Financial Reporting - Fund Accounting

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Financial Reporting - Fund Accounting
2012-02-05 13:16:34
CGfO Budget Financial Reporting Fund Accounting

Fund Accounting
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  1. What is Fund Accounting, what does it emphasize and whom is it used by?
    Fund accounting is an accounting system emphasizing accountability rather than profitability.

    It used by non-profit organizations and governments.

    • In this system, a fund is a self-balancing set of accounts,
    • segregated for specific purposes in accordance with laws and regulations or special restrictions and limitations*.
  2. What defines a current assets?
    Used in operations or converted to cash within 1 year.
  3. How is a capital asset defined?
    –Benefit the organization for more than 1 year (service life)

    Includes intangible assets*

    *GASB # 51 – Accounting & Financial Reporting for Intangible Assets – periods beginning after 6/15/2009 i.e. FY 2010
  4. What are current liabilities?
    –Obligations due within 1 year (includes current portion of long term debt)
  5. What are non-current liabilities?
    –Obligations due more than 1 year hence
  6. How are total assets minus total liabilities defined for governmental, proprietary & fiduciary funds?
    • Net assets – Fund level for proprietary
    • & fiduciary funds

    • Fund balance* – Fund level for governmental
    • funds, i.e. unreserved fund balance

    Owner’s Equity (private business)

    *GASB # 54 - Fund Balance Reporting and Governmental Fund Type Definitions
  7. According to GASB #54, what are the 5 types of fund balances?
    • Nonspendable Fund Balance
    • Cannot be spent because of:
    • Form (e.g. inventory, prepaid assets)
    • Must be maintained intact (e.g. principal of endowment fund)

    • Restricted Fund Balance
    • Externally enforceable limitations on use
    • By creditors, grantors, contributors, laws,
    • By law- constitutional or enabling legislation

    • Committed Fund Balance
    • Limitation in place before end of period
    • Limitation is self imposed (e.g. carryovers)
    • Must be removed by same “highest level” that imposed it

    • Assigned Fund Balance
    • Limitation results from intended use
    • “intended use” delegated to lower level
    • May be removed by same level that received delegation

    • Unassigned Fund Balance
    • Residual net resources
    • Balance in excess of :
    • non spendable/restricted/committed/assigned i.e. surplus
  8. What are the three broad fund classifications?
    • –Governmental funds (5)
    • –Proprietary funds (2)
    • –Fiduciary funds (4)
  9. What are the 5 types of Government funds?
    • –1. General
    • To account for & report all financial resources not (required to be)* accounted for & reported in another fund

    • Only fund required by GAAP
    • Only one ‘General Fund”
    • Small local governments may have only a General Fund

    **GASB 54 drops this phrase

    • 2. Special Revenue (OLD)
    • Resources restricted to specific purpose
    • –Legal or contract (e.g. CRA)

    • 2. Special Revenue (NEW)
    • Account for & report the proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projects

    • 3. Debt Service
    • Resources accumulated to pay long term debt
    • Principal & interest

    • 4. Capital Projects
    • Acquisition/construction of major capital assets*
    • –i.e. not equipment units financed by proprietary funds

    • 5. Permanent
    • Resources restricted to extent that earnings and not principal may be used for support of entity programs

    * GASB # 54 updates
  10. What are the 2 types of Proprietary Funds?
    • 1. Internal Service
    • Services provided by one agency, etc. to another on a cost reimbursement basis

    • 2. Enterprise
    • Operations financed & operated similar to private business
    • –i.e. user fees
    • –Accountability (not “profit “makers)
  11. What are the 4 types of Fiduciary Funds?
    • 1. Pension Trust Fund
    • Resources held in trust for others (others people's money)

    • 2. Investment Trust Fund
    • Pooled resources of legally separate entities
    • Entity holds investments on behalf of others

    • 3. Private-purpose Trust Fund
    • Principal & income benefit specific individuals or organization

    • 4. Agency Fund
    • Pass-through funds (other people's money)
    • –e.g. utility deposits