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ACCT 407 1 Accounting 4070 Chapter 2. ACCT 407 2 1. Types of Gov’t Activities Governmental Business-type Fiduciary.

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Presentation on theme: "ACCT 407 1 Accounting 4070 Chapter 2. ACCT 407 2 1. Types of Gov’t Activities Governmental Business-type Fiduciary."— Presentation transcript:

1 ACCT 407 1 Accounting 4070 Chapter 2

2 ACCT 407 2 1. Types of Gov’t Activities Governmental Business-type Fiduciary

3 ACCT 407 3 2. Reporting Entity Primary Government and Component Units – primary government - state, local, special – component units – legally separate organization

4 ACCT 407 4 2. Reporting Entity Type of presentation – discrete presentation – blending

5 ACCT 407 5 3. Required Financial Statements Government-wide financial statements Fund financial statements

6 ACCT 407 6 3. Required Financial Statements Government-wide financial statements – total economic resources measurement focus – accrual basis of accounting – use two columns (governmental activities and business-type activities) – Internal Service Fund - report in the governmental activities column – fiduciary activities - not reported

7 ACCT 407 7 3. Required Financial Statements Fund financial statements – two governmental fund financial statements balance sheet; statement of revenues, expenditures, and changes in fund balances – three proprietary fund financial statements statement of net assets; statement of revenues, expenses, and changes in fund net assets; statement of cash flows – two fiduciary fund financial statements statement of fiduciary net assets; statement of changes in fiduciary net assets

8 ACCT 407 8 4. Major Funds Reported on fund financial statements – separate column for each major governmental fund – nonmajor governmental funds - combined in single column Definition of “major funds” – Prob 2-5

9 ACCT 407 9 5. Basic Concepts of Funds Fund – a fiscal and accounting entity with a self-balancing set of books; segregating financial resources, liabilities payable from fund resources, and fund equities to attain objectives specified by regulations, restrictions, or limitations – i.e. an entity with its own set of books

10 ACCT 407 10 5. Basic Concepts of Funds Budgetary accounting – funds controlled by system of budgets – estimated revenues and expenditures – legally approved – budgets entered into budgetary accounts – actual expenditures recorded in proprietary accounts

11 ACCT 407 11 6. Types of Funds Governmental Funds (5 types) – General Fund; Special Revenue Funds; Capital Projects Funds; Debt Service Funds; Permanent Funds Proprietary Funds (2 types) – Internal Service Funds; Enterprise Funds Fiduciary Funds (4 types) – Agency Funds; Investment Trust Funds; Private-purpose Trust Funds; Pension Trust Funds

12 ACCT 407 12 7. Government Funds General fund – one per government – most of general government operating activities accounted for in GF Special Revenue Funds (SRF) – financial resources earmarked for a specified operating purpose – accounting and budgeting usually identical to GF

13 ACCT 407 13 7. Government Funds Capital Projects Funds (CPF) – financial resources segregated for construction or acquisition of long-lived capital assets Debt Service Funds (DSF) – financial resources segregated to pay principal or interest on long-term general liabilities

14 ACCT 407 14 7. Government Funds Permanent Funds – account for resources provided by trust in which the earnings but not the principal must be used for public purposes

15 ACCT 407 15 7. Government Funds Governmental Funds Common Characteristics – use current financial resources measurement focus – use modified accrual basis of accounting – account for expenditures of appropriations (not expenses) – capital assets and long-term liabilities are not accounted for within governmental funds

16 ACCT 407 16 8. Proprietary Funds Internal service funds (ISF) – account for activities in which goods or services are provided to other departments of the same government or to other governments for a charge – examples: central stores, central computing, motor pools, and printing – reported as governmental activities in government- wide statements because primarily benefit the government.

17 ACCT 407 17 8. Proprietary Funds Enterprise Funds – account for activities in which goods or services are provided to the general public for a charge – examples: electric and water utilities, airports, parking garages, transportation systems, and liquor stores – reported as business-type activities in government-wide financial statements

18 ACCT 407 18 8. Proprietary Funds Proprietary Funds Common Characteristics – accounting and reporting essentially same as for-profit entities full accrual accounting – capital assets and long-term liabilities accounted for in the funds – depreciation expense reported in the funds – reports expenses not expenditures

19 ACCT 407 19 9. Fiduciary Funds Agency Funds (often several) – account for financial resources in which the government is acting in an agency capacity – accounting is simple; assets = liabilities – no revenue and expense accounts used – no fund equity account – examples: tax agency funds, special assessment debt service funds, and pass- through agency funds

20 ACCT 407 20 9. Fiduciary Funds Trust Funds – Investment trust funds – Private-purpose trust funds – Pension trust funds

21 ACCT 407 21 10. Capital Assets General capital assets are distinguished from capital assets of proprietary and fiduciary funds – general capital assets reported in government-wide financial statements – not reported in fund financial statements

22 ACCT 407 22 10. Capital Assets Proprietary capital assets – reported in both government-wide and fund financial statements Fiduciary capital assets – reported only in the statement of fiduciary net assets

23 ACCT 407 23 10. Capital Assets Accounted for at historical cost, or estimated cost if actual cost is unknown Donated assets accounted for at estimated fair value at time of gift Capital assets depreciated over estimated useful lives, except inexhaustible assets such as land

24 ACCT 407 24 10. Capital Assets Depreciation expense for general capital assets – reported only in the government-wide financial statements Proprietary and fiduciary capital assets depreciation – reported in the fund financial statements and government-wide statements

25 ACCT 407 25 10. Capital Assets Infrastructure assets highways, streets, sidewalks, storm sewers, street lights, etc. GASB 34 requires reporting (and depreciating) in government-wide statements “modified approach” may be used for certain infrastructure assets instead of depreciation

26 ACCT 407 26 11. Long-term Liabilities General long-term liabilities are distinguished from fund long-term liabilities – general long-term liabilities reported in government-wide statements – general long-term liabilities not reported in the fund financial statements

27 ACCT 407 27 11. Long-term Liabilities Long-term liabilities to be repaid from proprietary funds – reported in the proprietary fund statements and government-wide statements Long-term liabilities to be repaid from fiduciary funds – reported in the fiduciary fund statements and government-wide statements

28 ACCT 407 28 12. Measurement Focus – Basis of Accounting

29 ACCT 407 29 13. GASB 34 in the News

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