introduction to governmental and not-for-profit … ©2013 pearson education, inc. publishing as...
TRANSCRIPT
2-*
Introduction to Governmental and
Not-for-Profit Accounting, 7e
Chapter 2: The Use of Funds in
Governmental Accounting
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Part 2
Fund Accounting
Fund Accounting
Fund Accounting
A- Governmental-Type Funds
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A- Governmental-Type Funds :
Financial Statements
Fund level:
• Balance Sheet
• Statement of Revenues, Expenditures,
and Changes in Fund Balance
– a.k.a. Operating Statement
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Governmental Funds:
Operating Statement Format
Revenues
- Expenditures
= Excess of revenues over expenditures
+/- Other financing sources and uses
+/- Special and extraordinary items
= Net change in fund balance
+ Fund balance at beginning of period
= Fund balance at end of period
Governmental
Type Funds
Grouping
Governmental
Type Funds
Grouping
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Governmental Funds:
A- General Fund
• All general-purpose governments and certain
special-purpose governments, such as school
districts, use a General Fund.
• Used for most basic day-to-day operations
• Used to account for financial resources not
accounted for in another governmental fund
Governmental Funds:
A- General Fund • Inflows from:
– Taxes on real property, sales, and personal or
corporate income
– Intergovernmental grants
– Licenses, fees, forfeitures, and fines
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Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall 2-*
Governmental Funds:
Basic Accounting Equation
Financial
Assets*
Matured Short-Term
Liabilities** + Fund
Balance*** =
*Some governments may have deferred outflows of resources, which should be
added to assets in the accounting equation.
**Some governments may have deferred inflows of resources, which should be
added to liabilities in the accounting equation.
***GASB S54 classifies Fund Balance by degree of constraint on use of resources.
Governmental Funds:
Basic Accounting Equation • Financial Assets
– Cash, investments, and receivables
• Matured Short-Term Liabilities
– Short-term has a shorter time frame than
“current” in business accounting, which
means payable in a year.
• Accounts payable, salaries payable, and amounts
payable to other funds
• Matured liabilities due for payment and expected to
be paid shortly after the accounting period ends
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Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall 2-*
Governmental Funds:
2-Special Revenue Funds • Used to account for proceeds of specific
revenue sources that are restricted or
committed to spending for specific
purposes (other than debt service or
capital projects)
– Specific revenue sources must be a
substantial portion of fund’s resources.
• Revenue from dedicated source, such as
a special tax, grant, or fee
– Specific-purpose federal grant proceeds
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Governmental Funds:
3-Special Revenue Funds • Accounting same as general fund
• Governmental entity May have more than
one special revenue fund
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Governmental Funds:
4-Capital Projects Funds
• Used to account for financial resources
restricted or otherwise limited to spending for
capital outlays
– Acquisition or construction of capital facilities or
other capital assets
• NOT for assets of a(n):
– Enterprise fund, internal service fund, trust fund
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Governmental Funds:
4-Capital Projects Funds
• Required to use CPF if capital outlays
financed from general obligation bond
proceeds
– Many capital assets are acquired through the
General Fund when general obligations bonds
are not issued
• Separate fund per project or bond
• No long-term assets or debt reported in CPF
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Governmental Funds:
5-Debt Service Funds • Used to account for financial resources that
are restricted or otherwise limited to spending for principal and interest on general long-term debt – Proprietary fund debt not included
• Resources in debt service funds – Transfers from other funds
– Investment earnings
– Taxes specifically assessed for debt service
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Governmental Funds:
5-Debt Service Funds • Required when
– Legally mandated
– Financial resources being accumulated for principal and interest payments that come due in future years
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Governmental Funds:
B-Permanent Funds
• Only earnings may be used
– Not principal
• To support government or citizens
• Doesn’t include private-purpose trust
funds
• Examples: Library endowment, cemetery
• Same accounting as general fund
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Proprietary Funds:
Types and Statements
• Enterprise Funds
• Internal Service Funds
• Statement of Net Position
• Statement of Revenues, Expenses, and
Changes in Net Position
• Statement of Cash Flows
Proprietary Type Funds:
Measurement Focus • Economic resources measurement focus
• Accrual basis of accounting
– Provides accurate measure of revenues and
expenses to help determine user charges
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Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall 2-*
Proprietary Funds:
Operating Statement Format Operating revenues - Operating expenses = Operating income (loss) +/- Non-operating revenues and expenses = Income before other revenues, expenses, gains, losses, and transfers + Capital contributions +/- Special and extraordinary items +/- Transfers = Increase (decrease) in net position + Net position at beginning of period = Net position at end of period
Reconciliation
• For products/services sold for a fee
• Primarily to external users
• Typically, separate fund for each activity
• Examples
– Municipal airport
– Municipal electric utility
– Municipal water and sewer utilities
– Toll roads
– Lotteries Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall 2-*
Proprietary Funds:
1-Enterprise Funds
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Proprietary Funds:
1-Enterprise Funds
• Enterprise funds required if
– Pricing intended to cover costs
– Law requires costs of providing services be
recovered through fees and charges, OR
– Debt secured only by net revenues of activity
(revenue bonds)
• For products/services sold for a fee
– Fee designed to recover cost
• To internal users or other governments
– Reporting government must be predominant
participant
• Established for cost savings
– To consolidate support activities performed by
several agencies
– To obtain bulk discounts
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Proprietary Funds:
2-Internal Service Funds
Proprietary Funds:
2-Internal Service Funds • Separate fund for each activity
• Bill other funds for products/services
– Revenue to Internal Service Fund
– Expenditure/expense to fund receiving
products/services
• Examples
– Motor pool operations
– Data processing
– Printing services
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C-Fiduciary Funds
• Assets held by government in a trust or
agency capacity for others
– Cannot be used to support government’s own
programs
• Economic resources measurement focus
• Accrual basis of accounting
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Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall 2-*
Fiduciary Funds:
Types and Statements • Pension (and other employee benefit) Trust
Funds
• Investment Trust Funds
• Private-Purpose Trust Funds
• Agency Funds
• Statement of Fiduciary Net Position
• Statement of Changes in Fiduciary Net Position*
*Not used by agency funds
C-Fiduciary Funds
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Fiduciary Funds
• Pension (and other employee benefit)
Trust Funds
– Hold restricted resources
– For pensions, health care, etc.
• Investment Trust Funds
– For investment pools
– External portion only
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Fiduciary Funds
• Private-Purpose Trust Funds
– For all other trust arrangements
– Example: escheat property
• Agency Funds
– For custody arrangements, example: sales
tax collections for other governments
– No “net assets”
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