FAR - GASB - Major Funds

Question 1

Major Fund Rules

Answer 1

1) total assets & deferred outflows or resources, liab, and deferred inflows of resources, revenues, or expenditures/expenses of any individual gov’t fund or enterprise fund are at least:

10% of total corresponding amount for ALL FUNDS OF THAT CATEGORY (govt, or enterprise) and

2) 5% of corresponding amount for that element for all gov’t AND enterprise funds combined.

Question 2

Balance Sheet

Answer 2

General fund = always a major fund

All other funds in statement are major funds

All non-major gov’t funds are aggregated & reported in single column

Question 3

Operating Statement

Answer 3

Modified accrual acct for gov’t fund types

Major funds shown in separate columns

Non-major funds aggregated & reported in single column

Question 4

Budget & Actual Comparison

Answer 4

Budgetary comparison required for 1) general fund and for each annually budgeted 2) major special revenue fund

Presented as part of basic financials OR as supplemental info

Question 5

Budget to GAAP Reconciliation

Answer 5

if budget is on basis that differs from GAAP, then reconciliation between budgetary basis & GAAP should be presented

Question 6

Proprietary Fund Financials

Answer 6

1) Statement of Net Position
2) Statement of Revenues, Expenses, & Changes in Net Position
3) Statement of Cash Flows
4) Major fund reporting doesn’t apply to internal service funds; therefore, they are reported in single column

Question 7

Fiduciary Fund Financials

Answer 7

1) Statement of Fiduciary Net Position
2) Statement of Changes in Fiduciary Net Position

• not part of gov’t wide financials
• never major funds

Question 8

For what fund is major fund reporting not required?

Answer 8

Internal Service Funds -> not required b/c it’s an internal fund for internal purposes ONLY

Question 9

True/False

Budgetary Comparison Schedule must report the original budget, the amended/final budget, and actual revenues and expenditures. The revenues and expenditures must be reported using the same basis used to prepare the budget: governmental budgets are frequently prepared on a cash or near-cash basis.

Answer 9

True

Question 10

General Fund

Answer 10

Required Fund, only one

• modified accrual
• budgetary AND encumbrance acct
• accts for financial resources of PG that are not accounted for by any other kind

Question 11

General Fund

Revenue

Answer 11

Taxes
Licenses/Permits
Intergov't revenues (grants)
Charges for services
Fines/Forfeits
Miscellaneous

Question 12

General Fund

Expenditures

Answer 12

Current Operating (salaries/supplies)
Capital Outlays (land, buildings, improvements)
Debt Service (interest/principal payments)
Intergov't

Question 13

Revenues: Susceptible to Accrual

Answer 13

• revenues = measurable/available
• when both conditions met, revenue = susceptible to accrual
• 60 day rule

Question 14

Gov’t Fund Financials

Answer 14

1) Balance Sheet
2) Statement of Rev, Exp, Changes in Fund Balance

3) Revenues, Expenditures, & Changes in Fund Balance - Budget-to-Actual:
- “statement of” if part of basic financials
- “budget comparison schedule” if placed in RSI

Question 15

Special Revenue Funds

Answer 15

Accounting similar to General Fund

• specific revenues restricted/committed to expenditure for specific purpose other than debt service/capital project
• restricted/committed revenues = substantial portion of fund’s resources

Question 16

Purpose of Debt Service Funds

Answer 16

Fund required if:

• legally mandated, or
• financial resources accumulated for principal/interest payments to be made in future yrs

*otherwise general fund used

Question 17

Debt Service Fund Acct

Answer 17

Modified Accrual

Fund life tied to life of debt

Accounts for resources used in periodic payment of interest/principle on general obligation long-term debt

Question 18

Capital Project Funds

Answer 18

Financial resources restricted, committed, or assigned to expenditure for capital outlays

• accounts for resources use to construct/acquire major fixed assets for general gov’t purposes
• major resource accounted for: bond proceeds (other financing source)
• doesn’t account for business-type (proprietary) or trust fixed assets
• fund life tied to construction/acquisition period
• modified accrual
• encumbrance acct, budgetary acct = optional

Question 19

Permanent Funds

Answer 19

• acct for resources held in trust by gov’t for benefit of gov’t
• principal required to remain intact
• earnings transferred to general fund OR special revenue fund for expenditure

Question 20

Perm Fund Financials

Answer 20

1) Balance Sheet

2) Statement of Revenues, Expenditures, & Changes in Fund Balances

Question 21

Fund Balance Categories

Answer 21

1) Nonspendable
2) Restricted
3) Committed
4) Assigned
5) Unassigned

Question 22

General Fund records the original receipt of cash as Revenues, then transfers the cash to the Debt Service Fund. The Debt Service Fund records this receipt of cash as an operating transfer. The cash payments are recognized as Expenditures by the Debt Service Fund.

Answer 22

True

Question 23

Proprietary Funds

Answer 23

1) Internal Service Fund
2) Enterprise Fund

• business-type transaction = business-like acct
• accrual accounting (economic resource measurement focus)
• acct for long-term debt/assets
• depreciation expense recorded
• “Expenses” rather than expenditures

Question 24

Internal Service Funds

Answer 24

IN HOUSE business type transactions

EX: central garage, data processing, print shops

“billings to depts”: revenue account on a cost reimbursement basis

• financial statement reported in supplemental section, (NOT in basic financials)

Question 25

Enterprise Fund

Answer 25

- acounts for business-type transactions that govt provides to GENERAL PUBLIC EX: public utilities, parking lots, airports, and solid waste landfills Intent to cover all costs (including depreciation/capital maintenance) through user charges for service Reported in basic financials subject to major/non-major fund reporting requirements

Question 26

When enterprise fund is required

Answer 26

1) activity financed by debt secured solely by pledge of net revenues from fees/charges of activity (revenue bonds) 2) laws/regulations require that costs of providing services be covered by such fees/charges 3) pricing policies of activity establish fees/charged designed to cover its costs and to maintain capital of activity

Question 27

Financials

Answer 27

1) statement of net position (balance sheet) 2) Statements of revenues, expenses, and changes in fund net position 3) Statement of Cash Flows

Question 28

Statement of Net Position

Answer 28

Contains current/noncurrent assets/liab similar to private sector Equity section: categories of net position - Net Investment in Capital Assets - Restricted - Unrestricted

Question 29

Net Investment in Capital assets

Answer 29

``` Historic cost of capital assets - Accumulated Depreciation = Net BV - Capital Asset-related debt (adj. for unspent proceeds) = Net Investment in Capital assets ```

Question 30

Statement of Cash Flows

Answer 30

4 sections - direct method required for operating section (FASB allows either direct/indirect method) - noncash transactions reporting on face of statement (private allows reporting in notes)

Question 31

GASB financing section of SCFs

Answer 31

Fasb Financing = 1) Noncapital financing activities and 2) capital and related financing activities

Question 32

Cash Flows from Operating Activities

Answer 32

- excludes interest revenues/expenses - includes loans made/collected for operations - direct method required - reconciliation of operating income to cash flows from operating activities must be present as part of the statement

Question 33

Cash Flows from Noncapital Financing Activities

Answer 33

- debt issued to finance OPERATIONS - include interest related to such debt - transfers not related to capital acquisition

Question 34

Cash Flows from Capital and related financing activities

Answer 34

- issuance/repayment of debt issued to acquire capital assets - include interest related to such debt - acquisition and sale of capital assets (investing of FASB)

Question 35

Cash Flows from Investing Activities

Answer 35

Acquisition and sale of investments in debt/equity instruments - interest/dividends on such investments - loans made/collected (except operating loans which appear in operating activities section)

Question 36

Noncash transactions

Answer 36

don't involve cash EX: donated assets, capital leases, unrealized gains/losses on investments, debt issued to acquire capital assets

Question 37

Principal revenue for internal service revenue fund & enterprise fund?

Answer 37

1) fees charged to internal users | 2) fees charged to external users

Question 38

true/false Shared Revenues received by a Proprietary Fund for operating purposes should be recorded as Non-Operating Revenues in the period in which they are earned and become measurable

Answer 38

true

Question 39

Pension Trust

Answer 39

- assets held in trust for employees, retirees, and beneficiaries of pension plans

Question 40

Pension Trust - Types

Answer 40

Single Employer Multi- employer: 1) Agent: several single employer plans pooled for admin functions each receives separate actuarial valuation 2) Cost-sharing: 1 large pension plan w/cost-sharing arrangements and 1 actuarial evaluation performed

Question 41

Pension Trust Reporting

Answer 41

Financials 1) Statement of Fiduciary Net Position 2) Statement of Changes in Fiduciary Net Position - "additions/deductions" rather "revenues/expenses" Required Supplementary Information (RSI) - Schedule of Funding Progress - Schedule of employer Contributions - Actuarial Information

Question 42

Investment Trusts Funds

Answer 42

Gov'ts frequently pool/commingle resources for investments - fund accounts for portion of fund = held for govts other than reporting entity

Question 43

Private-Purpose Trust Funds

Answer 43

For benefits of individuals/organizations except those related to: - pension plans - investment pools - permanent funds *rare in use

Question 44

Agency Funds

Answer 44

Assets held briefly & distributed (clearinghouse) to other funds, individuals, govts, or orgs EX: tax collection, special assessments, pass-through grants, payroll deduction NOT reported in govt wide financials Recognize ONLY Current Assets = Current Liabilities, *no equity/revenues (additions) and no expenses (deductions), or Net Position

Question 45

Special Assessment Agency Funds

Answer 45

Property owners agree to finance capital improvements that benefit their properties financed by special assessment debt for which the govt is NOT OBLIGATED in any manner Govt acts as agent - collects from property owners, acts as debt service agent Construction of asset accounted for in capital projects fund (street improvement) or Enterprise (utility) depending on type of project

Question 46

True/False - Fiduciary Funds EXCLUDED from gov't wide financials - govt acts as trustee for fiduciary funds has no "equity"these funds

Answer 46

True

Question 47

equity account is used by Pension Trust Funds?

Answer 47

Net Position Held in Trust for Pension Benefits.

Question 48

funds are used to account for any resources managed in trust by the governmental entity where the beneficiaries are outside of the governmental entity itself?

Answer 48

Private Purpose Trust Fund

Question 49

Functions of tax Agency Funds

Answer 49

- each govt maintains own tax records - assessments turned over to TAF for collection - TAF sends bills to taxpayers - collects tax from taxpayers - remit collections to participating govts - if collection fee charged by TAF, revenue is recognized in General Fund no in TAF

Question 50

True/False funded ratio of a pension plan compares the actuarial value of plan assets to the actuarial accrued pension liability.

Answer 50

True

Question 51

True/False Due to Pension Trust Fund should be credited, not debited in connection with employer pension contributions.

Answer 51

True

Question 52

True/False In addition to the actual earnings on plan assets, both employer and employee contributions are recognized as Additions in the Pension Trust Fund.

Answer 52

True

Question 53

True/False Concerning Investment Trusts, cash available from all the different accounting funds, irrespective of whether or not they are restricted or unrestricted funds. Realized and unrealized gains and losses must be equitably allocated among the participating funds.

Answer 53

True

Question 54

True/False Agency Funds act as intermediaries in the process of disbursing monies from one governmental entity to another. The government has no claim on the resources in the Agency Fund and does not recognize revenues when it receives the monies or recognize expenses when the monies are disbursed.

Answer 54

True

Question 55

True/False Private-Purpose Trust Fund may be either expendable or nonexpendable. It is expendable if the principal of the trust gift, as well as the earnings, is expendable. A nonexpendable Private-Purpose Trust occurs when the principal must be maintained intact and only the earnings are expendable, or neither the principal nor the earnings are expendable

Answer 55

True

Question 56

True/False Agency Funds prepare a Statement of Net Position and a Statement of Changes in Net Position. Since Agency Fund assets are always completely offset by liabilities, they do not report Net Position (assets - liabilities = 0). Agency Funds collect and distribute funds (e.g., property taxes) and do not recognize either revenues or expenditures.

Answer 56

True