Government Flashcards
Fund Balance Classifications
GASB Statement No. 54 eliminated the use of “reserve” and “unreserved” fund balances. The appropriate fund balance classifications are Nonspendable, Restricted, Committed, Assigned, and Unassigned
Can be used for Budgetary though.
Fund Level Statements
The CAFR includes Fund statements from all three fund categories. The government-wide statements include data from the Governmental and Proprietary Funds only.
Expenditures in General Fund
Debt doesn’t NEED to be from Debt Service Fund…
On the Statement of Revenues, Expenditures, and Changes in Fund Balances, which reports transactions using the modified accrual basis of accounting, repayment of principal on long-term debt, payments to vendors, and purchases of fixed assets are all reported as expenditures.
Fund Characteristics
A fund is both a fiscal and an accounting entity. A fund is “fiscal” because it has assets, liabilities, revenue, expenditure or expense, and fund balance or other equity accounts. A fund is “accounting” because it has its own ledgers and contains a self-balancing set of accounts. A fund is not a separate legal entity.
Outstanding Encumbrances
The fund balance classification is either restricted, committed, or assigned depending on the level of authority behind the encumbrance (NOT Designated or Reserved)
Encumbrances outstanding at year’s end represent outstanding purchase orders or unfilled contracts. The fund balance classification is either restricted, committed, or assigned depending on the level of authority behind the encumbrance.
If the government intends to use the resources the specific purposes but is not a constraint imposed by external parties or enabling legislation (i.e., restricted) or by formal action of the government’s highest decision making authority (i.e., committed) then a portion of the fund balance needs to be assigned for the outstanding encumbrances to indicate that a portion of the fund balance needs to be assigned for the outstanding encumbrances to indicate that a portion of the fund balance is not available for future appropriations.
Debt Service Fund Revenue
The Debt Service Fund recognizes revenue when it is measurable and available. Since the first installment will be received 120 days into Year 20x2, no revenue is recognized in Year 20x1.
Deferred Inflow
The remaining levy is measureable and available in Year 20x3 through Year 20x6 and is a deferred inflow of resources in Year 20x2.
four financial reporting implications associated with the legally adopted annual budget:
GASB Concepts Statement No. 1 lists the following four financial reporting implications associated with the legally adopted annual budget:
(1) expression of public policy, (2) expression of financial intent, (3) form of control, and (4) it may provide a basis for evaluating performance (if the government established service efforts and accomplishment goals as part of its budget process). Since budgets are usually prepared according to requirements of state and local laws, the budget is not required to be prepared on the GAAP basis.
Many state and local governments prepare the budget on the cash basis. When this occurs, the budget-to-actual statement is presented on the budget basis (i.e., cash basis) and a reconciliation of the cash basis to the GAAP basis is included in the notes to the basic financial statements.
five elements of the Statement of Financial Position:
GASB Concepts Statement No. 4 identifies the following five elements of the Statement of Financial Position: (1) assets, (2) liabilities, (3) deferred inflows of resources, (4) deferred outflows of resources, and (5) net position. Since net assets are the difference between assets and liabilities, GASB prefers the term “net position,” which is the difference between assets and deferred outflows and liabilities and deferred inflows.
Transfers vs Other Sources / Uses
Inflows of assets from other funds without a requirement for repayment are considered interfund transfers.
In proprietary funds (which include internal service funds), transfers should be reported separately after nonoperating revenues and expenses in the statement of revenues, expenses and changes in fund net position.
An interfund transfer to/from a governmental fund should be reported as “other financing sources or uses” in the governmental fund.
