F9: Governmental and Not-for Profit Organizations

Question 1

What is the difference between operation accountability and fiscal accountability, and what do F/S do they relate to?

Answer 1

• Operational relate to the government wide, and deal with seeing if government has met its operating objectives efficiently (B/S) and effectively (I/S).
• Fiscal relates to the fund f/s and they serve to see if the funds were being spent for the right reasons.

Question 2

What is the integrated approach?

Answer 2

• This requires the reconciliation between the fund financial statements and the government wide f/s
• Starts with MDA (narrative analysis)
• Basic F/s (Gov wide, and fund statements, and the notes to the F/s)
• Lastly, the supplemental information.

Question 3

What financial statements do GRASSP require?

Answer 3

• The balance sheet

- Statement of revenues, expenditures, and changes in fund balance.

Question 4

What financial statements do SE require?

Answer 4

• Statement of net position
• Cash flow statement
• Statement of revenue, expenses, and changes in net position.

Question 5

What financial statements do PAPI require?

Answer 5

• Statement of fiduciary net position

- Statement of changes in fiduciary net position.

Question 6

When will special purpose local governments be treated as primary government entities?

Answer 6

• If they can report by itSELF.
• S - separately
• E - elected governing body
• L - legally separate
• F - fiscally independent of other state and local governments.

Question 7

What are the requirements for a blended presentation of a component?

Answer 7

• only 1 of the following has to be met
• board of the component is basically the same as the primary government
• unit is not a separate legal entity
• unit serves the primary government exclusively or almost exclusively.

Question 8

What are the two requirements for the use of modified approach?

Answer 8

• 1. inventory of eligible assets is up to date, summarized conditions assessment is performed, each year an estimate is made about the amount needed to maintain and preserve the infrastructure assets.
     
     2. there should be date about asset preservation.

Question 9

What are the program revenues for the government wide financial statements?

Answer 9

SOC away these revenues

• S = charges for services.
• O = Operating grants and contributions
• C= Capital grants and contributions.

Question 10

How do you tell if something is a major fund within the fund financial statements?

Answer 10

1. There is a 10% test, and to meet this the GRSPP funds are compared to the total governmental funds, and the Enterprise funds are compared to the total enterprise funds, and their must be at least 10% of rev, exp, deferrals must be there.
2. 5% test to be met the GRSPP is compared to both the enterprise and governmental funds, and the enterprise is also compared to both.
   The internal service funds are not included in these test, and general fund is alway going to be major, and the special revenue.
   BOTH OF THESE RULES MUST BE MET

Question 11

How do you reconcile the information for the fund statements government wide financial statements?

Answer 11

1. For the balance sheet you are going to take GALS BARE.
   G- GRaSPP fund bal
   A- Add assets (non current only) “Capital assets”
   L- Subtract liabilities (non current) “long term obligations”
   S- add Service (internal) fund net position
2. For the statement of revenue, expenditures, and changes in fund balance its GOES BARE
   G- GRaSPP fund balance
   O- Subtract other financing sources (proceeds from long term debt issuance or capital leases)
   E- Add expenditures (capital outlay net of depreciation)
   add the principal on debt services not interest.
   S- Add service fund net income

BARE is basis of accounting accrued for revenues and expenses.

Question 12

How is CAFR presented?

Answer 12

• Introductory section, basic financial statements and required supplementary information and statistical section( which is not part of the F/S).
• The MD&A section would be under the section basic financial statements and required supplementary information.

Question 13

What is an example of non capital financing under the statement of cash flows for a governmental entity?

Answer 13

• Proceeds or payments related to borrowing that are not attributable to capital assets.
• Cash receipts or payments that are related to grants and subsides that are not for capital purposes.
• Property taxes not designed for capital purposes.
• Cash paid to other funds

Question 14

What are the required Financial statements for a not for profit organization?

Answer 14

You must be full accrual first of all, and they are the:

• Statement of financial position
• Statement of activities
• Statement of cash flows
• Statement of functional expenses (Required for voluntary health and welfare orgs, and is not mandatory for others)

Question 15

What are the PUT funds?

Answer 15

You PUT into net assets. And you PUT them into revenues.
- Permanent - similar to temporarily restricted but the stipulation cannot be removed through the passage of time or by doing actions.

• Unrestricted - they are not restricted in anyway and can be used, and the internal board designated funds would fall under this.
• Temporarily restricted- have donor imposed stipulations that expire through times or have to be done by doing something by the organization.

Question 16

How do you recognize the donated services?

Answer 16

You recognize them SOME of the time.

• S - specialized skills are required and possessed by the donor
• O - otherwise needed by the organization
• M - measurable
• E - easily at fair value.

JE = DR expenses
CR Contribution revenue

Question 17

How do you get the gross revenue for tuition and fees?

Answer 17

You take the Assess tuition and fees and subtract the cancelled classes = gross revenue from tuition and fees.

• Some examples of revenue would be student tuition and fees, government aid, and gifts and private grants,.
• Scholarships and tuition waivers are considered expenditures.

Question 18

What are examples of patient service revenue, other operating revenue, and non operating revenue and support gains and losses?

Answer 18

1. patient service revenue - done on the gross basis, and deductions are made from gross revenue to report patient service revenue net of deductions. Medical services, doctors surgery, recovery room, and room and board. Charity care is not accounted for its just disclosed the policy.
2. other operating revenue - tuition, revenues from ed programs, donated supplies (not same as donated services), parking fees, gift shop rev
3. Non operating revenue and support gains and losses. - unrestricted items basically, and donated services.

Question 19

What does it mean to be financially interrelated? When it comes to not for profit organizations?

Answer 19

One is able to influence the operating and financial decisions of another, AND has ongoing economic interest in the net assets of the other.

Question 20

What is a Quasi endowment fund?

Answer 20

This fund would be used by a designating board, which means they are unrestricted funds.
But they have the ability to decide what happens with the income.

Question 21

What is an Endowment fund?

Answer 21

This is where you would get something that is permanently restricted but the income can be used for specific purposes.