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Chapter 5 Part 3 - Governmental Financial Reporting (Fund ...
 

Chapter 5 Part 3 - Governmental Financial Reporting (Fund ...

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    Chapter 5 Part 3 - Governmental Financial Reporting (Fund ... Chapter 5 Part 3 - Governmental Financial Reporting (Fund ... Presentation Transcript

    • Governmental Financial Reporting The Reporting Entity Chapter 5 – Part 3 Fund Financial Statements
    • Review of the Financial Reporting Model Chapter 5 – Part 2
    • The Financial Reporting Model
      • Financial reporting model defines contents of external financial reports
        • June 1999 = GASB No. 34
      • Current reporting model based on
        • Accountability
          • Fiscal
            • Complied with revenue & expenditure decisions of public
          • Operational
            • How efficiently business-type activities met operating objectives
        • Information useful for decision making
    • The Financial Reporting Model
      • Minimum reporting requirements for external general purpose FS
        • Management’s Discussion & Analysis (MD&A)
          • Classified as Required Supplementary Information
        • Basic Financial Statements (BFS)
          • Covered by audit opinion
        • Required Supplementary Information (RSI)
          • Other than MD&A
      • Government-wide financial statements
        • Statement of Net Assets
        • Statement of Activities
      • Fund financial statements
      • Notes to the financial statements
      Basic Financial Statements
    • Comprehensive Annual Financial Report (CAFR)
      • Goes beyond GASB requirements for general purpose external reporting
      • Include non-GAAP information & GAAP based information
    • Fund Level Financial Statements Chapter 5 – Part 3
    • Fund Level Financial Statements
      • Short-term focus - financial accountability
      • Reported based on type of fund
        • Governmental funds - modified accrual
        • Proprietary funds - essentially same as for-profit entities
      • Information on fund level financial statements must be reconciled to information reported in GWS
    • Fund Level Financial Statements
      • Present all categories of funds
        • Governmental
        • Proprietary
        • Fiduciary
    • Fund Level Financial Statements
      • Presented for major funds & nonmajor funds in the aggregate
        • Page 131
          • Two governmental fund financial statements
          • Three proprietary fund financial statements
          • Two fiduciary fund financial statements
    • The Concept of Major Funds Prior to the implementation of GASB No. 34, the emphasis on fund statements was to prepare them by fund type & fund category . While the fund category statements remain, the emphasis is no longer on fund type but major funds .
    • Major Fund Steps
      • Always general fund
      • May designate additional funds as major
      • ISF never major fund
    • Major Fund Steps
      • A two step process
        • 10% test
          • Item for fund type
        • 5% test
          • Same item for all fund types
      • Major fund exercise
    • Governmental Fund Financial Statements
      • Balance sheet – page 133
        • Assets in order of liquidity
        • Liabilities in order of liquidation
        • Fund balance
          • Reserved
            • Not available for appropriation
              • Inventories, long-term interfund loans, encumbrances, etc.
          • Designated
            • Self imposed limitation on use of funds
          • Unreserved & undesignated
    • Governmental Fund Financial Statements
      • Statement of revenues, expenditures & changes in fund balance – page 135
        • Detailed revenues
        • Detailed expenditures
        • Other financing sources & uses
        • Special & extraordinary items
          • Extraordinary
            • Unusual & infrequent
          • Special
            • Unusual OR infrequent & within control of management
          • Not so special
            • Unusual OR infrequent & NOT within control of management
    • Governmental Fund Financial Statements
      • Required reconciliation to GWS – page 133 & 136
        • Balance sheet to statement of net assets
          • Adjust for economic resource items
            • Capital assets & LTD
        • Statement of revenues, expenditures, & changes in fund balance to statement of activities
          • Adjust for accrual items
            • Depreciation
            • Revenues deferred because not available
            • Accrued interest on LTD
            • Reclassify principle paid on LTD & purchases of capital assets
            • Gains/losses
    • Proprietary Fund Financial Statements
      • Statement of net assets OR balance sheet – page 142
        • Statement of net assets = assets – liabilities = net assets
        • Balance sheet = liabilities + net assets = assets
      • Presentation
        • Assets in order of liquidity, liabilities in order of liquidation
        • Net assets
          • Invested in capital assets net of related debt
          • Restricted
            • Distinguish between legal & contractual
          • Unrestricted
    • Proprietary Fund Financial Statements
      • Statement of revenues, expenses & changes in fund net assets – page 144
        • Operating revenues & expenses
          • Directly related to goods/services provided by fund
        • Nonoperating revenues & expenses
          • Nonexchange
          • Investment income
    • Proprietary Fund Financial Statements
      • Statement of cash flows – page 145
        • Only fund category for which SCF is required
        • Direct method must be used
        • Four categories of cash flows
          • Operating
          • Noncapital financing
            • Interfund transfers
          • Capital & related financing
          • Investing
    • Fiduciary Fund Financial Statements
      • Statement of fiduciary net assets – page 146
      • Statement of changes in fiduciary net assets – page 147
        • Not for agency funds
      • Four columns max
        • Pension trust
        • Investment trust
        • Private purpose trust
        • Agency
    • Class Exercises – Part 3
      • Chapter Problem 5-2 & 5-3 on page 180
      • NOTE: These are not part of your required assignment for this chapter. They simply represent things we will discuss in class for this part of Chapter 5.