Chapter 3

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Chapter 3

  1. 1. State and Local Government Financial Reporting <ul><li>Reporting Unit </li></ul><ul><ul><li>Primary Government </li></ul></ul><ul><ul><ul><li>State, General Purpose or Special Purpose Local Government that is legally separate and fiscally independent of other state or local governments </li></ul></ul></ul><ul><ul><li>Component Unit </li></ul></ul><ul><ul><ul><li>Legally separate organizations for which elected officials and primary government are financially accountable </li></ul></ul></ul><ul><ul><ul><li>Also, if exclusion would cause reporting entity financial statements to be misleading or incomplete </li></ul></ul></ul>
  2. 2. Reporting Component Units <ul><li>Blending </li></ul><ul><ul><li>When organizations financial transactions are so intertwined that ‘in substance’ are the same as the primary government </li></ul></ul><ul><li>Discrete </li></ul><ul><ul><li>Most component units reported this way as a separate column following the ‘Totals’ column </li></ul></ul>
  3. 3. Comprehensive Annual Financial Report (CAFR) <ul><li>Introductory Section </li></ul><ul><li>Financial Section </li></ul><ul><ul><li>MD & A </li></ul></ul><ul><ul><li>Basic Financial Statements </li></ul></ul><ul><ul><ul><li>Government-Wide (Level 1) </li></ul></ul></ul><ul><ul><ul><li>Fund (Level 2) </li></ul></ul></ul><ul><ul><ul><li>Notes to financial statements </li></ul></ul></ul><ul><ul><li>RSI </li></ul></ul><ul><li>Statistical Section </li></ul>
  4. 4. Government-Wide Financial Reporting <ul><li>Level One Financial Statements </li></ul><ul><li>Accrual Basis of Accounting </li></ul><ul><li>Economic Resources Measurement Focus </li></ul><ul><li>General Government Fixed assets and general long-term debt are reported in these statements </li></ul>
  5. 5. Financial Statements-GW <ul><li>Statement of Net Assets </li></ul><ul><ul><li>Separate columns for Governmental Activities, Business-Type Activities, Totals, and Discretely Presented Component Units </li></ul></ul><ul><li>Statement of Activities </li></ul><ul><ul><li>Separate columns for expenses, program revenues, and net (expense) revenue for Governmental Activities, Business-Type Activities, Totals and Discretely Presented Component Units. (Pp. 32-33) </li></ul></ul>
  6. 6. Financial Statements-Fund <ul><li>Governmental Type ( Modified Accrual/Flow of Financial Resources) </li></ul><ul><ul><li>Balance Sheet </li></ul></ul><ul><ul><li>Statement of R, Expenditures , and Changes in FB </li></ul></ul><ul><li>Proprietary Type ( Accrual/Economic Resources ) </li></ul><ul><ul><li>Statement of Net Assets (Balance Sheet) </li></ul></ul><ul><ul><li>Statement of R, Expenses , and Changes in Net Assets </li></ul></ul><ul><ul><li>Cash Flow Statement </li></ul></ul><ul><li>Fiduciary Funds ( Accrual/Economic Resources ) </li></ul><ul><ul><li>Statement of Net Assets </li></ul></ul><ul><ul><li>Statement of Changes in Fund Net Assets </li></ul></ul>
  7. 7. Financial Reporting and Accounting <ul><li>Reporting Peculiarities </li></ul><ul><ul><li>GFA and GLTD included and reported only on G-W financial statements and Proprietary Fund Statements </li></ul></ul><ul><ul><li>Depreciation of GFA recorded in G-W Statement of Activities only </li></ul></ul><ul><ul><li>Enterprise Fund activities flow through to business-type activities on GW Statements </li></ul></ul><ul><ul><li>Internal Service Fund activities flow through to governmental activities on GW Statements </li></ul></ul>
  8. 8. Reporting, Continued <ul><li>Internal Service Fund inter-fund transactions must be eliminated before put on GW financial statements </li></ul><ul><li>If the government has only business-type activities, then they need to prepare only Fund financial statements </li></ul><ul><li>Fiduciary Funds are not a part of GW Financial Statements </li></ul>
  9. 9. Reporting, Continued <ul><li>General Fixed Assets are reported as Capital Assets, net of Depreciation </li></ul><ul><li>Net Asset breakdown is </li></ul><ul><ul><li>Invested in Capital Assets, Net of Related Debt </li></ul></ul><ul><ul><li>Restricted (Covenants or Law) </li></ul></ul><ul><ul><li>Unrestricted (Does not include internal designations) </li></ul></ul><ul><li>General LTD reported in GW Statement of Net Assets </li></ul>
  10. 10. Reporting, Continued <ul><li>Reconciliation items </li></ul><ul><ul><li>GFA and GLTD </li></ul></ul><ul><ul><li>Deferred Revenue </li></ul></ul><ul><ul><li>Unrecorded Liabilities (Unfunded Pension Liability) </li></ul></ul><ul><ul><li>Special items such as sale of land </li></ul></ul><ul><li>What is reconciled </li></ul><ul><ul><li>Fund balances Govt Funds to Net Assets </li></ul></ul><ul><ul><li>Ch in FB Govt Funds to Ch in Net Assets </li></ul></ul>
  11. 11. Reporting, Continued <ul><li>Reconciliation Schedule is reported </li></ul><ul><ul><li>Face of Fund Financial Statements, or </li></ul></ul><ul><ul><li>Notes to Financial Statements </li></ul></ul><ul><li>Infrastructure must be capitalized and reported with other fixed assets </li></ul><ul><ul><li>Retrospectively and Prospectively </li></ul></ul><ul><ul><li>Prospectively only for Less than $10 million revenue </li></ul></ul>
  12. 12. Reporting, continued <ul><li>Infrastructure must be depreciated unless the ‘modified’ approach is elected </li></ul><ul><li>Collections and Works of Art may or may not be capitalized </li></ul><ul><li>Statistical Information </li></ul><ul><ul><li>Schedule of changed in LTD </li></ul></ul><ul><ul><li>Annual DS requirements </li></ul></ul><ul><ul><li>Legal Debt Margin Schedule </li></ul></ul>

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