GASB #34 Model: Government-Wide FS. GASB #34 Model: Fund Financial Statements

Transcription

1 Topic 11 Governmental Accounting Fund Structure Fund Accounting : Measurement Focus Fund Accounting : Basis of Accounting Governmental Fund Accounting - JE GASB #34 Model: Government-Wide FS GASB #34 Model: Fund Financial Statements Sample of Financial Statements Financial Reporting Entity Interfund Activity 11-1

2 SUMMARY NOTES 1. FUND STRUCTURE A fund is a sum of money or other resource segregated for the purpose of carrying on a specific activity or attaining certain objectives in accordance with specific regulations, restrictions or limitations and constituting an independent fiscal and accounting entity. Each fund is a self-balancing set of accounts. Dr / Cr Fund accounting enables governmental organizations to easily monitor and report compliance with spending purposes (restrictions), spending limits (budget and financial control), and other fiscal accountability objective. (restriction) (budget) Fund Categories and Fund Types Eleven fund types (GRaSPP SE PAPI) are classified in the following three generic categories: Governmental Funds (governmental-type activities) General Fund. accounts for the ordinary operations of a governmental unit that are financed from taxes and other general revenues. All transactions not accounted for in some other funds are accounted for in this fund (i.e., operating catch-all fund). (ordinary operations) General Fund Revenue Sources. Taxes Intergovernmental (grant or shared revenue) Fines & penalties Licenses & permits Charge for service Other revenues Expenditures Types. Character Current operating expenditures Capital outlay expenditures Function / Program General government Education Public safety Health and welfare Special Revenue Fund. account for revenues from specific taxes or other earmarked sources that are designated to finance particular activities of government. (special revenue) Revenue Sources. Special taxes (e.g., gasoline taxes) Specific fees (e.g., admission fees) Restricted grants = Operating grants Restricted donations Expenditures Types. Character Current operating expenditures (e.g.maintain street ) 11-3

3 MC1 Restricted Grants Type FUND Operating grants Special Revenue Fund Capital grants Capital Project Fund Pass thru grants Agency Fund Restricted Donations FUND Use Spending Special Revenue Fund Public Principal and earnings (Expendable) Permanent Fund Earnings only (Nonexpendable) Private Purpose Trust Fund Private Principal and / or earnings Debt Service Fund. account for the accumulation of resources and the payment of interest and principal on all "general obligation debt" (used by GRaSPP only, not by proprietary or fiduciary funds). general obligation debt Governmental Funds Debt Service Fund Unreserved Fund Balance Fund Balance Fund Balance Reserved for Debt Service Revenue & Other Financing Sources. Interfund transfers Allocated portion of property taxes Investment earnings Expenditures Types. Character Debt service expenditures (principal & interest ) Capital Projects Fund. account for resources used for the acquisition or construction of major capital assets (used by GRaSPP only, not by proprietary or fiduciary funds). (major capital assets) Debt Service Fund (e.g.) Convention center construction Construction of special assessment projects Revenue & Other Financing Sources. Bond proceeds Restricted grants = Capital grants Interfund transfers Taxes specifically identified for construction Investment earnings Expenditures Types. Character Capital outlays expenditures (e.g. convention center construction) 11-4

4 Special Assessments (a) Primarily or potentially liable Capital Projects Fund and Debt Service Fund (b) NOT primarily or potentially liable Capital Projects Fund and Agency Fund Permanent Fund. are used to report resources that are legally restricted to the extent that income, and not principal, may be used for purposes that support the reporting government's programs. (principal) (earnings) (public) (e.g.) Cemetery perpetual-care fund Proprietary Funds (business-type activities) (charge for service) Internal Service Fund. account for goods and services provided by departments on a cost reimbursement basis to other departments. (e.g.) Central printing and duplicating services Central garages and motor pool Self-insurance Interfund Services Provided and Used Motor Pool Fund General Fund Internal Service Fund DR Cash or Due from General Fund $ CR Revenue ( operating revenue ) $ General Fund DR Expenditures $ CR Cash or Due to Internal Service Fund $ Enterprise Fund. account for the acquisition and operation of governmental facilities and services that are intended to be primarily (over 50%) self-supported by user charges. (e.g.) Public utilities (water and electric corporation) Public hospitals & universities Public benefit corporation Public transportation system Municipal Solid Waste Landfill Proprietary Funds General Fund Capital Contributions 11-5

5 4. GOVERNMENTAL FUND ACCOUNTING JOURNAL ENTRIES Journal entries typically focus on accounting for recording the Budget, Activity, Encumbrance. NOTE BUDGET To record the budget into the accounting records, the following entry is used. Any balancing amounts are posted to budgetary fund balance (which is the budgetary equity account). Budgetary fund balance can also be a debit. DR/CR DR. Estimated Revenues control DR. Estimated Other Financing Sources control DR. Budgetary Fund Balance (negative / deficit) CR. Appropriations control CR. Estimated Other Financing Uses control CR. Budgetary Fund Balance (positive / surplus) MC4 Budgetary accounts are recorded at the beginning of the year and are closed at the end of the year. Budgetary accounts are only impacted when establishing (amending) or closing the budget. B DR. Appropriations control DR. Estimated Other Financing Uses control DR. Budgetary Fund Balance (positive / surplus) CR. Estimated Revenues control CR. Estimated Other Financing Sources control CR. Budgetary Fund Balance (negative / deficit) ACTIVITY Actual activities are recorded as they happen throughout the year. There are four classifications of revenues (GASB #33): a. Derived Tax Revenues A tax imposed on an exchange transaction such as sales taxes, or income is earned and an income tax is assessed. b. Imposed Non-exchange Revenues Fines are viewed as imposed non-exchange revenues because there is no underlying transaction. Property taxes also belong in this category because ownership is being taxed, not a specific transaction. Receivables are recorded when property taxes are levied because there is an enforceable legal claim. Journal entry to record accrual of Property Taxes levied (Revenue = When Billed) : DR. Property Tax Receivable Current CR. Allowance for Uncollectible Taxes Current CR. Revenue 11-9

6 Reconciliation of Fund Statements to Government-Wide Statements MC7&8 G A L S Balance Sheet GRaSPP- Fund Balance Assets - Fixed Assets 1 Liabilities - LT Debt 2 Service (Internal) Fund Net Assets G O E S Statement of Revenues, Expenditures, and Changes in Fund Balance GRaSPP-Net Change in Fund Balance Other Financing Sources - Debt Proceeds 3 Expenditures Capital Outlays 4 Service (Internal) Fund Net Income B A R E Basis of Accounting Accrued Revenues and Expenses B A R E Basis of Accounting Additional Accrued Revenues and Expenses 1 net of accumulated depreciation 2 net of principal payments 3 net of principal payments 4 net of depreciation expense Statement of Cash Flows The Statement of Cash Flows is only used for the proprietary funds and it is prepared in a similar manner as the commercial version, with the following differences: CF The direct method is required There are four categories (instead of the three) and the order of the categories is the following: i. operating activities, ii. Non-capital financing activities, iii. Capital and related financing activities and iv. Investing activities Capital asset purchases are reported as capital and related "Capital and related financing activities" (not as investing activities). Investing activities Capital and related financing activities Interest expense/cash payments are either Non-capital financing or Capital and related financing activities (not as operating activities). Operating activities Noncapital financing activities Capital and related financing activities Interest income/cash receipts are reported as "investing activities" (not as operating activities). Operating activities Investing activities A reconciliation of operating income (instead of net income) to net cash provided by operations is required. Net income Operating income 11-17

7 MULTIPLE CHOICE QUESTIONS 1. City of Trenton The City of Trenton received a $15,000,000 federal grant to finance the construction of a center for rehabilitation of drug addicts. The proceeds of this grant should be accounted for in the: 1. Special revenue funds. 2. General fund. 3. Capital projects funds. 4. Fiduciary funds. 2. Town of Farrell Property taxes for the Town of Farrell of $25,000,000 were assessed in October of 20X1 to fund budgeted operations for the fiscal year ended September 30, 20X2. Some $24,000,000 are collected from November 20X1 through March 20X2 with liens of $1,000,000 applied to properties with unpaid property tax bills in May 20X2. Properties subject to delinquent property taxes were auctioned for taxes of $800,000. At September 30, 20X2, government would record property tax revenue of: 1. $25,000, $24,800, $24,200, $24,000, City of Lawrence The City of Lawrence has a $20,000,000 bond issue outstanding with a stated rate of 6% issued at.855 to yield 7%. Interest is payable on April 1 and October 1. The City also had a master lease agreement with a balance of $200,000 yielding 6% that qualified for treatment as a capital lease to buy equipment used in general governmental operations. Monthly interest had not been paid at year-end. The bond indenture required the uses of formal debt service fund accounting. Lease payments were made through the general fund. At December 31, the governmental funds of the City of Lawrence would display accrued interest payable of: General Fund Debt Service Fund 1. $ 1,000 $ 300, $ 1,000 $ 350, $ 1,000 $ 0 4. $ 0 $

8 SIMULATION #2 GASB#34 SIMULATION #2 Becker COURSE DISC Simulation 11-45

9 Becker COURSE DISC. Solution : GWFS Comp TAB 1. Fiduciary fund financial statements Fiduciary funds are excluded from government-wide presentations and presented as fund financial statements only 11-48

10 2. Required supplementary information Infrastructure reporting under the modified approach will be displayed as required supplementary information. The fact pattern indicates that Tarbet Township does not have any cost basis data regarding their infrastructure so they can not display cost basis financial data on their government wide balance sheet. Modified approach 3. Consolidated with governmental activities in the government-wide financial statements Activities of governmental fund types are consolidated into the governmental activities column of the government-wide financial statements (GWFS). Fund financial statements are reconciled to the government wide totals. Debt Service Fund Governmental Fund Financial Statement Other governmental funds GWFS Governmental activities Select items Combining statements for non-major fund 4. Consolidated with governmental activities in the government-wide financial statements Internal service funds are typically consolidated with Governmental Activities in the GWFS if the internal service fund exclusively supports governmental activities. Key Internal Service Fund data are used as reconciling items between fund and GWFS. 5. Agency funds Special assessments for which a governmental entity assumes no responsibility are accounted for in an agency fund. 6. Required supplementary information Budgetary displays are generally included in the required supplementary information section of the government's financial statements although they MAY appear in the fund financial statements. 7. Optional supplementary information Budget presentations are required supplementary displays while computations of variances from budget are optional. 8. Management's discussion and analysis Management's discussion and analysis will include a separate discussion of significant variances from budget. MD&A is considered required supplementary information. 9. Optional supplementary information Presentation of details of non-major funds is optional and would normally be included in a combining financial statement of non-major funds as part of optional supplementary information. 10. Required footnote disclosure The entity's definition of measurable and available used for revenue recognition is a required footnote disclosure