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Governmental - 21 Flashcards

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1
Q

Authoritative sources for GASB:

A
  1. GASB Statements & Interpretations
  2. GASB Technical Bulletins
  3. AICPA Practice Bulletins cleared by GASB
  4. Implementation Guides published by GASB
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2
Q

What two types of accountability does governmental accounting focus on?

A
  1. Operational Accountability - demonstrated by government-wide financial statements which illustrate how effective and efficient the organization has been using it’s resources
  2. Fiscal Accountability - Fund financial statements that show the organization’s compliance with laws and regulations affecting it’s spending activities
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3
Q

What are the minimum reporting requirements for state and local governments?

A
  1. Management’s Discussion & Analysis
  2. Government-Wide Financial Statement (Accrual)
    • Statement of Net Position
    • Statement of Activities
    • Assets + Deferred Outflow of Resources = Liabilities + Deferred Inflow of Resources + Net Position
  3. Fund Financial Statements
    • Governmental Funds (Modified Accrual)
      • Balance Sheet
      • Statement of Revenues, Expenditures, & Changes in Fund Bal.
    • Proprietary Funds (Accrual)
      • Statement of Net Position
      • Statement of Revenue,Expenditures, and Changes in Net Position
      • Statement of Cash Flows
    • Fiduciary Funds (Accrual)
      • Statement of Fiduciary Net Position
      • Statement of Changes in Fiduciary Net Position
  4. Notes to the Financial Statements
  5. Required Supplementary Information (RSI) other than MD&A
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4
Q

Are Fiduciary Funds included in Government-Wide FS?

A

NO - because Fiduciary Funds do not belong to the government

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5
Q

What is included in a Comprehensive Annual Financial Report (CAFR)?

A
  1. Introductory Section
    • Letter of Transmittal
    • Organization Chart
    • Principal Officers
  2. Financial Section
    • All financial information
    • Auditor’s Report
  3. Statistical Section
    • Statistics about area of government
    • Ex: How many people moved into our county, etc…
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6
Q

Is the CAFR optional?

A

Yes

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7
Q

Is the Statistical Section of the CAFR part of the basic financial statements?

A

No

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8
Q

What are examples of Special Purpose Governments?

A
  1. Park Districts
  2. Tollway Authorities
  3. School Districts
  4. Sanitation Districts
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9
Q

What comprises a reporting entity?

A

A primary government and appropriate component units

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10
Q

What is a primary government?

A

Either a:

  1. State government
  2. General or special purpose local government
  3. Separately elected governing body
  4. Fiscally separate
  5. Fiscally independent of other state or local governments
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11
Q

What is a component unit?

A

A legally separate organization for which the elected officials of a primary government are financially (fiscally) responsible

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12
Q

What are the three criteria of fiscal dependence (only one needs be met)?

A

Government authority make decision regarding components:

  1. Budget
  2. Tax or users fees
  3. Debt (whether they are allowed to issue debt)
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13
Q

To be considered a component, an entity must be both?

A
  1. Fiscally dependent AND
  2. Provide financial benefit or burden on government authority

Ex: School Boards

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14
Q

How are component financials reported?

A
  1. Discrete - separate from primary

2. Blended - Included with primary

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15
Q

Why would a components financials be blended?

A
  1. The component is substantially the same as the primary
  2. The component provides services almost entirely for the primary
  3. The components total debt is to be repaid by the primary
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16
Q

What is Management’s Discussion & Analysis?

A

An overview of the government’s financial activities
Includes Current & Prior Year information
Considered to be RSI

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17
Q

What are examples of items that continue to be reported as assets on the Statement of Net Position on the Government-Wide FS?

A
  1. Prepayments
  2. Net pension plan position in excess of employer’s total liability
  3. Capitalized incurred cost for regulated activities
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18
Q

What are examples of items that continue to be reported as liabilities on the Statement of Net Position on the Government-Wide FS?

A
  1. Advances of derived tax revenues
  2. Grant amounts received in advance of meeting requirements other than timing
  3. Receipt of prepayment
  4. Loan commitment fees
  5. Refunds imposed by regulator
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19
Q

How are capital assets presented in the Statement of Net Position on the Government-Wide FS?

A

UNDER THE CAPITAL ASSETS SECTION:
Capital Assets
- Accumulated Depreciation
= Capital Assets

UNDER THE NET POSITION SECTION:
Capital Assets
- Accumulated Depreciation
- Debt associated with acquisition or improvement
= Net Investment in Capital Assets
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20
Q

Does a government have to depreciate its infrastructure assets?

A

Not if they elect to use the modified approach for recording infrastructure assets and two conditions are met:

  1. The government manages those assets in an asset management system
  2. The government documents that the assets are eing preserved approximately at a condition level establishd and disclosed by the government
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21
Q

If the government used the modified approach for infrastructure, how are all expenditures recorded?

A
  1. General Expenditures - expensed in the period incurred

2. Additions & Improvements - Capitalized

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22
Q

Examples of Deferred Outflow of Resources?

A
  1. Grant Expenditures paid in advance of meeting time requirements
  2. Deferred amounts from refunding of debt (Debits)
  3. Cost to acquire rights to future revenues
  4. Deferred loss from sale and leaseback
  5. Negative FV of government hedge of a future transaction
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23
Q

Examples of Deferred Inflow of Resources?

A
  1. Grant amounts received in advance of meeting timing requirements
  2. Deferred amounts from refunding of debt (Credits)
  3. Proceeds from the sale of future revenues
  4. Deferred gain from a sale-leaseback transaction
  5. Positive FV of governemnt hedge of a future transaction
  6. Advance of revenue from inposed nonexchange transactions
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24
Q

In the Statement of Net Position on the Government-Wide FS, Deferred Outflow of Resources are presented where?

A

In a separate section following assets

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25
If a state government's defined benefit pension plan's net fiduciary position is not expected to be sufficient to make projected benefit payments, what rate should be used to discount projected future benefit payments?
20 year tax-exempt municipal bonds with an average rating of AA/Aa or higher
26
The effects on the net pension liability of differences between expected and actual investment returns for a defined benefit plan is reconized in pension expense over?
A closed period of 5 years
27
What are the differenct types of Defined Benefit Plans?
Single Employer Mutliple Employer - Agent - Cost Sharing
28
GASB 68 requires what disclosures?
1. Descriptive information about types of benefits provided 2. A statement of how contributions to the pension plan are determined 3. The assumptions and methods used to calculate the pension liability
29
What additional disclosure information does GASB 68 require for Single Employer or Agent benefit plans?
1. The composition of the employees covered by benefit terms | 2. Sources of changes in the components of the net pension liability for the current year
30
In a Special Funding Situation, must the nonemployer recognize their proportionate share of net pension liability and pension expense?
Yes
31
What are the three types of funds under GASB?
1. Governmental (Modified Accrual) 2. Proprietary (Accrual) 3. Fiduciary (Accrual)
32
What are the 5 types of Governmental Funds/
1. General 2. Special Revenue 3. Debt Service 4. Capital Projects 5. Permanent
33
What are the 2 types of Proprietary Fund?
1. Interal Service | 2. Enterprise
34
What are the 4 types of Fiduciary Funds?
1. Agency 2. Pension & other employee benefit trust funds 3. Investment trust funds 4. Private-purpose trust funds
35
Fund accounting is used by governmental units with resources that must be?
Segregated for the purpose of carrying on specific activities or attaining certain objectives
36
What accounting basis do each type of funds use?
Governmental - Modified Accrual Proprietary - Accrual Fiduciary - Accrual
37
The Modified Accrual basis has what?
No long term assets or long term liabilities | Except: Loans from the General Fund
38
How many general funds may each government have?
Only one and it is always a major fund, but there can be multiple major funds
39
What are Special Revenue Funds?
Funds established to received funds from specific sources to be expended for a legally restricted purpose Capital Projects are excluded from this!! Grants Motor, Fuel, or Gasoline Excise Taxes
40
What is the Debt Service Fund?
Accumulates to pay principal and interest on bonds issued | Includes Premiums from issued Bonds
41
What are Capital Project Funds used for?
Capital Assets
42
What are Permanent Funds?
Funds where the principal is untouchable, but the interest and earnings off those funds can be used by the government
43
Fund Balance classifications imposed by GASB 54 are?
1. Nonspendable 2. Restricted - External or by Law 3. Committed - Internal 4. Assigned - Internal Intent 5. Unassigned - only GF should have positive Unassigned balance; if there is a negative in another governmental fund, then it would be a negative amount in the unassigned classification
44
What is the equation for Fund Accounting?
A + DO = L +DI + FB
45
What do Proprietary Funds focus on and what is included?
Focus on total economic resources, income determination, & cash flow presentation. 1. Internal Service Funds 2. Enterprise Funds
46
Internal Service Funds include what transactions?
Activity that provides goods or services to another fund of the same entity - this will be reported under the Governmental Activities column on the Government-Wide FS EX: Motor Pool, Printing/Binding Service
47
Enterprise Funds include what?
Goods or services provided to an external source for a fee - this will be reported under the Business Activities column on the Government-Wide FS
48
What statements are required for Proprietary Funds?
1. Statement of Net Position 2. Statement of Revenues, Expenses, & Changes in Fund Net Position 3. Statemetn of Cash Flows (Direct Method) - Reconciled from Operating Income
49
What are the four categories of activities used on the Proprietary Fund Statement of Cash Flows?
1. Operating 2. Non-Capital Financing - Interest Payments; gratns to decrease operating deficits 3. Capital & Related Financing - Interest Payments - Capital acquisition by financing 4. Investing - Cash received from Interest - Capital acquisition by cash
50
What are the 4 types of fiduciary funds?
1. Pension 2. Investment 3. Private-Purpose 4. Agency
51
What statements are required for Fiduciary Funds?
1. Statement of Fiduciary Net Position | 2. Statement of Changes in Fiduciary Net Position
52
Are Budgetary Comparison Schedules required for the General Fund?
Yes
53
What are the 4 categories of non-exchange transactions?
1. Derived Tax Revenues - Exchange Transaction 2. Imposed Non-exchange revenues - Non-exchange Transaction 3. Government-Mandated Nonexchange Transactions 4. Voluntary nonexchange transactions
54
In order for revenue of a non-exchange transaction to be recognized, what are the four criteria that must be met?
1. Required characteristics of the recipients 2. Time requirements 3. Reimbursement 4. Contingency
55
When may a government capitalize its proprietary software?
1. Specific objective & service capacity has been determined 2. Feasibility has been demonstrated 3. Intention to complete has been demonstrated
56
Any agency that is not obligated in any manner to repay bonds issued should record these bonds where?
Not in the Debt Service Fund | The Enterprise Fund if the cost of the bonds will be recouped via exchange transactions with the public
57
Gifts & Donations received by governmental units should be recorded how?
Fair Value
58
Government-Wide Statement of Activities lists program revenues as?
1. Charges for Services 2. Operating Grants & Contributions 3. Captial Grants & Contributions
59
Where are Fixed Assets capitalized and depreciated?
Proprietary Funds Except for general non-capitalized fixed assets which are captured in the governmental activity column of teh government -wide Statement of Net Position
60
The Governmental Fund Balance Sheet includes what?
Asset + Deferred Outflows - Liabilities - Deferred Inflows = Fund Balance
61
The Governmental Fund Statement of Revenues, Expenditures, & Changes in Fund Balances includes what?
Revenues - Expenditures +- Other Financing Sources = Fund Balance
62
The Proprietary Statement of Net Position Includes what?
Assets (Current & NonCurrent) + Deferred Outflow - Liabilities (Current & NonCurrent) = Net Position
63
Under the Modified Accrual Basis, when is revenue recorded?
When they are both measurable & available
64
What is the definition of available?
Collected by year-end or soon enough to pay liabilities of the current period (no more than sixty days after the end of the fiscal year)
65
Transfers of money between funds is considered revenue for the receiveing fund?
No; it is considered a Financing Source
66
A university choosing to report as engaged in business type activites should report a state appropriation how?
Nonoperating Revenue
67
If a public college or university elects to report only business type activities, then the FS that must be submitted are? If they elect both governmental & business like?
Business Like 1. Statement of Net Position 2. Statement of Revenues, Expenses, & Changes in Net Position 3. Statement of Cash Flows Business & Governmental 1. Balance Sheet 2. Statement of Revenues, Expenditures, & Changes in Fund Balances
68
What are the closing entries for Appropriations?
Appropriations DR Expenditures CR Encumberances CR Budg. Fund Bal. CR
69
Even though the Encumberances account is closed at the end of the year, is the Reserved for Encumberances account closed as well?
No
70
What is the Agency Fund used for?
To account for activities where the government is acting as an agent for other entities
71
What is the difference between an interfund transfer and an interfund reimbursment?
Transfer - Annual Subsidy Accounted for as another Financing Source/Use Reimbursement - Ex would be the General Fund paying for a specific expense in the Enterprise Fund Accounted for as an Expenditure in the General Fund and a reduction of Expense in the Proprietary fund
72
What is the definition of an Enterprise Fund?
The government unit provides goods & services which are: 1. Rendered primarliy to the general public 2. Financied substantially or entirely through user charges 3. Intended to be self-supporting
73
When issuing bonds for a capital project, when are the funds recognized in the capital fund?
In entirety when received
74
The Budgetary Comparison Schedule should include which funds?
General and Major Special Funds
75
What is the difference between Accrual & Modified Accrual?
Under Modified Accrual: Revenue is recognized when available and measurable Expenditures are recognized when the liability is incurred Exceptions: Encumberances are future liabilities, but are not expensed until incurred
76
If a local government files Chapter 9 Bankruptcy, AP should be remeasured how?
Based on the Plan of Adjustment
77
Government-Wide Financial Statements require measurement focus of what?
Economic Resources
78
When a component unit is blended vs discrete, it has to meet what criteria?
1. The governing body of the component unit is substantially the same as the primary unit OR 2. The services are provided entirely or almost entirely to the primary government OR 3. The components debt will be repaid entirely or almost entirely by the primary government
79
What method must be used in attributing the actuarial present value of projected benefit payments of each employee?
The Entry Age Actuarial Cost Method
80
The effects on the net pension liability of differences between expected and actual investment returns for a defined benefit plan is recognized in pension expense over?
A closed period of five years
81
Depreciation Expense is recorded in what two areas?
1. Government-Wide Statement of Activities | 2. The Proprietary Funds Statement of Revenues, Expenses, & Changes in Fund Balance
82
Are component units presented on the Fund FS?
No; they are only presented on the Government-Wide FS
83
How is interest received in the enterprise fund classified on the statement of cash flows?
As investing which is in direct opposition to US GAAP which has interest from investing activities classified as Operating
84
What is required to capitalize software costs?
1. Objective & Scope 2. Feasability 3. Intention to complete
85
Revenues to the General Fund are defined as?
Increases in fund financial resources other than from interfund transfers & debt issues proceeds
86
Encumberances outstanding at year-end should be reported how?
As a fund balance reserve in the general fund
87
An impaired capital asset no longer used by the government should be reported in the FS how?
The lower of carrying value or fair value
88
What is the requirement to identify when impairment of a capital asset should be recognized?
When an event or change in circumstance causes: 1. A decline in service utility AND 2. The event is large 3. The event is outside the normal life of the capital asset
89
How are bond premiums recorded in the debt service fund?
Recorded as Other Financing Source - NOT capitalized or amortized
90
Real estate held as an investment should be recorded how?
Fair Value at each reporting date
91
Do Agency Funds record Revenues, expenditures, transfers, or a net position?
No - they only record assets & liabilities
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