SAMPLE. ACT555: Governmental Accounting. Course Description and Outcomes. Participation & Attendance. Credit Hours: 3

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1 ACT555: Governmental Accounting Credit Hours: 3 Contact Hours: This is a 3-credit course, offered in accelerated format. This means that 16 weeks of material is covered in 8 weeks. The exact number of hours per week that you can expect to spend on each course will vary based upon the weekly coursework, as well as your study style and preferences. You should plan to spend hours per week in each course reading material, interacting on the discussion boards, writing papers, completing projects, and doing research. Course Description and Outcomes Course Description: This course provides a thorough understanding of governmental accounting topics. Topics covered include financial reporting of state and local governments, learning about the governmental operating statement accounts and budgetary accounting, accounting for general capital assets and capital projects. Course Overview: This course will provide you with an awareness of the issues of government and not-for-profit accounting. It will help you understand all other issues including, among other topics, revenue and expenditure recognition, assets and liability valuation, the scope of the reporting entity, and reporting cash flows. You will also learn about current accounting and reporting standards and practices for governmental and not-for-profit entities. This course takes into account all other GASB statements, applicable Financial Accounting Standards Board standards, AICPA Audit and Accounting Guides and application of the Office of Management and Budget and the Government Accountability Office issues. Course Learning Outcomes: 1. Describe the key unique characteristics of government and non-profit accounting. 2. Demonstrate an understanding of fund accounting and how to treat the different funds in relation to the required entries. 3. Articulate budgetary accounting and reporting practices. 4. Analyze the format and content of the fund financial statements and government-wide financial statements. 5. Assess and present knowledge of the timing of recognition and classification of revenues and expenses of non-government not- for-profit entities. 6. Prepare non-government not for profit organizational financial statements. Participation & Attendance

2 Prompt and consistent attendance in your online courses is essential for your success at CSU-Global Campus. Failure to verify your attendance within the first 7 days of this course may result in your withdrawal. If for some reason you would like to drop a course, please contact your advisor. Online classes have deadlines, assignments, and participation requirements just like on-campus classes. Budget your time carefully and keep an open line of communication with your instructor. If you are having technical problems, problems with your assignments, or other problems that are impeding your progress, let your instructor know as soon as possible. Course Materials Textbook Information is located in the CSU-Global Booklist on the Student Portal. Course Schedule Due Dates The Academic Week at CSU-Global begins on Monday and ends the following Sunday. Discussion Boards: The original post must be completed by Thursday at 11:59 p.m. MT and Peer Responses posted by Sunday 11:59 p.m. MT. Late posts may not be awarded points. Opening Exercises: Take the opening exercise before reading each week s content to see which areas you will need to focus on. You may take these exercises as many times as you need. The opening exercises will not affect your final grade. Mastery Exercises: Students may access and retake mastery exercises through the last day of class until they achieve the scores they desire. Critical Thinking: Assignments are due Sunday at 11:59 p.m. MT. Live Classroom: Although participation is not required, four Live Classroom sessions will be held during Weeks 1, 3, 5, and 7. We ek # Readings Assignments Chapters 2 & 5 in Accounting for Governmental and Nonprofit Discussion (25 Entities Critical Thinking (75 Live Classroom (0 Chapter 6 in Accounting for Governmental and Nonprofit Entities Discussion (25 Critical Thinking (75 Chapter 7 & 8 in Accounting for Governmental and Nonprofit Entities Discussion (25 Critical Thinking (75

3 Chapters 9 & 10 in Accounting for Governmental and Nonprofit Entities Chapter 11 & 12 in Accounting for Governmental and Nonprofit Entities Chapter 13 & 14 in Accounting for Governmental and Nonprofit Entities Blackwood, A., Roeger, K., & Pettijohn, S. (2012). The Nonprofit Sector in Brief: Public Charities, Giving and Volunteering, The Nonprofit Almanac. Retrieved from Principles for Good Governance and Ethical Practice. (2007, October 1). Retrieved from nciples_for_good_governance_and_ethical_practice.pdf Chapters 15 & 16 in Accounting for Governmental and Nonprofit Entities Live Classroom (0 Discussion (25 Critical Thinking (75 Discussion (25 Critical Thinking (75 Live Classroom (0 Discussion (25 Critical Thinking (75 Discussion (25 Live Classroom (0 Chapter 17 in Accounting for Governmental and Nonprofit Entities Discussion (25 Portfolio (350 Assignment Details This course includes the following assignments/projects: Module 1 CRITICAL THINKING ASSIGNMENT (75 Choose one of the following two assignments to complete this week. Do not do both assignments. Identify your assignment choice in the title of your submission. Option 1: Accounting Principles for Governments and the Balance Sheet

4 In Erikus County, the Parks and Recreation Department constructed a library in one of the county s high growth areas. The construction was funded by a number of sources. Below is selected information related to the funding and closing of the Library Capital Project Fund. All activities related to the library construction occurred within the 2015 fiscal year. 1. The county issued $6,000,000, 4% bonds, with interest payable semi-annually on June 30 and December 31.The bonds sold for 101 on July 30, Proceeds from the bonds were to be used for construction of the library, with all interest and premiums received to be used to service the debt issue. 2. A $650,000 federal grant was received to help finance construction of the library. 3. The Library Special Revenue Fund transferred $250,000 for use in construction of the library. 4. A construction contract was awarded in the amount of $6,800, The library was completed on June 1, 2011, four months ahead of schedule. Total construction expenditures for the library amounted to $6,890,000. When the project was completed, the cost of the library was allocated as follows: $200,000 to land, $6,295,000 to building, and the remainder to equipment. 6. The capital projects fund was closed. It was determined that remaining funds were related to the bond issue, and thus they were appropriately transferred to the debt service fund. Required: Make all necessary entries in the capital projects fund general journal and the general activities journal at the government-wide level. For written responses, follow the CSU-Global Guide to Writing and APA Requirements. Review the Critical Thinking grading rubric, which is found in the Module 1 folder, to see how you will be graded on this assignment. Be in contact with your instructor if you have any questions or concerns Option 2: Multiple-Project Fund Transactions During FY 2014, the voters of Surprise County approved construction of a $21 million police facility and $11 million fir station to accommodate the county s population growth. The construction will be financed by tax-supported bonds in the amount of $30 million, a $1 million economic stimulus grant, and a portion of future use tax revenues. During 2014, the following events and transactions occurred. 1. Issued $100,000 of 6 percent bond anticipation notes to cover preliminary planning and engineering expenses. 2. Incurred architecture and engineering costs in the amount of $60,000. They were split evenly between the two projects. 3. Entered into a construction contract for $32 million--$21 million was for the police facility and $11 million was related to the fire station. 4. Issued the $30 million, 20-year 5% bonds at 101. (The premium should be recorded in a debt service fund. You do not need to record this entry.) 5. Paid off the bond anticipation notes that had been outstanding 180 days. (Interest as an expenditure of the capital projects fund.) 6. An invoice for $16 million was received from the contractor for a portion of the police facility construction ($10 million) and the fire station construction ($6 million). 7. Half of the grant funds were received in cash. The remainder is anticipated in 2015; however, the grantor notified the county that there is no guarantee that the federal government will appropriate the 2015 portion. 8. The initial construction invoice, less 5% retainage, was paid. 9. The fire station was completed, and a final invoice for the remaining $5 million was received. All fire station construction charges incurred can be capitalized as buildings. 10. Following inspection, the fire station invoices were paid in full. 11. At year-end, the contractor billed the county an additional $7.5 million for the police facility; however, the police facility was incomplete. 12. Temporary accounts were closed at year-end. Assume that the fund balances are all restricted. Required: Prepare journal entries to record the preceding information in a single Surprise County Construction Fund and the governmental activities general journal at the government-wide level. For written responses, follow the CSU-Global Guide to Writing and APA Requirements.

5 Review the grading rubric, which is found in the Module 1 folder, to see how you will be graded on this assignment. Be in contact with your instructor if you have any questions or concerns Module 2 CRITICAL THINKING ASSIGNMENT (75 Choose one of the following two assignments to complete this week. Do not do both assignments. Identify your assignment choice in the title of your submission. Option 1: Long-term Liability Transactions Following are a number of unrelated transactions for the Village of Centerville, some of which affect governmental activities at the government-wide level. None of the transactions has been recorded yet. 1. The General Fund collected and transferred $750,000 in tax collections to the debt service fund; $600,000 of this amount was used to retire outstanding serial bonds and the remainder was used to make the interest payment on the outstanding serial bonds. 2. A $5,000,000 issue of serial bonds to finance a capital project was sold at 102 plus accrued interest in the amount of $50,000. The accrued interest and the premium were recorded in the debt service fund. Accrued interest on bonds sold must be used for interest payments; the premium is designated by state law for eventual payment of the bond principal. 3. The debt service fund made a $110,000 capital lease payment, of which $15,809 was interest. Funds used to make the lease payment came from a capital grant received by the special revenue fund. 4. Tax-supported serial bonds with $2,800,000 par value were issued in cash to permit partial refunding of a $3,500,000 par value issue of term bonds. The difference was settled with $700,000 that had been accumulated in prior years in a debt service fund. Assume that the term bonds had been issued several years earlier at par. 5. Four months prior to year-end, 6 percent special assessment bonds totaling $500,000 were issued to fund a streetlight improvement project in a local subdivision. The bonds are secondarily backed by the village. The first $25,000 installment will be due from property owners six months after the initial bond issuance, but no debt payments are due in the first year. 6. Marketable equity securities held by the debt service fund increased in value by $10,000 during the year. Required: Prepare in general journal form the necessary entries in the governmental activities and appropriate fund journals for each transaction. Explanations may be omitted. For each entry you prepare, name the fund in which the entry should be made. For written responses, follow the CSU-Global Guide to Writing and APA Requirements. Review the grading rubric, which is found in the Module 1 folder, to see how you will be graded on this assignment. Be in contact with your instructor if you have any questions or concerns Option 2: Accounting for Contributions Vary by Use Required: The City of Jamestown has agreed to acquire a new city maintenance building under a capital lease agreement. At the inception of the lease, a payment of $100,000 is to be made; nine annual lease payments, each in the amount of $100,000, are to be made at the end of the year after the inception of the lease. The total amount to be paid under this lease, therefore, is $1,000,000. The town could borrow this amount for nine years at the annual rate of 8%; therefore, the present value of the lease at inception, including the initial lease payment, is $724,689. Assume that the fair market value of the building at the inception of the lease is $750,000.

6 a. Show the entry that should be made in a capital projects fund at the inception of the lease after the initial payment has been made. b. Show the entry that would be made at the inception of the lease in the governmental activities journal. c. Show the entry that would be made in the debt service fund and governmental activities journal to record the second lease payment. Submit your responses to the requirements above in a 1-2 page document in MS Word. Label each question clearly. For computations, please include them in a table. For written responses, follow the CSU-Global Guide to Writing and APA Requirements. Review the grading rubric, which is found in the Module 2 folder. Reach out to your instructor if you have any questions Module 3 CRITICAL THINKING: (75 Choose one of the following two assignments to complete this week. Do not do both assignments. Identify your assignment choice in the title of your submission. Option 1: Net Position Classifications During 2014, the Town of Falmouth had a number of transactions that affected net position of its town skating rink, which is operated as an enterprise fund. You are provided with the following information for 2014: 1. The beginning net position balances are: net investment in capital assets, $679,800; restricted, $0; and unrestricted, $1,254, Net income for the year was $162, Depreciation expense totaled $54, A piece of equipment with a carrying value of $26,100 was sold for $25, Bonds for $500,000 were issued to construct a concession stand at the rink. At the end of the year, the concession stand was 50 percent complete, and construction work in progress totaled $248, A $15,000 principal payment was made on a capital lease. 7. A new Zamboni ice resurfacing machine was purchased for $250,000. Required: Prepare the net position section of Falmouth s Statement of Net Position based upon the information provided. Submit your responses to the requirements found in the opening paragraph of the assignment in a 1-2 page document in MS Word. Label each question clearly. For computations, please include them in a table. Review the grading rubric, which is found in the Module 3 folder. Reach out to your instructor if you have any questions Required: Option 2: Identification of Fiduciary Funds Following is a list of fund names and descriptions from the comprehensive annual financial reports (CAFRs).

7 Indicate which of the following are fiduciary funds. If not a fiduciary fund, identify which type of fund should be used to account for the activities and explain why that fund is most appropriate. a. Tri-Centennial Fund. Accounts for money raised or contributed by several local area governments and other organizations. The purpose is to ensure availability of resources to celebrate the United States Tri-Centennial in b. Perpetual Care Fund. Accounts for endowed gifts and investment earnings dedicated to perpetual care of the city s cemeteries. c. Poudre River Public Library District Fund. Accounts for cash and investments held by the city on behalf of Poudre River Public Library District. d. School Impact Fee Fund. The city collects school impact fees as part of the cost of building permits issued. Money must be remitted periodically to the local school district, a legally separate government that is not a component unit of the city. e. Cultural Services and Facilities Fund. Accounts for revenues received from the Lincoln Center performing arts facility, the city museum, and General Fund subsidies used to promote cultural activities for city residents. f. Payroll Fund. The city has established a fund in which all payroll deductions are reported. g. Telephone Commissions Fund. The city collects commissions on pay telephones used by jail inmates. The funds are used to provide inmates such benefits as library resources and fitness equipment. h. Block Grant Fund. The state receives federal funds for the homeless which it passes through to local not-for-profit organizations. The only responsibility the state has is to contribute and additional amount of funds (match) to the federal grant. i. Health Benefits Fund. The county has agreed to pay a portion of the health insurance premiums for employees when they retire. Contributions for the benefit are paid into this fund. j. Unclaimed Property Fund. The state has established a fund to account for abandoned and unclaimed property. The property is held in the fund for 10 years. If a legal claimant to the property is not found within the 10-year time period, the property reverts to the state. Submit your responses to the requirements found in the opening paragraph of the assignment in a 1-2 page document in MS Word. Label each question clearly. For computations, please include them in a table. Review the grading rubric, which is found in the Module 3 folder. Reach out to your instructor if you have any questions Module 4 CRITICAL THINKING: (75 Choose one of the following two assignments to complete this week. Do not do both assignments. Identify your assignment choice in the title of your submission. Option 1: Identification of Component Unit Following are descriptions of several relationships between primary governments and other organizations. Required: Using just the information provided, indicate whether you believe the primary government should include the organization as a component unit. Please explain each answer. a. Tesser Municipal Hospital is a not-for-profit corporation, whose governing board is appointed by the Tesser city mayor. The hospital manages its day-to-day operations and sets its own fee schedule. The governing board

8 provides preliminary approval of the hospital budget, with final approval required by the Tesser city council. Bonded debt for the hospital is repaid with the hospital s revenues. b. The Atkins Convention and Visitor s Bureau is a not-for-profit organization funded by a hotel tax levied by the City of Atkins. By city statute, the hotel tax is set by the city and can be used only by the Convention and Visitor s Bureau. c. The Sports Authority of Dawson County is a legally separate organization with its own elected board. It annually presents its budget to the Dawson County Commission for commissioners input and recommendations. The Sports Authority incorporates those recommendations it deems beneficial. d. The County Aviation Authority has issued bonds that are guaranteed by the City of Middle Falls. The Aviation Authority will use its revenues to service the debt. Middle Falls believes that the probability it will have to cover any debt service requirements related to the Aviation Authority bonds is remote. e. Help for Kids is a not-for-profit organization that receives funding from Alice County. Each year Help for Kids is required to submit its audited financial statements and approved budget to Alice County. County commissioners review the financial statements and budgets to ensure that the resources provided by the county are being used in an approved manner. Submit your responses to the requirements found in the opening paragraph of the assignment in a 1-2 page document in MSWord. Label each question clearly. For computations, please include them in a table. Review the grading rubric, which is found in the Module 4 folder. Reach out to your instructor if you have any questions Option 2: Internet Case Citizen-Centric Reporting Although citizens should be concerned about the performance of government, in truth, few citizens typically review the financial information provided by their government. In part, this is due to the complexity of reports such as the comprehensive annual financial reports (CAFR). The Association of Government Accountants (AGA) may have a potential solution to the lack of citizens involvement in assessment of their government. To complete this case, refer to the AGA Web site at Once at the Web site, look for Citizen-Centric Reporting under the Performance & accountability button. Required: 1. Prepare a paper on Citizen-Centric Reporting. In your paper, discuss the purpose of Citizen-Centric Reporting, why you believe such reports are necessary, and what the AGA recommends as the format and content of the report. 2. After reviewing a Citizen-Centric Report found through your research, provide your opinion on whether you believe the format and content of the report you reviewed meet the intended purposes of Citizen-Centric Reports. (Links to government sites with Citizen-Centric reports are available through the AGA Web site.) Submit your responses to the requirements found in the opening paragraph of the assignment in a 1-2 page document in MSWord. Label each question clearly. For computations, please include them in a table. Review the grading rubric, which is found in the Module 4 folder. Reach out to your instructor if you have any questions Module 5 CRITICAL THINKING ASSIGNMENT (75 :

9 Choose one of the following two assignments to complete this week. Do not do both assignments. Identify your assignment choice in the title of your submission. Option 1: GAAS, GAGAS, and the Single Audit A city has approached you concerning the audit of its 2015 financial statements. State law requires the city to have an audit and submit the audited financial report to the state. New elections at the beginning of the fiscal year resulted in a change in the administration of the city. Your firm and the audit firm that conducted the prior year s audit have been asked by the city to submit bids for the current year s audit. Since the new city administration is quite inexperienced, it has not provided you with a formal Request for Proposal (RFP). Therefore, you have the prior year s audit and financial reports, and little more information than the following for fiscal year The new city controller is a certified public accountant who worked for a firm that specialized in government audits. 2. The last three years the city has received a clean audit opinion. 3. The city is receiving grants and other aid from state and federal sources totaling $3,977, The budgeted revenues for the year were $20,980,000 and expenditures were $25,749,000. Approximately 48% of revenues are from property taxes. 5. The city has six governmental funds, three enterprise funds, and an agency fund. 6. It is five months until the end of fiscal year Prior to determining whether you would be interested in submitting a bid for the audit, you decide to use the information you have to draw up a list of factors that would affect the cost of your bid. Provide your list and explain why each item would affect your fee bid. Paper Requirements: Submit your responses to the requirements found above in a 1-2 page document in MS Word. Label each question clearly. For computations, please include them in a table. Review the grading rubric, which is found in the Module 5 folder. Reach out to your instructor if you have any questions Option 2: Allowable Costs under a Federal Grant Imagine that you work for an auditing firm performing a local government audit. The government has received federal grant funding. The audit manager on the engagement has asked you to perform the necessary research, reviewing the following costs charged to the federal grant in order to determine whether or not they are allowable. Those costs include: 1) travel to a conference overseas, the primary purpose of which is the dissemination of technical information 2) employee recreational activities and counseling services 3) charges for investment counsel incurred to enhance income from investments 4) lobbying activities undertaken to obtain a grant 5) depreciation 6) insurance Required: a. What document will you research to determine whether the costs can be allowed? b. Write a short memo to document your opinion about whether these costs would be allowable indirect costs to be recovered in part by federal grants. If certain limitations or specifications must be met for allow-ability, note them in your memo.

10 Submit your responses to the requirements above in a 1-2 page document in MS Word. Label each question clearly. For computations, please include them in a table. Review the grading rubric, which is found in the Module 5 folder. Reach out to your instructor if you have any questions Module 6 CRITICAL THINKING ASSIGNMENT (75 Choose one of the following two assignments to complete this week. Do not do both assignments. Identify your assignment choice in the title of your submission. Option 1: Joint Activities with a Fundraising Appeal Consider the following scenarios relating to activities that include a fundraising appeal: 1. The Green Group s mission is to protect the environment by increasing the portion of waste recycled by the public. The group conducts a door-to-door canvass of communities that recycle a low portion of their waste. The canvassers share their knowledge about the environmental problems caused by not recycling with households, asking them to change their recycling habits. The canvassers also ask for charitable contributions to continue this work, although the canvassers have not participated in fundraising activities before. 2. Central University s mission is to educate students in various academic pursuits. The political science department holds a special lecture series in which prominent world leaders speak about current events. Admission is priced at $250, which is above the $50 fair value of other lectures on campus, resulting in a $200 contribution. Invitations are sent to previous attendees and donors who have contributed significant amounts in the past. 3. The mission of Kids Camp is to provide summer camps for economically disadvantaged youths. It conducts a doorto-door solicitation campaign for camp programs by sending volunteers to homes in upper-class neighborhoods. The volunteers explain the camp s programs and distribute leaflets explaining the organization s mission. Solicitors say, Although your own children most likely are not eligible to attend this camp, we ask for your financial support so that children less fortunate can have this summer camp experience. Required: Determine for each scenario whether its purpose, audience, and content meet the criteria described in Chapter 13 of the AICPA Audit and Accounting Guide, Not-for-Profit Organizations so that the joint costs can be allocated between programs and support services. Explain your reasoning. Submit your responses to the requirements above in a 1-2 page document in MS Word. Label each question clearly. For computations, please include them in a table. Review the grading rubric, which is found in the Module 6 folder. Reach out to your instructor if you have any questions Option 2: Intermediate Sanctions

11 For each of the following independent situations, determine whether the organization is at risk for receiving intermediate sanctions from the Internal Revenue Service for conferring excess economic benefits on disqualified persons. If so, indicate how the organization can minimize those sanctions. 1. Jane is president of an IRC Sec. 501(c)(3) public charity and personally owns a building that she has decided to sell to the not-for-profit organization. The appraisal value is $200,000, and the agreed-upon selling price is $250, A large public charity is very happy with its president s performance and offers him a new compensation agreement for the coming year. He will receive a base salary plus a percentage of the increase in gross revenues of the organization with no limitation as to the maximum amount. 3. Ann is a member and director of a symphony association. She receives 20 free admission tickets as a member of the organization. 4. The local chapter of the United Way recently hired Joe Curtis as its new president at a salary of $200,000. The outgoing president was paid $150,000. Mr. Curtis had other offers that ranged from $95,000 to $190,000. The minutes of the meeting reflected that he was exceptionally talented and would not have accepted the position for a lower salary. Required: Submit your responses to the requirements found in the opening paragraph of the assignment in a 1-2 page document in MS Word. Label each question clearly. For computations, please include them in a table. Review the grading rubric, which is found in the Module 6 folder. Reach out to your instructor if you have any questions Module 8 PORTFOLIO (350 : Option 1: Government and Nonprofit Accounting Portfolio #1 Your Portfolio Project will provide specific answers to questions that follow. Apply what you have learned in this course to your answers to these questions. Scenario A The nature of a transaction gives a clue as to the type of fund in which it should be recorded. Kendal County engaged in the following transactions. For each, do the following: Prepare an appropriate journal entry. Indicate the type of fund in which it would most likely be recorded. Response: 1. It levied and collected $1 million in taxes dedicated to the repayment of outstanding general obligation bonds. 2. It billed sponsors of a charity bicycle ride $5,000 for providing police patrols during the ride. 3. It recognized $60,000 of cash dividends on investments dedicated to the support of a county arts center. 4. It recognized $70,000 of cash dividends on investments dedicated to scholarships for needy county residents. 5. It incurred $6 million in construction costs to complete a new county jail. The new jail was funded entirely with the proceeds of long-term bonds. 6. It transferred $400,000 of unrestricted funds to an appropriate fund to be invested and eventually used to repay the principal on the long-term jail bonds (entries in two funds required). 7. It recognized depreciation of $100,000 on equipment in a vehicle repair center that services all county departments that have motor vehicles. 8. It collected $30,000 in parking fees at the county owned garage.

12 9. It issued $8 million in bonds to improve the city-owned electric utility. 10. It distributed $3 million in taxes collected on behalf of school districts located within the country. Scenario B Generally accepted modified accrual accounting practices pertaining to inventories may not fulfill the objectives of financial reporting. The following is an excerpt from a note to the financial statements of the city of Dallas (dates changed): The city prepares its annual appropriated general fund, debt service fund, and proprietary operating funds budgets on a basis (budget basis) which differs from generally accepted accounting principles (GAAP basis). The major differences between the budget and GAAP bases are that encumbrances are recorded as the equivalent of expenditures (budget) rather than a commitment of fund balance (GAAP) in the governmental funds. The city accounts for inventories on the purchases basis. One of the city s departments, which is accounted for in the general fund, budgeted $195,000 in supplies expenditures for fiscal It began the 2015 fiscal year with $30,000 of supplies on hand. It also had $12,000 of supplies on order. During the year it ordered an additional $180,000 of supplies, received (and paid for in cash) $185,000 of supplies, and consumed $178,000 of supplies. Response: 1. Prepare all journal entries, consistent with GAAP, including budgetary and encumbrance entries that the department should make in Indicate the accounts and amounts related to supplies that the city would report on its year-end statement of revenues, expenditures, and changes in fund balance and balance sheet. 3. By how much did the department overspend or underspend its supplies budget (on a budget basis)? 4. Comment on the extent to which the city s statement provides a basis to: a. Assess the true economic costs associated with supplies b. Determine whether the city adhered to budgetary spending mandates 5. Suppose that in the last quarter of the year, department officials realized that the department was about to overspend its supplies budget. They therefore ceased placing new orders for supplies. However, they imposed no restrictions on the use of supplies and thereby allowed the supplies inventory to decline to near zero. a. What impact would these cost-cutting measures have on supplies expenditures as reported in an actual-to-budget comparison (on a budget basis)? b. What impact would the year-end measures have on reported supplies expenditures (per GAAP)? Would your response be different if the city accounted for supplies on the consumption basis? Scenario C Investment gains and losses may have to be accounted for differently in nonexpendable than in expendable funds. The McCracken County Humane Society (MCHS), which is part of a county s reporting entity, established a permanent fund to provide support for its pet neutering program. As of the start of the year, the fund had a balance of $600,000, composed of both cash and marketable securities. The program itself, which is accounted for in a special revenue fund, is funded by both direct contributions and the income from the permanent fund. At the start of the year, the special revenue fund had assets (all investments) of $26,000. The following transactions and events occurred in a recent year. The MCHS conducted a Walk Your Pet Day fundraising drive. The event raised $120,000, of which $20,000 was in pledges expected to be collected shortly after year-end. The society acquired food and medicine at a cost of $60,000 (cash). During the year, it used $30,000 of these supplies. The society accounts for supplies on a consumption basis. It incurred other operating costs (all paid in cash) of $85,000. The society earned interest of $45,000 on investments accounted for in the permanent fund.

13 During the year, the market value of the investments held by the permanent fund increased by $30,000. Per the terms of the agreement establishing the endowment, all capital gains, both realized and unrealized, must be added to principal. During the year, the value of investments held by the special revenue fund increased by $3,000. The society transferred cash to the special revenue fund in the amount of the earnings of the permanent fund. Response: 1. Prepare journal entries to record the events and transactions. Be sure you indicate the fund in which they would be recorded. 2. In your opinion, should the unrealized gains on the investments held in the special revenue fund be considered expendable or nonexpendable? Explain. 3. How would the transfer from the permanent fund to the special revenue fund be reported in the government-wide statements? Review the Portfolio Project grading rubric, which is found in the Module 8 folder. Your final paper must be formatted per the CSU-Global Guide to Writing and APA Requirements. Include a title page. Submit your final case study through the Week 8 folder. Reach out to your instructor if you have any questions or concerns Option 2: Government and Nonprofit Accounting Your Portfolio Project will provide specific answers to the questions that follow. Apply what you have learned in this course to your answers to these questions. Scenario A Is fund accounting less appropriate for businesses than for not-for-profits? A newly formed not-for-profit advocacy organization, the Center for Participatory Democracy, requests your advice on setting up its financial accounting and reporting system. Meeting with the director, you learn the following: Member dues can be expected to account for approximately 80% of the organization s revenues. The organization plans to seek grants from private foundations to carry out research projects pertaining to various political causes. The center has already received a gift of $100,000. The donor specified that the funds be placed in investment-grade securities and that only the income is to be used to support center activities. The center leases office space but owns its furniture, fixtures, and office equipment. The center has taken out a fiveyear term loan of $100,000. Although the loan is not due until its term expires, the organization intends to set aside $17,740 each year with the prospect that, properly invested, these payments will provide the necessary $100,000. Response: 1. Do you believe that the center should establish its accounting system on a fund basis? If so, why? 2. Assume you answered yes to Question 1. What specific fund types do you think the center should set up? Explain. 3. Alternatively, suppose the center was a privately owned, profit-oriented consulting firm that provided political advice to its clients. The firm would charge its clients a fixed fee each month in return for which they would receive periodic newsletters and the opportunity to meet with the firms partners. In addition, the firm expects to enter into contracts to carry out specific research projects for its clients. Would you now recommend that the firm establish its accounting system on a fund basis (assuming, of course, that it would prepare its external financial reports in accordance with generally accepted accounting principles applicable to businesses)? Explain. Scenario B Can a government sell assets to itself to generate revenue? A city is having fiscal problems in It expects to report a deficit in its general fund, the only fund that is statutorily required to be balanced. To eliminate the anticipated deficit the city opts to sell its city hall to itself for $5 million. The

14 city establishes a capital asset financing agency. The agency is a separate legal entity but will have to be reported as a component unit. As such, it will be accounted for in a fund other than the general fund. The city structures the transaction as follows: The financing agency pays the city $5 million in 2015 in exchange for ownership of city hall. The city hall has been carried as general capital asset. The agency acquires the necessary cash by issuing 20-year, 6% notes. The notes will be repaid in 20 annual installments of $435,920. The notes are guaranteed by the city at large. Hence, they are ultimately a liability payable from the general fund. The agency leases the city hall back to the city at large. Lease payments are to be paid out of general fund resources. Response: 1. Prepare journal entries in the general fund to record the sale and concurrent leaseback of the city hall. The leaseback satisfies the criteria of a capital lease transaction. 2. Prepare journal entries in the general fund to record the first lease payment, which was made in Will the transaction, in fact, reduce the 2015 anticipated fund deficit? Briefly justify the accounting principles that underlie this type of accounting. Scenario C Nonexpendable fiduciary funds should be accounted for on a full accrual basis. The Nebraska Institute of Science (NIS) pools all of its endowment funds so that it can obtain the benefits of a large and diverse investment portfolio. The institute recently acquired a commercial office building as an investment property. The cost was $12 million and its economic life was expected to be 15 years. Upon acquiring the building, NIS signed a 15-year lease with a tenant. The annual rent was $1.3 million, with the tenant responsible for all maintenance and other operating costs. Response: 1. Suppose that the NIS did not charge depreciation and distributed to expendable funds the entire income earned on the office building. a. What would be the total amount distributed over the 15-year life of the building? b. Assuming that NIS s estimate of economic life was correct, what would likely be the market value of the building when the lease expired? Would NIS have had available any cash for the acquisition of other assets that would compensate for the decline in value of the building? 2. Suppose NIS charged depreciation and distributed to expendable funds the entire income earned on the office building. a. What would be the total amount distributed over the 15-year life of the building? b. Assuming that NIS s estimate of economic life was correct, what would likely be the market value of the building when the lease expired? c. Would NIS have had available any cash for the acquisition of other assets that would compensate for the decline in value of the building? Review the Portfolio Project grading rubric, which is found in the Module 8 folder. Your final paper must be formatted per the CSU-Global Guide to Writing and APA Requirements. Include a title page. Submit your final case study through the Week 8 folder. Reach out to your instructor if you have any questions or concerns Course Policies Course Grading Grading Scale and Policies A

15 20% Discussion Participation 45% Critical Thinking Assignments 35% Final Portfolio Paper 0% Live Classroom A B B B C C D F 59.9 or below In-Classroom Policies For information on late work and incomplete grade policies, please refer to our In-Classroom Student Policies and Guidelines or the Academic Catalog for comprehensive documentation of CSU-Global institutional policies. Academic Integrity Students must assume responsibility for maintaining honesty in all work submitted for credit and in any other work designated by the instructor of the course. Academic dishonesty includes cheating, fabrication, facilitating academic dishonesty, plagiarism, reusing /re-purposing your own work (see CSU-Global Guide to Writing and APA Requirements for percentage of repurposed work that can be used in an assignment), unauthorized possession of academic materials, and unauthorized collaboration. The CSU-Global Library provides information on how students can avoid plagiarism by understanding what it is and how to use the Library and Internet resources. Citing Sources with APA Style All students are expected to follow the CSU-Global Guide to Writing and APA Requirements when citing in APA (based on the APA Style Manual, 6th edition) for all assignments. For details on CSU-Global APA style, please review the APA resources within the CSU-Global Library under the APA Guide & Resources link. A link to this document should also be provided within most assignment descriptions in your course. Disability Services Statement CSU Global is committed to providing reasonable accommodations for all persons with disabilities. Any student with a documented disability requesting academic accommodations should contact the Disability Resource Coordinator at and/or ada@csuglobal.edu for additional information to coordinate reasonable accommodations for students with documented disabilities. Netiquette Respect the diversity of opinions among the instructor and classmates and engage with them in a courteous, respectful, and professional manner. All posts and classroom communication must be conducted in accordance with the student code of conduct. Think before you push the Send button. Did you say just what you meant? How will the person on the other end read the words? Maintain an environment free of harassment, stalking, threats, abuse, insults or humiliation toward the instructor and classmates. This includes, but is not limited to, demeaning written or oral comments of an ethnic, religious, age, disability, sexist (or sexual orientation), or racist nature; and the unwanted sexual advances or intimidations by , or on discussion boards and other postings within or connected to the online classroom. If you have concerns about something that has been said, please let your instructor know.