Governmental Accounting Flashcards
What are the three major types of funds in governmental accounting?
Governmental, Proprietary, Fiduciary
Which two accounting bases are used in governmental accounting?
Accrual basis - current economic resources focus (revenues recognized when earned)
Modified accrual basis - current financial resources focus (revenues recognized when available and measurable)
What is a budget appropriation?
The highest amount allowed for a particular expenditure under a budget.
What is an encumbrance?
Records purchase and reserves it for the encumbrance.
Record when purchase order is approved
Encumbrances
Reserved for Encumbrance
What is the opening budgetary entry?
Dr Estimated Revenues Control
Cr Appropriations Control
Dr/Cr Budgetary Fund Balance (plug)
What is the closing budgetary entry?
Dr Appropriations Control
Dr/Cr Budgetary Fund Balance (plug)
Cr Estimated Revenues Control
What are the types of governmental funds?
General Fund - unassigned
Special Revenue Fund-restricted/committed
Permanent Fund -restricted, non expendable
Capital Projects Fund
Debt Service Fund
= both restricted, committed, assigned
What is a General Fund?
The operating fund of the governmental unit
Records Significant Revenues: Taxes; Tickets; Fines; Licenses
Records Significant Expenditures: Police; Education; Fire Dept
What is a Special Revenue Fund?
Restricted for a specific purpose such as street repair.
What is a Permanent Fund?
Legally restricted fund; where only earnings can be used to fund programs.
Principal remains intact.
What is a Capital Projects Fund?
Used to acquire and build facilities.
What is a Debt Service Fund?
Handles repayment of long-term debt and related interest.
Which fund statements are issued in Governmental Accounting?
Balance Sheet
Statement of Revenues; Expenditures; and Changes in Fund Balance
When is Revenue recorded in Governmental Accounting?
When it is BOTH available and measurable; regardless of when it is spent.
What is Derived Tax Revenue?
Money collected from people doing things:
Sales tax (buying cars) or income tax (people working)
What is Imposed Tax Revenue?
Tax assessed just because things exist
Example: property tax on a car (even if it’s never driven); real estate tax
Recorded as a revenue when BUDGETED.
Estimated uncollectible property tax revenues don’t offset revenues; so don’t net them.
What are the types of Proprietary Funds?
Internal Service Funds - to serve the needs of other governmental units (i.e. motor pool)
Enterprise Funds - provide goods or services to external users (i.e. post office)
What are the Fund Balance Types?
Restricted - Restricted by Contributor Committed - Restricted by Government Assigned - Intended for a purpose Unassigned - Available to be spent Non-spendable - Not in a spendable state
What are the types of Fiduciary Funds?
Agency Fund - government acts as an agent or custodian
Pension Trust Fund - Government is a trustee for a pension plan
Investment Trust Fund - Government is a trustee over a series of investments
Private Purpose Trust - Trust that benefits various individuals and entities
How are Assets & Liabilities presented on the Statement of Net Position?
Assets (Current & Non-Current)
Deferred Outflows of Resources
Liabilities (Current & Non-Current)
Deferred Inflows of Resources
How are Capital Assets shown on a governmental Statement of Net Assets?
They are shown net of debt
Asset Cost - Accumulated Depreciation - Asset Liabilities : Net Assets
How is infrastructure reported on a governmental Statement of Net Assets?
Modified approach:
Reported at cost; no accumulated depreciation
How is a Statement of Net Assets divided?
Into Governmental Activities and Business Activities
How are activities presented in a Statement of Activities?
They are divided by function
If the activities of a component are distinguishable from the rest of the governmental entity; then discreet presentation is required
If the activities of the component cannot be identified and separated from the rest of the governmental activities; then blended presentation is warranted.
Component units are reported in the Entity-Wide Financial Statements and not the Fund Financial Statements.
What is the primary objective of governmental accounting?
To provide information that is useful and benefits a wide range of users including:
Costs of services provided
Sufficiency of revenues to cover costs
Financial position of entity
Government wide financial statements demonstrates
operational accountability
-how effective the organization was in using resources
Fund financial statements demonstrates
fiscal accountability
organization’s compliance with rules and regulations on spending activities
Government Reporting Model
focuses on fiscal and operational accountability
fiscal - fund FS
operational - government wide FS
Basic governmental FS
- MD & A
- GOVERNMENT WIDE FS
Statement of Net Position
Statement of Activities - FUND FINANCIAL STATEMENTS:
- Governmental(modified accrual)
Balance Sheet
Statement of Revenues, Expenditures and
Changes in Fund Balances - Proprietary (accrual)
Statement of Net Position
Statement of Revenues, Expenses and
Changes in Fund Net Position
- Governmental(modified accrual)
- Fiduciary Funds
Statement of Fiduciary Net Position
Statement of Changes in Fid. Net Position - NOTES TO FINANCIAL STATEMENTS
- REQUIRED SUPPLEMENTARY INFORMATION
other than Management’s Discussion and
Analysis
Required Supplementary Information
- Ten year schedule of selected information
- for entities that provide pensions through
pension funds administered thru trust funds
- for entities that provide pensions through
- Budgetary Comparison Schdule
- Information about Infrastructure assets
- Claims Development Information when the government sponsors a public entity risk pool
Other supplementary schedules (not mandatory)
CAFR
CAFR - comprehensive annual financial report
Major sections are introductory, statistical and financial.
Introductory - transmittal, organization chart,
list of principal officials (unaudited)
Financial section - includes auditor’s report
Statistical - various schedules:
- net position by component
- demographics
- debt capacity
- revenue capacity etc
Special purpose governments- what FS are required?
Example: park districts, tollway authorities, school districts, sanitation districts
Engaged in:
governmental activities
business type
fiduciary
or both governmental and business type
Guide:
Criteria #1
If engaged in governmental activities and have one
more than one program
OR
If engaged in both governmental and business type activities
= BOTH GOVERNMENT WIDE FS AND
FUND FINANCIAL STATEMENTS
REQUIRED
Criteria #2
If engaged in only ONE GOVERNMENTAL ACTIVITY = combine Government Wide and Fund Financial Statements
Criteria #3
If engaged in only:
Business type activities or
Fiduciary activities
= Fiduciary or
Proprietary Fund FS only
Primary government
- state government
- general purpose local government
- special purpose local government
- has a separately elected governing body
- legally separate
- fiscally independent of other state or local government
Component is
- legally separate organization for which the elected officials of a primary government are financially accountable.
Assumption of financial accountability:
- When the primary government appoints a voting majority of the organization’s governing board
- it is able to impose its will on that organization
- there is a potential for the organization to provide specific financial benefits to or impose specific financial burdens on the primary government
- the organization is fiscally dependent on and there is a potential for the organization to provide specific financial benefits to, or burdens on, the primary government
- regardless of the primary government’s influence of the governing board
Omission of the component in the primary government’s FS would cause it to be misleading
IS DISCRETELY PRESENTED IN THE GOVERNMENT WIDE FINANCIAL STATEMENTS
CAN BE BLENDED IF CRITERIA ARE MET.
Criteria for a component unit to be blended in the FS
- governing body of the component unit is substantially the same as that of the primary government
- there is a financial benefit or burden relationship between the primary government and the component unit
- management of the primary government has operational responsibility for the component unit
- the component unit provides services ENTIRELY or ALMOST ENTIRELY for the primary government or for the benefit of the primary government
- the component unit’s TOTAL debt outstanding, including leases, is expected to be repaid entirely or almost entirely by the primary government
Management’s Discussion and Analysis
- overview of the government’s financial activities
- provides comparison of the current year results with prior year, with emphasis on the prior year
INCLUDES:
- brief discussion of the financial statements
- condensed financial information from the government wide FS and individual fund FS
- analysis of significant variations between the original budget, final budget and current year results
- description of significant capital asset and long term debt activity for the year
- a discussion by those governments using the modified accrual approach - about infrastructure assets regarding the condition of these capital assets and changes from the prior year
- any know facts, conditions, decisions that have significant effect on the governments financial position and results of operations
Government wide FS format
Statement of Net Position
Assets \+ Deferred Outflows - Liabilities - Deferred Inflows = Net Assets
Deferred Outflow
cash payments
- asset
- consumption of net assets that is applicable to a FUTURE PERIOD
Example:
- grant expenditure paid in advance
- deferred amounts from refunding of debt (debit)
- advance cash payment
- cost to acquire rights to FUTURE revenues
- deferred loss from sale and leaseback
- negative fair value of government hedge of a FUTURE transaction
Deferred inflows
cash received
- liabilities
- acquisition of net assets applicable to a FUTURE reporting period
Example:
- grants received in advance
- deferred amounts from refunding of debt (credit)
- proceeds from sale of future revenues
- deferred gain from sale and leaseback
positive fair value on govt hedge of a future transaction - advanced revenue from imposed nonexchange transactions
Government Wide FS - Statement of Net Position Format
GA BTA Total CU Assets Deferred Outflows Liabilities Deferred Inflows Net Assets Net Investment in Capital Assets Restrited Unrestricted
GA - governmental activities
- all govt funds + internal service
BTA - business type activities
- enterprise fund only
FIDUCIARY FUNDS NOT INCLUDED HERE
Assets include:
Capital assets - net of depn
Internal balances (transfers) - not eliminated
- GTA to GA transfers (vice versa)
Government Wide FS - Statement of Activities Format
Additional disclosures are in this statement not in the financial position
Column Headings:
FUNCTIONS/PROGRAMS:
EXPENSES - program expenses by function
- NO DEPRECIATION here
- includes interest on long term debt
PROGRAM REVENUES:
Charges for services
Operating grants and contributions
Capital grants and contributions
GOVERNMENTAL ACTIVITIES
BUSINESS TYPE ACTIVITIES
TOTAL
COMPONENT UNITS
ROW Headings;
Functions/Programs:
Primary Government
Governmental activities
- expenses by function/program
Business Type activities
Total primary activities
Component Units
Total component units
Below the totals:
GENERAL REVENUES:
Taxes
Transfers
Total general revenues, taxes and transfers
Change in Net position
Add: Net position beginning
Net position end
Taxes include:
property taxes levied for general purposes
property taxes levied for debt service
franchise taxes
public service taxes
payment from City
grants and contributions not restricted to specific
programs
investment earnings
miscellaneous
special items - gain on sale of land
Transfers:
debit (credit) amounts in the governmental activities and business type activities columns
Funds Statement - Governmental Funds
Balance Sheet
Additional disclosures are in here not in the Statement of activities
Column headings:
By Fund type:
Major Funds:
General
HUD programs
Community development
Route 7 construction
Other governmental funds TOTAL GOVERNMENTAL FUNDS
ROW Headings:
Assets - includes Due from other funds
- no capital assets here
Deferred Outflow
Liabilities - includes Due to other funds
Deferred Inflow
Fund Balances:
Nonspendable
Restricted
Committed
Assigned
Unassigned
TOTAL FUND BALANCES (final total)
ADDITIONAL DISCLOSURES AT THE BOTTOM:
Reconciliation and discussion of total fund balances to fund balances in the Statement of Net Position in government wide FS:
Amounts reported for governmental activities in the statement of net assets are different because:
ADD THESE AT THE BOTTOM OF THE TOTAL FUND BALANCES FROM ABOVE (LAST COLUMN) Capital assets Other long term assets Internal Service Fund Long term liabilities
NET POSITION OF GOVERNMENTAL ACTIVITIES
- FINAL TOTAL - DOUBLE RULE IN THE COLUMN OF TOTAL GOVT FUNDS ONLY
Fund Statements
Governmental Funds
Statement of Revenues, Expenditures and Changes in Fund Balances
COLUMN HEADING:
By major fund type (same as in the BS)
General HUD programs Community development Route 7 construction Other governmental funds Total governmental funds
ROW HEADINGS:
Revenues - by source i.e taxes, fees, fines
- Expenditures - by character
Current
Debt service
Capital outlay
Total expenditures
= Excess (Deficiency) of total revenues
over expenses
Other financing sources (uses)
Proceeds of refunding bonds
Payment to bond refunding
Proceeds of long term debt
Transfer in
Transfer out
Total
Special Items:
Proceeds from sale of land
NET CHANGE IN FUND
Add: Beginning
FUND BALANCE END
