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