund (amt not restricted, committed, or assigned within the general fund)
How do you classify a “major fund”?
fund is either:
1. 10% of Assets, Rev, or expense of Govt or Enterprise funds
2. 5% of combined reven/expense government AND Enterprise assets, revenues, and expenses
What fund is always treated as a major fund?
General Fund
How are interfund receivables and payables recorded?
As internal balances
How are pledges for future years recorded (I.e pledge not received till 3 years later)?
Pledge receivable with Donor restrictions of present value of pledge
What are billings for services provided to other govt units recorded as in the internal service fund?`
Operating revenues
When is a conditional pledge to a nongovt org rec as revenue?
NEVER until it becomes and unconditional pledge
What is included in a general fund’s encumbrance amt?
Only o/s purchase orders (obligation to spend)
What is the Je to set up an encumbrance,
reverse encumbrance
Actual expenditure
DR: Encumbrance
CR: Budgetary control
DR: Budgetary control
CR: Encumbrance (same amt)
DR: Expenditure
CR: Voucher payable/cash (actual)
If encumbrances is not closed at y/e –> what is the y/e entry?
DR: Budgetary control
CR: Encumbrance
DR: Unassigned fund balance
CR: Fund balance, committed
What is an appropriation
Budgetary account - represents approved spending
What are the characteristics of Special items?
Unusual and infrequent
Where are changes in values of derivatives used as investment classified?
As revenues
Where are changes in values of derivatives for hedging classified as? (forward contract)
Deferred inflow/outflows
What are the categories of govt fund balances? (NU CAR)
Nonspendable fund balance - CA that cant be spent (Prepaids, inven)
Unassigned Fund balance - residual of general fund (should be positive in general fund)
Committed - assets obligated by formal action of govt highest decision-making authority (encumbered appropriations). came in unrestricted but govt council committed for certain purpose
Assigned Fund Balance - assets that govt intends to obligate (designations)
Restricted - assets restricted by external authorities (legislation, grantors, creditors)
What F/S should show Net Position
Govt -wide
Proprietary
What is a Reciprocal interfund activity and how are they treated?
Include exchange type transactions between funds
2 types:
Interfund loans - transfers
Interfund services provided/used - sales/purch –> rev/expense
What is a nonreciprocal interfund activity and how are they treated?
Represents non-exchange transactions between funds.
2 Types:
1. Interfund transfers - flow of assets b/n funds w/o exchange of equivalent value –> other financing sources and uses after nonoperating rev/expenses
- Interfund reimbursement - pmts made on behalf of another fund. not displayed as interfund transactions
What are the general fund revenue sources?
Taxes
Fees and fines
Shared or grant rev
investment earning
What are the expenditures of general fund?
General admin functions (city mgmt, finance)
Public safety
Culture and rec (parks, lib)
What are ex of special rev funds?
Legally restricted or committed for specific purpose
Sales tax fund –> to op park and tourist
Gas tax fund –> op and maintain streets
Special fees –> op school program
Parking fees –> op traffic court)
State grant –> juvi
What is the JE for a restricted Capital grant?
DR:Cash
CR: Rev collected in advance (deferred)
What is a special assessment?
Taxes or fees levied against property owners who will directly benefit from project (sidewalks, street lights)
What two govt funds do not include encumberances?
Debt service and permanent
What is the BS structure for a Govt Fund?
Assets, Liab, Fund balances
What is the layout of a statement of rev/expen/changes in fund balances for govt balances
Revenues
Expenditures (current vs, capital outlay)
Other financing sources
Special item
What are the rev sources of internal service fund
Restricted grant (recognized when spent)
Op/non op rev
What is the layout of proprietary fund statement of net position (RUN)?
Assets (current and NCA) reduced by A/D
-Liab (CL and NCL)
Net position (Net inv in capital assets, Restricted for debt services, Unrestricted)
How are shared revenues classified in enterprise funds?
As nonope rev
What is the order of presentation of a proprietary fund statement of rev/ex/change in net position? (INCASET)
Income (operating)
Nonoperating income/exp
Captial contributions
Additions to endowments
Special items (unusual and infrequent)
Extra ordinary items
Transfers
What funds are included in the Govt-Wide Financials
GRaSPP and SE
What are the 3 characteristics of fiduciary funds?
- Assets controlled by govt
- Assets are not govt “Own- source” of rev
- Assets are not subject to admin involvement by govt (if admin monitoring –> special rev)
What are the F/S of Fiduciary Funds?
Statement of fiduciary net position
Statement of changes in fiduciary net position
NO Cash flows
Footnotes
What are the revenue additions to investment trust fund?
Contributions, net appreciation(depreciation) FV of plan assets, Real/unreal G/L, premiums/discounts on debt
What is the private purpose fund
reporting all other trust arrangements under which principal and income are for the benefit of specific individuals, private org, or other govt
what are the two types of accountability for govt reporting requirements?
Operational accountability - govt wide F/S to report govt has met the operating objectives efficiently and effectively using all resources available for purpose
Fiscal Accountability - Fund FS show govt entity’s actions in the current period have compiled with public decisions concerning the raising and spending of public funds in ST
What is the approach that Govt financials are reported? (6 things included)
Integrated approach
1. MD&A
2. Govt wide f/s (Net position, activities, no CF, fiduciary is removed)
3. fund F/s(GRasPP, Propriety, fiduciary)
4. have to reconcile,
5. Notes to FS,
6.Required supplementary info (not MD&A) like pension, budget, infrastructure )
What is in the annual comprehensive Financial report?
Intro section (unaudited) - org chart, list of officers
Basic FS and required supp information (audited)
Statistical section (unaudited) - selected Financial data and economic data
What are the 3 components of net position?
Net investments in capital assets- Assets less A/D, Less O/S AP. included deferred inflow/outflows
Restricted (externally imposed)
Unrestricted (everything else)
What are the 7 differences between reg cash flows and proprietary fund FS?
- Direct method is Required (no indirect)
- Recon of op income NOT Netincome
- there are 4 categories (operating, capital related financing activities, non capital financing activities, investing activities)
- Financing is before investing
- Int income is investing (not operating)
- Int expense/cash pmts are capital/noncapital financing instead of operating
- Capital asset purchases is financing NOT investing
What is in the Capital and noncapital financing activities?
Capital financing = issuing debt w/ cap assets, capital asssets
Non capital financing - ope transfers, property tax to subsidize ops
How are proceeds from general obligation of bond issue and transfer of general fund classified in the capital projects fund?
As other financing sources
What types of funds do not report cash flows?
Govt and Fiduciary
What are examples of cash flows from noncapital financing?
Procced/pmts related to borrowing (not for Capital assets)
Cash receipts/pmts related to grants (not for capital assets)
Property taxes not designated for capital asset
Cash paid to other funds (not interfund services)
What is the reconciliation of Govt Funds statement of rev,expenditures and fund balance to the Govt wide fund balance? (CPAS RIDES)
Govt Change in fund balance
+Capital outlay
+Principal payments
-Asset disposals
- Sources (debt proceeds)
+Revenue measurable but unavailable (deferred revenue)
-Accrued int expense
-Depreciation Expense
+Internal Service Net revenue
What is the JE for recording capitalized asset in the govt-wide financials?
DR: Capital asset
CR: Capital outlay expenditure
DR: Depreciation expense
CR: A/D
What is the JE to record a lease that will transfer for govt funds?
DR: Capital outlay expenditure
CR: Other financing sources
Where would a bond of $5M issued at 101 and premium of $50k go in the govt funds?`
Capital projects for the proceeds LESS premium
Debt service fund for premiums
If a general fund over spent, how would the deficit be recorded?
Negative fund balance - unassigned
When GASB 34 reporting stds are adopted - what should be in the FS`
- Budget vs actual amounts for General fund and each major Special rev fund with legally adopted budget presented in Required supplementary info OR within basic FS
How would you transfer a lease from govt funds to a lease govt wide F/S
Original recording:
DR: Capital expenditure
CR: Other financing source
Govt Wide
DR: Capital asset
CR: Capital outlay expenditure
DR: Other financing source
CR: Lease liability
At what salary rate should be used to calc liability for compensated balances at y/e for govt-wide F/S?
Rate @ balance sheet date
For govt-wide financials - how is the lease payment recorded for a lease that transfers ownership?
DR: Lease liability (principal)
DR: Expenditures control (interest)
CR: Cash
What are the basic financial statements according to GASB 34? (4)
- Govt-wide F/S (statement of net position, statement of activities)
- Fund F/S (Govt Funds –> Bs/Rev/exp/chang in fund. Proprietary funds –> statement net position, rev/exp/change in net position. fiduciary Funds –> statement of fiduciary net position, statement of changes in fiduciary net position)
- Notes to F/S
- Supplementary information (includes MD &A)
- budget vs actual comparison
When converting Govt fund F/S to Govt-wide F/S - how is a sale of an asset treated?
NBV of the asset (not the gain)
Where is the portion of special assessment debt maturing in 5 years from govt fund reported?
Govt-wide statement of net position (cant keep in general bc they are current only)
What is the JE for an interest payment in a govt fund? and what does it decrease overall?
DR: Interest expenditure
CR: Cash
Decrease overall fund balance
What are the two objectives of govt reporting?
- Accountability
- Interperiod equity (can current resources cover current obligations)
What are the three main groups of F/S users for govt entity?
- Citizens
- Legislative and oversight boards (school boards)
- Investors and creditors
What is SEA reporting and what does it measure?
SEA = measures of service efforts and accomplishments
- Measure of service efforts = input (spent x to hire employees)
- measure of accomplishments = output (hired employees responded to X calls and produced Y output)
- Efficiency = measure of resources to achieve level of output
If city designates funds in the enterprise fund for future equipment - how is this reported in the fund?
Unrestricted net position
What funds only have “Other financing sources and uses”?
Only the govt fund
How is a transfer of funds from General Fund to enterprise fund recorded on both funds?
General Fund:
DR: Other financing uses
CR: Cash
Enterprise Fund:
DR: Cash
CR: Non-operating revenues
How would a grant be recorded?
DR: Cash
CR: Deferred inflow
When recognized:
DR: Deferred inflow
CR: Rev
What is the entry to record payment of $300k principal and $80k interest on general longterm debt in the debt service fund?
DR: Expenditure-Principal 300
DR: Expenditure- interest 80
CR: Cash 380
What funds record budgets?
Only Govt funds record budget since its on the modified accrual
Proprietary and fiduciary funds do not record since that are on accrual
For Governmental funds - what 2 things increase and decrease fund balance?
Decrease = Expenditures and other financing uses
Increase = Revenues and other financing sources
What is the determination for a primary govt (SELF)?
Separately
Elected
Legally separate
Fiscally independent entity of other state and local govts
If no –> component unit
What is a component unit and what is is the difference b/n a discrete component unit and blended component unit
Component unit of primary govt which primary govt are financially accountable (not separately elected
Discrete - separately elected board, does not pass SELF (fiscally dependent(
Blended - one in the same board and serves the primary govt exclusively
For the govt wide financial statements - what funds are included and what funds are govt vs business?
Govt and Proprietary funds are included ONLY in the Govt wide F/S
Govt activities for F/S = GRaSPP and internal service
Business type = Enterprise
What part of the cash flows will include making and collecting loans/acquiring and disposing of D/E?
Investing
What is the entry to record tax revenues on Govt-wide F/S
DR: Deferred inflows
CR: Tax revenue
How is construction interest recorded on the Govt wide financial statements?
Reported as int expense –> NOT CAPITALIZED
What is the balance sheet adjustments for Govt fund balance to Net position? (CANS)
Total Govt Fund Balance
+ Capital Assets (ALL)
- A/D
- NCL
+ Eliminate/reverse deferred inflows
- Accrued int payable
+Internal Service fund Position
What are the Fund F/S required for Govt funds?
Balance sheet
Statement of rev, expenditures, changes in fund balance
What are the proprietary fund F/S required?
- Statement of net position
- Statement of rev, expenses, changes in fund net position
- Statement of cash flows
What are the required Fiduciary Fund F/S
Statement of fiduciary net position
Statement of changes in fiduciary net position
What Fund is most likely to have a fund balance that is non-spendable inv of supplies
general
In preparing enterprise fund cash flows. ID the following
1. Cash pmts to suppliers
2. interfund reimbursement for services
3. Capital outlay for water plant
4. Operating transfers out
- Operating
- Operating
- Capital Financing
- Noncapital financing
How would a local govt report expenses in govt-wide statement of activities?
By function or program listed
Where do the following go in the Govt wide FS:
- Comparison of General fund budgets to actual to general Fund activity
- Budget variances
- Analysis of significant budget variances
- RSI
- Optional supplementary information
- MD&A
What is included in the MD&A of govt F/S (4)
- Description of F/S (analysis of results and reasons for changes from PY, analysis of sig variations in budget to original)
- ID Primary govt and discrete component units
- Economic conditions and outlook
- Major initiatives (Capital asset and LTD)
What is included in the notes to the F/S (part of basic F/s, 5)
- Govt activities (will describe measurable and available here)
- Business Type activities
- Major funds
- Nonmajor funds in the aggregate
- Additional info on discrete component units
What is included in the Required supplementary information for Govt F/S?(3)
- Budgetary comparison reporting (original , Final, and actual)
- Infrastructure information (modified approach)
- Pension information
