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CGFM Test 2 > Section 2, Chapter 1 > Flashcards

Section 2, Chapter 1 Flashcards

1
Q

What is GASB Statement 34 title?

A

Basic Financial Statements - and Management’s Discussion and Analysis - for State and Local Governments

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2
Q

What does GASB Statement 34 focus on?

A

Fiscal accountability and operational accountability

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3
Q

What is operational accountability?

A

the need for stewards of public resources to be accountable for safekeeping of all resources, capital and financial, and complying with the requirements for their use.

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4
Q

What is the GASB responsible for?

A

setting accounting and external reporting standards for state and local governments.

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5
Q

Are state and local governments required to follow GASB standards?

A

No - they are sovereign entities. However, many state and local governments have enacted legislation requiring preparation of financial reports following the standards of GASB.

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6
Q

What 2 things encourage state and local governments to follow GASB standards?

A
  1. ) Many state and local governments have enacted legislation requiring preparation of financial reports following the standards of GASB.
  2. ) Government credit rating agencies encourage governments that want to issue debt to provide audited financial statements prepared in accordance with GAAP.
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7
Q

What is Ethics Rule 203?

A

the ethics standard for attesters and financial statements.

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8
Q

Who are the three primary groups of users of external financial reports?

A
  1. ) The citizens
  2. ) Legislative and oversight bodies
  3. ) Investors and creditors
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9
Q

What is the title of GASB Concepts Statement 1?

A

Objectives of Financial Reporting

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10
Q

What does the GASB Concepts Statement 1 state?

A

Financial reporting should provide information to assist users in assessing accountability and making economic, social and political decisions.

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11
Q

What does the Statement of Auditing Standards No. 69 establish?

A

The hierarchy of governmental accounting principles

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12
Q

What is the hierarchy of governmental accounting principles?

A
  1. ) GASB Statements and Interpretations, AICPA and FASB pronouncements make applicable to state and local governments.
  2. ) GASB Technical Bulletins and AICPA Industry Audit and Accounting Guides, AICPA Statements of Position
  3. ) AICPA Accounting Standards Executive Committee Practice Bulletins.
  4. ) implementation guides, FASB standards not make applicable to state and local governments by GASB.
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13
Q

What sets forth the provisions for defining the reporting entity?

A

GASB Codification Section 2100.

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14
Q

What is a reporting entity?

A

the primary government and its component units, including any other units whose omission would be misleading.

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15
Q

What is a component unit?

A

Organizations for which the primary government is financially accountable.

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16
Q

What is a primary government?

A

any state government or general purpose local government and possibly a special purpose government.

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17
Q

What are examples of a general purpose government?

A

municipalities, county, township

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18
Q

When would a special purpose government be considered a primary government?

A
  1. ) legally separate
  2. ) separate elected governing body
  3. ) fiscally independent of other state and local governments.
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19
Q

When is an organization legally separate?

A

When it possesses corporate powers; has its own name, right to sue and be sued in its name, buy sell lease and mortgage property, right to issue debt in its name.

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20
Q

What three abilities does special purpose government possess to be fiscally independent?

A
  1. ) Determine its budget without other governments having the authority to approve or disapprove.
  2. ) levy taxes or set rates/charges without approval of another government.
  3. ) issue bonded debt without approval of another government.
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21
Q

When should a governmental organization be considered a component unit? 4

A
  1. ) if it is not legally separate
  2. ) if primary govt appoints a voting majority of board
  3. ) if primary govt is able to impose its will
  4. ) is PCU can provide financial benefits to, or impose financial burdens on primary govt
  5. ) if it is fiscally dependent on primary government.
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22
Q

What is imposition of will?

A

significantly influence programs, projects, activities, or level of service.

23
Q

When is a component unit financially dependent on a primary government?

A
  1. ) the component unit cannot determine its budget without the primary government having the authority to approve and modify.
  2. ) the component unit cannot levy taxes or set rates/charges without approval of the primary government
  3. ) the component unit cannot issue bonded debt without approval by the primary government.
24
Q

What are the two methods for displaying component units?

A
  1. ) blending

2. ) discrete

25
Q

What is blending?

A

the data are presented in a manner similar to the presentation of the balances and transactions of the primary government.

26
Q

What is discrete presentation?

A

the data are presented in the reporting entities financial statements separate from the data of the primary government. Usually separate columns in financial statements.

27
Q

What are the 3 criteria for determining whether data should blended or discrete?

A
  1. ) composition of board
  2. ) providing services to the primary government
  3. ) related organizations
28
Q

What impact does the composition of the two boards have on how data is presented?

A

If the board of the component unit is made up of members of the board of the primary government, the data will be blended.

29
Q

What impact does the providing of services have on how data is presented?

A

If the primary government is the sole customer of the component unit, then the data is blended.

30
Q

When is discrete presentation used to present data?

A

when the board of the component unit is not made up of the board of the primary government, and when the primary government is not the sole customer of the component unit.

31
Q

How is a related organization presented in the financial statements?

A

disclosed in the notes

32
Q

What is a related organization?

A

organization for which a primary government is not financially responsible even though it appoints a voting majority of the governing board.

33
Q

What are the 3 minimum requirements for external financial reporting?

A
  1. ) MD&A (managements discussion and analysis)
  2. ) Basic Financial Statements
  3. ) Required supplemental info (other than MD&A)
34
Q

What are the three basic financial statements?

A
  1. ) government wide financial statements
  2. ) fund financial statements
  3. ) notes to the financial statements
35
Q

What are the 2 required statements in the government wide financial statements?

A
  1. ) statement of net assets

2. ) statement of activities

36
Q

What are the fund financial statements?

A

financial statements presented in a columnar format for the governmental, proprietary and fiduciary funds.

37
Q

What is the purpose of the notes to the financial statements?

A

to communicate information that is necessary for fair presentation of the basic financial statements but which is not displayed on the face of the statements.

38
Q

What GASB section includes the requirements for the CAFR?

A

2200

39
Q

What 3 things should the CAFR contain?

A
  1. ) Audited Basic Financial Statements
  2. ) Combining Statements for nonmajor funds for the primary government and discretely presented component units.
  3. ) Individual fund statements and schedules for the funds of the primary government and its blended component units.
40
Q

What three sections make up the CAFR?

A
  1. ) introduction
  2. ) financial
  3. ) statistical
41
Q

What is included in the into section of the CAFR?

A
  1. ) cover
  2. ) title page
  3. ) table of contents
  4. ) list of principal officials
  5. ) org chart
  6. ) letter of transmittal
  7. ) GFOA Award
42
Q

What is the most important item in the introduction section of the CAFR?

A

Letter of Transmittal

43
Q

What is the Letter of Transmittal?

A
  1. ) Formal Transmittal of CAFR - accounting standards & managements responsibility for preparation of report.
  2. ) profile of government
  3. ) local economy
  4. ) long range planning
  5. ) cash management
  6. ) risk financing
  7. ) independent audit
  8. ) awards
44
Q

What 5 things are included in the financial section?

A
  1. ) Auditors Report
  2. ) MD&A
  3. ) Basic Financial Statements - Gov’t Funds, Proprietary Funds, Fiduciary funds
  4. ) Required info other than MD&A
  5. ) Combining Statements and individual fund statements
45
Q

What is the objective of the statistical section?

A

to provide the user with additional historical perspective, context, and detail to assist in using the information in the financial statements and associated notes, and to understand and assess a governments economic condition.

46
Q

What 5 categories make up the statistical section?

A
  1. ) financial trends
  2. ) revenue capacity
  3. ) debt capacity
  4. ) demographic and economic
  5. ) operating information
47
Q

At minimum, what things should a govt present in financial trends section?

A
  1. ) info about net assets and changes in net assets

2. ) information about governmental funds

48
Q

How should unreserved fund balance be resented in the CAFR?

A

by fund type

49
Q

At minimum, what three aspects of own source revenues should be presented in the revenue capacity info section of the statistical section?

A
  1. ) revenue base
  2. ) revenue rates
  3. ) principal revenue players
50
Q

At a minimum, what four types of information should be presented in the debt capacity section of the statistical section?

A
  1. ) ratio of outstanding debt
  2. ) direct and overlapping debt
  3. ) debt limitations
  4. ) pledged revenue coverage
51
Q

What should be included in the demographic and economic section of the statistical section?

A

population, personal income, unemployment rate

52
Q

What three types of information should be presented in the operating information section of the statistical section?

A
  1. ) number of government employees
  2. ) operating indicators
  3. ) capital asset info
53
Q

What is a popular term for “popular reporting?”

A

summary financial information

54
Q

What are popular reports?

A

No required by GASB and cannot replace CAFR. Allows governments to present information in a user-friendly format that focuses on a specific area of interest.

CGFM Test 2 (8 decks)

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