Flashcards in F8: Governmental Accounting Overview Deck (35):
What are two items lead to the use of fund accounting by governmental organizations?
1- Spending purpose (legal restrictions)
2- Spending limits (budget and financial control)
The purpose of separate fund financial statements for governmental and proprietary funds:
To report additional and detailed info about the primary government
2 Objectives for governmental and non-for-profit reporting
1- Demonstrate their operational accountability
2- Show their fiscal accountability
Primary purpose of fund accounting
Enables service and mission-driven organizations to easily monitor and report compliance with:
-Spending purposes (legal restrictions)
-Spending limits (budget)
-and other fiscal accountability objectives
External fund reporting is allowed for what?
What cannot use external fund reporting?
Non-for-profit (they use it for internal accounting only)
Types of industries that use governmental or non-for-profit accounting and reporting principles
-Health care organizations
-Voluntary Health and Welfare organizations
-Other NFP organizations
"Governmental Accounting Principles and Standards Board"
-the governmental counterpart of FASB
What accounting principles and standards are used for non-for-profits?
GAO and its role
"Government Accountability Office"
-Prescribes government auditing standards (yellow book standards)
Single Audit Act
Allows for frequent audits of federal financial assistance awarded
3 Themes of Governmental Accounting:
1- Fund structure
2- Fund accounting
3- External reporting
Definition of a Fund:
Think "like a checkbook"
- sum of money segregated for the purpose of carrying on a activity
- each fund is a self-balancing set of accounts
What defines fund structure for governments?
11 fund types are classified in the GASB 34 in what three categories?
1- Governmental Funds
2- Proprietary Funds
3- Fiduciary Funds
Fund financial statements should be presented how for governmental, proprietary, and fiduciary funds?
GASB establishes what?
Minimum reporting requirements
What type of reconciliation is required?
A presentation of a reconciliation of fund f/s to government-wide f/s
-Government-wide = consolidated f/s
-Major fund f/s = like segmented reporting
Governmental Funds are "MAC-GRaSPP"
Current financial resources measurement focus (no FA or LTD)
R- special Revenue funds
S- debt Service funds
P- capital Project funds
P- Permanent fund
Proprietary and Fiduciary Funds have "SPACE"
A- Accrual accounting
C- Carry fixed asset and long-term debt
E- Economic resources measurement focus
Proprietary Funds "SE"
S- internal Service funds
E- Enterprise funds
Fiduciary Funds "PAPI"
P- Pension and other employee trust funds
A- Agency trust funds
P- Private purpose trust funds
I- Investment trust funds
2 of the most significant reconciling items between governmental funds and government-wide financial statements:
1- adding fixed assets
2- subtracting non-current liabilities
Net position is analyzed and reported in 3 components:
1- Net investment in capital assets
How to record revenues & expenses under "Modified Accrual"
Revenue- recognized when measurable and available
Expenses- recorded when the related fund liability is incurred
How to record revenues & expenses under "Full Accrual"
Revenue- recognized when earned
Expenses- recognized when incurred
Saying revenue is available means:
Collectible within the current period or within 60 days after year-end
5 Degrees of Constraint with the classification of governmental fund balances
N- non-spendable fund balance
U- unassigned fund balance
C- committed fund balance
A- assigned fund balance
R- restricted fund balance
Non-spendable fund balance examples
prepaid expenses, inventories, etc.
Unassigned fund balance thing to remember
Only the general fund should have a positive unassigned fund balance
Committed fund balance examples
Resolutions, encumbered appropriations, etc.
Assigned fund balance
Government tends to obligate but has not formally committed
Restricted fund balance
Restricted by external authorities