CHAPTER  29 GOVERNMENTAL ACCOUNTING: THE  SPECIAL-PURPOSE FUNDS  AND ACCOUNT GROUPS
FOCUS OF CHAPTER 29 <ul><li>The Remaining Governmental Funds </li></ul><ul><li>The Account Groups </li></ul><ul><li>The Pr...
THE GOVERNMENTAL FUNDS:  SPECIAL REVENUE FUNDS <ul><li>Purpose:  To account for the proceeds of  specific revenue sources ...
THE GOVERNMENTAL FUNDS:  CAPITAL PROJECTS FUNDS <ul><li>Purpose:  To account for the  proceeds  of financial resources tha...
THE GOVERNMENTAL FUNDS:  CAPITAL PROJECTS FUNDS <ul><li>A   temporary fund -- at completion of the project: </li></ul><ul>...
THE GENERAL FIXED ASSET ACCOUNT GROUP (GFAAG) <ul><li>Purpose:  Accounts for fixed assets  not  accounted for in  </li></u...
THE GENERAL FIXED ASSET ACCOUNT GROUP (GFAAG) <ul><li>Categories of Assets: </li></ul><ul><ul><li>Land. </li></ul></ul><ul...
THE GENERAL FIXED ASSET ACCOUNT GROUP (GFAAG) <ul><li>Capitalization is  optional   for  public domain  or  “infrastructur...
THE GENERAL FIXED ASSET ACCOUNT GROUP (GFAAG) <ul><li>Recording Depreciation: </li></ul><ul><ul><li>OPTIONAL-- May   refle...
THE GOVERNMENTAL FUNDS: DEBT SERVICE FUNDS <ul><li>Purpose:   To account for the  servicing  of debt  initially  recorded ...
THE GENERAL LONG-TERM DEBT ACCOUNT GROUP (GLTDAG) <ul><li>Purpose:  To account for long-term debt that is  not  properly s...
THE GENERAL LONG-TERM DEBT ACCOUNT GROUP  (GLTDAG) <ul><li>The   GLTDAG  is  not  a fund--it is a self-balancing set of ac...
THE GENERAL LONG-TERM DEBT ACCOUNT GROUP  (GLTDAG) <ul><li>Examples of Debt Recorded in GLTDAG: </li></ul><ul><ul><li>Gene...
THE GENERAL LONG-TERM DEBT ACCOUNT GROUP  (GLTDAG) <ul><li>Consequences of Reporting “Nondebt Issuance Liabilities” in the...
THE GENERAL LONG-TERM DEBT ACCOUNT GROUP  (GLTDAG) <ul><li>BAD NEWS: Many governmental units  have tons of  nondebt issuan...
THE GENERAL LONG-TERM DEBT ACCOUNT GROUP  (GLTDAG) <ul><li>GOOD NEWS: GASB issued  GAS 34  in 6/99.  It requires  financia...
THE GENERAL LONG-TERM DEBT ACCOUNT GROUP  (GLTDAG) <ul><li>GOOD NEWS: GAS 34  becomes effective  for years beginning after...
THE GENERAL LONG-TERM DEBT ACCOUNT GROUP  (GLTDAG) <ul><li>Liquidation of GLTD: </li></ul><ul><ul><li>Debt Issuance Liabil...
SPECIAL ASSESSMENTS <ul><li>Special Assessments:  Assessments made against properties that  directly benefit from improvem...
SPECIAL ASSESSMENTS  <ul><li>Bond Repayment:  Assessees pay taxes over several years to pay off the bond issue. </li></ul>...
SPECIAL ASSESSMENTS  <ul><li>SADs  With  Government Commitment: </li></ul><ul><ul><li>A  Debt Service Fund  is used to acc...
SPECIAL ASSESSMENTS <ul><li>SADs  Without   Government Commitment:  </li></ul><ul><ul><li>An  Agency Fund  is used to acco...
THE PROPRIETARY FUNDS:  INTERNAL SERVICE FUNDS <ul><li>Purpose:   To account for activities that provide services  solely ...
THE PROPRIETARY FUNDS:  ENTERPRISE FUNDS <ul><li>Purpose:   To account for activities that provide services  primarily  to...
THE FIDUCIARY FUNDS: AGENCY FUNDS <ul><li>Purpose:  To serve as conduits for the transfer of money-- purely custodial in n...
THE FIDUCIARY FUNDS: TRUST FUNDS <ul><li>Purpose:  To account for the  investing   and  using  of money in accordance with...
THE FIDUCIARY FUNDS: TRUST FUNDS   <ul><li>Expendable Trust Funds: </li></ul><ul><ul><li>Principal may be spent. </li></ul...
FINANCIAL REPORTING TO THE PUBLIC:  The CAFR <ul><li>The Comprehensive Annual Financial Report (CAFR):  </li></ul><ul><ul>...
FINANCIAL REPORTING TO THE PUBLIC:  The CAFR <ul><li>CAFR (continued):  </li></ul><ul><ul><li>Four levels of financial inf...
FINANCIAL REPORTING TO THE PUBLIC:  GENERAL PURPOSE F/S <ul><li>Level 1:  Combined Financial Statements:  Contains 6  spec...
FINANCIAL REPORTING TO THE PUBLIC:  GENERAL PURPOSE F/S <ul><li>Level 1:  Combined Financial Statements-- The 6 Types of R...
End of Chapter 29   (Appendix material follows) <ul><li>Time to Clear Things Up-- Any Questions? </li></ul>
Appendix:   GASB’s New Financial Reporting Model ( GAS 34 )   (issued in June 1999)   [effective for years beginning  afte...
Appendix: Government-Wide Statements <ul><li>Requires  two  major new statements that: </li></ul><ul><ul><li>Are presented...
Appendix:  Government-Wide Statements <ul><li>The two new statements are the: </li></ul><ul><ul><li>Statement of Net Asset...
Appendix: Government-Wide Statements <ul><li>These two  government-wide statements  enable assessment of whether: </li></u...
Appendix: Government-Wide Statements <ul><ul><li>A government’s  financial position  has  improved  or  deteriorated  as a...
Appendix: Government-Wide Statements <ul><li>Each of the two  government-wide statements   must distinguish between : </li...
Appendix: Government-Wide Statements <ul><li>Fiduciary activities   are: </li></ul><ul><ul><li>Excluded  from the  governm...
Appendix:  Government-Wide Statements <ul><li>IMPORTANT FEATURES  of   the  government-wide   Statement of Net Assets : </...
Appendix: Government-Wide Statements <ul><li>IMPORTANT FEATURES  of   the  government-wide   Statement of Net Assets  (con...
Appendix: Government-Wide Statements <ul><li>IMPORTANT FEATURES  of   the  government-wide   Statement of Net Assets  (con...
Appendix: Government-Wide Statements <ul><li>IMPORTANT FEATURES  of   the  government-wide   Statement of Activities: </li...
Appendix: Government-Wide Statements <ul><li>IMPORTANT FEATURES  of   the  government-wide   Statement of Activities: </li...
Appendix: Government-Wide Statements <ul><li>IMPORTANT FEATURES  of   the  government-wide   Statement of Activities  (con...
Appendix: Government-Wide Statements <ul><li>IMPORTANT FEATURES  of   the  government-wide   Statement of Activities   (co...
Appendix: Government-Wide Statements <ul><li>IMPORTANT FEATURES  of   the  government-wide   Statement of Activities   (co...
Appendix: Fund-Based Statements--What’s  OLD ? <ul><li>SOS (same old stuff)   insofar as: </li></ul><ul><ul><li>Measuremen...
Appendix: Fund-Based Statements--What’s  OLD ? <ul><li>Purpose  of fund-based statements: </li></ul><ul><ul><li>These stat...
Appendix: Fund-Based Statements--What’s  NEW <ul><li>A SHARPENED FOCUS: </li></ul><ul><ul><li>Now must report information ...
Appendix: Fund-Based Statements--What’s  NEW <ul><li>Major funds  are those whose revenues, expenditures/expenses, assets,...
Appendix: Fund-Based Statements--What’s  NEW <ul><ul><li>Nonmajor funds  are: </li></ul></ul><ul><ul><ul><li>Aggregated   ...
Appendix: Fund-Based Statements--What’s  NEW <ul><li>IMPORTANT FEATURES  of   the  fund-based statements:   </li></ul><ul>...
Appendix: Fund-Based Statements--What’s  NEW <ul><li>IMPORTANT FEATURES  of   the  fund-based   statements  (cont.): </li>...
Appendix: Fund-Based Statements--What’s  NEW <ul><li>IMPORTANT FEATURES  of   the  fund-based   statements  (cont.): </li>...
Appendix: Fund-Based Statements--What’s  NEW <ul><li>IMPORTANT FEATURES  of   the  fund-based   statements  (cont.): </li>...
Appendix: Fund-Based Statements--What’s  NEW <ul><li>IMPORTANT FEATURES  of   the  fund-based   statements  (cont.): </li>...
Appendix: Fund-Based Statements--What’s  NEW <ul><li>IMPORTANT FEATURES  of   the  fund-based   statements  (cont.): </li>...
Appendix: Fund-Based Statements--What’s  NEW <ul><li>IMPORTANT FEATURES  of   the  fund-based   statements  (cont.): </li>...
Appendix: Reporting Capital Assets <ul><li>Capital assets (which are reported at historical cost) must now include: </li><...
Appendix: Reporting Infrastructure Assets <ul><li>Infrastructure Assets : </li></ul><ul><ul><li>Long-lived capital assets ...
Appendix: Infrastructure Assets-- Depreciation <ul><li>Noneligible   Infrastructure Assets : </li></ul><ul><ul><li>Must be...
Appendix: Infrastructure Assets-- Depreciation <ul><li>Eligible   Infrastructure Assets : </li></ul><ul><ul><li>Need not  ...
Appendix:  Revised Fund Structure-- Permanent Funds  Created <ul><li>Permanent Funds--A new  governmental fund-type : </li...
Appendix:  Revised Fund Structure-- Private-Purpose Trust Funds  Created <ul><li>Private-Purpose Trust Funds--A new  fiduc...
Appendix:  Revised Fund Structure-- Certain  Fund-types  Deleted <ul><ul><li>No longer have  Expendable  and  Nonexpendabl...
Appendix:  Required Supplementary Information (RSI) <ul><li>RSI  includes: </li></ul><ul><ul><li>Budgetary comparison stat...
End of Chapter 29  Appendix <ul><li>Time to Clear Things Up-- Any Questions? </li></ul>
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  1. 1. CHAPTER 29 GOVERNMENTAL ACCOUNTING: THE SPECIAL-PURPOSE FUNDS AND ACCOUNT GROUPS
  2. 2. FOCUS OF CHAPTER 29 <ul><li>The Remaining Governmental Funds </li></ul><ul><li>The Account Groups </li></ul><ul><li>The Proprietary Funds </li></ul><ul><li>The Fiduciary Funds </li></ul><ul><li>Financial Reporting to the Public: General-Purpose Financial Statements </li></ul><ul><li>Appendix: The GASB’s New Financial Reporting Model ( GAS 34 ) </li></ul>
  3. 3. THE GOVERNMENTAL FUNDS: SPECIAL REVENUE FUNDS <ul><li>Purpose: To account for the proceeds of specific revenue sources that are legally restricted to expenditure for specific purposes -- excluding inflows for: </li></ul><ul><ul><li>Capital projects and Expendable trusts. </li></ul></ul><ul><li>Inflows: U sually from specific taxes or nontax sources not directly related to services provided. </li></ul><ul><li>A General Fund “clone”--same structure. </li></ul>
  4. 4. THE GOVERNMENTAL FUNDS: CAPITAL PROJECTS FUNDS <ul><li>Purpose: To account for the proceeds of financial resources that are to be used for the acquisition or construction of MAJOR CAPITAL FACILITIES -- other than : </li></ul><ul><ul><li>Those financed by </li></ul></ul><ul><ul><ul><li>Proprietary Funds and </li></ul></ul></ul><ul><ul><ul><li>Trust Funds . </li></ul></ul></ul>
  5. 5. THE GOVERNMENTAL FUNDS: CAPITAL PROJECTS FUNDS <ul><li>A temporary fund -- at completion of the project: </li></ul><ul><ul><li>The fund is closed and </li></ul></ul><ul><ul><li>The facility ’s cost is recorded as a fixed asset in the General Fixed Asset Account Group (GFAAG) . </li></ul></ul><ul><ul><li>Costs incurred during construction are charged to expenditures ( outflows ). </li></ul></ul><ul><ul><li>Inflows : Bond sales and transfers from GF. </li></ul></ul>
  6. 6. THE GENERAL FIXED ASSET ACCOUNT GROUP (GFAAG) <ul><li>Purpose: Accounts for fixed assets not accounted for in </li></ul><ul><ul><li>Enterprise Funds, Internal Service Funds, or Trust Funds. </li></ul></ul><ul><li>Not a fund--a self-balancing set of accounts: </li></ul><ul><ul><li>Debit balances of assets are offset by </li></ul></ul><ul><ul><li>Credit balances describing the asset’s source . </li></ul></ul>
  7. 7. THE GENERAL FIXED ASSET ACCOUNT GROUP (GFAAG) <ul><li>Categories of Assets: </li></ul><ul><ul><li>Land. </li></ul></ul><ul><ul><li>Buildings. </li></ul></ul><ul><ul><li>Improvements other than buildings. </li></ul></ul><ul><ul><li>Equipment. </li></ul></ul><ul><ul><li>Construction work in progress (being performed by Capital Projects Funds). </li></ul></ul>
  8. 8. THE GENERAL FIXED ASSET ACCOUNT GROUP (GFAAG) <ul><li>Capitalization is optional for public domain or “infrastructure” fixed assets such as: </li></ul><ul><ul><li>Streets. </li></ul></ul><ul><ul><li>Sidewalks. </li></ul></ul><ul><ul><li>Bridges. </li></ul></ul>
  9. 9. THE GENERAL FIXED ASSET ACCOUNT GROUP (GFAAG) <ul><li>Recording Depreciation: </li></ul><ul><ul><li>OPTIONAL-- May reflect Accumulated Depreciation in the GFAAG . </li></ul></ul><ul><ul><li>Depreciation Expense is never reported in the operating statement of governmental funds. </li></ul></ul><ul><li>Sales of Assets: Record proceeds as OTHER FINANCING SOURCES in General Fund. </li></ul>
  10. 10. THE GOVERNMENTAL FUNDS: DEBT SERVICE FUNDS <ul><li>Purpose: To account for the servicing of debt initially recorded as a liability of the General Long-Term Debt Account Group (GLTDAG) . </li></ul><ul><li>“ Servicing of Debt” defined: The payment of (1) interest and (2) debt principal at maturity. </li></ul><ul><li>Unusual Features: </li></ul><ul><ul><li>Interest is not accrued until the due date . </li></ul></ul><ul><ul><li>Principal payments are not recorded as liabilities until the due date . </li></ul></ul>
  11. 11. THE GENERAL LONG-TERM DEBT ACCOUNT GROUP (GLTDAG) <ul><li>Purpose: To account for long-term debt that is not properly shown in Proprietary Funds or Trust Funds . GLTD includes: </li></ul><ul><ul><li>DEBT issuance liabilities having a maturity date of more than one year at the time of issuance. </li></ul></ul><ul><ul><li>NONDEBT issuance liabilities that would not “normally be liquidated with expendable available financial resources.” </li></ul></ul>The second category is a problem-- see slide 15 .
  12. 12. THE GENERAL LONG-TERM DEBT ACCOUNT GROUP (GLTDAG) <ul><li>The GLTDAG is not a fund--it is a self-balancing set of accounts: </li></ul><ul><ul><li>Credit balances of liabilities are offset by </li></ul></ul><ul><ul><li>Debit balances that are not assets but instead are mere balancing amounts intended solely to prevent reporting an “unbalanced” combined balance sheet. </li></ul></ul>
  13. 13. THE GENERAL LONG-TERM DEBT ACCOUNT GROUP (GLTDAG) <ul><li>Examples of Debt Recorded in GLTDAG: </li></ul><ul><ul><li>General obligation bonds (usually issued to pay for capital projects). </li></ul></ul><ul><ul><li>Claims and judgments. </li></ul></ul><ul><ul><li>Compensated absences (vacation & sick pay). </li></ul></ul><ul><ul><li>Unfunded pension contributions. </li></ul></ul><ul><ul><li>Capital leases payable. </li></ul></ul><ul><ul><li>Special assessment debt having government commitment (explained later). </li></ul></ul>
  14. 14. THE GENERAL LONG-TERM DEBT ACCOUNT GROUP (GLTDAG) <ul><li>Consequences of Reporting “Nondebt Issuance Liabilities” in the GLTDAG: </li></ul><ul><ul><li>It enables governments to magically conceal whether or not they are living within their means . </li></ul></ul><ul><ul><li>It results in the “operating statement” being a “Statement of ALL of the Revenues and SOME of the Costs Incurred This Period.” </li></ul></ul>
  15. 15. THE GENERAL LONG-TERM DEBT ACCOUNT GROUP (GLTDAG) <ul><li>BAD NEWS: Many governmental units have tons of nondebt issuance liabilities that will have to be paid by future generations (which may find it quite burdensome or impossible to pay). </li></ul>
  16. 16. THE GENERAL LONG-TERM DEBT ACCOUNT GROUP (GLTDAG) <ul><li>GOOD NEWS: GASB issued GAS 34 in 6/99. It requires financial statements that measure the flow of economic resources on the accrual basis. Such statements reveal: (1) the cost of providing services. (2) the change in the financial condition . </li></ul>
  17. 17. THE GENERAL LONG-TERM DEBT ACCOUNT GROUP (GLTDAG) <ul><li>GOOD NEWS: GAS 34 becomes effective for years beginning after 6/15/01. See Chapter Appendix for details. </li></ul>
  18. 18. THE GENERAL LONG-TERM DEBT ACCOUNT GROUP (GLTDAG) <ul><li>Liquidation of GLTD: </li></ul><ul><ul><li>Debt Issuance Liabilities: At the maturity date , the liability is transferred to a Debt Service Fund. </li></ul></ul><ul><ul><li>Nondebt Issuance Liabilities: At the payment date , the liability is transferred to the General Fund. </li></ul></ul>Note that GLTD is not removed from the GLTDAG when it becomes a current liability (due within 12 months).
  19. 19. SPECIAL ASSESSMENTS <ul><li>Special Assessments: Assessments made against properties that directly benefit from improvements: </li></ul><ul><ul><li>Examples: Sidewalks, street lighting. </li></ul></ul><ul><li>Special Assessment Bonds are usually issued to pay for the improvements. </li></ul><ul><ul><li>All construction activity takes place in a Capital Projects Fund . </li></ul></ul>
  20. 20. SPECIAL ASSESSMENTS <ul><li>Bond Repayment: Assessees pay taxes over several years to pay off the bond issue. </li></ul><ul><li>Special Assessment Debt may or may not have the backing of the governmental unit in the event of default . </li></ul><ul><li>Special Assessment Debt (SAD) Categories: </li></ul><ul><ul><li>SADs With Government Commitment. (This is the usual situation.) </li></ul></ul><ul><ul><li>SADs Without Government Commitment. </li></ul></ul>
  21. 21. SPECIAL ASSESSMENTS <ul><li>SADs With Government Commitment: </li></ul><ul><ul><li>A Debt Service Fund is used to account for : </li></ul></ul><ul><ul><ul><li>All collections from assessees . </li></ul></ul></ul><ul><ul><ul><li>All payments to bondholders . </li></ul></ul></ul><ul><ul><li>The bond liability is recorded in the GLTDAG . </li></ul></ul><ul><ul><li>Unique Item: The entire tax assessment is recorded as Property Tax Receivables --the noncurrent portion is Deferred Revenues . </li></ul></ul>
  22. 22. SPECIAL ASSESSMENTS <ul><li>SADs Without Government Commitment: </li></ul><ul><ul><li>An Agency Fund is used to account for: </li></ul></ul><ul><ul><ul><li>All collections of property taxes from assessees. </li></ul></ul></ul><ul><ul><ul><li>All payments to bond holders. </li></ul></ul></ul><ul><ul><ul><li>No liability is recorded in the GLTDAG. </li></ul></ul></ul><ul><ul><li>The governmental unit is viewed merely as an agent for the assessees and the bondholders . </li></ul></ul>
  23. 23. THE PROPRIETARY FUNDS: INTERNAL SERVICE FUNDS <ul><li>Purpose: To account for activities that provide services solely to other departments . </li></ul><ul><li>Manner of accounting parallels that of commercial businesses ( accrual basis & measurement of flow of economic resources ). </li></ul><ul><ul><li>Balance sheet reports Long-Term Debt . </li></ul></ul>
  24. 24. THE PROPRIETARY FUNDS: ENTERPRISE FUNDS <ul><li>Purpose: To account for activities that provide services primarily to the public . </li></ul><ul><li>Examples: Gas, electric, water utilities. </li></ul><ul><li>Manner of accounting parallels that of commercial businesses ( accrual basis & measurement of flow of economic resources ). </li></ul><ul><ul><li>Balance sheet reports Long-Term Debt . </li></ul></ul>
  25. 25. THE FIDUCIARY FUNDS: AGENCY FUNDS <ul><li>Purpose: To serve as conduits for the transfer of money-- purely custodial in nature . </li></ul><ul><li>ASSETS ALWAYS EQUAL LIABILITIES. </li></ul><ul><li>The following items do not exist: </li></ul><ul><ul><li>A fund balance/equity. </li></ul></ul><ul><ul><li>An operating statement. </li></ul></ul>A = L
  26. 26. THE FIDUCIARY FUNDS: TRUST FUNDS <ul><li>Purpose: To account for the investing and using of money in accordance with stipulated provisions of trust indenture agreements or statutes. </li></ul><ul><li>Nonexpendable Trust Funds: </li></ul><ul><ul><li>Principal must be preserved intact. </li></ul></ul><ul><ul><li>Accounted for in essentially the same manner as proprietary funds . </li></ul></ul>
  27. 27. THE FIDUCIARY FUNDS: TRUST FUNDS <ul><li>Expendable Trust Funds: </li></ul><ul><ul><li>Principal may be spent. </li></ul></ul><ul><ul><li>Accounted for in essentially the same manner as governmental funds . </li></ul></ul>
  28. 28. FINANCIAL REPORTING TO THE PUBLIC: The CAFR <ul><li>The Comprehensive Annual Financial Report (CAFR): </li></ul><ul><ul><li>Uses a “reporting pyramid” concept. </li></ul></ul>
  29. 29. FINANCIAL REPORTING TO THE PUBLIC: The CAFR <ul><li>CAFR (continued): </li></ul><ul><ul><li>Four levels of financial information --the lower the level the more detailed the information provided: </li></ul></ul><ul><ul><li>Level 1: Combined financial statements. </li></ul></ul><ul><ul><li>Level 2: Combining financial statements. </li></ul></ul><ul><ul><li>Level 3: Individual fund and account group statements. </li></ul></ul><ul><ul><li>Level 4: Schedules. </li></ul></ul>
  30. 30. FINANCIAL REPORTING TO THE PUBLIC: GENERAL PURPOSE F/S <ul><li>Level 1: Combined Financial Statements: Contains 6 specified statements that present the governmental unit’s overall financial position and operating results as a whole . </li></ul><ul><ul><li>Called the General-Purpose Financial Statements . </li></ul></ul><ul><ul><li>Similar in concept to consolidated statements for commercial enterprises. </li></ul></ul>
  31. 31. FINANCIAL REPORTING TO THE PUBLIC: GENERAL PURPOSE F/S <ul><li>Level 1: Combined Financial Statements-- The 6 Types of Required Statements: </li></ul><ul><ul><li>1 Balance Sheet (all fund types & A/Gs). </li></ul></ul><ul><ul><li>3 Operating Statements: </li></ul></ul><ul><ul><ul><li>One for governmental type funds. </li></ul></ul></ul><ul><ul><ul><li>One for proprietary type funds. </li></ul></ul></ul><ul><ul><ul><li>One budgetary comparison statement. </li></ul></ul></ul><ul><ul><li>1 Cash Flow Statement for Proprietary Type Funds. </li></ul></ul><ul><ul><li>1 special statement for fiduciary trust funds. </li></ul></ul>
  32. 32. End of Chapter 29 (Appendix material follows) <ul><li>Time to Clear Things Up-- Any Questions? </li></ul>
  33. 33. Appendix: GASB’s New Financial Reporting Model ( GAS 34 ) (issued in June 1999) [effective for years beginning after 6/15/01-- earlier application is encouraged.]
  34. 34. Appendix: Government-Wide Statements <ul><li>Requires two major new statements that: </li></ul><ul><ul><li>Are presented on the accrual basis . </li></ul></ul><ul><ul><li>Measure the flow of economic resources (same measurement flow as in commercial accounting ). </li></ul></ul><ul><ul><li>Are called the “ government-wide” statements. </li></ul></ul>
  35. 35. Appendix: Government-Wide Statements <ul><li>The two new statements are the: </li></ul><ul><ul><li>Statement of Net Assets (includes all GFA and GLTD). </li></ul></ul><ul><ul><li>Statement of Activities ( includes depreciation expense). </li></ul></ul><ul><li>These two new statements are presented in addition to the Fund-Based Financial Statements (7 of them) . </li></ul>
  36. 36. Appendix: Government-Wide Statements <ul><li>These two government-wide statements enable assessment of whether: </li></ul><ul><ul><li>Current-year citizens paid for the services they received in the current year , or if the costs of services were shifted to future-year citizens </li></ul></ul>#1 FREE RIDE
  37. 37. Appendix: Government-Wide Statements <ul><ul><li>A government’s financial position has improved or deteriorated as a result of the year’s operations. </li></ul></ul>#2
  38. 38. Appendix: Government-Wide Statements <ul><li>Each of the two government-wide statements must distinguish between : </li></ul><ul><ul><li>Governmental activities and business-type activities of the primary government . </li></ul></ul><ul><ul><li>The total primary government and its discretely presented component units by reporting each in separate columns. </li></ul></ul>#2 #1
  39. 39. Appendix: Government-Wide Statements <ul><li>Fiduciary activities are: </li></ul><ul><ul><li>Excluded from the government-wide statements if their resources are NOT available to finance the government’s programs. </li></ul></ul>
  40. 40. Appendix: Government-Wide Statements <ul><li>IMPORTANT FEATURES of the government-wide Statement of Net Assets : </li></ul><ul><ul><li>Reports all “general capital assets” --including infrastructure. </li></ul></ul><ul><ul><li>Reports all debt-- including GLTD . </li></ul></ul>#1 #2
  41. 41. Appendix: Government-Wide Statements <ul><li>IMPORTANT FEATURES of the government-wide Statement of Net Assets (cont.): </li></ul><ul><ul><li>Reports net assets in 3 categories: </li></ul></ul><ul><ul><ul><li>Invested in capital assets, net of related debt. </li></ul></ul></ul><ul><ul><ul><li>Restricted. </li></ul></ul></ul><ul><ul><ul><li>Unrestricted. </li></ul></ul></ul>#3 #2 #3 #1
  42. 42. Appendix: Government-Wide Statements <ul><li>IMPORTANT FEATURES of the government-wide Statement of Net Assets (cont.): </li></ul><ul><ul><li>In general, interfund balances (loans, advances, and due to and due from accounts) are eliminated . </li></ul></ul>#4 #1
  43. 43. Appendix: Government-Wide Statements <ul><li>IMPORTANT FEATURES of the government-wide Statement of Activities: </li></ul><ul><ul><li>Presented in at least the same level of detail provided in the governmental fund statements (generally, expenses and program revenues by function--e.g., public safety, public health, and recreation). </li></ul></ul>#1
  44. 44. Appendix: Government-Wide Statements <ul><li>IMPORTANT FEATURES of the government-wide Statement of Activities: </li></ul><ul><ul><li>Format must report expenses reduced by program revenues ---results in a measurement of “net (expense) revenue” for each of the government’s functions. </li></ul></ul>#2
  45. 45. Appendix: Government-Wide Statements <ul><li>IMPORTANT FEATURES of the government-wide Statement of Activities (cont.): </li></ul><ul><ul><li>Program expenses include all direct expenses. </li></ul></ul><ul><ul><ul><li>Depreciation expense that can specifically be identified with a function is reported as a direct expense . </li></ul></ul></ul><ul><ul><ul><li>Allocated overhead and other indirect expenses to individual programs are presented in a separate column . </li></ul></ul></ul>#3
  46. 46. Appendix: Government-Wide Statements <ul><li>IMPORTANT FEATURES of the government-wide Statement of Activities (cont.): </li></ul><ul><ul><li>Reports extraordinary items (items beyond control of mgt.) separately. </li></ul></ul><ul><ul><li>Reports special items (items within the control of mgt.) separately. </li></ul></ul>#4 #5
  47. 47. Appendix: Government-Wide Statements <ul><li>IMPORTANT FEATURES of the government-wide Statement of Activities (cont.): </li></ul><ul><ul><li>In general , interfund activity is eliminated : </li></ul></ul><ul><ul><ul><li>Interfund services provided and used. </li></ul></ul></ul><ul><ul><ul><li>Interfund transfers. </li></ul></ul></ul><ul><ul><ul><li>Other interfund activity. </li></ul></ul></ul>#6
  48. 48. Appendix: Fund-Based Statements--What’s OLD ? <ul><li>SOS (same old stuff) insofar as: </li></ul><ul><ul><li>Measurement basis -- </li></ul></ul><ul><ul><ul><li>Flow of current financial resources . (generally cash and assets that can easily be converted to cash) </li></ul></ul></ul><ul><ul><li>Basis of accounting -- </li></ul></ul><ul><ul><ul><li>Modified accrual basis. </li></ul></ul></ul>
  49. 49. Appendix: Fund-Based Statements--What’s OLD ? <ul><li>Purpose of fund-based statements: </li></ul><ul><ul><li>These statements show the short-term performance of individual funds using the same measures that governments use to manage their money. </li></ul></ul>
  50. 50. Appendix: Fund-Based Statements--What’s NEW <ul><li>A SHARPENED FOCUS: </li></ul><ul><ul><li>Now must report information about the most important funds -- the “major funds” (including the General Fund ). </li></ul></ul>
  51. 51. Appendix: Fund-Based Statements--What’s NEW <ul><li>Major funds are those whose revenues, expenditures/expenses, assets, or liabilities are at least: </li></ul><ul><ul><li>10% of the total for their fund category or type ( governmental or enterprise ) and </li></ul></ul><ul><ul><li>5% of the aggregate amount for all governmental and enterprise funds. </li></ul></ul>
  52. 52. Appendix: Fund-Based Statements--What’s NEW <ul><ul><li>Nonmajor funds are: </li></ul></ul><ul><ul><ul><li>Aggregated and </li></ul></ul></ul><ul><ul><ul><li>Reported in a separate column (labeled “all other funds”). </li></ul></ul></ul>
  53. 53. Appendix: Fund-Based Statements--What’s NEW <ul><li>IMPORTANT FEATURES of the fund-based statements: </li></ul><ul><ul><li>Must present two summary reconciliations that show the interplay between the two types of statements. </li></ul></ul><ul><ul><ul><li>Both types of statements together constitute “an integrated set of statements.” </li></ul></ul></ul>#1
  54. 54. Appendix: Fund-Based Statements--What’s NEW <ul><li>IMPORTANT FEATURES of the fund-based statements (cont.): </li></ul><ul><ul><li>In general , interfund activity will be reported separately : </li></ul></ul><ul><ul><ul><li>Interfund services provided and used. </li></ul></ul></ul><ul><ul><ul><li>Interfund transfers. </li></ul></ul></ul><ul><ul><ul><li>Other interfund activity </li></ul></ul></ul><ul><ul><ul><li>Interfund open balances. </li></ul></ul></ul>#2
  55. 55. Appendix: Fund-Based Statements--What’s NEW <ul><li>IMPORTANT FEATURES of the fund-based statements (cont.): </li></ul><ul><ul><li>Internal Service Funds are aggregated and presented in a separate column on the proprietary fund statements. </li></ul></ul>#3
  56. 56. Appendix: Fund-Based Statements--What’s NEW <ul><li>IMPORTANT FEATURES of the fund-based statements (cont.): </li></ul><ul><ul><li>Governmental Funds (no substantive changes) : </li></ul></ul><ul><ul><ul><li>Balance Sheet. </li></ul></ul></ul><ul><ul><ul><ul><li>Displays fund balances by reserved and unreserved categories. </li></ul></ul></ul></ul><ul><ul><ul><li>Statement of Revenues, Expenses, and Changes in Fund Balances </li></ul></ul></ul>#4
  57. 57. Appendix: Fund-Based Statements--What’s NEW <ul><li>IMPORTANT FEATURES of the fund-based statements (cont.): </li></ul><ul><ul><li>Proprietary Funds: </li></ul></ul><ul><ul><ul><li>Statement of Net Assets (or Balance Sheet): </li></ul></ul></ul><ul><ul><ul><ul><li>Displays net assets using the same categories used in government-wide statements. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Distinguishes between restricted and unrestricted assets . </li></ul></ul></ul></ul>#5
  58. 58. Appendix: Fund-Based Statements--What’s NEW <ul><li>IMPORTANT FEATURES of the fund-based statements (cont.): </li></ul><ul><ul><li>Proprietary Funds (cont.): </li></ul></ul><ul><ul><ul><li>Statement of Revenues, Expenses, and Changes in Fund Net Assets (or Equity): </li></ul></ul></ul><ul><ul><ul><ul><li>Must distinguish between operating and nonoperating revenues and expenses . </li></ul></ul></ul></ul>#6
  59. 59. Appendix: Fund-Based Statements--What’s NEW <ul><li>IMPORTANT FEATURES of the fund-based statements (cont.): </li></ul><ul><ul><li>Proprietary Funds (cont.): </li></ul></ul><ul><ul><ul><li>The all-inclusive change in fund net assets includes (1) capital contributions; (2) contributions to term and permanent endowments, (3) special items, (4) extraordinary items, and (5) transfers. </li></ul></ul></ul><ul><ul><ul><li>Cash flow statement must use the direct method . </li></ul></ul></ul>#7
  60. 60. Appendix: Reporting Capital Assets <ul><li>Capital assets (which are reported at historical cost) must now include: </li></ul><ul><ul><li>Infrastructure assets. </li></ul></ul>
  61. 61. Appendix: Reporting Infrastructure Assets <ul><li>Infrastructure Assets : </li></ul><ul><ul><li>Long-lived capital assets that normally are (1) stationary in nature and (2) normally can be preserved for a significantly greater number of years than most capital assets. </li></ul></ul><ul><ul><li>Examples: Roads, bridges, tunnels, drainage systems, water and sewer systems, dams, and lighting systems. </li></ul></ul>
  62. 62. Appendix: Infrastructure Assets-- Depreciation <ul><li>Noneligible Infrastructure Assets : </li></ul><ul><ul><li>Must be depreciated. (See following slide regarding eligible infrastructure assets.) </li></ul></ul>
  63. 63. Appendix: Infrastructure Assets-- Depreciation <ul><li>Eligible Infrastructure Assets : </li></ul><ul><ul><li>Need not be depreciated. </li></ul></ul><ul><ul><li>Defined: Assets being (1) managed using an asset management system having certain characteristics (described in GAS 34 ) and (2) preserved approximately at or above an established and disclosed condition level. </li></ul></ul><ul><ul><ul><li>Condition assessments must be performed at least every 3 years. </li></ul></ul></ul>
  64. 64. Appendix: Revised Fund Structure-- Permanent Funds Created <ul><li>Permanent Funds--A new governmental fund-type : </li></ul><ul><ul><li>Accounts for endowment-type situations in which: </li></ul></ul><ul><ul><ul><li>Only the endowment’s earnings can be used for purposes that support the reporting government’s programs. </li></ul></ul></ul><ul><ul><ul><li>Benefits the reporting government or its citizenry. </li></ul></ul></ul>
  65. 65. Appendix: Revised Fund Structure-- Private-Purpose Trust Funds Created <ul><li>Private-Purpose Trust Funds--A new fiduciary fund-type : </li></ul><ul><ul><li>Accounts for property held under trust arrangements in which: </li></ul></ul><ul><ul><ul><li>Both the principal and income benefit: </li></ul></ul></ul><ul><ul><ul><ul><li>Individuals, </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Private organizations, or </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Other governments. </li></ul></ul></ul></ul>
  66. 66. Appendix: Revised Fund Structure-- Certain Fund-types Deleted <ul><ul><li>No longer have Expendable and Nonexpendable Trust funds. </li></ul></ul><ul><ul><li>The only fiduciary funds that now exist are: </li></ul></ul><ul><ul><ul><li>Pension (and other employee benefit) Trust Funds. </li></ul></ul></ul><ul><ul><ul><li>Investment Trust Funds (created by GAS 31 ). </li></ul></ul></ul><ul><ul><ul><li>Private-Purpose Trust Funds. </li></ul></ul></ul><ul><ul><ul><li>Agency Funds. </li></ul></ul></ul>
  67. 67. Appendix: Required Supplementary Information (RSI) <ul><li>RSI includes: </li></ul><ul><ul><li>Budgetary comparison statements for the General Fund and each major Special Revenue Fund . </li></ul></ul><ul><ul><ul><li>Use both original budget and </li></ul></ul></ul><ul><ul><ul><li>Any amended budget .. </li></ul></ul></ul><ul><ul><li>Management’s discussion and analysis (the MD&A). </li></ul></ul>
  68. 68. End of Chapter 29 Appendix <ul><li>Time to Clear Things Up-- Any Questions? </li></ul>
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