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52 Cards in this Set
- Front
- Back
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3 categories of Net Position |
1. net investment in capital assets 2. restricted 3. unrestricted |
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5 types of funds |
1. non-spendable 2. restricted 3. committed 4. assigned 5. unassigned |
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characteristics of a governmental organization |
-lack of clear profit motive -ownership is collective and non-transferable -financial resources are not always for a proportional share of services (i.e. taxes pay for all schools, even if some have fewer students) -decisions are made by elected bodies -decisions are open to public and news -success is determined by ability or inability to meet the budget |
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types of State and Local governments |
1. general purpose (cities, states, counties) 2. limited/special purpose (school district, transit authority, municipal utility districts) 3. agencies and commissions (employment commission, economic development commission) |
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what regulatory body has ultimate authority over hybrid organizations? |
GASB, even though they may follow FASB guidelines |
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Concept Statements |
establishes the conceptual framework to be used by GASB in evaluating and establishing standards -not authoritative; not GAAP |
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Budget |
expression of public policy and financial intent -has the force of law -established by concept standards |
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financial reports are used by what 3 parties? |
1. citizenry 2. legislative/oversight bodies 3. investors/creditors |
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2 main purposes of financial reporting |
1. accountability 2. interperiod equity |
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6 characteristics of financial reporting |
-timeliness -relevance -understandability -comparability -consistency -reliability |
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SEA (Service Efforts and Accomplishments reporting) |
-NOT required -assists users in assessing accountability and making informed choices |
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3 elements of SEA performance |
1. service efforts: amount of financial and non-financial resources that are applied 2. service accomplishments: quality of service provided and outcome measures 3. relating service efforts to service accomplishments (efficiency) |
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4 things that an SEA provides |
1. comparisons with previous years and other projects 2. unintended effects 3. demand for services (competing demand for resources) 4. external and internal factors that influence results |
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Required Supplementary Info (RSI) |
essential for placing basic FS and notes in appropriate context -REQUIRED |
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Supplementary Info (SI) |
used for placing basic FS and notes to basic FS in appropriate context -NOT required |
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5 elements of Statement of Financial Position |
1. assets 2. liabilities 3. deferred outflow of resources 4. deferred inflow of resources 5. net position (residual of all other elements) |
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define Fund |
separate fiscal and accounting entity with self-balancing set of accounts (assets, liabilities, residual balances) |
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how Funds segregate resources |
segregate resources according to restrictions on use; budgetary accounts provide control over expenditures |
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what are the 2 main purposes of Funds? |
1. improve management accountability
2. meet legal requirements |
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Fund Accounting Equation |
assets + def outflows = liabilities + def inflows + fund balance |
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3 categories of funds |
1. governmental 2. proprietary 3. fiduciary |
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define Governmental Fund |
non-exchange revenues (i.e. taxes, intergovernmental revenues, grants) |
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define Proprietary Fund |
operate like for-profit organizations in that users are charged directly (i.e. public utilities, airports) |
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define Fiduciary Fund |
resources managed on behalf of other entities or individuals |
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Budgetary Accounting |
used by governments because they are not profit-driven -regulate spending limits -so organizations must demonstrate compliance with prescribed spending limits and purposes |
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Encumbrance Accounting |
estimates amount of expenditures at time of an order -ensures that entity does not order more goods than it has the authority to purchase |
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2 overall Governmental FS |
Fund Statements: all prepared using the "native" basis of accounting Government-Wide Statements: must be presented on full accrual basis |
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basis of accounting for 3 categories of Funds |
Governmental: modified accrual basis Proprietary: full accrual basis Fiduciary: full accrual basis |
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3 objectives of governmental accounting |
1. assess availability of current period resources to finance expenditures -interperiod equity; balanced budget 2. assess service efforts and accomplishments 3. demonstrate compliance with legal authorizations to expend |
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Fund Structure mnemonic |
'DRIP-CEG-PIPpA' |
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DRIP |
1. debt service funds 2. special revenue funds 3. internal service funds 4. permanent funds |
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CEG |
1. capital projects funds 2. enterprise funds 3. general fund |
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PIPpA |
1. pension trust funds 2. investment trust funds 3. private purpose trust funds 4. agency funds |
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what are the consonants in DRIP-CEG |
governmental funds |
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what are the vowels in DRIP-CEG |
proprietary funds |
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what kind of funds are PIPpA? |
fiduciary funds -there is only one General Fund; all other fund types may be comprised on many funds |
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Number of Funds Principle |
an organization should use the minimum number of funds possible consistent with: 1. laws and contracts 2. sound financial management |
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5 funds in Governmental Fund Category |
Debt service funds special Revenue funds Permanent funds Capital projects funds General funds |
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characteristics of Governmental Fund Category |
finance most general government activities i.e. public safety, schools, capital projects -use only expendable funds -use modified accrual basis -can use budgetary & encumbrance accounting -capital assets and LT debt are recorded in off-books records -not reported in fund statements; only govt-wide statements |
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General Fund Category |
revenues from taxes, licenses, fines -not unrestricted resources are accounted for here -expenditures an be made for any general govt service not specifically in another fund -this is the only REQUIRED fund of a governmental unit |
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Special Revenue Fund |
accounts for proceeds of revenues from taxes, grants, entitlements, etc -restricted for expenditures other than debt service or major capital projects i.e. gas tax that must be spent on road maintenance -NEVER account for capital asset acquisition/construction or debt service transactions |
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Capital Projects Funds |
account for money designated for acquisition/construction of significant capital items -short-lived -any extra money is transferred to Debt Service Fund or General Fund |
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Debt Service Funds |
money set aside to pay interest and principal on long-term general obligation debt -does not account for liabilities themselves -like a bond sinking fund |
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Permanent Funds |
account for resources received with the stipulation that the principal amount remains intact, but the earnings must be spent
a.k.a. endowments i.e. buy library books, cemetery maintenance |
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Proprietary Fund Category |
account for activities that charge fees in exchange of goods/services -activities that are self-supporting; 50% or more of costs are covered by fees -activities with the INTENT of being self supporting -record and report their own capital assets and LT debt |
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Net Position equation |
(current assets + cap assets + def outflows) - (current liab + LT liab + def inflows) |
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2 types of Proprietary Funds with definitions |
1. enterprise funds: account for activities that provide goods/services to general public; service fee usually charged to make self-sustaining 2. internal service funds: account for activities that provide goods/services ONLY to other govt agencies/depts |
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Fiduciary Fund Category (PIPpA) |
account for money held by governmental unit in a trustee/agent capacity 1. pension trust funds 2. agency funds: where this unit collects money and then distributes them as appropriate 3. private purpose trust funds: other entities are the beneficiaries; i.e. endowments 4. investment trust funds: account for money received from other govt agencies to be included in govt Investment Pool |
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Agency Funds details |
-only has current assets and current liabilities; NO revenues and expenses |
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Investment Trust Fund details |
-only includes resources from external parties |
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General Fixed Asset Account Group |
used to record LT assets purchased by any of the governmental funds as well as items donated -assets recorded at either historical cost or FMV at date of donation |
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General LT Debt Account Group |
used to record general obligation of LT debt of the unit i.e. bonds, capital leases -as the debt become current, it is moved to a Debt Service fund for repayment |
