State & Local Governments Flashcards
How many funds does a municipality need?
What characteristic of service efforts is most difficult to report in governmental entities?
- No number. Just minimum number of funds consistent with the legal requirements and sound financial administration
- Relevance because information must bear a logical relationship with the needs for its purpose
Fund Accounting
What are the 11 types of funds and their 3 categories? and a description of each.
Use the acronyms?
Acronyms
GRASPP SE PAPI
E and I = Proprietary
PIPPA = Fiduciary
- Governmental Fund (Modified Accrual)
General - Big fund that accounts for most of transactions in gov and services
I.e.
Special Rev - accounts for resources that are restricted for specific purpose other than debt or capital
Capital Projects - Resources for construction
Debt Service - Provide debt service principal and interest expense
Permanent - resources that are legally restricted to income not principal (Benefit the general public)
- Proprietary Funds
Enterprise (Accrual) - business like but public is primary user (water utility
Internal Service - Business type where government is primary user (internal users)
Fiduciary Funds
Anything with “Trust” in name (Accrual)
Pension trust - employee retirement obligation
Private purpose trust - created to benefit individuals
Investment Trust - trust of other participants
Agency - Assets held for custodian fashion
taxes collected and held for a school district
What is the measurement focus of governmental, Proprietary and Fiduciary funds? And government-wide statements?
What method of accounting do they use to recognize revenue?
Governmental
- Current financial resources
- Financial position
- Modified Accrual = when they become available and measurable
- ONLY current assets and liabilities on BS
Proprietary/Fiduciary/GW statements
- Economic resources
- Full Accrual = when earned
What is interperiod Equity?
Interperiod Equity = balanced budget
- Interperiod equity is a significant part of accountability on behalf of gov entity.
- Helps users assess whether current year revenues are sufficient to pay for the services provided that year so future tax payers wont be required to assume burdens for services
How does a Government formally integrate a budget (JE)?
How do you record CLOSING budgetary accounts?
What is the budgetary control account?
What is JE when property taxes are levied?
JE when township issues purchase order of supplies and when received
JE for general fund when electric utility enterprise fund supplied them with electricity?
What happens if a special rev fund overspent available resources - how would deficit be displayed?
Est. Rev xx
…….Appropriations xx
…….Budgetary Control xx
Appropriations xx
Budgetary Ctrl xx
…….Est. Rev xx
*if estimated revenues was initially $20mn and actual revenues was $17mn. Use the $20mn (initially budgeted) to close off the account regardless of what actual revenues are.
Budgetary control is the “equity” account
Property Levied:
Prop tax receivable
Uncollectible
Revenues
Order:
Encumbrance xx
Budget Ctrl xx
Received:
Supplies Expenditure xx
Voucher payable xx
Budget Ctrl xx
Encumbrance xx
reverse original entry using SAME amounts
General Fund:
Expenditure xx
Due to electric utility enterprise fund xx
Deficit = Negative fund balance - unassigned
** IMPORTANT**
What class of non-exchange transactions are Property Taxes and Fines?
And example of derived non-exchange tax revenue?
What is an example of Gov-mandated non-exchange transactions?
And voluntary non-exchange?
Imposed non-exchange revenues
Derived non-exchange tax revenue = city taxes hotels 2% to promote tourism
Gov-mandated = environmental clean up
Voluntary = Grants
Difference between non-spendable, restricted, assigned, committed, assigned, and unassigned?
Non-spendable are resources in a form that cannot be spent (inventories or prepaid expense) - General Fund
Restricted are resources whose use has been limited by external source like creditors or constraints imposed by law (internal restrictions are unrestricted like funds for the replacement of equipment)
Committed is most restricted classification internally limited by formal action from highest decision authority
Assigned resources/assets that the government intends to obligate
Unassigned residual equity classification. ONLY general fund should have a positive unassigned balance
The debt service fund is used to account for resources for…
How should bond premium or discount be amortized in a debt service fund?
Last, if a bond’s interest payment is due Dec-31 when/what amount of bond interest should be recorded in Sept-30 fiscal year end?
- Debt services ONLY services the general debt. SO, a debt service fund cannot service fiduciary or proprietary funds - they issue they’re own long-term debt
- It shouldn’t. Gov premiums and discounts is not amortized in its governmental funds
- $0 interest expenditures should not be accrued between payments. It should be recorded when legally payable.
If a capital projects fund issued bonds to construct a civic center - how would it be reflected in its financial statements at fiscal year end?
How do you record depreciation expense in capital projects (gov funds) and in Proprietary funds?
- Government-wide statement of net position should report the construction in progress
- Would NOT be in the capital projects fund since each year’s activities are closed out at year-end
- Depreciation is NOT recorded in ANY government fund. Since measurement focus is the flow of financial resources (and dep does not reflect the use of financial resources) it is not recorded.
How should shared revenues be recorded?
JE for internal service fund when it billed another government fund for services?
Non-Operating revenues
- Shared revenues are levied by one government but shared on predetermined basis with another government
Due from other funds xx
Operating rev x
- due from other funds appears on balance sheet but they are not a component of changes in net position
What are the financial statements of Governmental, Proprietary, and Fiduciary funds?
For an enterprise fund, is there any other required info for an Enterprise fund?
Governmental Funds
- Balance Sheet
- Statement of Revenues, Expenditures, and Changes in Fund Balance
Proprietary Funds
- Statement of Net Position
- Statement of Revenues, Expenses, and changes in net position
- Statement of Cash Flows
Fiduciary Funds
- Statement of Fiduciary Net Positions
- Statement of changes in Fiduciary net position
Enterprise - normal 3 statements in addition to footnotes AND MDA and Required Supplementary Information
JE for motor pool internal service fund that sold vehicle for $5k that cost $6k when CV was $4k?
Cash $5k
Acc Dep $2k
Equipment $6k
Gain $1k
What are the characteristics of Government financial reports?
Which is most difficult to report?
“U R MICE”
- Understandability
- Reliability
- Relevance (make a difference)
- In Timeliness
- Consistency
- Comparability (entity to entity)
Relevance is most difficult to report because it makes a difference to users so there should be a logical relationship to the purpose.
GASB 34, what is the purpose of separating fund financial statements?
What is the type of approach used?
To report additional and detailed information about the primary government
Integrated approach which includes both government-wide and fund financial statements along with reconciliations
What do revenues include in a government fund?
What are examples of the following?
- Derived Non-exchange Revenues
- Imposed on-exchange Revenues
- Government Mandated
- Voluntary Non-exchange Transactions
- Revenues include:
1) Property taxes
2) Licenses
3) Intergovernmental revenues
Derived Non-exchange revenues
- Sales/Income Tax
- its “derived” from economic activity
Imposed Non-exchange Revenues
- Fines and property taxes
- Accrued when billed
Government Mandated
- Grants
Voluntary Non-exchange
- Resources for a particular purpose
