FAR - GASB - Major Funds Flashcards
Major Fund Rules
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.
Balance Sheet
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
Operating Statement
Modified accrual acct for gov’t fund types
Major funds shown in separate columns
Non-major funds aggregated & reported in single column
Budget & Actual Comparison
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
Budget to GAAP Reconciliation
if budget is on basis that differs from GAAP, then reconciliation between budgetary basis & GAAP should be presented
Proprietary Fund Financials
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
Fiduciary Fund Financials
1) Statement of Fiduciary Net Position
2) Statement of Changes in Fiduciary Net Position
- not part of gov’t wide financials
- never major funds
For what fund is major fund reporting not required?
Internal Service Funds -> not required b/c it’s an internal fund for internal purposes ONLY
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.
True
General Fund
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
General Fund
Revenue
Taxes Licenses/Permits Intergov't revenues (grants) Charges for services Fines/Forfeits Miscellaneous
General Fund
Expenditures
Current Operating (salaries/supplies) Capital Outlays (land, buildings, improvements) Debt Service (interest/principal payments) Intergov't
Revenues: Susceptible to Accrual
- revenues = measurable/available
- when both conditions met, revenue = susceptible to accrual
- 60 day rule
Gov’t Fund Financials
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
Special Revenue Funds
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
Purpose of Debt Service Funds
Fund required if:
- legally mandated, or
- financial resources accumulated for principal/interest payments to be made in future yrs
*otherwise general fund used
Debt Service Fund Acct
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
Capital Project Funds
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
Permanent Funds
- 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
Perm Fund Financials
1) Balance Sheet
2) Statement of Revenues, Expenditures, & Changes in Fund Balances
Fund Balance Categories
1) Nonspendable
2) Restricted
3) Committed
4) Assigned
5) Unassigned
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.
True
Proprietary Funds
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
Internal Service Funds
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)
Enterprise Fund
- 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
When enterprise fund is required
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
Financials
1) statement of net position (balance sheet)
2) Statements of revenues, expenses, and changes in fund net position
3) Statement of Cash Flows
Statement of Net Position
Contains current/noncurrent assets/liab similar to private sector
Equity section: categories of net position
- Net Investment in Capital Assets
- Restricted
- Unrestricted
Net Investment in Capital assets
Historic cost of capital assets - Accumulated Depreciation = Net BV - Capital Asset-related debt (adj. for unspent proceeds) = Net Investment in Capital assets
Statement of Cash Flows
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)
GASB financing section of SCFs
Fasb Financing = 1) Noncapital financing activities and 2) capital and related financing activities
Cash Flows from Operating Activities
- 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
Cash Flows from Noncapital Financing Activities
- debt issued to finance OPERATIONS
- include interest related to such debt
- transfers not related to capital acquisition
Cash Flows from Capital and related financing activities
- issuance/repayment of debt issued to acquire capital assets
- include interest related to such debt
- acquisition and sale of capital assets (investing of FASB)
Cash Flows from Investing Activities
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)
Noncash transactions
don’t involve cash
EX: donated assets, capital leases, unrealized gains/losses on investments, debt issued to acquire capital assets
Principal revenue for internal service revenue fund & enterprise fund?
1) fees charged to internal users
2) fees charged to external users
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
true
Pension Trust
- assets held in trust for employees, retirees, and beneficiaries of pension plans
Pension Trust - Types
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
Pension Trust Reporting
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
Investment Trusts Funds
Gov’ts frequently pool/commingle resources for investments
- fund accounts for portion of fund = held for govts other than reporting entity
Private-Purpose Trust Funds
For benefits of individuals/organizations except those related to:
- pension plans
- investment pools
- permanent funds
*rare in use
Agency Funds
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
Special Assessment Agency Funds
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
True/False
- Fiduciary Funds EXCLUDED from gov’t wide financials
- govt acts as trustee for fiduciary funds has no “equity”these funds
True
equity account is used by Pension Trust Funds?
Net Position Held in Trust for Pension Benefits.
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?
Private Purpose Trust Fund
Functions of tax Agency Funds
- 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
True/False
funded ratio of a pension plan compares the actuarial value of plan assets to the actuarial accrued pension liability.
True
True/False
Due to Pension Trust Fund should be credited, not debited in connection with employer pension contributions.
True
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.
True
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.
True
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.
True
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
True
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.
True
