Governmental Accounting 2 Flashcards
Deferred inflows & outflows
They are inflows & outflows of resources that occur in a period but are related to a future period
Deferred Inflows & outflows for Governmental fund balance sheet
(Current Assets + Deferred Outflows of Resources) - (Current Liabilities + Deferred Inflows of Resources) = Fund Balance
Deferred inflows & outflows for Proprietary Fund balance sheet
(Assets + Deferred Outflows of Resources) - (Liabilities + Deferred Inflows of Resources) = Net Position
Deferred inflows & outflows for Fiduciary Fund balance sheet
(Assets + Deferred Outflows of Resources) - (Liabilities + Deferred Inflows of Resources) = Net Position
3 Categories of Net Position
Net Investments in Capital Assets
Restricted
Unrestricted
Net Investments in Capital Assets - Net Position
Capital Assets net of depreciation minus outstanding debt used to construct or acquire capital assets
Restricted - Net Position
By external parties like creditors or grantors
By Constitutional provisions or enabling legislation
Held in a trust (fiduciary fund)
CPA exam may ask question about funds a governing board sets aside for a or a purpose (board designated funds)
Unrestricted
5 Categories of Fund Balance
Nonspendable Restricted Committed Assigned Unassigned
Nonspendable - Fund Balance
Shit isn’t in a spendable form like inventory, long term receivables, or property held for resale or government legally or contractually has to maintain the amount like a endowments in a permanent fund
Restricted - Fund Balance
Externally imposed through creditors, grantors, contributors or or laws of other governments
or by constitutional provisions or enabling legislation
Committed - Fund Balance
Amounts that are committed for a specific purpose by formal action of the government’s highest level of decision-making (e.g., by city council resolution)
Assigned - Fund Balance
Amounts that are intended by the government to be used for specific purposes that are not classified as restricted or committed
Unassigned - Fund Balance
The residual classification for the general fund for amounts not classified as restricted, committed, or assigned.
Negative Fund Balance Amounts
Should be no negative residual for restricted, committed, or assigned
If there is they reduce amounts assigned for other purposes but if there are still negative balances then they are reclassified to unassigned fund balance
So all the funds besides General have an unassigned balance then there was a negative balance
Unassigned fund balance note
General fund has to have positive balance and every other governmental fund has to have a negative balance
Common Reconciling Items for Fund Balances from Modified Accrual to Accrual
Capital Outlays (expenditures) Disposition (sale) of capital assets Depreciation Issuance of long term debt debt Retirement of long term debt Accrued liabilities Interfund transfers Internal Service funds Expenditures vs expenses Revenue not recognized in governmental funds
GASB Statement of Cashflows
Operating Activities
Noncapital Financing Activities
Capital related financing activities
Investing Activities
Notes about operating cashflows
Operating does not include interest revenue & expense
Notes about Investing Cashflows
Acquisition & sale of investments
Interest & dividends on such investments
Loans made & collected
Noncash transactions
Donated Assets
Capital Assets
Unrealized gains & losses on investments
Debt issued to acquire capital asset
The Comprehensive Annual Financial Report(cafr) sections
Introductory
Financial
Statistical
Introductory Section of CAFR
Letter of Transmittal
Organization Chart
Principal Offers
Other
Financial Section of CAFR
Independent auditors report MD&A Basic Financial Statements - Government Wide statements - Financial fund statements - Notes RSI Combining Statements & individual fund statements
Statistical Section of CAFR
Financial trends Revenue capacity Debt capacity Demographic & economic Operating information Other
Government Wide Financial Statements
Statement of Net Position
Statement of Activities
GWFS Statement of Net Position
- Government wide balance sheet; does not include fiduciary funds
- Full Accrual
- Separate columns for Governmental funds & business funds(internal service fund eliminated) and total
GWFS Statement of Activities
- Government wide statement of operations
- Accrual
- Sections: Program Expenses & Revenues, Net program expense OR revenue, and General revenues
- Separate government activities from business
- Does not include fiduciary funds
Typical adjustments you need to make to derive government wide financial statements
- include general government capital assets & long term liabilities
- remove interfund payable & receivables
- eliminate internal service activities
- convert modified accrual to accrual
- reclassify activities between primary government & component units as internal activity
- eliminate capital outlay expenditures & establish capital assets
- record depreciation expense
- remove debt principal payment expenditures & establish debt principal
- convert interest expenditure into interest expense
- eliminate interfund payables/receivables & transfers
Government Fund Statements
Balance Sheet(5 categories) Statement of revenues, expenditures, and changes in fund balance
Proprietary Fund Statements
Statement of Net position(3 categories)
Statement of revenues, expenses, and changes in net position
Statement of cashflows (4 categories)
Fiduciary Fund Statments
Statement of fiduciary net position
Statement of changes in fiduciary net position
Component Unit
Financially dependent and/or accountable to the primary government
Blended approach for component unit
Component Unit’s governing body and primary government’s governing body are pretty much the same
CU primarily provides service and benefits PG exclusively
CU is included because PG has a fiduciary responsibility for it
Difference between blended and discretely presented
Blended is reported within the government’s financial statements and discrete is presented in a separate column in government wide financial statements
Major Fund Rules
- 10% of the total assets plus deferred outflows, or liabilities plus deferred inflows, revenues, or expenditures/expenses
- 5% of the corresponding total for all governmental and enterprise funds combined.
BOTH
Fiduciary is never a major fund & General fund is always major
Can transfers between funds include business type(enterprise)
Yes in includes governmental & business funds
Quasi-external transactions
Business like transactions that take place between funds like internal service & enterprise fund providing service for a fee to other units of government
Reimbursements
Recorded as an expense or expenditure in the fund making the reimbursement
Transfers
Transfer between funds with no repayment required
- Operating Transfers: usually budgeted and maybe recurring
- Residual Equity Transfers: typically to start or close a fund
Not required to distinguish between the 2 in financial reports
Loans
Amounts transferred between funds expected to be repaid
Record receivable and payable among the funds
Infrastructure
Government can elect not to depreciate if it preserves condition, and expenditures to maintain them are expensed in the period incurred.
If condition is failed to be maintained then it reverts back to depreciation and no longer uses modified approach
Common types of long term debt other than bonded debt
Claims & judgements (contingencies) Compensated absences Pensions Other post employment benefits Municipal landfill Leases
General Rule
Recognize fund expenditures and fund liabilities to the extent that the amounts are payable with expendable available financial resources
Report full liability & associated expense according to accrual accounting
Derived Tax Revenues
Taxes assessed from exchange contracts like fuel or sales tax
Recognize when exchange transaction occurs
Imposed Tax Revenues
Tax that is not an exchange contract like property tax o parking fines
Recognize when legally enforceable claim is established & can objectively be measured
Government Mandated Revenues
Grants that mandate implementation of programs like environmental protection programs or alcohol & drug abuse programs
Voluntary Revenues
Legislative or contractual agreements between parties like special education cost programs and state distribution or resources to fix streets
Personal on corporate income taxes
Derived not imposed taxes
Management Discussion & Analysis
allows management to highlight significant issues and discuss key issues from the financial statements
