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benefits every citizen, whether or not they contribute to its cost.
Relationship with Stakeholders
Government-obligated to demonstrate accountability for public funds
Role of the Budget
Government- budget is public policy and officials cannot spent outside the budget. Reports on budgeted and actual amounts
Activities of an organization separate from other activities in the accounting records to demonstrate compliance with legal restriction or limitations
A Fund is: 4
1. A fiscal and accounting entity
2. Self balancing set of accounts
3. Own assets, liabilities, revenues, and expenditures.
4. Numerous funds, to account for different activities of governments
Fund Accounting Equation
Assets + Deferred Outflow of Resources = Liabilities + Deferred Inflow of Resources + Fund Balance
Federal government standards can be rejected by these 3 principals(agencies)
- US Government Accountability Office (GAO)
- US Dept. of Treasury
- US office of Management and Budget (OMB)
GASB and FASB members are appointed and are under the oversight of
Financial Accounting Foundation (FAF)
Definition of Government
Public corporations and bodies corporate and politic are governmental organization
Definition of Government
one or more characteristics 4
- 1 Election of officers by government
- 2 dissolution by government with resources reverting to a government
- 3 power to enact and enforce a tax levy
- 4 Issue debt directly whose interest is tax exempt
The two levels of financial statement reporting the government has
- Fund basis financial statements
- government wide statements
Government wide statements
combine the governmental and business-type activities of the government to present an overall picture of the financial position and results of operations of the government.
- 1. spending focus
- 2. modified accrual accounting
- 3. flow of financial resources measurement focus
- 4. only has-current assets, deferred in resources, current liabilities, deferred out resources
- 5. record budgets
- 6 use encumbrance accounting
5 types of governmental funds
- Capital project
- Debt service
- Special revenue
- 1. accounts for most basic services and resources not reported in another fund.
- 2. used for unrestricted resources
- 3. major revenue sources-taxes-property, sales, income
Capital Projects Funds
Used for resources earmarked for the construction of major fixed assets such as bridges, tunnels, court houses, city halls, schools, etc.
Debt Service Fund
Used to account for debt property taxes or for sinking fund resources earmarked for principal and interest payments on long term debt of the governmental unit.
Special Revenue Fund
- accounts for the proceeds of specific revenue sources that are for a specified purpose other than debt service or capital projects
- Principal of the fund cannot be spent
- Funds are invested to generate income for governmental purposes
the funds are used to account for governments's ongoing organizations and activities that are similar to those in the commercial sector
funded through user charges and use the full accrual basis of accounting.
2 types of proprietary funds
- internal service
are used when resources are provided primarily through the use of sales and service charges to parties external to the government.
Internal service funds
account for services provided by one department of a government to another, generally on a cost-reimbursement basis.
account for resources for which the government is acting as a collecting/disbursing agent or as a trustee and use the full accrual basis of accunting
4 types of fiduciary funds
- pension trust
- investment trust
- private-purpose trust
used to account for situations in which the government as a collecting/disbursing agent
Pension Trust Fund
used to account for pension and employee benefit funds for which the governmental unit is the trustee
Investment Trust Fund
account for the external portion of investment pools reported by the sponsoring government.
Private-purpose trust fund
report all other trust arrangement under which principal and income benefit individuals, private organizations, or other governments
3 part budgetary principle
- 1. an annual budget adopted by every governmental unit
- 2. accounting system provide basis for appropriate budgetary control
- 3. budgetary comparisons included in financial statements and schedules for governmental funds for which an annual budget has been adopted