1. Government and Non-Profit Accounting

2. Financial Reporting and Control for State and Local Governments
WEEK THREE
Financial Reporting and Control for State and Local Governments

3. Learning Objectives After Week 3, you should be able to:
Assess and prepare governmental fund financial statements and government-wide financial statements and understand how to reconcile the two.
Evaluate the components of a comprehensive annual financial report (CAFR).
Perform key financial analysis of an entities financial position, financial condition, and economic condition.
Examine issues related to budgeting and control.

4. Governmental Financial Reporting
A CAFR is the government’s official annual report prepared and published as a matter of public record.
Introductory Section
This section includes:
Table of contents
Letter of transmittal
Other material deemed appropriate by management

5. Governmental Financial Reporting (Cont.)
Financial Section
This section includes:
Auditor’s report
Management’s discussion and analysis (MD&A),
Basic financial statements
Government-wide financial statements
Fund financial statements
Notes to the financial statements
Budgetary comparison schedule
Combining statements and individual fund statements and schedules

6. Governmental Financial Reporting (Cont.)
Statistical Sections
There are five categories defined by the GASB that should be included in the statistical section. The most recent 10 years of data should be presented for each.
Financial trends information
Revenue capacity information
Debt capacity information
Demographic and economic information
Operating information

7. Select Financial Ratios for Governmental Funds
Revenues Measures
Expenditures Measures
Operating Position Measures
Debt Indicators
Unfunded Liability Measures
Capital Plant Indicators
Financial Position Ratios
Financial Performance Ratios
Financial Capability Ratios

8. Budgeting in Governments
Budgeting in government is not just a prudent management practice, it’s the law!
Budgeting in government can be seen as
A prioritization of program and service goals
An expression of political values
A plan of financial operation
A way to facilitate compliance with laws
A way to communicate performance effectiveness

9. Reporting Performance Information
GASB offers 16 suggested criteria within 3 categories for reporting on service efforts and accomplishments.
Category I: The External Report on Performance Information
Category II: What Performance Information to Report
Category III: Communication of Performance Information

10. Questions?