Yellow Book Flashcards
Governmental Financial reports are used primarily to:
- Compare actual financial results with legally adopted budget
- Assess financial condition and results of operations
- Assist in determining compliance with fincnace-related laws, rules, and regulations
- Assist in evaluating efficiency and effectiveness
- Accountability is the cornerstone of all financial reporting in government
What is not the goal of governmental entities?
Earning a profit is not the goal.
Who are the main users of governmental financial reports?
- The citizenry
- Legislative and oversight bodies
- Investors and creditors
What are the major types of governmental entities?
General purpose governments
- Provide wide array of services
- Examples: Federal government, state governments, cities, towns, townships, villages, counties, boroughs, and parishes.
Special purpose governments
- Governmental entity engaged in a single governmental activity-usually provide only a single or just a few services
- Examples: Park district, independent school systems, public colleges, public hospitals.
Not for Profit Organization
Legally separate organizations
Usually exempt from federal, state and local taxation
Religious, community service, private educational and health care, museums.
who is responsible for establishing GAAP for state and local governments and Governmental not for profits?
GASB -Governmental Accounting Standards Board
The Comprehensive Annual Financial Report (CAFR) contains what 3 main sections?
- Introductory Section
- Financial Section
- Statistical Section
What are the required supplementary info in the financial section?
- Management Discussion and Analysis (MD&A)
- Budgetary Comparison Schedule
- Information on Infrastructure
What are the two sets of “basic” financial statements required in the CAFR?
- Government Wide Statements
- Fund Statements
The Government Wide Statements consist of what statements? and on what basis are they reported?
- Statement of Net Position (like a BS)
- Statement of Activities (a statement of revenues and expenses)
All financial info in the government wide FSs reported on the ACCRUAL BASIS with economic resources focus.
Assists in assessing operational accountability- How efficiently resources are being used.
The Fund Statements consist of what funds and what statements?
-
Governmental Funds
- A BS
- A Statement of Revenues, Expenditures and Changes in Fund Balance
-
Proprietary Funds
- A Statement of Net Position
- A Statement of Revenues, Expenses and Changes in Net Positions
- Cash Flows (direct method)
-
Fiduciary Funds
- A Statement of Net Position
- A Statement of Changes in Fiduciary Net Positions
The Reporting Entity consists of:
the primary government and all component units for which the primary government is financially accountable.
What are component units?
Legally separate organizations for which the elected officials of the primary government are financially accountable.
Most component units are reported by what kind of presentation?
reported by discrete (separate column) presentation, rather than blending the component units financial info with the appropriate fund columns of the primary government.
What is Discrete Presentations?
Is when one or more component units are reported in separate columns, in addition to those pertaining to the primary government.
What is blending?
Is when the component units’ transactions and balances are reported as if they were part of the primary government- that is, the component units’ funds are accounted for just as if they were funds of the primary government.
*Blending is required when governing boards having the same member controls the primary government and the component units or the component unit provides services solely to the primary government. If those conditions are not satisfied then discrete presentation is required*
Full Accrual basis is used on the?
Government Wide Statements
Proprietary Funds
Fiduciary Funds
Modified Accrual basis is used on the ?
Governmental Funds
What is modified accrual?
- Recognizes revenue when measurable and available to cover liabilities of the current period
- Recognizes expenditures in the period that current resources are expected to be used
- Measurement focus is on short term assets and liabilites
- LT assets and liabilities are excluded from the BS
- Only shows the amounts that are needed/used in the current period
- Focus on cash resources that are measurable and available to finance current amounts due.
What are funds?
Separate fiscal and accounting entities within the organization. Each fund will have its own separate and distinct cash and noncash resources, obligations and fund balance.
What is the accounting formula for governmental accounting?
Assets=Liabilities + Fund balance
*Fund balance is used instead of owner’s equity, as governmental entities have no real owners*
What are Expendable Funds?
Funds are collected and spent or expended (Governmental Funds). The resources of this fund are to be used for a specific purpose. These funds are intended to be used in the current period to meet the objectives of the fund.
what are non-expendable funds?
Funds are continually replenished thru charges for the services provided (Proprietary Funds). Used for funds that are operated like a Business enterprise.
what are the three main funds for State and Local Governments?
Governmental
Proprietary
Fiduciary
What are governmental funds used for and what are the primary types of governmental funds?
Governmental- used to account for the governments operating and financing activities.
- General-the main fund used to account for all unrestricted resources that are not accounted for in other funds.
- Special Revenue- Revenues restricted for specified purposes
- Debt Service- Funds set aside for payment of principal and interest on LT debt
- Capital Projects- funds set aside to be used for acquisition or contruction of major capital items
- Permanent- used to report resources that are legally restricted- the main resource must stay intact- but the earnings on the principal may be used to support various governmental programs