Governmental Accounting & Reporting

Question 1

5 Characteristics that determine Governmental Accounting & Reporting

Answer 1

1. No profit motive
2. Lack of clear ownership
3. Non-exchange services (people who contribute resources do not necessarily receive proportionate services, i.e., school districts)
4. Compliance with laws and regulations
5. Formal budget process

Question 2

3 Types of Governmental Entities

Answer 2

1. State and Local Governments (SLG)
2. Special Purpose Governments
3. Agencies and Commissions

Question 3

Are GASB Concept Statements Authoritative Guidance?

Answer 3

No. They do not represent Governmental authority and are not GAAP,

Question 4

5 GASB Concept Statements

Answer 4

1. Objectives of Financial Reporting
2. Service Efforts and Accomplishments
3. Financial Reporting
4. Elements of Financial Reports
5. Service Efforts and Accomplishments (amendment to concept statement no. 2)

Question 5

2 Purposes of GASB Financial Reporting

Answer 5

1. Accountability

2. Inter-period Equity - are there enough resources to cover current year services?

Question 6

6 Characteristics of GASB Financial Reporting

“TRUCCR”

Answer 6

1. T - Timeliness
2. R - Relevance
3. U - Understandability
4. C - Comparability
5. C - Consistency
6. R - Reliability

Question 7

5 Elements of GASB Financial Statements

Answer 7

1. Assets
2. Liabilities
3. Deferred Outflow of Resources
4. Deferred Inflow of Resources
5. Net Position

Question 8

4 Financial Reporting Implications for a legally adopted annual budget

Answer 8

1. Expression of public policy
2. Expression of financial intent
3. Form of control
4. Provide a basis for evaluating performance

Question 9

3 Governmental Fund Types

Answer 9

1. Governmental Funds
2. Proprietary Funds
3. Fiduciary Funds

Question 10

11 Governmental Fund Types

Answer 10

DRIP

1. Debt service fund
2. Special revenue fund
3. Internal service fund
4. Permanent fund

CEG

5. Capital project fund
6. Enterprise fund
7. General fund

PIPPA

8. Pension fund
9. Investment fund
10. Private purpose trust fund
11. Agency fund

Question 11

2 Levels of Reporting for Government Entities: (each has 3 parts)

Answer 11

1. General Purpose Financial Statements (GPFS) - this represents the minimum requirements for external reporting.
   - Management Discussion & Analysis (MD&A)
   - Basic Financial Statements
   - Required Supplementary Information (RSI)
2. Comprehensive Annual Financial Report - more extensive reporting that is equivalent to for-profit annual report.
   - Introductory Section
   - Financial Section
   - Statistical Section

Question 12

5 Parts of the Financial Section of the CAFR

Answer 12

1. Auditor’s Report
2. Management’s Discussion & Analysis (MD&A)
3. Basic Financial Statements
   - Government-wide statements
   a. Government-wide Statement of Financial Position
   b. Government-wide Statement of Activities
   
   • Includes data from Gov’t + Propriety, but NOT Fiduciary Funds
     - Fund Statements
     a. Government Fund Category
     i. Balance Sheet
     ii. Statement of Revenues, Expenditures, and change in fund balance
     b. Proprietary Fund Category
     i. Statement of Net Position
     ii. Statement of Revenues, Expenses, and change in net position
     iii. Statement of Cash Flows
     c. Fiduciary Fund Category
     i. Statement of Fiduciary Net Position
     ii. Statement of Changes in Fiduciary Net Position
     - Notes to the Financial Statements
4. Other Required Supplementary Information (RSI)
   - Budgetary Comparison Statement
   - Pension Plan Disclosures
   - Info Related to Infrastructure Assets Accounted for using Modified Approach
5. Combining FS and Individual Fund FS

Question 13

A primary government meets what 3 criteria and can take what 3 actions without

Answer 13

3 Criteria

1. Separately elected body
2. Is legally separate
3. Is fiscally independent from state and local gov’ts

3 Actions

1. Determine its budget
2. Levy taxes or set user fees
3. Issue bonded debt

Question 14

2 Measurement Focus Basis of Accounting

• What is the Accounting Objective of Each?
• What is the Accounting Basis of Each?

Answer 14

1. Flow of Financial Resources
   - Objective: Sources and uses of current financial resources
   - Basis: Modified Accrual
2. Flow of Economic Resources
   - Objective: Net Income
   - Basis: Accrual

Question 15

5 Fund Types that use Modified Accrual Accounting Basis

Answer 15

Governmental Funds (DRiP CeG)

• Debt Service Fund
• Special Revenue Funds
• Permanent Funds
• Capital Project Funds
• General Fund

Question 16

6 Fund Types that use Accrual Accounting Basis

Answer 16

Proprietary & Fiduciary (drIp cEg PIPPA)

• Internal Service Funds
• Enterprise Funds
• Pension Trust Funds
• Investment Trust Funds
• Private-Purpose Trust Funds
• Agency Funds

Question 17

2 Criteria for Recognizing Revenue

Answer 17

1. Measurable
   - can be reasonably estimated
2. Available
   - Legal right to collect
   - Collected in current period or soon thereafter (within 60 days of next period)
   - Classify as deferred inflow of resources if collected before legally available

Question 18

5 Revenue Types

• Measurable?
• Available?
• Recognition Approach?

Answer 18

1. Property Taxes - Measurable/Available/Accrual
2. Licenses & Permits - Not Measurable/Not Available/Cash
3. Intergovernmental Grants - Measurable/Not Available/When grant provisions are met
4. Charges for Services - Measurable/Available/Accrual
5. Fines & Forfeits - Not Measurable/Not Available/Cash

Question 19

5 Budgetary Accounts (GASB)

Answer 19

1. Estimated Revenues (Dr)
2. Appropriations (Cr)
3. Estimated other financing sources (Dr)
4. Estimated other financing uses (Cr)
5. Budgetary Fund Balance (Dr/Cr - offset account to balance budget entry)

Question 20

3 Categories of Net Position (GASB)

Answer 20

1. Net investment in capital assets
2. Restricted
3. Unrestricted

Question 21

Formula for Statement of Net Position (GASB)

Answer 21

\+ Assets
\+ Deferred Outflows of Resources
- Liabilities
- Deferred Inflows of Resources
= Net Position

Question 22

5 Fund Balance Classifications (GASB)

Answer 22

1. Nonspendable
2. Restricted Fund Balance
3. Committed Fund Balance
4. Assigned Fund Balance
5. Unassigned Fund Balance

Question 23

3 Government Fund Types

Answer 23

1. Special Revenue Funds
2. Capital Project Funds
3. Debt Service Funds

Question 24

4 Interfund Transaction Types (Government Accounting)

Answer 24

1. Quasi External Transactions
2. Reimbursements
3. Transfers
4. Loans

Question 25

5 Governmental Fund Types | Accounting Basis for Governmental Funds

Answer 25

DRiP CeG 1. Debt Service Fund 2. Special Revenue Fund 3. Permanent Fund 4. Capital Project Fund 5. General Fund Modified Accrual Accounting Basis

Question 26

4 Categories in Proprietary Fund Statement of Cash Flows

Answer 26

1. Operations 2. Non-capital Financing 3. Capital Financing 4. Investing

Question 27

6 Common Fund Classification Schemes in Governmental Reporting

Answer 27

1. by Fund (ex. General Fund) 2. by Program or Function (ex. Public Safety) 3. by Activity under the program (ex. Police Training) 4. by Organization Unit (ex. Police Department) 5. by Character (ex. Current) 6. by Object (ex. Personal Services)

Question 28

4 Characteristics of an Expenditure

Answer 28

1. Current - primary benefit during current period 2. Capital outlay - benefit current and future periods 3. Debt service - payment on debt to acquire capital outlay that benefit past, current, and future periods 4. Intergovernmental - transfer of governmental resources from one fund/department to another

Question 29

What are the 5 Liability Recognition Triggers for Accounting and Reporting for Pollution Remediation Obligations?

Answer 29

1. Pollution poses an imminent danger 2. Violation of pollution prevention permit 3. Identified as responsible for cleanup 4. Outcome of lawsuit will impose responsibility 5. Government begins to cleanup

Question 30

5 Categories that Statistical Information is to be reported in the CAFR [FRODD]

Answer 30

1. Financial Trend Information 2. Revenue Capacity Information 3. Debt Capacity Information 4. Demographic and Economic Information 5. Operating Information

Question 31

3 Stages of Software Development and how accounted for during the period

Answer 31

1. Preliminary Project Stage - expensed as incurred 2. Application Development Stage - capitalized in government-wide financial statements 3. Post-implementation/Operation stage - expensed as incurred

Question 32

1. How are changes in the fair value of Derivative Instruments used for investment purposes to be reported? 2. How are changes in the fair value of Hedging Derivative Instruments reported? 3. How are changes in the fair value of Hedging Derivative Instruments reported?

Answer 32

1. Within the Investment Income classification of the Statement of Activities 2. As Deferred Outflow or Deferred Inflow of Resources in the Statement of Net Position 3. As Deferred Credit in the Statement of Net Position