Transcript Chapter 28

GOVERNMENTAL
ACCOUNTING
Governmental Accounting
 Many concepts are similar
to financial accounting,
but terminology and
procedures differ.
 Governmental Accounting
Standards Board (GASB)
generates standards.
Governmental Accounting
User Needs
Concepts Statement #1, GASB
Basic Groups of Users
 Citizenry
 Legislative and Oversight
Bodies
 Investors and Creditors
Nature of
of Governmental Activities
Charter
Extensive Legal Requirements:
Constitutions, charters, and statutes regulate
governmental units.
Some legal provisions pertain to accounting and
financial reporting matters:
 Keeping separate set of books for certain
activities.
 Being audited by outside CPAs.
Nature of
Governmental Activities
Absence of a Profit Motive
Question of What to Measure?

Revenues & Costs of Providing Services?

Inflows and Outflows of all Resources?

Inflows and Outflows of certain Resources?
Government Finance Officers
Association (GFOA)
Equivalent to the AICPA for the private sector.
To enhance and promote professional management
of governmental units --- publishes/provides the
following :
 Books, periodicals, monthly newsletter.
 Services to members.
 Software.
GAAFR
GAAFR: “The Blue Book ”
Stands for Governmental Accounting, Auditing and
Financial Reporting
Published by the GFOA.
 Neither prescribes nor authoritatively interprets
GAAP for governmental units.
 Provides detailed guidance (many examples) for
applying governmental GAAP.
 Widely used by governmental units.
Governmental Accounting
Standards Board (GASB)
Created in 1984
Sister organization to the FASB
Establishes GAAP for state and local government
No authority to establish GAAP for the federal
government.
Seven members--simple majority vote needed
Jurisdictional Arrangement
Between GASB and FASB
GASB --- primary responsibility for state and
local governmental units.
 Must
 May
follow FASB rules if GASB says so.
elect to follow a FASB rule if GASB
has not addressed a specific issue --- if
election made, must use ALL such rules.
Basic Principles of the GASB
Codification: Grouped into 7 Categories
Accounting & Reporting Capabilities
Types of Funds
Basis of Accounting
Financial Reporting
Long-Term Liabilities
Capital Assets
Budgets and Budgetary Accounting
Accountability and
Governmental Accounting
Governmental Accounting Statements attempt
to answer 3 questions related to
Accountability:
Where did the
financial resources
come from?
Where did the
financial
resources go?
What amount of
financial resources
is presently held?
Reporting Diverse Governmental
Activities - Fund Accounting
 Governmental units
have many different
types of activities.
 No common
motivation links these
activities.
 Each activity operates
quasi-independent,
self-balancing sets of
accounts called funds.
Examples include:

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
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

Public Safety
Sanitation
Health & Welfare
Education
Parks & Recreation
Judicial System
Water and Sewer
Employee Pensions
Fund Accounting
Fund Accounting: Accounting for certain
activities/operations separately from all other
operations.
Fund --- self-balancing set of accounts
Reporting Entity --- focus on service
Financial Statements --- focus on accountability
Fund Accounting
Classification
Governmental
Funds
Proprietary
Funds
Fiduciary
Funds
Accounting for
activities related
to serving the
public.
Accounting for
business-type
activities.
Accounting for
financial
resources held
for others in a
trustee capacity.
Fund Accounting Classification
Governmental Funds
Governmental Funds
General
Fund
Special
Revenue
Fund
Capital
Projects
Fund
Debt
Service
Fund
Permanent
Fund
(Endowments)
Governmental Funds
General Fund
 Used to account for all
financial resources except
those accounted for in other
funds.
 In 2011, 60% of Baltimore’s
governmental funds were
accounted for in the General
Fund.
Governmental Funds
Special Revenue Fund
 Expenditures are legally
restricted.
 Revenues that must be spent
for specific purposes.
 St. Paul, MN, requires that
money received for the sale
of zoo animals, must be spent
to acquire NEW animals for
the zoo.
Governmental Funds
Capital Projects Fund
 Used to account for
costs to acquire or build
major governmental
facilities.
 The asset is not recorded
in this account, but the
funds to acquire or build
it are accounted for here.
Governmental Funds
Debt Service Fund
 Used to account for financial
resources collected to pay
long-term liabilities and
interest.
 In 2011, Birmingham reported
paying out $11 million in
principal payments and $15
million in interest from its
Debt Service Funds.
Governmental Funds
Permanent Fund (Endowments)
 Used to account for
funds donated to the
government by external
donors.
 In 2008, Dallas reported
nearly $8 million in
funds donated to take
care of city parks.
Fund Accounting Classification
Proprietary Funds
Proprietary Funds
Enterprise Fund
Internal Service
Fund
Proprietary Funds
Enterprise Fund
 Used to account for any government activity that is financed by
user charges.
 An activity MUST be accounted for here if, any one of the
conditions below are met . . .
Net revenues
provide the
security for the
activity’s debts.
The the law
requires costs to
be recovered
from user fees.
Fees are set high enough to
recover costs..
Proprietary Funds
Internal Service Fund
 Used for any unit that
provides services to the
OTHER governmental
departments.
 Inter-departmental fees
are charged.
 Tennessee Tech
University charges the
departments for the use
of University vehicles.
Fund Accounting Classification
Fiduciary Funds
(Only used for funds
held for external parties)
Investment
Trust Funds
Private Purpose
Trust Funds
Pension
Trust Funds
Agency
Funds
Account Groups
No longer reported on the Financial Statements
Used to keep track of general capital assets and
long-term debt
Types:
 General
Fixed Asset Account Group
(GFAAG)
 General
Long-Term Debt Account Group
(GLTDAG)
Basis of Accounting
Modified Accrual Basis Used for Governmental
Funds:

General Fund

Special Revenues Fund

Capital Projects Funds

Debt Service Funds

Permanent Funds
Basis of Accounting
Modified Accrual Means:
 REVENUES:
Recognize in period in which
they become available and measurable.
 Available
means: Collectible within the
current period or soon enough thereafter to
be used to pay current period liabilities.
Basis of Accounting
Full Accrual (when earned) Basis Funds:
Proprietary Funds --Enterprise Funds
Internal Service Funds
Fiduciary Funds --Trust
Agency
Governmental Fund Accounting
Major Account Classification
Recording the Budget
Controlling Accounts:
 Revenues
 Other
Financing Sources
 Appropriation/Expenditures
 Other
Financing Sources/Uses
 Encumbrances
Fund Accounting
Equity Section
ASSETS minus LIABILITIES =
Governmental and
Fiduciary Funds
FUND BALANCE
Reserved
Unreserved
Proprietary
Funds
NET ASSETS
Invested in Capital Assets
net of related debt
Restricted
Unrestricted
Budgets and Budgetary
Accounting
Annual Budgets for the General Fund and the
Special Revenue Funds --- always recorded in
the general ledger for control purposes.
Optional for Capital Projects Funds and Debt
Service Funds.
Recording the Budgetary
Entries
Fund Balance Composition
+ Estimated Revenues
+ Estimated Other Financing Sources
- Appropriations
- Estimated Other Financing Uses
= Fund Balance
Journal Entry:
Estimated Revenues
xx
Estimated Other Financing Sources xx
Appropriations
Estimated Other Financing Uses
Fund Balance (Derived)
xx
xx
xx
REVENUE
AN INFLOW OF ASSETS
Common Revenue Sources
Taxes
Licenses and Permits
Intergovernmental Revenues
Charges for Services
Fines and Forfeits
Miscellaneous

Interest, Rents, Sales of Fixed Assets

Other Financing Sources (OFS)
Income from Legal Claims
Property Taxes --- Levy of Taxes
Charges for Services --- Performing Services
Sales Taxes --- Taxable Sale by Business
Income Taxes --- Taxpayer Earning Income
GUIDE TO RECOGNIZING REVENUES:
Revenues STAND ALONE.
Not “earned” as in the private sector.
Delivery of services requires expenditures
Delivery of service does not “generate”
revenues.
Come from outside the government unit
Property Taxes
Local governments derive most revenue from
property taxes - based on value (ad valorem taxes)
Recognize as Revenue when levied
 Collected in the current period or soon
enough thereafter…
 Need allowance for uncollectible
 Deferred revenue if not “available”
Sales Taxes
Recognize when merchant files sales tax return
 Measurable
 Available
Charges for Services
Recognize revenue when billing for services
rendered
Licenses and Permits
Difficult to predict accurate amounts
Normally recognize revenue when cash is received
Fines
Options:
 when tickets are issued
 date fine is due
 actual payment date
Common practice - when cash is received
Investment Income
Record all investments at Fair Value
 “mark-to-market”
 unrealized gains/losses are
recognized as revenue in period
Interest and dividends accrued as earned
Grants & Other Intergovernmental
Revenues
Restricted Grants --- Expenditure Driven
 Food Stamps,
 Pass-Through Grants (if administered)
 On-Behalf Payments
Unrestricted Grants --- recognize upon
award
Entitlements --- recognize upon award
Deferred Revenues
Liability recorded if
 unearned or
 not legally available
Donations
Treatment by Type of Asset
Current Assets --- FMV
Fixed Assets to be used --- Account Groups at FMV
Fixed Assets to be sold --- Short-Term Investments at
FMV
Tax Anticipation Notes
Recorded as a liability
Always short-term
Will not be converted into long-term
so never in the account group
Other Financing Sources
Not a Revenue
Proceeds from Issue of Long-Term Debt
Sale of a Fixed Asset (up to original cost)
Transfer of Resources from Another Fund
EXPENDITURES
OUTFLOW OF ASSETS
Examples of Expenditures
Wages and Salaries
Compensated Absences
Vacations
Sick Leave
Pensions
Claims and Judgments
Supplies
Prepayments
Fixed Assets
Leases
Debt Service
Principal
Interest
Accounting for Expenditures
Recognize --- when liability is both measurable
and incurred
Current Liabilities
Funded by Current Taxpayers
Use Available Financial Resources
Exception: Interest on Long Term Liabilities
Long Term Liabilities go in the Long Term
Account Group
Other Financing Uses
Not an Expenditure
Operating Transfers of Resources to
Other Funds
Not classified as “Expenditures” in
remitting fund to avoid double
counting
ENCUMBRANCES
RESERVING ASSETS
Encumbrances --- commitments related to
unperformed/executory contracts for goods
or services.
Special General Ledger Accounts --- purpose
which is to prevent spending more than has
been appropriated.
ENTRIES HAVE NO EFFECT ON REPORTED
OPERATIONS.
Encumbrances - Year 1
Commit to Future Expenditure
Encumbrance Control
xx
F.B. Reserve for Encumbrances
xx
When Invoice is Received
F.B. Reserve for Encumbrances
Encumbrance Control
xx
Expenditures Control
Vouchers Payable
xx
Year-End
Fund Balance
Encumbrance Control
Expenditures Control
xx
xx
xx
xx
xx
Encumbrances - Year 2
At Beginning of the Year: Reinstate Encumbrances
Encumbrances
Fund Balance
xx
xx
When Invoice is Received
F.B. Reserve for Enc. xx
Encumbrances
xx
Expenditures
xx
Vouchers Payable
xx
At year-end
Fund Bal
Expenditures
xx
xx
Inventories of Supplies
Consumption Method:

Preferred Method-- parallels business practice.

ACQUISITION of inventory is treated as the
conversion of resources (debit Inventory).

USE of inventory is treated as an outflow of
resources (credit Inventory and debit Expenditures
or Expenses).
Purchases Method:

ACQUISITION of inventory is treated as an
outflow of resources (debit Expenditures or
Expenses).
Supplies Expenditure
Consumption Method
Acquisition:
Inventory - Supplies
Vouchers Payable
xx
xx
Record Expenditure Upon Consumption:
Expenditures - Supplies
Inventory - Supplies
xx
xx
Year end
Fund Balance - Unreserved
Fund Balance -Reserve for Supplies
xx
xx
Supplies Expenditure
Purchase Method
Record expenditure upon acquisition:
Expenditure - Supplies
Vouchers Payable
xx
Inventory - Supplies
Fund Balance - Reserve for Supplies
xx
xx
xx
Prepayments
Purchases Method:
Expenditure - Insurance
Vouchers Payable
xx
xx
Consumption Method:
Prepaid Insurance
Vouchers Payable
xx
Expenditure - Insurance
Prepaid Insurance
xx
xx
xx
Year End Closing Entries
Close the Budget:
Appropriations
Budgetary Fund Balance
Estimated Revenues
xx
xx
xx
Close the Actual Accounts:
Revenues
Expenditures
Encumbrances
Fund Balance
xx
xx
xx
xx
Special Revenue Fund
 Same accounting as the General Fund
 May have expenditure-driven grants
 If “on behalf” payments are administered by the
government, activities are accounted for here
 Accounts for expendable trust fund activity where
both principal and earnings are used to support
government activities or programs
CAPITAL PROJECT FUND (CPF)
Acquisition of major General Fixed Assets
through
 Purchase
 Construction
 Capital
lease
Same basic accounting and reporting model
as General Fund or Special Revenue Funds
CPF: Funding Sources
Sources
Interfund Operating
Transfers (Credit OFS)
Long-Term Borrowing (Credit OFS)
Intergovernmental Grants (Credit Revenue)
Special Assessments (Credit Revenue) --- levied
against property owners or other beneficiaries
CPF: ACCOUNTING ACTIVITIES
 Record Budget on an annual basis
 Interim Financing (Bond Anticipation Notes)
 Record Costs Charged to Projects
 Interest on Temporary Investments is Revenue
 Intergovernmental Grants are Revenues
 Disposition of Bond Premiums/Discounts,
Accrued Interest, and Issuance Costs
CPF Resources:
Bond Issued at Premium
Issue Bond:
Cash
OFS - Bond Proceeds
1,509,000
1,509,000
Transfer Premium to Debt Service Fund:
Other Financing Uses
9,000
Cash (or Due to Debt Service Fund)
9,000
CPF Resources:
Bond Issued at Discount
Issue Bond:
Cash
OFS - Bond Proceeds
1,491,000
1,491,000
Additional financing may have to come from a transfer
from the general fund or project may have to be scaled
back.
CPF Resources:
Bond Anticipation Notes (BANS)
Issued as short-term “interim” financing
Accounted for in GLTDAG if:
 maturity > 1 year or
 maturity  1 year and
all
steps have been taken to
refinance on long-term basis
intent is supported by ability to
consummate refinancing
All other BANS are current (Fund Liabilities)
CPF Resources: Special Assessments
Compulsory levy made against certain property to defray
part or all of the cost of an improvement service
Assume general/specific benefit to property owners
assessed
If proceeds from special assessment are related to debt --- is
government obligated in some manner?


yes: credit OFS-Bond Proceeds
no: credit Contributions from Property
Owners
Debt not issued --- Credit OFS-Transfer from Other Funds
CPF:
Capital Project Funds: Year End
Project Complete
--- Close Revenues and
Expenditures to Fund
Balance
Project Incomplete
 Close revenues & OFS,
Expenditures & OFU to the
Fund Balance
--- Transfer any residual
fund equity to source(s)
 Close open encumbrances
against F. B. -- leave F.B.Reserve for Encumbrance
 Reestablish at beginning of
next year:
Encumbrance xx
F.B.
xx
CPF Acquisition: Capital
Lease
Use FASB 13 criteria to assess lease contract
Entries:
Expenditure - Fixed Asset
xx
Other Financing Sources
(Lease Liability recorded in GLTDAG)
Expenditure - Lease Principal
Expenditure - Lease Interest
Cash
xx
xx
(Fixed Asset recorded in GFAAG)
xx
xx
Debt Service Fund
Used to account for the financial resources accumulated to
cover the payment of principal and interest on general
government obligations
Used when legally mandated, or
Accumulating resources to satisfy term bond indenture
requirements for future years’ debt service payments
Debt Service Fund:
Types of Debt Serviced
Most common are Bond Issues
 usually serial debt
 term bonds are rare
Capital Lease Obligations
Notes and Warrants Payable
Other
Debt Service Fund:
Sources of Financing
Property Taxes (usually transferred in from another
fund)
Sales Tax
Special Assessments
Income from Investments (net of any arbitrage)
Refunding or Defeasance
Debt Service Fund
Special Assessment
Levied to provide for indebtedness incurred for
general government special assessment projects.
Noncurrent Special Assessments Receivable:
included in fund assets are offset by deferred
revenue and do not result in revenue or affect
fund balance
Debt Service Fund
Expenditure Recognition
Modified Accrual: report principal and interest
expenditures when legally payable (i.e., does
not accrue unmatured principal or interest)
Accrual permitted, but not required, if:
 resources for debt service accumulated in
fund by year end and
 payment due early next year
 if accrual option is used, must accrue entire
debt service payment due early next year
Debt Service Fund:
Fund Balance Reserves
Excess of Assets over Liabilities
 Fund Balance Reserved for Debt Service
 Amount usually equal to highest year’s
principal plus interest payments
 “Amount Available” in GLTDAG at year end
should equal amount in debt service fund for
future principal payments
 If not, then adjusting entry is made:
Amount Available
Amount to be Provided
xx
xx
Debt Service Fund
Refunding Defined
Issuance of new debt to finance payment of interest and
principal of existing debt
 Current Refunding - use refunding proceeds to retire
debt immediately
 Advance Refunding - place proceeds in escrow and use
to pay interest and principal in future (in-substance
defeasance)
Reasons for Refunding or Defeasance:




Lower Effective Interest Rates
Extend Maturity Dates
Revise Payment Schedules
Remove or Modify Restrictions
Debt Service Fund:
Reporting Refunding & Defeasances
Debt Service Fund Entry:
Cash
xx
OFS-Proceeds of Refunding Bonds
xx
Refunding issue is reported in General Long Term
Debt Account Group
Defeased/Retired Debt is removed from General
Long Term Debt Account Group
Account Groups
General Fixed Assets - GFAAG
General Long-Term Debt - GLTDAG
Common Features:
Focus on general government as whole
Accounting procedures
 List and Offset Accounting Entries
 Primarily “add to/remove from” list
Classification of Fixed Assets
Land
Building (or Building and Improvements)
Infrastructure (or Improvements other than Buildings)
Machinery and Equipment
Construction in Progress (no capitalized interest)
General Fixed Asset
Account Group
Acquisition and initial valuation
 Cost
 Estimated
 Gifts:
Cost
Fair Market Value
 Foreclosure:
Lower of FMV or Amount Due
for Taxes
 Eminent
Domain: Compensation to Owner
 Escheat:
FMV
Fixed Assets
Not all funds account for & report capital assets
General Fixed Assets --- Fixed assets not accounted for in a
specific fund are reported in the General Fixed Asset Group
Depreciation Expense --- not reported in the operating
statement of the governmental funds
Accounting Equation for Fixed Assets
Fixed Asset = Investment in GFA---(Source of funding)
Classification of Investment in GFA
by Financing Source
General Fund and Special Revenue Funds
General Revenues
 Special Revenues

Capital Projects Funds
 Long-Term Borrowing
 Special Assessments
 Intergovernmental Grants-in-Aid
 Interfund Transfers
Fixed Asset Acquisition
Acquisition:
Expenditure - Fixed Assets
Vouchers Payable (Cash)
xx
xx
(then fixed asset is recorded in account group)
If borrow to acquire the asset:
Cash xx
Other Financing Sources
xx
(then long-term debt is recorded in account group)
Long-Term Liabilities
Certain funds account for and report long-term
liabilities.
Long-term liabilities not accounted for in a specific
fund are General Long-Term Liabilities (GLTL)
 Accounted
for in the General Long Term Debt
Account Group
 Liability
of the government as a whole and not
that of any specific fund.
General Long Term Debt Account
Group
All unmatured debt except that of the Proprietary
Funds
Unmatured Principal
Secured (typically) by Full Faith & Credit
Not a liability of any one fund
GLTD --- Examples
General Government:
Bond Issue
Special Assessment Debt
Long-term Notes
Claims and Judgments
Compensated Absences
Capital Lease Liabilities
Unfunded Pension Contributions
Unfunded Landfill Closure and Postclosure Care
GLTDAG: Accounting Equation
When Incurred:
Amount to be provided = Long-term obligation
While Debt is Outstanding:
(Amount available + Amount to be provided) = Longterm obligation
When Debt Matures:
Reverse Accounts from Account Group
PROPRIETARY FUNDS
Proprietary Funds
Pertaining to a Proprietor: Users of goods or
services --- charged on the basis of consumption
Types
 Enterprise: Goods or Services provided to the
General Public
 Internal
Service: Goods or Services provided
Inter or Intra- Governmental Units
Proprietary Funds: Common Features
Accounting - Full Accrual
Fixed Assets and Long-Term Debt
maintained in the fund
Applicability of Pertinent Business (i.e.,
FASB) Pronouncements
Reporting Interfund Transactions
Financial Statements Required
Proprietary Funds
Accounting Principles
Similar to For-Profit Enterprises
GAAP applied except where it has been specifically
overridden by a GASB pronouncement
GASB #20:
 Must apply all pertinent GAAP (ARBs, APBs, SFASs,
etc.) through SFAS 102 unless conflict
 May apply GAAP from SFAS 103 to present --Choices
 apply ALL, unless conflict or
 apply NONE, unless adopted by GASB
GASB #34: May apply those FASB standards and
interpretations limited to NFP organizations
Proprietary Funds
Financial Statements
Balance Sheet
Statement of Revenues, Expenses, and
Changes in Net Assets
Statement of Cash Flows
Plus:
Combining Statements
Segment Information
Enterprise Funds
Fund use is mandatory to account for operations financed or
operated like a business
1. Provide goods/services, to the public, on continuing
basis for a fee
2. Intended to recover (most of) the full costs of
providing goods/services
3. Use is optional when the entity engages in activities
for which the governing body deems net income
type information appropriate
Examples of Enterprise Funds:
Public Utilities
Public Transportation Systems
Recreational Facilities
Parking Facilities
Lotteries
Airports
Hospital/Healthcare Facilities
Landfills
Enterprise Funds
Non-operating Revenues
Capital Contributions
Operating Transfers
Loans
Others
Grants
Tap Fees
Impact Fees
Internal and External Subsidies
Debt Forgiveness from General Government
Enterprise Funds
Capital Contribution
Recorded as Interfund Transfer
Included in the Statement of Revenues,
Expenses, and Changes in Net Assets as
Nonoperating Revenue
No separate Contributed Capital on Balance
Sheet
Not “Residual Equity Transfers”
Enterprise Funds
Restricted Assets
Way to have a “Fund within a Fund”
Distinctively titled Restricted Asset, Liability and Equity
Reserve Accounts
Customer Deposits
Construction Financed by Bond Issue
Debt Service
Contingencies
Internal Service Fund
Services to Other Governmental Departments
Cost-Reimbursement Basis
Intermediary Fiscal and Accounting Entity
Economy/Efficiency
Equitable Cost Sharing
Internal Service Fund
Pricing Policies
Charges should be Based on Cost
Charges cannot be excessive
Pricing often includes Total Costs and
Total Consumption of Goods or
Services
Fiduciary Funds
Fiduciary Funds
Used to account for assets received and held by
government acting as trustee or custodian for
individuals, organizations, businesses, or other
governments
Difference - Duration of Fiduciary Responsibility
Agency
Trust
Fund – Short-Term Fiduciary Responsibility
Funds – Long-Term Fiduciary Responsibility
Types of Trust Funds
Private Trust
 Expendable
 Nonexpendable
Investment Trust
Pension Trust
Trust Funds
Private Purpose Expendable
Can spend both Principal (Corpus) and
Earnings
Financial Statements
Statement of Net Assets
Statement of Changes in Net Assets
Trust Funds:
Private Purpose Nonexpendable
Can Spend Only Earnings
Principal (Corpus) Stays Intact
Financial Statements
Statement of Net Assets
Statement of Changes in Net Assets
Investment Trust Funds
Used to Account for Pooled Investment Funds
and Other Investment Activity
Financial Statements
Statement of Net Assets
Statement of Changes in Net Assets
Pension Accounting
GASB 25
Annual Pension Cost - Actuarial Method
Acceptable Annual Required Contribution
(ARC)
Determination of Normal Cost
Unfunded Actuarial Accrued Liability and
Amortization
Pensions
ARC - Actuarial Required Contribution
Portion of ARC that will be paid from current
resources
Expenditures - Pension Benefits
Accrued Wages and Salaries
xx
xx
Portion of ARC that will be paid in future
Amount to be provided...
xx
Long-term liability for pension benefits xx
Pension
Claims and Judgements
Follow FASB 5: Accrue if probable and reasonably estimable
Amount to be paid from current resources
Expenditures - Claims/Judgments
xx
Accrued Claims and Judgments
xx
Amount to be paid in the future
Amount to be Provided...
Long-term Liability for Claims and Judgments
xx
xx
Pension
Reporting
Statement of Net Plan Assets
Investments at FMV
Fixed income securities not amortized
Fixed assets reported at depreciated cost
No liability reported for actuarial present value of
future benefits
Actuarial information (must comply with established
parameters & assumptions) reported as Required
Supplementary Information (RSI)
Statement of Changes in Net Plan Assets
Reports on additions and deductions
Identifies changes in net plan assets
Agency Funds
Used for
Tax Collections for Other Governments
Payroll Deductions
Pass-Through Grants
Grants, Entitlements, Shared Revenue
GASB required Agency Funds
Government has no program/discretion
No obligation special assessment debt service
Agency Funds
Accounting Equation
Assets = Liabilities
Financial Statement
Statement of Net Assets
FINANCIAL REPORTING
Coverage of Fund Accounting
Procedures
Governmental
Funds
Proprietary
Funds
Fiduciary
Funds
Fund-Based Financial
Statements
Use the current financial
resources measurement focus
and modified accrual
accounting for the timing of
revenue and expenditure
recognition.
Use the economic resources
measurement focus and
accrual accounting for the
timing of revenue and expense
recognition.
Use the economic resources
measurement focus and
accrual for the timing of
revenue and expense
recognition.
Government-Wide
Financial Statements
Use the economic resources
measurement focus and
accrual accounting for the
timing of revenue and expense
recognition.
Use the economic resources
measurement focus and
accrual accounting for the
timing of revenue and expense
recognition.
Not applicable
The Operating Statement for
Governmental Fund
REVENUES: Always classified by source.
EXPENDITURES:
 Classified
by character:
Current, Capital Outlay, or Debt Service
 Then
by function (for example):
Health, Welfare, Sanitation, Public Safety
OPERATING STATEMENT FORMAT
OPERATING STATEMENT--Use the “all-inclusive”
format which includes the analysis of the fund balance
(modified accrual basis funds) or net assets (accrual basis
funds) for the period:
Revenues
(Inflows)
Expenditures (Outflows)
Excess of Revenues over Expenditures
Fund Balance, 1/1/11
Fund Balance, 12/31/11
Balance Sheet Format
BALANCE SHEET--Display restrictions of
the fund balance in the following manner:
Fund Balance:
Reserved for encumbrances…$ 33,000
Unreserved................................. 417,000
Total Fund Balance.............. $450,000
Numerous types of restrictions can exist--thus
several types of “reservations” may be used.
Time to Clear Things Up --Any Questions?