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CPA > FAR - GASB - Format & Content > Flashcards

FAR - GASB - Format & Content Flashcards

1
Q

3 categories of funds

A

1) Gov’t: sources, uses, balances of general gov’t financial resources (taxes)
2) Proprietary: business-type activities
3) Fiduciary: resources held by gov’t in capacity as trustee/agenet for benefit of others

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2
Q

Gov’t Funds (5 types)

A

1) General: everything not required to be accounted for by a different type of fund
2) Special Revenue: specific revenues sources that are restricted/committed to expenditure for specific purposes other than debt service/capital projects
3) Capital Project: resources restricted, committed, assigned for construction or acquisition of capital facilities and other capital assets
4) Debt Service: resources restricted, committed, assigned to debt service principal and interest expenditures
5) Permanent: endowments in which its earnings are restricted to support gov’t programs that are dedicated for public purpose

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3
Q

Proprietary Funds (2 types)

A

1) Enterprise: business-type activities, public = primary user (external)
2) Internal Service: business-type activities, gov’t depts = primary users (internal)
* use accrual acct

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4
Q

Fiduciary Funds (4)

A

1) Pension Trust: provide employee retirement benefits
2) Private-Purpose Trust: created to benefit individuals
3) Investment Trust: for other participants/gov’ts
4) Agency: custodial fashion

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5
Q

Memory Aid for Gov’t, Proprietary Funds, Fiduciary Funds

DRIP (4) CEG PIPPA

A 
DRIP
Debt service fund         = Gov't
special Revenue Fund  = Gov't
Internal service fund     = Proprietary
Permanent fund             = Gov't

CEG
Capital Project fund = Gov’t
Enterprise fund = Proprietary
General fund = Gov’t

PIPPA
Pension fund = Fiduciary
Investment fund = Fiduciary
Private Purpose fund = Fiduciary
Agency fund = Fiduciary

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6
Q

Non-fund Acct Groups

A

1) general long-term debt account group

2) general fixed assets

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7
Q

two important characteristics of a “fund”?

A

1) fiscal entity

2) acct entity

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8
Q

true/false

Governmental accounting systems are organized and operated on a fund basis.

A

True

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9
Q

Measurement Focus Basis of Acct

2 types of measurement focus

A

1) flow of current expendable financial resources
- similar in concept to cash flow

2) change in economic resources
- net income determination

Types of basis of acct:
1) modified accrual basis 2) accrual basis

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10
Q

Financial Sources (revenues)

A
  • taxes
  • licenses/fees
  • grant revenues
  • transfers from other funds
  • bond proceeds
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11
Q

Financial Uses (expenses)

A
  • salaries
  • utilities
  • capital expenditures
  • repayments on debt
  • transfers out to other funds
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12
Q

Flow of current financial resources measurement focus

A

Current Assets - Current Liab = Fund Balances

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13
Q

Measurement focus basis of Acct

A

Flow of financial resources -> Sources/uses of current financial resources -> modified accrual

Flow of economic resources -> net income -> accrual

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14
Q

Basis of acct type

A 
Modified Accrual: (DR*P C*G *****) (Gov't)
General Fund                   
Special Revenue Funds
Capital Project Funds
Debt Service Funds
Permanent Funds 
Accrual: (**I* *E* PIPPA)  (Proprietary & Fiduciary) 
Internal Service Fund
Enterprise Funds
Pension Trust Funds
Investment Trust Funds
Private-Purpose Trust Funds
Agency Funds
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15
Q

Modified Accrual Acct: Revenues

A

Revenues recognized when:
1) measurable (reasonably estimable)

2) available:
- legal right to collect
- collected in current period/soon to pay liab in current period (60 days after EOY)
- classify as deferred inflows of resources in current yr if collected before legally available

3) susceptible to accrual (both measurable/available)

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16
Q

Modified Accrual Acct: Expenditures

A

Expenditures recognized when:

  • incurred/due to be paid from currently available resources in gov’t fund
  • term expenditures used, NOT expenses*
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17
Q

Modified Accrual Revenue Recognition Approaches

A

Taxes - Accrual
Licenses/Permits - Cash (not measurable/available)
Intergov’t grants- when provisions met (not available)
service charges - accrual
fines/forfeits - cash

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18
Q

Budgetary Acct

Modified Accrual Acct

A

Purpose: Planning/Control

Budgetary Accts:
1) Appropriations: authorized spending (planned expenditures)

2) Est. Revenues: forecast of financial resource inflows from revenues (taxes, licenses, fees)
3) Est. other financing sources/uses: interfund transfers, bond proceeds.

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19
Q

Closing Entries

A

Reverse budget/close actual

  • Close budgetary accts of Appropriations and Estimates Revenues by reversing original budgetary entry, as adjusted
  • close actual operating accounts (revenues & expenditures)
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20
Q

Financial Reporting

A

Reporting budgetary results required for:

  • general fund
  • each major annually budgeted special revenue funds

Purpose of report:

  • report budget-to-actual results
  • demonstrate companies w/ related laws
  • assist in evaluating performance
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21
Q

Budgetary reporting

optional placement

A

optional placement:

  • part of basic fund-level financial
  • pat of Required Supplementary Information (RSI) after notes to financials
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22
Q

Budgetary Reporting

A 
Format:
- original budget
- final budget
- actual on budgetary basis
    (if non-gaap budget basis (cash basis) include reconciliation to GAAP in notes/schedule
- variance column (optional)
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23
Q

What budgetary account represents the legally mandated spending limit?

A

Appropriations

credited for the amount of the authorized spending limit.

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24
Q

Normal balance for following accts?

1) Estimated Revenue
2) Est. Rev. Control
3) Appropriations
4) Appropriations Control
5) Estimated Other Financing Uses
6) Estimated Other Financing Sources

A

1) debit
2) credit
3) credit
4) debit
5) credit
6) debit

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25
Q

Encumbrance

(debit balance)

used only in gov’t funds, not proprietary/fiduciary

Not used in Debt service fund of gov’t funds.

A

control spending according to budget authorization (protect from overspending)

  • record commitments in acct system until orders received
  • recorded amounts may be estimates and therefore, different than actual invoice costs
  • disclosed in notes to financials
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26
Q

Change in acct names

“new name used to be reported @ year end reporting”

A

“fund balance-reserved for encumbrance” -> either “Fund Balance Committed” or “Fund Balance Assigned”

*no more “reserve,” these accts show amounts dedicated to outstanding purchase orders @ EOY in financials

27
Q

Items Rarely Encumbered

A

Regularly scheduled entries:

  • payroll
  • interfund
  • petty cash
28
Q

Year End Closing - Encumbrance

A

If cancelled, close out both 1) Encumbrances & 2) Budgetary Fund Balance accounts

If carried forward to next yr, close out nominal account budgetary fund balance into a real account “Fund Balance - Assigned (or Restricted or Committed if applicable)

29
Q

True/False

No expenditures are recorded at the time purchase orders were issued. Encumbrances represent a commitment made to the vendor in the form of a purchase order prior to incurring actual expenditures.

A

True

30
Q

Appropriations Remaining (Balance)

A

Appropriations
Less: Expenditures
Less: Outstanding Encumbrances
= Remaining Appropriations

payables don’t affect

31
Q

Timing differences of Deferred Inflows/Outflows

A

Deferred Outflows/Inflows of resources are inflows/outflows of resources that occur in a period but are related to a FUTURE period

32
Q

Use of Deferred

A

GASB #65, limits use of term “deferred” to items reported as deferred outflows/inflows

losses = outflow (debit balance), gains = inflows (credit balance)

33
Q

When is revenue related to grants, entitlements, shared revenues, etc., that are subject to ELIGIBILITY restrictions recognized for government accounting?

A

Revenue is recognized when the eligibility requirements are met (until then, a liability is recognized).

34
Q

When is revenue related to grants, entitlements, shared revenues, etc., that are subject to TIME restrictions recognized for government accounting?

A

When the stated time has arrived or the stated event has occurred (until then, deferred inflow of resources is recognized.)

*MEASURABLE & AVAILABLE

35
Q

What account is credited when general fund revenues are received before they are legally due?

A

Deferred inflow of resources

36
Q

Acct name change of “net asset”

“net asset” -> “net position”

A

True

37
Q

Net Position Definition

A

Residual amount “equity” in gov’t wide financials:

  • statement of net position
  • statement of activities

*Residual amount in Proprietary & Fiduciary Funds

38
Q

Net Position Categories

A

1) Net investment in capital assets
- capital assets net of Accumulated Depreciation
- Less: outstanding debt use to construct/acquire capital assets

2) Restricted:
- by external parties
- by constitutional provisions/enabling legislation
- held in trust (fiduciary funds)

3) Unrestricted:
- board designated
- no restriction

39
Q

Change in Fund Balance Classifications

A

Reserved -> “Nonspendable, Restricted, Committed”

Designated -> “Assigned”

Unreserved -> “Unassigned”

  • “equity” section for gov’t fund types - encumbrance acct
40
Q

Nonspendable fund balance

A
  • amounts cannot be spent:
  • not in spendable form
  • legally/contractually required to be maintained intact (perm endowment)
41
Q

Restricted Fund Balance

A

Amounts constrained to being use for specific purpose:

- external parties/imposed by enabling legislation

42
Q

Committed Fund Balance

A

Constraint imposed by govt’s highest level of decision-making

  • constraint imposed on use of resourses is separate from authority to raise resources
  • action taken to constrain resources occur prior to end of reporting period
  • not legally enforceable
43
Q

Assigned Fund Balance

A
  • amounts constrained by govt’s intent to be used for specific purpose but are neither restricted or committed.

intent is expressed by:

1) governing body itself
2) body (budget committee) or official authorized by governing body to assign amounts

*assigned fund balance = residual amount in govt funds other than general fund

44
Q

Unassigned fund balance

A

residual classification used by general fund

  • amount of resources available for any purpose
  • ONLY fund to report a POSITIVE unassigned fund balance (General Fund)
45
Q

Negative Fund Balance Amounts

A
  • negative residual amount should not be reported for restricted, committed, or assigned fund balances of any fund.

When negative residual balance occur:
- reduce amounts assigned to other purpose of fund to eliminate deficit

  • if deficit still remains, should be classified as unassigned fund balance
46
Q

Reconciliation

A
  • net position in gov’t wide financials = net residual using full accrual acct
  • fund balance in gov’t fund financials = net residual using modified accrual acct
  • therefore, reconciliation is required
47
Q

Common Reconciliation Items

A

1) capital outlays
2) disposition of capital assets
3) depreciation
4) issuance of long-term debt
5) retirement of long-term debt
6) accrued liabilities
7) interfund transfers
8) internal service funds
9) expenditures versus expenses
10) revenue not recognized in gov’t funds

48
Q

stabilization “rainy day” arrangements

A

considered constraint for specific purpose

  • amounts classified as restricted/committed if they meet criteria (unassigned in general fund if they don’t)
  • usually reported in general fund
  • can report in special revenue fund if resources restricted by enabling legislation or committed by governing body
49
Q

CAFR Sections:

Intro, Financial, Statistical

A

Intro

  • letter of transmittal
  • organizational chart
  • principal officers

Financial

  • independent auditor’s report
  • MD&A
  • Basic financials
  • Required Supplemental Info
  • Combine statements & individual fund statements

Statistical

  • financial trends
  • revenue capacity
  • debt capacity
  • demographic & economic
  • operating info
50
Q

Minimum Financial Reporting Requirements

A

1) MD & A
2) Required Supplemental Info
3) Basic Financials
- Gov’t Wide Financials
- Fund Financials
- Notes

51
Q

Gov’t Wide Financials

A
  • Gov’t Fund Financials
  • Proprietary Fund Financials
  • Fiduciary Fund Financials

“report info about gov’t as whole & includes primary gov & component units*

2 statements:

1) statement of net position
2) statement of activities

52
Q

Statement of Net Position

A

Gov’t Wide Balance Sheet
(Accrual)

Separate Columns:

  • gov’t activities [DRIP CEG]
  • business activities [DRIP CEG]
  • NO Fiduciary Funds [PIPPA]
  • Net Position
53
Q

Statement of Activities

A

Gov’t Wide Statement of Operations
(Accrual)

Sections:

1) Program expenses
2) Program revenues
3) Net program (expense) revenue
4) General revenues

  • separate gov’t activities from business-type activites

**NO Fiduciary Funds*

54
Q

Deriving Gov’t Wide Financials

A

Typical adjustments:

  • include general gov’t capital assets/long-term liab
  • remove interfund payables/receivables
  • eliminate internal service activities
  • convert modified accrual to accrual
  • reclassify activities between primary gov’t & component units as internal activity
55
Q

Gov’t Fund Types Example Conversions

A
  • eliminate capital outlay expenditures & establish capital assets
  • record deprec. expense
  • eliminate debt principal payment expenditures & establish debt principal
  • convert interest expenditure to interest expense
  • eliminate interfund payable/receivables & transfers
56
Q

Combining Statements

A

Included in CAFR when primary govt has more than 1 non-major fund in any of the fund type categories

57
Q

Financial Reporting Entity

2 types

(similar to consolidations or p-sub relationships)

A

Primary government (PG) - general purpose unit (county, state, county)

  • elected governing bodies
  • separate legal entity
  • fiscal independence

Component Units (CU) - 1) financially dependent and/or 2) financially accountable to primary gov’t

58
Q

Financial Accountability

1st criteria

A

Exists when primary govt:
- appoints voting majority of units governing body/created or can abolish organization AND

  • Has ability to impose its will OR has potential to receive financial benefits or is subject to financial burdens because of unit
59
Q

Financial Dependence

2nd criteria

A

Fiscally dependent if another gov’t has substantial authority to:

  • establish its budget
  • levy taxes or set rates/charges
  • issued bonded debt

And PG has potential to receive financial benefits or is subject to financial burdens because of the unit

60
Q

Presentation Approaches

A

Blended: similar to a fund of the primary gov’t (no distinction)

Discretely Presented: (separate column in financials of primary gov’t - GOVT WIDE FINANCIALS)

61
Q

Blended Approach used

A

CU’s governing body AND PG’s governing body = substantially the same

CU provides services only for the PG itself (building authority)

CU benefits exclusively PG (administers PG employee healthcare plans)

CU = included b/c PG has fiduciary responsibility for it (pension plan)

62
Q

When should component units be blended with primary government?

A

If CU is, in substance, a part of the PG (e.g., the principal beneficiary of the component units services is the primary government), it should be blended.

63
Q

blended presentation of component units accomplished in the government-wide statements?

A

component unit’s totals are included with the primary government’s data in the Governmental Activities and Business-type activities columns, as appropriate for each component unit.

64
Q

discrete presentation of component units accomplished in the government-wide statements?

A

column of aggregated totals for the component units is added to the right of the primary government’s data

CPA (50 decks)

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