ACCT 4071

Accounting 4070

Chapter 2

ACCT 4072

1. Types of Gov’t Activities

Governmental Business-type Fiduciary

ACCT 4073

2. Reporting Entity

Primary Government and Component Units– primary government - state, local, special– component units – legally separate

organization

ACCT 4074

2. Reporting Entity

Type of presentation– discrete presentation– blending

ACCT 4075

3. Required Financial Statements

Government-wide financial statementsFund financial statements

ACCT 4076

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

ACCT 4077

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

ACCT 4078

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

ACCT 4079

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

ACCT 40710

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

ACCT 40711

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

ACCT 40712

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

ACCT 40713

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

ACCT 40714

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

ACCT 40715

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

ACCT 40716

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.

ACCT 40717

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

ACCT 40718

8. Proprietary Funds

Proprietary Funds Common Characteristics– accounting and reporting essentially same as

for-profit entitiesfull accrual accounting

– capital assets and long-term liabilities accounted for in the funds

– depreciation expense reported in the funds– reports expenses not expenditures

ACCT 40719

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

ACCT 40720

9. Fiduciary Funds

Trust Funds– Investment trust funds– Private-purpose trust funds– Pension trust funds

ACCT 40721

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

ACCT 40722

10. Capital Assets

Proprietary capital assets– reported in both government-wide and fund

financial statementsFiduciary capital assets

– reported only in the statement of fiduciary net assets

ACCT 40723

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

ACCT 40724

10. Capital Assets

Depreciation expense for general capital assets– reported only in the government-wide

financial statementsProprietary and fiduciary capital assets

depreciation– reported in the fund financial statements

and government-wide statements

ACCT 40725

10. Capital Assets

Infrastructure assetshighways, 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

ACCT 40726

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

ACCT 40727

11. Long-term Liabilities

Long-term liabilities to be repaid from proprietary funds– reported in the proprietary fund statements

and government-wide statementsLong-term liabilities to be repaid from

fiduciary funds– reported in the fiduciary fund statements and

government-wide statements

ACCT 40728

12. Measurement Focus – Basis of Accounting

Measurement Focus

Basis of Accounting

Government-wide statements

Economic resources

Accrual

Governmental fund statements

Current financial resources

Modified accrual

Proprietary fund statements

Economic resources

Accrual

Fiduciary fund statements

Economic resources

Accrual

ACCT 40729

13. GASB 34 in the News