• Author / Uploaded
• cpacfa

• Categories
• Contabilidad de fondos
• Gastos
• Ingresos
• Ganancias
• Presupuestos y Presupuestos

Citation preview

FAR - Notes Chapter 8 http://www.cpa-cfa.org

Governmental Accounting Overview Dual objectives – operational accountability and fiscal accountability Purpose – Fund accounting enables service and mission driven organizations to easily monitor and report compliance with spending purposes (restrictions) and spending limits (budgets) FASB sets standards for everything (including not-for-profit) except for government entities The Government Accounting Standards Board (GASB) sets standards for government entities The Government Accountability Office (GAO) governs audits under the federal “Single Audit Act” A fund – sum of money segregated for the purpose of carrying on a specific activity (fire or police department) or attaining certain objectives. Each fund is a self balancing set of accounts GASB 34 established a fund structure for governments using fund accounting to provide specific fund financial statements. Reporting requirements include fund bases and government wide presentations: there are three generic categories • Governmental funds • Proprietary funds • Fiduciary funds Government wide presentation = consolidated F/S Major fund F/S’s = like segment reporting, only major funds presented, non major funds presented in aggregate - must reconcile between the two Governmental Funds – no profit motive • Modified accrual accounting (I/S) - revenue recognized when measurable and available [means collectable within 60 days after year end] - Expenditures – recorded when liability is incurred • Current financial resources measurement focus (B/S) - only current asses and current liabilities included Governmental fund types include G General fund R Special Revenue funds and S Debt Service funds P Capital Project funds P Permanent funds GRaSPP – current only in F/S B/S: Current assets – current liabilites = fund balance Statement of Rev, expenditures and changes in fund balance (I/S): Rev – expenditures + other financing sources = net change in fund balance Proprietary Funds – treat like a customer • Full accrual accounting (I/S) - revenue is recognized when earned - expenses recognized when incurred • Economic resources measurement focus (B/S) 1

FAR - Notes Chapter 8 http://www.cpa-cfa.org

- all assets and liab included on B/S. Net assets are reported as restricted, unrestricted and invested in property S E

Internal Service funds (maintenance department) Enterprise funds (utilities, airports)

SE- carry everything (fixed assets and LT debt) Statement of net assets: All assets – all liabilities = net assets Statement of Rev, expenses, and changes in fund net assets Operating rev – operating expenses + non operating revenue – non operating exp = change in net assets Fiduciary Funds – trust accounts • Full accrual accounting - revenue is recognized when earned - expenses recognized when incurred • Economic resources measurement focus (B/S) - All assets and liab included on B/S. Net assets are reported as restricted, unrestricted and invested in property P Pension trust funds A Agency trust funds P Private purpose trust funds I Investment trust funds PAPI- carry everything (fixed assets and LT debt) Statement of fiduciary net assets: All assets – all liabilities = net assets Statement of changes in fiduciary net assets Additions – deductions = change in net assets B/S – measurement focus Current financial resources

Modified Accrual Accounting– GRaSPP funds • • • •

No profit motive  no I/S  no matching principal Budgetary accounting is emphasized in order to control spending Activity emphasizes cash flow of current financial resources Encumbrance – when things are bought on credit, they encumber or freeze the necessary fund to pay for the purchase later

Under modified accrual GRaSPP funds will book BAE and close BAE at end of year for same amount Budgetary accounting • Budgetary accounts posted only twice a year; beginning and end • Budgetary accounts are “estimated accounts” that are the opposite from “real” or “actual” accounts Revenue sources – taxes (income, sales, property, real estate) and fines & penalties Other financing sources – debt proceeds (bonds and notes) and interfund transfers Estimated revenue control Estimated fund transfer in

xx xx 2

FAR - Notes Chapter 8 http://www.cpa-cfa.org

Budgetary fund balance xx (negative/deficit) Appropriations control xx Estimated fund transfer out xx Budgetary fund balance xx (positive/surplus) Debt a deficit, credit a surplus At the end of the year reverse all the entries and close the accounts with the same amounts Activity • Emphasis on the flow of current financial resources not profit and loss; so no matching principle • GRaSPP revenues are recorded when measurable and available (when billed or recorded) • No difference between operating and capital expenditures • As soon as there is a liability expense it 2 alternatives for expenditure recognition • Purchase method - Expenditure current assets when purchased - Reverse items not used during period (still on hand) • Consumption Method - Set up as current asset when purchased - Expenditure items as consumed (by physical count) Purchase method

Consumption method

Buying item

Use of item

On hand at year end

In transfers between funds, transfers out are not an expenditures Classification of governmental expenditures Function/Program  Organizational Unit  Activity  Character  Object classes Ex: Public safety  Police department  Highway safety or drug enforcement Character - Current expenditures – period expense - Fixed asset – capital outlays - Debt service – pay off LT debt - Transfers – Intergovernmental Object classes – chart of accounts Fixed assets are no expected to generate revenue, and therefore, is not capitalized on the funds books. Instead its considered and expenditure. The fixed assets are reported on the government wide financial statements 3

FAR - Notes Chapter 8 http://www.cpa-cfa.org

GRaSPP fund buys a police car Expenditure xx Vouchers payable (or cash) xx Long term debt is not carried on the funds books. The proceeds are reported as other financing sources on the statement of rev, expenditure and changes in fund balance Cash xx Other financing sources xx Encumbrances • Reserve funds for purchase orders • Helps monitor the degree to which appropriations have been used • If an encumbrance (purchase order) is still outstanding at yr end and appropriations do not lapse, reverse the JE and establish a fund balance reserved for encumbrance • Outstanding encumbrances at year end will be carried forward as a reserve fun balance with a corresponding reduction of unreserved fund balance F8-24, 26-27 examples

Governmental Funds GRaSPP • Modified accrual accounting • Current financial resources measurement focus General Fund • Created at the beginning of a governmental unit and exists throughout its life. The general funds accounts for general activities not accounted for by any other fund Revenue sources – taxes, fees and fines by public safety and regulation, intergovernmental, charges for services, investment earnings Expenditure – general government, public safety, culture and recreation (libraries and parks) Special Revenue Fund • Accounts for revenues and expenditures that are legally restricted for specific purposes. Life of the fund may be limited Expendable trusts – funding whose principal and income may be spent and depleted in the course of their designated operations - accounted for as a special revenue fund (GASB 34) When a grant is received and the government determines and monitors eligibility then account for as special revenue fund - Monitoring (determines who gets it) – special revenue fund - Nonmonitoring (govt tells you who to give it to, food stamps) – agency trust fund Debt Service Fund • Created to account for the accumulation of resources (cash and investments) and the pay debt interest and principal - pays off the debt for GRaSPP funds, not SE-PAPI funds, they carry and pay their own debt Any income from the investment of resources is recorded as revenue JE to record interest or principal payment 4

FAR - Notes Chapter 8 http://www.cpa-cfa.org

Expenditures xx Cash xx Principal and interest expenditures should be recorded when they are legally payable per the bond agreement No encumbrance accounts uses so no beginning or ending balances Capital Projects Fund • Established for the construction, purchase or leasing of significant fixed assets - Life of the capital projects fund is limited to between 1-3 years Revenue sources – investment earnings, tax revenues, capital grants, transfers (reported as other financing sources), bond issue proceeds (reported as other financing sources) Unrestricted government grant is booked immediately Cash xx Revenue xx Restricted government grants are deferred Cash xx Deferred Rev xx Recognize revenue (JE 2) when grant is spent (JE 1) Expenditure xx Vouchers payable xx Deferred Revenue Revenue

xx xx

Special assessments – taxes or fees leveied against property owners who will directly benefit from the project (sidewalks, streetlights) When the governmental unit is primarily or potentially liable use capital projects fund and report assets and liabilities on government wide financials - so project is being built in town x; town x manages/runs the project When the governmental unit in not primarily or potentially liable use agency fund and do not report assets and liabilities on the government wide financials - so project is being built in town x and state runs the project Bond liability balance is not carried/recorded in the capital projects fund, report on the govt wide financials Outstanding encumbrances at year end should be carried forward as a reserve of fund balance with a corresponding reduction of unreserved fund balance JE to record outstanding encumbrances Unreserved fund balance xx Fund balance reserved for encumbrances xx Permanent Fund • Used to report resources that are legally restricted to the extent that only earnings and not the principal • No encumbrance account ( so debt service fund and permanent funds do not record encumbrances) Goes into special revenue fund if you can spend principal and interest for the public benefit Goes into permanent fund if you can spend interest only for the public benefit 5

FAR - Notes Chapter 8 http://www.cpa-cfa.org

Proprietary Funds SE Use accrual accounting • Record LT liabilities and Fixed assets (therefore record depreciation) • Do not use budgetary or encumbrance accounts • Statement of cash flows required Internal Service Fund – customer not citizen • Established to finance and account for services and supplies provided exclusively to other departments Revenue sources – restricted grant revenue (recognize when spent), operating revenues (recognize when earned) • Net assets are classified into three categories - Unrestricted - Restricted - Invested capital, net of debt • Shown with governmental funds in government wide financials GRaSPP SE PAPI Shown together in government wide financials Shown separately in government wide financials PAPI is not shown in government wide financials Enterprise Funds • Used to account for operations that are financed and operated in a manner similar to private businesses 2 main revenue classifications - Operating revenues (charges for services and miscellaneous) - Non-operating revenues (shared revenue [collected by state and shared with local] and interest income) Same for classification for expenses • Net assets are classified into three categories - Unrestricted - Restricted - Invested capital, net of debt Municipal landfills governed by GASB 18 – need to record all the costs associated with the closure and care • Record cost of equipment and facilities constructed on the landfill closure date • Cost of monitoring • Cost of final cover • The estimate should be adjusted annually

Fiduciary Funds PAPI Use full accrual accounting Statement of cash flows not required Pensions Trusts Revenue sources - Employer and employee contributions Cash xx 6

FAR - Notes Chapter 8 http://www.cpa-cfa.org

Additions: employer contribution – restricted xx - Other fund transfer coming out of a GRaSPP fund (JE 1), coming out of a SE-PAPI fund (JE 2) Expenditures xx Cash xx Expense xx Cash xx Expenses – usually are benefit payments, refunds and admin expenses Investments held at fair value (GASB 31) Agency Trust Funds – just the mailman • Collects cash to be held temporarily and disbursed later to an authorized recipient • Is only a conduit fund, no monitoring or determining eligibility (if not use special revenue fund) • No income statement • No net assets, on the statement of fiduciary net assets its current assets = current liabilities Private Purpose Funds • Designated for reporting all other trust arrangements which principal and income benefit - Specific individuals - Private organizations - Other governments • Capital gains/losses are recorded as adjustments to fund principal and not to income Investment Trust Funds • Sponsors one or more external investment pools, reports each investment pool as a separate investment fund • Statement of fiduciary net assets • Statement of changes in Fiduciary net assets

7