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FAR 9 Flashcards

1
Q

Primary government entities

A
  1. State governments
  2. General purpose local governments )county or city)
  3. Special purpose local governments
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2
Q

Special purpose local government (SELF)

‘Primary Government’

A

Is primary government if all criteria are met

  1. separately-elected governing body
  2. Legally separate
  3. Finincially independent of other state or local government

If does not meet above criteria, then it is COMPONENT UNIT (either use discrete or blended)

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3
Q

Component Unit

A

An elected officials of the primary government are financially accountable

May be an organization that cannot be excluded from governmental-wide F/S

Not-for-profit organizations that provide ongoing support to primary govt or component unit of primary govt (e.g. private foundations associate with state universities or public health care facilities)

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4
Q

Component Unit

‘Blended Presentation’

A

Only one is required:

  1. Board of component unit is substantively the same as primary government
  2. Component unit serves the primary government exclusively
  3. Component unit is not a separate legal entity
  4. Not financially independent since its budget is approved by government official

Does not meet the SELF requirement

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5
Q

Discrete Presentation (or separate presentation) of component unit

A
  • Separately elected governance board

Default method when the criteria for blended presentation have not met

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6
Q

Legally separate, tax-exempt organizations should be reported as discrete (separate column) component unit if it meets

A
  1. Resources held are used for near-exclusive benefit of primary government
  2. Primary governemnt has access to majority resources
  3. Resources held are significant government
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7
Q

Reporting for general purpose governmental units

REQUIRED

A
  1. Required supplementary info before basic F/S

Management’s discussion and analysis (MD&A) -

  1. Basic F/S
  • Government wide F/S
  • Fund F/S
  • Notes to F/S
  1. Required supplementary info after basic F/S
  • Combine statements for non major funds
  • Budget vs. actual for general fund
  • adopted vs. final amended budget
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8
Q

Statistical section of optional reporting for general purpose governmental units is not

A

Part of basic financial statements

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9
Q

Management’s Discussion and analysis

A
  1. Easily readable analysis
  2. Condensed F/S info
  3. Analysis of overall financial position and results of operations
  4. Analysis of balances and transactions of individual funds
  5. analysis of signification variations (NO VARIANCE ANALYSIS & RECONCILIATION OF FUND F/S
  6. description of the signification assumptions
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10
Q

Government wide F/S - statement of net position (‘consolidated statement’)

A

Does not include fiduciary funds

Include component unit

Asset - Liabilities = Net position (RUN)

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11
Q

Construction Period Asset for Capital Assets

A

Is NOT REQUIRED

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12
Q

Capital assets include…

A

Infrastructure assets - streets, bridges, gutters, other asset of govt.

Reported as general capital assets

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13
Q

Capital Asset - Required Approach

A

All assets meeting capitalization requirements should be recorded and depreciated

Depreciation exp that can be identified with function category should bbe included in direct expense of that function

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14
Q

Capital Asset - Modified Approach

A

Infrastructure assets that are part of network or subsystem of network are NOT REQUIRED to be depreciated

Ongoing infrastructure expenditures are typicallly reported as expense

Outlays in additions or improvements should be capitalized

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15
Q

Capital asset -Modified approach requirement

A
  1. Govt’s asset management system meets certain conditions:
    - inventory eligible is up to date
    - summarized condition assessment of eligible infrastructure assets
    - estimate is made of the amount necessary to main or preserve the eligible infrastructure asset every year
  2. Govt documentaton should include data on asset preservation
    - complete condition assessment at leaset every THREE years
    - support assertions of the eligible infrastructure assets meeting the conditions
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16
Q

Changes from modified to required

Changes from required to modified

A

Treat as change in estimate

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17
Q

Treatment of artwork and historical treasures

A

Capitalize at historical cost or fair value at data of donation

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18
Q

Govt elect not to capitalize artwork and historical treasures

A
  1. Collection is held for public exhibition
  2. Collection is protected
  3. Collection is subject to an organizational policy that requires proceeds from sales to be used/acquired other items for collections
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19
Q

Treatment of Inter-fund receivables and payables

A

Eliminate all interfund activities

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20
Q

Program Revenue Category Types - SOC

A
  1. CHARGES FOR SERVICES to customers, to government, fines & forfeitures (exchange for exchange-like transactions)

OPERATING GRANTS & CONTRIBUTIONS - restricted use for particular program

CAPITAL GAINS & CONTRIBUTIONS - mandatory and voluntary non-exchange transactions

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21
Q

Government-wide statement of activities presentation

A

Horizontal: expenses, indirect expense allocation, program revenues (SOC), net(expenses) revenues and changes in net position (primary govt)

Vertical - Function/programs (- Primary govt (governemnt activities, business-ike type), component unit

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22
Q

Fund F/S requirement of Major fund

A

Both criteria must be MET:

  1. > 10% of the corresponding total revenues, expenditures/expense, assets and deferred outflows of resources, or liabilities and deferred inflows of sources of:
    ALL GOVERNMENTAL FUNDS
    OR
    ALL ENTERPRISE FUNDS (separate columns)
  2. > 5% of the corresponding total revenues, expenditures/expense, assets and deferred outflows of resources, or liabilities and deferred inflows of sources of:

ALL GOVERNMENTAL FUNDS AND ALL ENTERPRISE FUNDS (total column)

Use the statistic of
Aggregate revenues or expenditures/expenses and aggregate assets & liabilities

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23
Q

In determing major fund, general Fund is always

A

A major fund

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24
Q

In determing major fund, Internal services fund will not be considered

A

in the evaluation of major and non-maor fund

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25
Q

Reconciliation for B/S

‘

A

Governmental fund balances
ADD: non-current assets
SUBTRACT: non-current liabilities
ADD net position of governmental acivities

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26
Q

Reconciliation of I/S

‘Change in net position’

A

Net change in governmental Fund balances
SUBTRACT: other financing sources
ADD: expenditures - capital outlay (net of depreciation)
ADD: service (internal) fund net income

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27
Q

Governmental Fund F/S

A 
Assets 
Deferred outflow of resources
Liabilities
Deferred inflow of resources
Fund Balances (Non-spendable inventories
restricted for
committed to
assigned 
unassigned)
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28
Q

Governmental Funds - Statement of Revenue, Expenditures & changes in Fund Balance (Income Statement)

A
  1. Revenues
  2. Expenditures
  3. Other financing sources(uses)
  4. Special Item
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29
Q

Minimum budgetary information required as supplementary information are

A

Schedule showing

  1. original budget
  2. final appropriations budget
  3. actual inflows, outflows, and balances on a budgetary basis
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30
Q

Variances of budgets are…

A

Optional other supplementary information (optional)

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31
Q

Government-wide components of statement of cash flow

‘the difference between commercial statement of cash flow’

A
  1. Direct method is required (indirect method is prohibited)
  2. reconciliation of operating income (not NI) to net cash provided by operations is required
  3. Four categories: operating, capital financing, non-capital financing, investing
  4. Order of financing and investing activities are reversed
  5. Interest income/cash receipts reported as ‘investing activities’ (not operating activities)
  6. interest expense/cash payments are in financing
  7. capital asset purchases are reported as ‘financing activities (not investing activities)
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32
Q

Government-wide F/S focus the reader on accountability in which way

A

Operational accountability - takes economic view that reportes L/T efficient and effective use of resources

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33
Q

Fund Financial statements focus the reader on accountability in which way

A

Fiscal accountability - takes S/T view that focus reader on compliance and current year performance

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34
Q

Integrated approach is a…

A

Joint presentation of government-wide and fund financial statements and appropriate reconciliation

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35
Q

Combining financial statement of non-major fund types is reported in

A

Other supplementary Info (optional)

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36
Q

Comprehensive Annual Financial Report (CAFR)

‘Optional Reporting’

A
  1. Introductory section
  2. basic F/S and Required supplementary info (include MD&A)
  3. Satistical Section
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37
Q

Required Financial Reports

A
  1. Management’s Discussion & Analysis *MD&A) - required supplemental info
  2. Basic F/S - all 2 fund statements and notes to F/S
  3. Required supplementary info
  4. other supplementary info
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38
Q

Modified Approach report infrastructure expenditures as

A

Expenses except for outlays that result in additions or improvements, which would be capitalized

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39
Q

In preparing government-wide F/S for governmental entity, interfund receivables & payables between governmental and enterprise fund should be

A

Reported as internal balances

40
Q

Quasi-external transactions

A

One in which governmental fund acquires a good or service that could have been purchased from unrelated business Enterprise

An exception gives rise to operating expenditures and revenues for TRANSFERS BETWEEN FUND

41
Q

Special assessment debt that is to be repaid from general resources of the government is reported…

A

In government-wide statement of net position

42
Q

Revenue recognition of modified accrual basis

A

Measurable and available

Revenue recognize = current year collection + collection within 60 days of next year

43
Q

Unassigned fund balance of general fund represents…

A

The amount of current resources carried forward into the following year that will be available for appropriations.

Unassigned fund is likely to increase when appropriations > expenditures

44
Q

Non-capital financing activities of cash flow include

A
  1. Proceeds/payments related to borrowing not attributable to acquisition, construction or improvement of capital assets
  2. capital receipts or payments related to grants/subsidies not attributable to capital purposes
  3. property taxes not designed for capital purposes
  4. cash paid to other funds (other than for inter fund services)

Operating transfer out

45
Q

Operating section of Cash flow includes

A
  1. Receipts & disbursements related to sales of goods & services
  2. Interfund reimbursement
46
Q

Valuable donations that is used for lecction & display in protected exhibition area and if sold, use the proceed to buy another collection, the government may elect

A

to capitalize and depreciation; however, it is not require.

47
Q

Reciprocal inter fund activity includes

A
  1. Inter-fund loans

2. inter-fund services provided and used

48
Q

Non-reciprocal transfers include

A
  1. Interfund transfers

2. Inter-fund reimbursement

49
Q

Introductory section of comprehensive annual financial report includes

A
  1. letter of transmittal
  2. organizational chart
  3. list of principal officers
50
Q

Not-for-profit required financial statements

A
  1. Statement of Financial Position
  2. Statement of Activities
  3. Statement of Cashflows
  4. Statement of functional expenses - required for voluntary health and welfare organizations
51
Q

Statement of Financial Position

A

Asset
Liabilities
Net assets (equity) - permanent restricted, temporarily restricted, unrestricted

Current = to be spent soon
Non-current = to b permanently held
52
Q

Net Assets of not-for-profit
‘Unrestricted’

(Equity)

A

Available to finance general operations

  1. May be expended at discretion of the governing board
  2. Internal board-designed fund are considered unrestricted
  3. contributed services
53
Q

Temporarily restricted net assets
Not for profit

(Equity)

A

Donor-imposed stipulations either

  1. expire by passage of time
  2. removed by actions of the organization

Temporarily restricted net assets should not be displayed as DEFICIT,
Over spending should be classified as REDUCTION OF UNRESTRICTED NET ASSET

54
Q

Permanently restricted net assets
Not for profit

(Equity)

A
  1. Contributions whose use is LIMITED by donor-imposed stipulations that neither expire by passage of time nor can be fulfilled or otherwise removed by actions of the organization
55
Q

Statement of Activities

(Income Statement

A
  1. Changes in total assets
  2. changes in net assets
    - permanently restricted
    - temporarily restricted
    - unrestricted
56
Q

When a donor restriction is satisfied

A

A reclassification is reported on statement of activities

57
Q

Support in permanently restricted/unrestricted net assets is ordinarily

A

Not reclassified

58
Q

Classifications of functional expense categories in

A
  1. Program services - universities, hospitals, union, day care
  2. Support services - fundraising, administration, management and general, membership development
  3. combined cost - Fundraising efforts with eductional (program) services
    Allocate between the 2 costs
59
Q

Not-for-profit CF

‘Financing Activiites”

A
  1. Borrowing
  2. Certain restricted contributions (donor-imposed restrictions limiting its use to L/T purposes like increase in endowment, puchases of assets, or annuity agreements)
60
Q

Not-for-profit CF

‘Investing Activities”

A
  1. Equipment investment
  2. proceeds from sale/purchase of works art
  3. proceeds from sale of assets where restricted to inestment in equipment
61
Q

Cash and cash equivalent of not-for-profit restrict

A

restricted securities that meet the requirement

62
Q

Statement of functional expenses is required for

A

Voluntarily health and welfare

63
Q

Statement of function expenses categories

A
  1. Program support expenses
  2. Fundraising expenses - unsolicited merchandise sent out
  3. Management and general costs
  4. Multiple cost tiems
64
Q

Not-for-profit

Contributions & Recognition

A
  1. Unconditional transfer of cash or assets to new owner is voluntarily

Recognition
1. Cash = received, FV date of gift

  1. Unconditional promises - record at FV when promise is made (may be written or verbal)
  2. Conditional promises - record when conditions are substantially met or chances of not meeting is remote (earned)
    transaction depends on occurrence of future and uncertain event
65
Q

Multi-year pledge is recorded

A 
Now = revenue
Future = Temp. restricted revenue  (recorded at PV)
66
Q

Split-Interest contributions

A
  1. Measured at FV of date of acquisition

2. displayed as temporarily restricted (unless there is a permanent restriction establish by donor

67
Q

Donated Services reported as

A

Fair value and support

68
Q

Donated services are recorded as contribution revenue & expense at FV if services meet these criteria (SOME)

A
  1. Specialized skills are required/possed by donor
  2. Otherwise needed by the organization to hire personnel
  3. Measureable
  4. Easily (at fair value)

DR Expense/Asset
CR Contributions - nonoperating revenue

69
Q

Expenses associated with solicitations of contributions of volunteer assistance classified as

A

Fundraising expense

70
Q

Donated Materials JEs

A

Reported at FV

Significant donated material
DR Asset
CR Contribution -Support

Donate materials that merely pass through
DR Expense
CR Unrestricted contributions - supplies

71
Q

Restricted Contributions JEs

A

Restricted net asset
DR pledge receivable - temporarily restricted
CR Allowance for doubtful accounts
CR restricted revenue - temporarily restricted net assets

When receivable is collected

restricted net assets
DR reclassification - satisfaction of restriction
CR Cash/Restricted net aassets

Unrestricted net assets
DR Cash/unrestricted net assets
CR reclassification - satisfaction of restriction
DR Operating expense
CR cash/unrestricted net assts
72
Q

Gift-in kind

A

noncash contributions to a not for-profit

measured at FV

73
Q

Exchange transactions ‘Buyer&Seller’

A

contribution revenue = amount transferred - FV dues/purchases

74
Q

Recipient Accounting

‘Without variance power”

A

Not for profit act as agent/ no benefit/power

Asset value at FV

DR Asset
CR Redundable advance (liability)

75
Q

Recipient Accounting
‘Granted variance power”

Financially-Interrelated - Granted variance power

A

Not for profit acts as agent/has power

Asset value at FV

Recorded as contribution revenue when received & expensed when distributed to the beneficiary

DR Asset
CR Contribution revenue

76
Q

Beneficiary accounting

‘Recognize interest - financially interelated’ JE

A

Recognize interest in net assets of recipient when organizations are financially inter-related

Equity transaction

DR Asset
CR Equity Transaction

77
Q

Beneficiary Accounting

‘Recognize Beneficial interset - Pool of assets’ JEs

A

Beneficiaries recognize beneficial interest in unconditional right to receive specified CF from pools of assets as CONTRIBUTION REVENUE

Allocate realized and unrealized gains/losses among net asset classification

PV at fair value

DR Beneficial Interest
CR Contribution Revenue

78
Q

Recognize Receivable and contribution revenue

A

Cases that do not involve in net assets or beneficial interest

DR Receivable
CR Contribution revenue

Similar to all other unconditional promises

79
Q

Gain/loss in investment in securities recorded as

A

Reported on statement of activities as increases/decreases in unrestricted net asset, unless the investment is restricted

80
Q

Recognition of contribution revenue of unconditional promise

A

Net realizable value - amount to be collected

DR Cash
CR Allowance for Doubtful Account
CR Contribution Revenue

81
Q

In order for not-for-profit organizations to be financially interrelated, it must satisfy these characteristics

A
  1. able to influence the operating and financial decision of the other
    AND
  2. has an ongoing economic interest in the net assets of the
82
Q

Contribution revenue include

A

Transactions that are

  1. unconditional
  2. non-reciprocal
  3. voluntary
  4. not an ownership investment

Exchange transaction
contribution rev = amount transferred - FMV

83
Q

Unrestricted, temporarily restricted and permanently restricted category in statement of cash flow

A
  1. Operating activities - unrestricted & temporarily restricted
  2. Financing activities - permanently restricted
84
Q

Health care organization revenue classification

A
  1. patient service revenues - accounted for at gross, but deductions are made for CHARITY CARE
  2. non-operating revenues - incidental earnings not related to ongoing and central operations of the ospital unrestricted gifts
  3. other operating revenues - those generated by operations other than patient services

Gross patient service revenue

= Patient service revenue

85
Q

Quasi-endowment fund is

A

fund account for assets that have been internally designated by the institution for a specific purpose

86
Q

Endowment Fund

A

Outside donor stipulated that principal be maintained intact with perpetuity

87
Q

Restricted current fund

A

OUtside donor restricted for specified purpose

88
Q

Donated services that are recorded as contribution revenue and expense must meet the following criteria

A
  1. Create or enhance a non-financial asset

2. Require specialized skills that the provider possesses and would otherwise have been purposed by the organization

89
Q

Pledge receivables reported at

A

PV

90
Q

Operating expenses are reported in

A

Changes in unrestricted net asset as temporarily expenses are being reclassified

91
Q

Donor imposed restrictions that are met in the same period they are received may be recorded as

A

unrestricted support (contribution revenue)

92
Q

Gain/Loss on disposals of governemntal operations are displayed as

A

Special item

93
Q

Student tuition and fees reported at

A

Gross amount

Assessed student tuition and fees

= gross revenue from tuition and fees

94
Q

Derived tax revenue

A

Result from taxes assed by government in exchange transactions

95
Q

Imposed nonexchange transactioins

A

taxes and other assessments by government property taxes, special assessments, fines,

FAR (12 decks)

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