FAR9 Flashcards
Operational Accountability
Focus of government-wide f/s (met its operating objectives efficiently and effectively)
Fiscal Accountability
Focus on fund f/s (complied with public decisions concerning the raising and spending of public funds in the short term)
Required Reporting for General Purpose Gov’t Units
1. Management's Discussion and Analysis before F/S 2. Gov't-wide F/S 3. Fund F/S 4. Notes to F/S (2-4 is "basic F/S") after F/S 5. Required Supplementary Info (RSI) 6. Other Supplementary Info (optional)
Optional Reporting
Comprehensive Annual Financial Report (CAFR)
- Intro Section (unaudited)
- Basic F/S and Required Supplementary Info (audited)
- Statistical Section (unaudited) - not part of basic F/S
Primary Gov’t Entities (SELF)
- Has a Separately-Elected governing body,
- Is Legally separate,
- Is Fiscally independent of other state and local gov’ts
Component Unit
- Blended Presentation
- substantially the same as the primary gov’t
- serves the primary gov’t exclusively
- not a separate legal entity - Discrete Presentation - default method (if does NOT meet blended requirements)
- benefit, access, and significance standards
Management’s Discussion and Analysis (before f/s)
Description of F/S,
Identify of the Primary Gov’t and Discrete Component Units,
Economic Conditions and Outlook, and
Major Initatives
MD+A: Description of F/S
Easily readable analysis
condensed f/s info
analysis of overall financial position and results of operations
analysis of balances and transactions of individual funds
analysis of significant variations
a description of the significant assumptions
(No variance analysis OR reconciliation of fund f/s)
Gov’t-Wide F/S
Economic Resources Measurement Focus
Full Accrual Basis of Accounting (include all assets/liabilities)
Fiduciary funds excluded and Component Units included
Gov’t-wide F/S: Statement of Net Position
Assets - Liabilities = Net Position (restricted, unrestricted, net investment)
Gov’t-wide f/s - Government Activities
General Fund (GRaSPP + S) Special Revenue Fund Debt Service Fund Capital Project Fund Permanent Fund + Internal Service Fund
Gov’t-wide f/s - Business-type Activities
Enterprise Fund
Categories of Program Revenue (“SOC”)
Services (charges for)
Operating grants and contributions
Capital grants and contributions
Gov’t Funds B/S
Major Fund Rules (both must be met)
1. 10% Test individual funds compared to either all gov’t/enterprise funds
2. 5% Test individual funds compared to both all gov’t/enterprise funds
(General Fund is always a major fund)
Reconciliation of Gov’t Fund to Gov’t Activities (B/S)
GALS BARE:
G Gov't fund balance \+ A Assets (non-current) - L Liabilities (non-current) \+ S Internal service fund net position \+/- Adjustments for basis of accounting (Accrued, Revenue, Expense)
Reconciliation of Gov’t Fund to Gov’t Activities (Statements of Rev, Expenditures, and changes in fund balance)
GOES BARE:
G Gov’t fund balance
- O Other financial sources
+ E Expenditures-capital outlay (net of depreciation)
+ S Internal service fund net income
+/- Adjustments for basis of accounting (Accrued, Revenue, Expense)
Proprietary Funds: Statement of Cash Flows (differences)
- Direct method required
- Reconciliation of operating income (not NI)
- Four categories (Operating, Capital and Noncapital Financing, Investing Activities)
- Order of financing and investing activities reversed
- Interest income/cash receipts are Investing Activities
- Interest expense/cash payments are Financing
- Capital asset purchases are Financing activities
Notes to F/S
Description of gov’t-wide activities (exclusion of fiduciary)
Policies relating to elimination of internal activity
Description of the modified approach for infrastructure
Segment info on enterprise funds (meets segment def.),
Length of time used to define “available” 60 days
Actions taken to correct material noncompliance
Required Supplementary Info (after F/S)
Budgetary Info (must show the original budget, final amended budget, and actual amounts), Infrastructure Info (condition and estimated annual amount to maintain/preserve for each of past five years), Pension Info (presented for each of 10 most recent years) - sources of changes, info about components, significant methods and assumptions, annual money-weighted rate of return, and explanation of trends
Other Supplementary Info (optional)
Combining statements for nonmajor funds (gov’t funds = modified accrual)
Interfund Activity: Reciprocal
Interfund Loans (unrealizable balances are reclassified as transfers), and Interfund Services Provided and Used
Interfund Activity: Nonreciprocal
Interfund Transfers (displayed as other financing sources and uses after nonoperating revenues and expenses), Interfund Reimbursements (NOT displayed as interfund transactions)
F/S display/disclosure between primary gov’t and its Fiduciary Funds
Reported as if between external parties
Interfund receivables and payables between governmental and enterprise funds
Reported as internal balances
Primary government’s general fund has an equity interest in a joint venture
Equity interest should be reported in the Government-wide statement of net position
Donated Art work/painting
May be capitalized, but it is not required, and depreciation is not required (investing activities)
Not-for-Profit
Uses FASB, full accrual
Classification of net assets: “PUT” - permanently restricted, unrestricted, temporarily restricted
Not-for-Profit: Required F/S
Statement of Financial Position (B/S)
Statement of Activities (I/S)
Statement of Cash Flows
Statement of Functional Expenses - required for voluntary health and welfare organizations
Not-for-Profit: Statement of Financial Position
Assets - Liabilities = Net Assets
- Unrestricted: not permanently or temporarily restricted (internally board-designated funds)
- Temporarily Restricted: donor-imposed stipulations either expire by time or can be fulfilled and removed by actions
- Permanently Restricted: limited by donor-imposed stipulations that NEITHER expire by time NOR can be fulfilled and removed by actions of the organization
Expense Classification in the Statement of Activities
Reported as decreases in unrestricted net assets (either categorized as Program Services, Support Services, Combined Costs)
Not-for-Profit: C/F Operating
Unrestricted Revenue later earmarked (board designation) for construction or purchase of long-lived assets, Agency transactions
Not-for-Profit: C/F Financing
Cash transactions related to borrowing, include cash transactions related to certain restricted contributions (increases to endowment)
Not-for-Profit: C/F Investing
Proceeds from sale of works of art, investment in equipment, proceeds from sale of assets received in prior periods (restricted)
Contributions/Recognition
Cash Contributions: Received = Revenue
Unconditional Promises: Pledge = Revenue
Conditional Promises: Earned = Revenue
Multiyear Pledges: PV of Pledge (now = Rev., future = Temp. Restricted Rev.)
Allowance for uncollectible pledges = NRV (full accrual)
Split-Interest Agreements
Measured at FV and displayed as temporarily restricted
Donated Services
Recorded as contribution revenue and expense at FV if create/enhance a nonfinancial asset and
“SOME”: Specialized skill, Otherwise needed by organization, Measurable, Easily at FV
Restricted Contributions
Spent it = Earned it (remove restriction)
Contribution Revenue
Amount Transferred - FV of Dues/Purchases
Recipient Accounting: Without Variance Power
Acts as agent, no benefit/power: Asset valued at FV and recognized as LIABILITY
Recipient Accounting: Grant Variance Power
Acts as agent with power: Assets valued at FV and recognized as contribution Revenue (same for financially interrelated)
Beneficiary Accounting: Financially Interrelated
DR: Asset
CR: Equity transaction (statement of activities)
Beneficiary Accounting: Pool of Assets
DR: Beneficial interest
CR: Contribution revenue
University/Colleges Revenue
Assessed Student Tuition and Fees
- Cancelled Classes
= Gross Revenue from Tuition and Fees (unrestricted net assets)
Health Care Revenue
Gross Patient Service Revenue - Charitable Services = Patient Service Revenue (1 of 3) (2 of 3) Other operating revenue (3 of 3) Non-operating revenue
Donated Property
Valued at FV and recognized as support
Quasi-endowment funds
Account for assets that have been internally designated by the institution for a specific purpose. Quasi-endowment funds would be displayed as unrestricted net assets on externally published financial statements
Functional expense categories not-for-profit
Program services, management and general, and fund-raising
Classify gains and losses
Unless explicitly restricted by donor or law, gains and losses should be reported in the statement of activities as increases or decreases in unrestricted net assets
