Section 2, Chapter 1

Question 1

What is GASB Statement 34 title?

Answer 1

Basic Financial Statements - and Management’s Discussion and Analysis - for State and Local Governments

Question 2

What does GASB Statement 34 focus on?

Answer 2

Fiscal accountability and operational accountability

Question 3

What is operational accountability?

Answer 3

the need for stewards of public resources to be accountable for safekeeping of all resources, capital and financial, and complying with the requirements for their use.

Question 4

What is the GASB responsible for?

Answer 4

setting accounting and external reporting standards for state and local governments.

Question 5

Are state and local governments required to follow GASB standards?

Answer 5

No - they are sovereign entities. However, many state and local governments have enacted legislation requiring preparation of financial reports following the standards of GASB.

Question 6

What 2 things encourage state and local governments to follow GASB standards?

Answer 6

1. ) Many state and local governments have enacted legislation requiring preparation of financial reports following the standards of GASB.
2. ) Government credit rating agencies encourage governments that want to issue debt to provide audited financial statements prepared in accordance with GAAP.

Question 7

What is Ethics Rule 203?

Answer 7

the ethics standard for attesters and financial statements.

Question 8

Who are the three primary groups of users of external financial reports?

Answer 8

1. ) The citizens
2. ) Legislative and oversight bodies
3. ) Investors and creditors

Question 9

What is the title of GASB Concepts Statement 1?

Answer 9

Objectives of Financial Reporting

Question 10

What does the GASB Concepts Statement 1 state?

Answer 10

Financial reporting should provide information to assist users in assessing accountability and making economic, social and political decisions.

Question 11

What does the Statement of Auditing Standards No. 69 establish?

Answer 11

The hierarchy of governmental accounting principles

Question 12

What is the hierarchy of governmental accounting principles?

Answer 12

1. ) GASB Statements and Interpretations, AICPA and FASB pronouncements make applicable to state and local governments.
2. ) GASB Technical Bulletins and AICPA Industry Audit and Accounting Guides, AICPA Statements of Position
3. ) AICPA Accounting Standards Executive Committee Practice Bulletins.
4. ) implementation guides, FASB standards not make applicable to state and local governments by GASB.

Question 13

What sets forth the provisions for defining the reporting entity?

Answer 13

GASB Codification Section 2100.

Question 14

What is a reporting entity?

Answer 14

the primary government and its component units, including any other units whose omission would be misleading.

Question 15

What is a component unit?

Answer 15

Organizations for which the primary government is financially accountable.

Question 16

What is a primary government?

Answer 16

any state government or general purpose local government and possibly a special purpose government.

Question 17

What are examples of a general purpose government?

Answer 17

municipalities, county, township

Question 18

When would a special purpose government be considered a primary government?

Answer 18

1. ) legally separate
2. ) separate elected governing body
3. ) fiscally independent of other state and local governments.

Question 19

When is an organization legally separate?

Answer 19

When it possesses corporate powers; has its own name, right to sue and be sued in its name, buy sell lease and mortgage property, right to issue debt in its name.

Question 20

What three abilities does special purpose government possess to be fiscally independent?

Answer 20

1. ) Determine its budget without other governments having the authority to approve or disapprove.
2. ) levy taxes or set rates/charges without approval of another government.
3. ) issue bonded debt without approval of another government.

Question 21

When should a governmental organization be considered a component unit? 4

Answer 21

1. ) if it is not legally separate
2. ) if primary govt appoints a voting majority of board
3. ) if primary govt is able to impose its will
4. ) is PCU can provide financial benefits to, or impose financial burdens on primary govt
5. ) if it is fiscally dependent on primary government.

Question 22

What is imposition of will?

Answer 22

significantly influence programs, projects, activities, or level of service.

Question 23

When is a component unit financially dependent on a primary government?

Answer 23

1. ) the component unit cannot determine its budget without the primary government having the authority to approve and modify.
2. ) the component unit cannot levy taxes or set rates/charges without approval of the primary government
3. ) the component unit cannot issue bonded debt without approval by the primary government.

Question 24

What are the two methods for displaying component units?

Answer 24

1. ) blending

2. ) discrete

Question 25

What is blending?

Answer 25

the data are presented in a manner similar to the presentation of the balances and transactions of the primary government.

Question 26

What is discrete presentation?

Answer 26

the data are presented in the reporting entities financial statements separate from the data of the primary government. Usually separate columns in financial statements.

Question 27

What are the 3 criteria for determining whether data should blended or discrete?

Answer 27

1. ) composition of board 2. ) providing services to the primary government 3. ) related organizations

Question 28

What impact does the composition of the two boards have on how data is presented?

Answer 28

If the board of the component unit is made up of members of the board of the primary government, the data will be blended.

Question 29

What impact does the providing of services have on how data is presented?

Answer 29

If the primary government is the sole customer of the component unit, then the data is blended.

Question 30

When is discrete presentation used to present data?

Answer 30

when the board of the component unit is not made up of the board of the primary government, and when the primary government is not the sole customer of the component unit.

Question 31

How is a related organization presented in the financial statements?

Answer 31

disclosed in the notes

Question 32

What is a related organization?

Answer 32

organization for which a primary government is not financially responsible even though it appoints a voting majority of the governing board.

Question 33

What are the 3 minimum requirements for external financial reporting?

Answer 33

1. ) MD&A (managements discussion and analysis) 2. ) Basic Financial Statements 3. ) Required supplemental info (other than MD&A)

Question 34

What are the three basic financial statements?

Answer 34

1. ) government wide financial statements 2. ) fund financial statements 3. ) notes to the financial statements

Question 35

What are the 2 required statements in the government wide financial statements?

Answer 35

1. ) statement of net assets | 2. ) statement of activities

Question 36

What are the fund financial statements?

Answer 36

financial statements presented in a columnar format for the governmental, proprietary and fiduciary funds.

Question 37

What is the purpose of the notes to the financial statements?

Answer 37

to communicate information that is necessary for fair presentation of the basic financial statements but which is not displayed on the face of the statements.

Question 38

What GASB section includes the requirements for the CAFR?

Answer 38

2200

Question 39

What 3 things should the CAFR contain?

Answer 39

1. ) Audited Basic Financial Statements 2. ) Combining Statements for nonmajor funds for the primary government and discretely presented component units. 3. ) Individual fund statements and schedules for the funds of the primary government and its blended component units.

Question 40

What three sections make up the CAFR?

Answer 40

1. ) introduction 2. ) financial 3. ) statistical

Question 41

What is included in the into section of the CAFR?

Answer 41

1. ) cover 2. ) title page 3. ) table of contents 4. ) list of principal officials 5. ) org chart 6. ) letter of transmittal 7. ) GFOA Award

Question 42

What is the most important item in the introduction section of the CAFR?

Answer 42

Letter of Transmittal

Question 43

What is the Letter of Transmittal?

Answer 43

1. ) Formal Transmittal of CAFR - accounting standards & managements responsibility for preparation of report. 2. ) profile of government 3. ) local economy 4. ) long range planning 5. ) cash management 6. ) risk financing 7. ) independent audit 8. ) awards

Question 44

What 5 things are included in the financial section?

Answer 44

1. ) Auditors Report 2. ) MD&A 3. ) Basic Financial Statements - Gov't Funds, Proprietary Funds, Fiduciary funds 4. ) Required info other than MD&A 5. ) Combining Statements and individual fund statements

Question 45

What is the objective of the statistical section?

Answer 45

to provide the user with additional historical perspective, context, and detail to assist in using the information in the financial statements and associated notes, and to understand and assess a governments economic condition.

Question 46

What 5 categories make up the statistical section?

Answer 46

1. ) financial trends 2. ) revenue capacity 3. ) debt capacity 4. ) demographic and economic 5. ) operating information

Question 47

At minimum, what things should a govt present in financial trends section?

Answer 47

1. ) info about net assets and changes in net assets | 2. ) information about governmental funds

Question 48

How should unreserved fund balance be resented in the CAFR?

Answer 48

by fund type

Question 49

At minimum, what three aspects of own source revenues should be presented in the revenue capacity info section of the statistical section?

Answer 49

1. ) revenue base 2. ) revenue rates 3. ) principal revenue players

Question 50

At a minimum, what four types of information should be presented in the debt capacity section of the statistical section?

Answer 50

1. ) ratio of outstanding debt 2. ) direct and overlapping debt 3. ) debt limitations 4. ) pledged revenue coverage

Question 51

What should be included in the demographic and economic section of the statistical section?

Answer 51

population, personal income, unemployment rate

Question 52

What three types of information should be presented in the operating information section of the statistical section?

Answer 52

1. ) number of government employees 2. ) operating indicators 3. ) capital asset info

Question 53

What is a popular term for "popular reporting?"

Answer 53

summary financial information

Question 54

What are popular reports?

Answer 54

No required by GASB and cannot replace CAFR. Allows governments to present information in a user-friendly format that focuses on a specific area of interest.