Net Position & Fund Balance Flashcards
What are the 2 equity accounts for governmental accounting?
Net Position & Fund Balance
What does Net Position represent in the equity section of governmental accounting?
= the residual amount “equity” in government wide financial statements
- financial statements are:
1) Statement of Net Position
2) Statement of Activities
It is also the residual amount in Proprietary Fund and Fiduciary Fund Financial Statements
What are the 3 categories of Net Position?
1) Net investment in Capital Assets =
Capital assets net of accumulated depreciation
Less
Outstanding debt used to construct or acquire capital assets
2) Restricted: must come from external parties
by constitutional provisions or enabling legislation
held in trust
3) Unrestricted: everything else INCLUDING Board Designated Funds
What are the 5 categories of Fund Balances, used in Governmental Fund types?
1) Nonspendable
2) Restricted
3) Committed
4) Assigned
5) Unassigned
*remember the word “reserved” is prohibited in reporting
What is a “Nonspendable” Fund balance?
Amounts cannot be spent because:
1) Not in a spendable form
2) Legally or contractually required to be maintained intact (eg permanent endowment)
What is a “Restricted” Fund balance?
Amounts constrained to being used for a specific purpose by:
- External parties
- Imposed by enabling legislation! ie high authority
May be presented by major categories of restricted purposes or in aggregate
What is a “Committed” Fund balance?
Constraints are imposed by the government’s highest level of decision-making authority
Constraint can be removed or changed by taking the same action
Not considered to be legally enforceable
What is an “Assigned” Fund balance?
Amounts constrained by the government’s INTENT to be used for a specific purpose but are neither restricted or committed
Intent is expressed by:
1) Governing body itself, but not be formal action
2) A body (eg. budget committee) or official authorized by the governing body to assign amounts
*Assigned fund balance is the residual amount in government funds OTHER THAN the general fund
What is an “Unassigned” Fund balance?
Residual classification used by the General Fund
Represents the amount of resources available for any purpose
What is a “negative” fund balance?
Not one of 5 categories under Fund balances
It is a negative residual amount that should NOT be reported under:
restricted
committed
assigned
in any fund
if there is a negative balance at end of year, it must be cleared out if it ISN’T able to be cleared = UNASSIGNED FUND BALANCE
What are the common reconciliation items, when reconciling fund balance to net position on governmental wide financial statements?
1) Capital outlays
2) Disposition of capital assets
3) Depreciation
4) Issuance of long-term debt
5) Retirement of long-term debt
6) Accrued Liabilities
7) Interfund transfers
8) Internal service funds
9) Expenditures vs. Expenses
Where should Stabilization or “Rainy Day” arrangements typically be reported?
Usually reported in general fund
Can be reported in a special revenue fund if the resources restricted by enabling legislation or committed by the governing body
Where should “Encumbrances” be disclosed?
In the notes to the financial statements
What are the 3 sections of the Comprehensive Annual Financial Report (CAFR)?
Introductory
Financial
Statistical
What are the minimum financial reporting requirements under CAFR ( Comprehensive Annual Financial Report?)
MD&A Basic Financial Statements, including: - Govt. wide financial statements - Fund financial statements - Notes Required Supplemental Information
