Chapter Sixteen

1
Chapter Sixteen
Accounting for State and Local Governments
Government-wide financial statements

• focus on finances of government as a whole
• accrual accounting
• to provide useful information to oversight
  bodies, investors, and creditors
• Statement of Net Assets
• Statement of Activities

2
Fund-based Financial Statements

• sources and uses of financial resources
• focus on specific activities or functions
• modified accrual accounting
• recording expenditures, not expenses or assets
• to provide useful information to citizens
• enhance government accountability to the public
• Balance Sheet
• each fund reporting its own fund balance
• Statement of Revenues, Expenditures, and Changes
  in Fund Balance

3
Control of Public Funds

• corporate mechanisms of control are not available
  in public sector
• citizens cannot sell their investment like
  stockholders can
• measures of government success are difficult to
  identify
• budgets are the primary control mechanism
• w/ formal accounting recognition

4
Projections and Appropriations

• recorded in the budget accounts of the General
  Special Revenue Funds at the start of the year
• reversed at the end of the year
• budget comparisons supplementary information

Estimated Revenue 320,000 Est Other Sources
Bond Proceeds 100,000 Appropriations
Salaries 200,000 Appropriations
Supplies 140,000 Est Other Uses Transfers
Out 50,000 Budgetary Fund Balance 30,000
5
Encumbrances

• recording purchase commitments and contracts in
  the accounting system
• reported in fund-based financial statements only

Encumbrances Control 18,000 Fund Bal Reserv
for Encumb 18,000
Reversed when liability is recognized or at year
end.
6
Expenditures
Fund-Based Financial Statements
Expenditures - Electricity 1,000 Expenditures -
Ambulance 70,000 Vouchers Payable 71,000
Government-Wide Financial Statements
Utilities Expense 1,000 Ambulance 70,000 Voucher
s Payable 71,000
Depreciation recorded
7
Supplies and Prepaid Items
Fund-Based Financial Statements
Purchases Method
Consumption Method
Expend - Supplies 20,000 Vouchers Payable 20,000
Supplies Invent 20,000 Vouchers Payable 20,000
Supplies Invent 2,000 Fund Bal - Reserved 2,000
Expend - Control 18,000 Supplies Invent 18,000
Government-Wide Financial Statements
Supplies Invent 20,000 Vouchers Payable 20,000
Supplies Expense 18,000 Supplies Invent 18,000
8
Sales Taxes
Fund-Based Financial Statements
Receiv Sales Taxes 400,000 Revenue Sales
Taxes 400,000
Recognized when sale has occurred resources are
available.
Government-Wide Financial Statements
Receiv Sales Taxes 400,000 Revenue Sales
Taxes 400,000
Recognized when sale has occurred.
9
Property Taxes
Both Sets of Financial Statements
Cash 28,500 Deferred Prop Tax Revenue 28,500
Property Tax Receivable 500,000 Deferred Prop Tax
Revenue 28,500 Allowance for Uncoll
Taxes 20,000 Revenue Property Taxes 508,500
10
Issuance / Payment of Bonds
Fund-Based Financial Statements
Capital Projects Funds - School
Cash 5,000,000 Other Sources Bond
Proceeds 5,000,000
Debt Service Funds
Expenditure Bond Proceeds 500,000 Expenditure
Interest 10,000 Cash 510,000
Government-Wide Financial Statements
Cash 5,000,000 Bonds Payable 5,000,000
Bonds Payable 500,000 Interest Expense 10,000 Cas
h 510,000