Session 1-Government Accounting--Basics

1
Session 1-Government Accounting--Basics

• GASB and other key terms
• Uniqueness of government operations
• Objectives of government reporting
• Modified accrual basis
• Fund areas (3) and types (11)
• Budgetary accounting

2
GASB Other Key Terms

• GASB Governmental Accounting Standards Board
• www.gasb.org
• FASAB Federal Accounting Standards Advisory
  Board
• www.fasab.org
• GFOA Government Finance Officers Association
• www.gfoa.org
• Publishes the GAAFR or Blue Book Governmental
  Accounting, Auditing and Financial Reporting
• Government GAAP hierarchy (24-1)
• GAS 34
• Fund financial statements
• Government-wide financial statements

3
Uniqueness of Government Operations

• Absence of a profit motive
• Legal requirements (and environment)
• Diversity of activities
• Government
• Business or proprietary
• Fiduciary
• Use of fund accounting
• Different terms, concepts and reporting format

4
Objectives of Government Reporting

• Provides public accountability
• Evaluates operating results
• Assesses level of services and ability to meet
  obligations

5
Modified Accrual Basis

• Two concepts of measurement
• Economic resource flows, and
• Current financial resource flows
• Most governmental accounting follows the accrual
  basis of accounting, however
• Current financial resource flows implies a form
  of cash basis accounting
• Property taxes must be available and measurable
  (see page 799)

6
Fund Areas

• Governmental funds government operations
• Proprietary funds quasi-commercial activities
• Fiduciary funds agency activities for the
  benefit of 3rd parties
• and
• General capital assets and general long-term
  liabilities ledger (GCA-GLTL)

7
Government Funds

• General fund general activities
• Special revenue fund specific revenue activities
• Capital projects fund major facility
  construction activities
• Debt service fund long-term debt service
  activities
• Permanent fund restricted resource activities

8
Proprietary Funds

• Enterprise funds fee-based business activities
• Internal service funds support activities

9
Fiduciary Funds

• Pension trust funds benefit activities
• Investment trust funds pooled investment
  activities
• Private-purpose trust funds other trust
  activities
• Agency funds custodial activities

10
Budgetary Accounting

• Budgetary accounting statutory
  authorization/approval of spending based on
  estimated revenues
• Reflective of a balanced budget
• Special consideration in general ledger
• Provides instant source of comparisonHow much do
  I have left to spend?
• Appropriations vs. expenditures and encumbrances
• Key terms
• Appropriation approved spending
• Encumbrance committed spending (i.e. purchase
  order)
• Expenditure incurred spending (i.e. goods
  received)
• Disbursement payment

11
Typical Transactions-Session 2

1. Adoption of the budget
2. Property taxes
3. Revenue other than property taxes
4. Expenditures encumbrances other than inventory
5. Acquisition and consumption of inventory
6. Disbursements
7. Inter-fund transactions
8. Closing entries-general
9. Closing entries-encumbrances
10. Fund balance reserves