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Exam > Section 2, Chapter 1 - Accounting Standards and Financial Reporting > Flashcards

Section 2, Chapter 1 - Accounting Standards and Financial Reporting Flashcards

1
Q

When was GASB established?

A

1984

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2
Q

Who oversees GASB? And what do they do?

A

Financial Accounting Foundation’s Board of Trustees (FAF)

The board researches and develops accounting and reporting principles for state and local governments, and related organizations

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3
Q

Who issued statements of accounting principles for state and local governments beginning in 1979 and prior to GASB?

A

The National Council on Government Accounting (NCGA)

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4
Q

What did the first GASB statement include?

A
  • the adoption of existing NCGA pronouncements
  • initiated the codifications of accounting standards
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5
Q

What is the GASB codification?

A
  • An integration of currently effective accounting and reporting standards for state and local governments
  • the authoritative source for accounting and reporting standards for state and local governments
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6
Q

What is the GASB codification drawn from?

A
  • GASB and NCGA Statements
  • Interpretations
  • Technical Bulletins and Concept Statements
  • AICPA’s industry audit guide, Audits of State and Local Government Units
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7
Q

What occurred in 1989 with regard to GASB?

A
  • FAF reaffirmed GASB’s authority setting standards for state and local governments
  • The authority between GASB and FASB was clarified as reflected in GASB hierarchy of accounting standards in section one
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8
Q

What is GASB’s vs FASB’s authority?

A
  • GASB has authority regarding states and local governments
  • FASB has authority over all other non-federal entities
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9
Q

How many members are there of GASB?

A

Seven members including a chair and a vice chair

  • the chair is the only member that serves full time
  • the vice chair and remaining 5 member serve on a part time basis
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10
Q

Who are GASB board members appointed by?

A

The FAF Board of Trustees

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11
Q

How long are GASB board member terms?

A

Board members generally serve for 5-year terms, but they may serve up to 10 years

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12
Q

What knowledge is GASB members required to know?

A
  • knowledge of governmental accounting and finance
  • have a concern for the public interest in matters of accounting and financial reporting
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13
Q

Where are GASB staff drawn from and who leads them?

A
  • drawn from government and public accounting and academia
  • led by the director of research who supervises the staff and makes assignments
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14
Q

What does GASB staff do?

A
  • works directly with the board and its task forces
  • Conducts research
  • participates in public hearings
  • Analyzes oral and written comments on due process documents
  • prepares drafts and recommendations for board consideration
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15
Q

What is the Government Accounting Standards Advisory Board (GASAC)?

A
  • Serves as an advisor to GASB and is involved in suggesting future agenda items
  • issues statements of governmental accounting concepts (which provides the conceptual framework for state and local government accounting)
  • issues statements of governmental accounting standards (the rules that define FS content and form)
  • issues several other types of pronouncements
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16
Q

Who appoints the members of the Government Accounting Standards Advisory Board (GASAC)?

A

FAF

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17
Q

Who do the members of the Government Accounting Standards Advisory Board (GASAC) include?

A
  • a member of the AGA (typically the chair of AGA’s Financial Management Standards Board
  • other members are named from over 30 orgs representing various stakeholders involved in government accounting, operations, and auditing
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18
Q

Who does GASB set standards for?

A
  • only for general purpose external financial reports
  • not for internal reporting
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19
Q

Who are the primary groups GASB has identified in Concepts Statement 1, Objectives of Financial Reporting as users of external financial reports?

A
  1. The citizenry at large (including media and public interest groups)
  2. Legislative and oversight bodies
  3. Investors and creditors
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20
Q

In its objectives, what does the GASB Concepts Statement 1 state that financial reporting should provide?

A
  • information to assist users in assessing accountability and making economic, social, and political decisions
  • the concept of accountability is considered the paramount objective from which all other objectives flow
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21
Q

What are the GASB financial and reporting concepts for state and local governments?

A
  • financial reporting should assist in fulfilling government’s duty to be publicly accountable and should enable users to assess accountability.
  • financial reporting should assist users in evaluating the operations results of the governmental entity for the year
  • financial reporting should assist users in assessing the level of services that can be provided by the government entity and its ability to meet its obligations as they become due
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22
Q

What does a financial reporting entity consist of?

A
  1. Primary government
  2. Component units
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23
Q

What is the underlying concept of the definition of reporting entity?

A
  • financial accountability
  • governmental organizations (federal, state, local) are headed by elected officials who are accountable to their voters and tax payers
  • organizations provide public services for which their accountable
  • organizations are headed by appointed officials who are accountable to governments headed by elected officials
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24
Q

What are component units?

A

Organizations for which the primary government is financially accountable and other organizations for which the nature and significance are such that their exclusion would cause the reporting entity’s financial statements to be misleading

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25
Q

What is a primary government?

A

Any state or general-purpose local government (municipality, county, township, etc).

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26
Q

What is a special purpose government?

A
  • A school district
  • public utility
  • Transit system
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27
Q

What criteria must be met for a special purpose government to also be a primary government?

A
  • It’s legally separate
  • It has a separately elected governing body
  • It is fiscally independent of other state and local governments
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28
Q

When is an organization legally separate?

A

It has been created as a body corporate and politic, or otherwise possesses corporate powers

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29
Q

What are some corporate powers?

A
  • capacity to have a name
  • The right to sue and be sued in its own name
  • The right to buy, sell, lease, and the right to issue debt in its own name
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30
Q

When can a special purpose government be fiscally independent?

A

If it can accomplish the following in accordance with law and regulations:
- Determine its budget without another government substantive authority to approve and modify that budget
- Levy taxes, or set rates or charges without substantive approval of another government
- Issue bonded debt without substantive approval of another government

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31
Q

What type of oversight are special purpose governments typically subject to?

A
  • ensuring compliance than substantive in nature
  • example: accounting clerk may be required, determine if the tax rates and levy amounts comply with tax rate, and levy limitations (this is an example of ministerial/compliance approval
  • Special purpose government, subject ministerial/compliance approvals, would not prevent it from being considered primary government
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32
Q

What is the first factor considered to determine whether a government is potentially a component unit?

A
  • is it legally separate from the primary government?
  • Does the organization or potential component unit possess corporate powers?
    ** if yes, the potential component unit may be its own primary government
    ** if no, determine who possesses corporate powers
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33
Q

What must exist for a potential component unit to be financially accountable to a primary government, and therefore part of the reporting entity?

A
  • The primary government appoint of voting majority to the PCU governing body, and
    1. Can impose as well on the PCU or
    2. there’s a potential for the PCU to provide financial benefit to or impose burdens on the primary government
    (if either of these conditions exist, the PCU is financially accountable to the primary government)
  • The primary government may be financial accountable, if the PCU is financially dependent on the primary government, regardless of whether it has separately elected government board, and appointed a higher government, or has a jointly appointed board
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34
Q

What happens if the primary government appoints of voting majority?

A

Then the potential component unit may be accountable to the primary government
- the appointment of the voting majority must be substantive and the substantive process is one that that is not limited
- Example: if the appointment must come from the limited slate of candidates, provided by officials/groups, other than the primary government, the appointment process is not substantive

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35
Q

When can a primary government impose its will on an organization?

A

If it can influence the programs, projects, activities, or level of service performed/provided by the organization

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36
Q

What are some conditions that indicate a primary government can impose its well on an organization?

A
  • remove appointment members of the governing body at will
  • Modify/approve the budget of the PCU
  • Modify/approve rate or fee changes affecting revenues such as utility rate increases
  • veto, overrule, or modified decisions of the PCU governing body
  • Appoint, higher, reassign, or dismiss the people responsible for the day-to-day operations of the organization

In determining whether imposition of will exists, a distinction should be made between substantive, approvals and ministerial (compliance) approvals

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37
Q

What can a financial benefit or burden on a primary government result from?

A
  • legal entitlement or obligations
  • Decisions or agreements between the component unit and primary government
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38
Q

What conditions exist when an organization has a financial benefit or burden, relationship relationship to the government? (anyone of the conditions can exist for it to occur)

A
  • it is legally entitled to, or can otherwise access the component units resources
  • It’s legally obligated, or has assumed the obligation to finance deficits of, or to provide financial support to, the component unit
  • It is obligated in some manner for the debt of the component unit
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39
Q

Are exchange transactions between the primary government and component unit, considered a financial benefit or burden relationship?

A

No

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40
Q

When does a direct benefit or burden occur?

A

Primary government itself is entitled to the resources, or is obligated for the deficit/debts of the organization

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41
Q

When does an indirect benefit or burden exist?

A

If one or more of the primary governments components are entitled to the resources, or is obligated for the deficit/debt of the organization

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42
Q

What are some fiduciary activities that a primary government may have?

A
  • pension (and other employee benefit) trust funds
  • Investment trust funds
  • Private purpose trust funds
  • Custodial funds
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43
Q

What is the financial burden test for fiduciary activities only applicable to?

A
  • Defined benefit pension
  • Other post employment benefit plans that are administered through irrevocable trusts
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44
Q

When would a financial burden be present in a defined contribution plan (different from a deferred compensation plan)?

A

When the primary government is required to match employee contributions to the defined contribution plan due to a law, budget, contract

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45
Q

Even if a primary government does not appoint a voting majority, when were the potential component unit still be included in the reporting entity?

A

When it is fiscally dependent on the primary government

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46
Q

What does fiscal dependency not involve?

A

The amount of support provided by the primary government to the potential component unit
* Many local school districts receive more than 1/2 of their support from a state government. However, they can adopt and revise their budgets, levy taxes, or set rates and issued debt without approval. Thus they are not fiscally dependent upon the state.

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47
Q

What instances would it be misleading to exclude the PCU from reporting entities financial statements? .. when the PCU does not have a booty majority appointed by the primary government, and that is not fiscally dependent on the primary government.

A

If the nature and significance of the PCU’s relationship with the primary government is such that exclusion from the primary government’s financial statements would render the statements misleading

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48
Q

If the authority issues on behalf of the other government, and serves as a conduit for receiving dedicated revenues designed for the repayment of debt, the nature and significance of the relationship between the authority, and the government would do what?

A

Warrant including the authority as a component unit of the government

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49
Q

Other organizations should be evaluated as PCU if they are closely related to the primary government. What is used to determine whether the nature and significance of a PCU relationship with the primary government warrants inclusion?

A

Professional judgment is to be used

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50
Q

Who does GASB Statement 39: Determining Whether Certain Organizations Are Component Units apply to?

A

Certain legally separate tax exempt entities, including public institutions of higher education, public hospitals, and similar

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51
Q

What three situations must apply for the PCU to be treated as a component unit?

A
  1. Economic resources received or held by the organization entirely/almost entirely for the direct benefit of the PG, it’s component units or it’s constituents
  2. The PG or its component unit is entitled to/ can access most of the economic resources, received or held by the separate organization.
  3. Economic resources received/held by an individual organization. It is the specific primary government or component unit is entitled to/can access or significant to the PG or it’s component unit.
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52
Q

When is a primary government required to be blended (as prescribed by GASB Statement No 80: blending requirements for certain component units)?

A

If the PCU is organized as a nonprofit corporation, and which the primary government is a corporate member (not the residual equity interest owner).

Identification as the sole corporate member is contained in the PCU articles of incorporation or bylaws

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53
Q

What are the three methods for display component units in the financial statements of the primary government?

A
  1. Blending.
  2. Discrete presentation.
  3. Inclusion as a component unit that is fiduciary in nature (fiduciary component units)
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54
Q

What does blending financial data of the component unit mean?

A

Represented in a manner like the presentation of the balances and transactions of the primary government

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55
Q

What does discreet presentation mean?

A

Data are presented in the reporting entity’s financial statements, separate from the data of the primary government

This usually means separate columns in the financial statements

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56
Q

What criteria should be used to determine if a component unit should be blended?

A
  • composition of two boards
  • Providing services to the primary government
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57
Q

In some instances, the governing board of the component unit consists of members of the primary governments governing board. As a result, if the two boards are substantially the same, how would the component unit be displayed?

A

Blending

For example, enabling legislation may provide that board of a financing authority be composed of all members of a nine member city council plus additional members. As a result, the boards how about the same composition.

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58
Q

If there is sufficient representation of the primary government’s governing body, so that the decisions of the primary government cannot be overridden by the component unit…. What would be done to the financial data of the component unit?

A

The two boards are substantially the same, and the financial data of the component unit normally would be blended

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59
Q

Who are the customers of the component unit?

A

The component unit provides services entirely, or almost exclusively, to the primary government, or otherwise exclusively or almost exclusively benefits from the primary government, even though it does not provide services directly to it

This is much the same as internal service fund (and services are provided to the government itself rather than to citizens). Hence the financial data of the component unit normally would be blended with the data of the primary government

60
Q

What should I units do when they exclusively, or almost exclusively, benefit primary government by providing services indirectly?

A

They should be blended

For example, a component unit established a primary government to administer its employee benefit programs, exclusively benefits the primary government, even though it provides services to the employees rather than directly to the primary government itself

61
Q

When is a component units financial information discreetly presented?

A

When it does not be the criteria to be blended

62
Q

Where should discreetly presented major couponing units be represented?

A

In the financial statements of reporting entity, based on their significance in a relationship to the primary government in three ways:
1. A separate column for each major component unit can be presented in the entity’s statement of net position and statement of activities.
2. Component unit information can be aggregated in the entity’s statement of net position and statement of activities. Combining statements for the individual major component units would be presented after the fund statements in three basic financial statements.
3. Aggregate information is presented in the statement of net assets and statement of activities and condensed financial information for the individual major component units would be presented in the notes to the financial statements.

63
Q

How should nonmajor component units be presented?

A

Aggregated in a single column

A combining statement for nonmajor component units is not required, but maybe presented as supplementary information

64
Q

If a primary component unit meets the definition of a component, it is reported as a fiduciary activity, if it meets what criteria?

A
  • it it is a defined benefit pension or other post employment benefit plan held in an irrevocable trust
  • it is an activity that accumulates assets from other governments that are not part of the reporting entity, but controlled by the government such as certain multiple employer plans for pensions and other postemployment benefits
65
Q

If the activity is not a pension arrangement or another postemployment benefit arrangement, the activity may still be a component unit that is a fiduciary activity if there is any one (or more) things met. What are they?

A
  • assets are administrative through a trust in which of the government is not a beneficiary, the assets are dedicated to providing benefits to recipient in accordance with the benefit terms and assets are legally protected from creditors of the government. External investment pools may be part of this criteria.
  • The assets are for the benefit of individuals and the government is not required to monitor compliance, determine eligibility costs, provide matching resources, and does not have the ability to exercise discretion over how assets are allocated. In addition, the government does not provide goods or services to individuals. Cemetery perpetual care units are examples of this criteria
  • the assets are for the benefit of the organization, or other governments that are not part of the financial reporting entity. The Assets are derived from providing goods or services to those organizations or other governments. Component units that are established as pass-through entities for grants and taxation may be examples of this criteria.
66
Q

What is a related organization?

A

An organization for which a primary government is not financially accountable, even though it appoints a voting majority of the governing board

67
Q

Where is my related organization disclosed?

A

In the notes

The notes disclose the extent of the primary government’s involvement in the related organization. An example of a related organization might be the local housing authority.

68
Q

What do joint ventures result from?

A

Contractual arrangements of two or more participants. The venture is subject to joint control and the participants having ongoing financial interest or financial responsibility

The extent to which a government has a financial interest or responsibility is disclosed in the notes

69
Q

Many states can create regional governments or other multi governmental arrangements that are covered by the representatives from each of the governments that create the organization. These organizations may appear like joint ventures— they provide good services to the citizens of governments, but do not meet the definition of a joint venture, because there is no ongoing financial interest or responsibility by the participating government. What is done in a participant does not retain an ongoing financial interest or responsibility in the organization?

A

Only a disclosure is required 

70
Q

What did GASB Statement No 98 change the name of comprehensive annual financial reports to? When did it become effective?

A

It changed the name of comprehensive annual financial reports that many governments issue annually to the annual comprehensive financial report (ACFR)

Effective for fiscal year reports issued after December 15, 2001

71
Q

Who is the ACFR important to?

A

The investment community

72
Q

Is the Preparation of an ACFR required?

A

GASAB codification section 2200 says that it is not required by GAAP but it may be required by statue or bond covenant

73
Q

What is the ACFR?

A

The governments official annual financial report

74
Q

What are the three sections of the ACFR?

A
  1. Introductory.
  2. Financial.
  3. Statistical.
75
Q

What does introductory section of the ACFR include?

A

The basic information about the organizational units

Elements include:
- The cover
- Title page
- Table of contents
- Letter of transmittal
- List of principal officials
- Organization chart
- the Government Finance Officers Association’s (GFOA) certificate of achievement if participating in the program the government received one for its prior report

76
Q

What is the most principal element in the introductory section?

A

The letter of transmittal

77
Q

What should the transmittal letter not do?

A

Duplicate what is in the management discussion and analysis

78
Q

What is the transmittal letter address?

A
  • Formal transmittal of the ACFR
  • Local economy
  • long range planning
  • Cash management
  • Risk financing
  • independent audit
  • Awards and acknowledgments
79
Q

What does the formal transmittal of the ACFR include?

A
  • a description of the accounting standards applicable to the entity
  • managements responsibility for the preparation of the report
80
Q

What does the provide of the government include?

A

A description of the component units included in the financial statements and the method of the presentation (blended or discrete presentation)

81
Q

What does local economy include?

A
  • Discussion of the economic environment, types of the industry and commerce in the area, and how the government should include new resources of the government.
  • The discussion should include new industries coming into the area or industries that may be leaving the area
82
Q

What should long range planning include?

A

A summary of the goals and objectives of major programs or services, including projects

The discussion should include the results of programs or services during the year covered by the report and expected initiatives to be undertaken during the following year, and how they help achieve the long range plan

83
Q

What should cash management include?

A

Description of the policies and controls regarding cash management and investments used by entity, as well as descriptions of security for investments and participation in investment pools

84
Q

What does risk financing include?

A

An outline of the provisions for controlling the risk in key areas, such as worker’s compensation, liability, and property coverage

The entities assumption of risk or health and other benefits for employees would be included in the discussion

85
Q

What does independent audit include?

A

Description of the scope of the audit engagement

86
Q

What do awards and acknowledgments include?

A

Receipt of the certificate of achievement from the GFOAN/or intention to apply for a new certificate is addressed in this part of the letter. Acknowledgment to those who participated in the development of the report is also given

A similar program is also offered to benefit plans from public pension, coordinating council of the national Association of state retirement administrators, national council on teacher retirement, The national conference on the public employee retirement system

87
Q

What is included in the financial section of the ACFR for a general purpose government?

A
  1. Auditors report.
  2. MDA.
  3. Basic financial statements.
  4. Required supplementary information, other than MDA.
  5. Combining statements and individual fund statements and schedules
  6. Schedules to present greater detail for information reported in the statements, statistical section.
88
Q

What is included in the basic financial statements?

A

a. Government-wide statements.
i. Statement of net position
II. Statement of activities.

b. Fund of financial statements.
i. Government funds (1. balance sheet and 2. statement of revenues, expenditures, and fund balances)
II. Proprietary funds (1. Statement of net position, 2. Statement of revenues, expenses, and changes and fund net position, 3. Statement of cash flows)
iii. fiduciary funds and fiduciary component units (1. statement of fiduciary net position, 2. Statement of changes in fiduciary position)

c. Notes to the financial statements.

89
Q

What is included in combining statements and individual fund statements and schedules?

A

a. Combining statements and supplemental information.
b. Individual fund statements
c. Schedules.
I. Schedules necessary to demonstrate compliance with finance related legal and contractual balances.
II. Schedules to present information spread through the statements that can be brought together and shown in greater detail.

90
Q

Where are the requirements for the statistical section?

A

GASB Codification Section 2800 Statistical Section

91
Q

What is the objective of the statistical section?

A

To provide users of financial statements with additional historical perspective, context, and detail to assist the financial statements, associated notes, and RSI to assess a government’s economic condition

92
Q

What are the information categories which the statistical section should be presented?

A
  1. Financial trends.
  2. Revenue capacity
  3. Debt capacity
  4. Demographic and economic.
  5. Operations.
93
Q

What is usually required in the tables in the statistical section?

A

Information for the current period and nine years prior

94
Q

At minimum, what should governments present for financial trend information?

A
  • information about net position
  • Information about changes in net position
  • information about governmental funds
95
Q

What are the three components of net position?

A

Net investment in capital assets — restricted, and unrestricted — the government wide statement should be shown separately for governmental activities, business type activities, and the total for the primary government

96
Q

At minimum, What three aspects of source revenues should be presented?

A
  1. Revenue base.
  2. Revenue rates.
  3. Principal revenue payers.
97
Q

How should revenue information be shown?

A

By major components, such as real property and personal property

In addition, governments should show the total direct rate applied to this revenue base

98
Q

How should rates be shown?

A

Each individual direct rate applied should be shown separately as well as total direct rate

Rates applied by each overlapping government to the revenue base should also be shown separately. Governments should identify any legal restrictions on their abilities raise direct rates.

99
Q

What should governments identify about principal revenue payers?

A
  • the payers of their most significant own-source revenue
  • the amount of revenue base attributable to each or actual taxes levied on each
  • The percentage of each amount relative to the total revenue base or total taxes levied
  • information about the 10 largest payers should be presented unless fewer are needed to reach 50% of the total revenue base or total taxes levied
100
Q

Why are governments legally prohibited from doing to individual revenue payers?

A

They are prohibited from disclosing individual revenue payers (such as personal income taxes) should present other information that assists in understanding the degree to the sources of revenue may be concentrated

101
Q

What information about property tax levy and collections should be presented?

A
  • The amount levied for the period
  • Amount collected prior to the end of the period and the percentage of total levy that represents
  • The amount of the levee collected in subsequent years, the total amount collected to date, and the percentage of total levy collected to date
102
Q

At minimum, four types of information should be presented for debt capacity?

A
  1. Ratios of outstanding debt.
  2. Direct and overlapping debt
  3. Debt Limitations.
  4. Pledged revenue coverage.
103
Q

Information about each type of debt should be presented. How should it be?

A

Between governmental activities and business type activities, along with a total for the primary government

104
Q

How is the outstanding debt ratio calculated?

A

Providing total outstanding debt by total personal income

It should be presented along with:
- total personal income, or in the demographic and economic section
- estimated actual value of total personal income amount if total personal income is not available
- total personal income amounts are not available, taxable property, or another relevant economic base should be used
- Per capita (or other relevant base) ratio of total outstanding debt should also be presented

105
Q

What information should governments issuing general obligation, or other bonded debt financed with any general government resources provide?

A

Information about the ratios of general bonded debt

Governments should present a general bonded debt ratio calculated by dividing general bond debt by the total estimated actual value of taxable property (or another relevant base)

106
Q

Information about direct and overlapping debt should be provided. For each type of outstanding debt attributable to cover governmental activities of an overlapping government, The reporting government ship sent the following information for the current year

A
  • The total amount outstanding
  • The percentage of relapse between the reporting and overlapping governments
  • the product of debt outstanding multiplied by the percentage of overlsp
107
Q

What information governments with debt limitations provide?

A

Information upon which the legal debt margin is required to be calculated for the current year

108
Q

What information should governments present for the last 10 years?

A
  • debt limit amount
  • total net debt applicable to the limit
  • The legal debt margin amount
  • a ratio calculated by dividing either the legal debt margin amount, or the total net debt applicable to the debt limit by the debt limit
109
Q

Governments information about pledged revenue coverage for non-general obligation debt that is secured by a pledge of a specific revenue stream. What should be presented for each debt issue?

A
  • Gross revenue
  • Net available revenues
  • principal and interest requirements
  • Coverage ratio
110
Q

What type of demographic and economic information should be presented?

A
  • information about population
  • Total and per capita personal income
  • Unemployment rate
  • Information about principal employers in the jurisdiction, the number of persons each employ, and percentage of total employment that each represents should be presented for the 10 largest employers (unless you are needed to reach 50% of total employment)
  • Information should be for the current year and previous nine years
111
Q

What are the three types of operating information that should be presented?

A
  1. Number of government employees.
  2. Operating indicators.
  3. Capital asset information
112
Q

What type of information about government employees should be presented?

A

The number of people employed by function, activity or program, at least at the level required for expenses on the statement of activities

113
Q

What type of operating indicators should be presented?

A

Indicators of the demand or level of service at the function as well as activity or program, level, such as crime rates, or number of arrests

114
Q

When should the government use narrative explanations?

A

To enhance the statistical section

115
Q

What type of information should be included in narrative explanations?

A

Primarily analytical in nature

116
Q

What are the four types of narrative explanations in the statistical section?

A
  1. Explanations of the objectives of statistical section information in general and in the five categories of information as well as individual schedules of information if appropriate
  2. Explanations of basic concepts that may be unfamiliar to users of the report.
  3. Explanations that identify relationships among the various schedules as well as between the statistical section and other sections of the report
  4. explanations of atypical trends and abnormal data users would not otherwise understand such as frequent incidents, changes in underlying assumptions or accounting methods, organizational restructuring, policy changes, and other events
117
Q

What do basic financial statements (BFS) for general purpose government include?

A
  • Government wide financial statements
  • Fund financial statements
  • Notes to the financial statements
118
Q

What do government mind financial statements provide information about?

A
  • Activities of the government as a whole, except for its fiduciary activities
  • information about the entity’s governmental activities, business type activities, and it’s discreetly presented component units
  • information is presented in the separate columns and a total is required for primary government

A total for the reporting entity is optional

119
Q

What are the two required government wide financial statements?

A
  1. Statement of net position.
  2. Statement of activities.
120
Q

What measurement focus and accounting is used to present government wide, financial statements?

A
  • economic resources measurement focus
  • accrual basis of accounting
121
Q

How are fund financial statements presented?

A

In a columnar format for the primary governments, governmental, proprietary, and fiduciary funds

122
Q

What is the focus of reporting on fund financial statements?

A

Reporting is on major funds, individually, poor governmental, and enterprise funds and taken together for non-major government and enterprise funds as well as internal service funds

123
Q

How are fiduciary funds presented?

A

Fiduciary funds are presented by fund type

124
Q

What statements do special purpose governments that are only business type activities, or fiduciary activities present?

A

Statements that are applicable to them

125
Q

What statements are represented, if special purpose, government engages in more than one governmental program?

A

Both fund statements and government wide statements are presented, inclusive of notes, MDA and RSI

126
Q

What statements do special purpose governments engaged in only business type activities report?

A
  1. MDA
  2. Enterprise fund financial statements
    a. Statement of net position
    b. Statement or revenues, expenses, and fund net position.
    c. Statement of cash flows
  3. Notes to financial statements.
  4. RSI, other than MDA, if applicable.
127
Q

What statements do special purpose governments engaged in only fiduciary activities report?

A
  1. MDA
  2. Statement of fiduciary net position
    a. Statement of changes in fiduciary net position.
    b. Notes to financial statements
    c. RSI, other than MDA if applicable
128
Q

What is the purpose of notes to the financial statements?

A

To communicate information that is necessary for a fair presentation (essential for understanding) of the basic financial statements

That has a clear and demonstrable relationship to information in the financial statements

They are an integral part of the financial statements

129
Q

What do notes provide?

A
  • Descriptions of the accounting and finance related policies and underlying amounts recognized in financial statements
  • More detail about more explanations of amounts of recognized in financial statements
  • additional information about financial position or inflows and outflows resources that does not meet the criteria for recognition
130
Q

What should users be able to distinguish between information?

A

Information that pertains to primary government and it’s discreetly presented component units

Information about blended component units is presented as part of the primary government disclosures

131
Q

What do notes include?

A
  • Summary of significant accounting policies
  • stewardship, compliance, and accountability
  • Detailed notes on all activities and funds
  • Segment Information— enterprise funds
  • Individual major component unit disclosures (if not reported on the face of the government wide financial statements, or in combining statements)
  • nature of the primary government accountability to related organizations
  • joint ventures, and jointly governed organizations
  • Related party transactions
  • Summary disclosure of significant contingencies
  • Significant affects of subsequent events
132
Q

What does summary of significant accounting policies include?

A
  • A description of the government wide financial statements noting that fiduciary funds (including fiduciary component units) are not included
  • A brief description of the component units, including their relationship to the primary government
  • basis of presentation— government wide financial statements, and fund financial statements
  • basis of accounting
  • assets, liabilities, and net position and fund balances described in order of appearance in the financial statements of net position/balance sheet
  • Revenues, expenditures/expenses
133
Q

What type of basis of accounting is used for the following;
1. Government wide financial statements.
2. Governmental fund financial statements, including the length of time used to define available for purposes of revenue recognition
3. Proprietary and fiduciary fund statements.

A
  1. Accrual
  2. Modified accrual
  3. Accrual
134
Q

What is the summary financial information?

A

The technical term for popular reporting in condensed financial statements and summary reports

135
Q

Who can understand ACFRs?

A
  • Government financial management
  • The accounting community
  • Citizens without an accounting background because they’re not easily understandable
136
Q

What is wrong with ACFRs?

A

They contain complex charts and tables

137
Q

What is enticing about popular reporting?

A

They are significantly shorter in length with a focus on providing information of interest to the public

They can highlight goals and objectives for the year, spending over the recent years against those objectives, and the impact/results such as bridges, built, road, paved, schools, refurbished, and crime rate

138
Q

Are popular reports required?

A
  • they can supplement ACFR or BFS but not intended to replace these financial reports
  • They are not required by GSP
139
Q

Can popular reports be presented on a different basis of accounting from ACFR?

A

Yes

140
Q

What are AGA’s citizen centric reports?

A

One initiative intended to foster an innovative means of communication between governments and their citizens

141
Q

What do citizen centric reports detail?

A

Government finances in a visually appealing, clear and understandable 4 page document

142
Q

What is citizen centric reports based on?

A

A template that includes comprehensive community information, such as population, figures, regional characteristics, and government goals for the community

Performance report on Key missions and services, detailed cost and revenue information, and a look at the year ahead are also included

143
Q

Who is the citizen centric reporting used by?

A

Complex organizations and small government entities

144
Q

What do governments issue internal reports for?

A

To disclose financial operations and conditions of the governmental entity or parts there of

Some are issued to enable the government to monitor its financial operations

Others are issued to provide the executive branch and legislative bodies with the information necessary to set priorities for the use of financial resources, set program goals and objectives, and plan for future projects

145
Q

What guidance is there for internal reporting?

A

GASB has not issued any specific guidance before the preparation and publication of internal reports

State or local laws and regulations may set forth internal reporting requirements

146
Q

How is internal reporting format determined?

A

By the needs of the program, managers, administrative staff, or legislative regulators

Reports may also be distributed outside of the government, so preparers keep that possibility in mind as reports are compiled

Exam (14 decks)

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