preparing goverment wide financial statements
TRANSCRIPT
Statement of Activities
Statement of Net Position
June 2015
Statement of Activities
Statement of Net Position
June 2015
GOVERNMENT WIDEFINANCIAL STATEMENTS
Accrual
ERMA
GOVERNMENT WIDEFINANCIAL STATEMENTS
Accrual
ERMA Government wide financialstatements are prepared on
the economic resourcesmeasurement focus and the
accrual basis ofaccounting.
RECONCILE
RECONCILEReconciliations are required to show how yougot from the governmental statements to thegovernment wide statements. • You need one reconciliation that shows howyou got from fund balance to net position(equivalent of a balance sheet reconciliation).• You need another reconciliation to go fromthe change in fund balance to change in netposition (equivalent of an income statementreconciliation).
GOVERNMENTAL
GOVERNMENT-WIDE
FIXED ASSETSL/T DEBTDEFERRED REVACCRUALSINTERFUNDTRANSFERS
Reconciling items come fromjournal entries you make in
five categories. The entries arethose related to fixed assets,
long term debt, deferredrevenue, accruals andinter-fund transfers.
FIXED ASSETSBEGINNINGEXPENDITURESSALESDEPRECIATION
FIXED ASSETSBEGINNINGEXPENDITURESSALESDEPRECIATION
There are four things to do with fixedassets. Remember that governmentalfunds do not record fixed assets. Therefore, you have to:1. Record the beginning of year balances2. Zero the governmental fundexpenditures account and move thebalance to fixed assets3. Properly reflect the gain or loss on salesof fixed assets4. Record depreciation
L/T DEBT
BEGINNINGEXPENDITURESFINANCINGPREMIUM /DISCOUNTAMORTIZATION
L/T DEBT
BEGINNINGEXPENDITURESFINANCINGPREMIUM /DISCOUNTAMORTIZATION
There are four things to do with long termdebt. 1. Record the beginning of year balances2. Zero the governmental fundexpenditures account and reduce the longterm debt balance3. Zero the governmental fund financingsources representing proceeds of debtissued and record it as long term debt4. Adjust for bond premium or discountamortization
DEFERREDREVENUE
BEGINNINGENDING
DEFERREDREVENUE
BEGINNINGENDING
Deferred revenue adjustments are required. Thegovernmental funds make adjustments based onthe sixty day rule. Government wide statements
make no such adjustment. It is necessary toeliminate the governmental deferred revenue,
which they will pick up as revenue when collectednext year. Government wide will recognize
revenue this year. Also, adjust for the similarentry made last year. The governmental funds
show revenue this year for prior year receivables. The government wide statements picked it up as
income last year.
ACCRUALS BEGINNINGENDING
ACCRUALS BEGINNINGENDING
Similar entries areneeded for accrualsand other liabilities
such as long termpension obligations.
TRANSFERS ELIMINATEINTERGOV'T
TRANSFERS ELIMINATEINTERGOV'T
Eliminate the inter-governmentaltransfers. The statement ofactivity shows transfers betweenprimary government and businesstype activities but not those thattake place between funds withinthe primary government or withinthe business type activities.
INTERNAL SERVICE
FUNDS
FIRST
YEAR END STATEMENTOF NET POSITION
Add the year end statement of net position to the governmental funds balance sheet.
SECOND
REMOVE OPERATINGINCOME
Back the net operations of the internal service fund out of the balance sheet.
INCREASEINVESTMENT INCOME
ANDDECREASE
GOVERNMENT EXPENSES
INCREASEINVESTMENT INCOME
ANDDECREASE
GOVERNMENT EXPENSES
Operating income or loss results from transactionswith two types of customers – those that are
internal, or part of the government and those thatare external, or outside of the government. Anyprofit (or loss) from transactions with internal
customers should be subtracted from (or added to)the expense already recognized in the
governmental fund statements. Any profit or lossfrom transactions with outside customers should
be shown as income or loss on the statement ofactivities since those transactions representincreases or decreases in government assets.
THIRD
REMOVE TRANSFERS
Finally, the effects of any transfers between the governmental funds and the ISF during the current yearmust be removed from net position.
