Introduction to Governmental and Not-for-Profit Accounting, 7e

Transcription

1 Introduction to Governmental and Not-for-Profit Accounting, 7e Chapter 2: The Use of Funds in Governmental Accounting Part 2 Copyright 2013 Pearson Education, Inc. publishing as Prentice Hall 2-*

2 Fund Accounting

3 Fund Accounting

4 Fund Accounting

5 A- Governmental-Type Funds

6 A- Governmental-Type Funds : Financial Statements Fund level: Balance Sheet Statement of Revenues, Expenditures, and Changes in Fund Balance a.k.a. Operating Statement

7 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

8 Governmental Type Funds Grouping

9 Governmental Type Funds Grouping

10 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

11 Governmental Funds: Inflows from: A- General Fund Taxes on real property, sales, and personal or corporate income Intergovernmental grants Licenses, fees, forfeitures, and fines الغرامات المصادرات

12 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.

13 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

14 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

15 Governmental Funds: 3-Special Revenue Funds Accounting same as general fund Governmental entity May have more than one special revenue fund

16 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

17 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

18 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

19 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

20 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

21 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

22 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

23 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

24 Proprietary Funds: 1-Enterprise Funds 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

25 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)

26

27

28

29 Proprietary Funds: 2-Internal Service Funds 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

30 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

31 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

32 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

33 C-Fiduciary Funds

34 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

35 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

36

37

38 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.