Chapter 18 - Introduction to accounting for state and local governmental units. In order to learn about accounting for state and local governments you must learn a whole new vocabulary – many different funds. In addition, the whole field is experiencing change with the implementation of GASB’s Statement No. 34, which became effective in 2001. The process of changing governmental reporting to make it easier for outsiders to use just makes learning how to do it more difficult! | Introduction to Accounting For State and Local Governmental Units 1 Learning Objectives Identify the issues involved in developing standards for nonprofit organizations. Describe the broad categories of government fund entities. Distinguish between a general fund and a special revenue fund. Explain the use of a capital projects fund. Describe the purpose of a debt service fund. Explain the use of a permanent fund. 2 Learning Objectives Distinguish proprietary funds from government funds. Describe where capital assets and long-term obligations are reported in government financial statements. Describe the changes in reporting requirements under GASB Statement No. 34. Explain the benefits of government-wide statements. Describe the types of interfund activities. 3 Governmental Accounting GASB’s Statement No. 34, issued June 1999, requires: Financial statements using government-wide (entity-wide) approach. (This does not eliminate traditional fund accounting.) Statements emphasizing major funds. Management’s discussion and analysis (MD&A). GASB Statement No. 34 requires “full accrual” accounting for all government-wide statements (., flow of economic resources approach). 4 Statement of net position Governmental funds: Statement of activities Balance sheet Statement of revenues, expenditures, and changes in fund balances Reconciliation to government-wide statements Proprietary funds: Balance sheet or statement of net position Statement of revenues, expenses, and changes in net position Statement of cash flows—direct format Fiduciary funds: Statement of fiduciary net position Statement of changes in net position Reporting Model: Minimum Information Required 5 Government-wide Fund Financial Statements History of Governmental Accounting Standards GASB was established (1984): Separate board under oversight of Financial Accounting Foundation (FAF). Responsible for establishing financial and reporting standards for governments. GASB endorsed prior statements and . | Introduction to Accounting For State and Local Governmental Units 1 Learning Objectives Identify the issues involved in developing standards for nonprofit organizations. Describe the broad categories of government fund entities. Distinguish between a general fund and a special revenue fund. Explain the use of a capital projects fund. Describe the purpose of a debt service fund. Explain the use of a permanent fund. 2 Learning Objectives Distinguish proprietary funds from government funds. Describe where capital assets and long-term obligations are reported in government financial statements. Describe the changes in reporting requirements under GASB Statement No. 34. Explain the benefits of government-wide statements. Describe the types of interfund activities. 3 Governmental Accounting GASB’s Statement No. 34, issued June 1999, requires: Financial statements using government-wide (entity-wide) approach. (This does not eliminate traditional fund accounting.) Statements emphasizing major
