Florida Government Finance Officers
Association, Inc.
School of Government Finance
PGA National Resort & Spa
Palm Beach Gardens, Florida
Introduction to Governmental Accounting
Brent X. Thurmond, CPA, Wakulla County Clerk of Courts
Greg James, Finance Director, Wakulla County Clerk of Courts
Monday, November 2, 2015, 8:00 – 9:40 a.m.
Introduction to Governmental Accounting
Today’s Agenda
A. Introduction
B. Governmental Uniform Chart of Accounts
C. Fund Accounting
D. Basic Transactions
1. Revenues
2. Expenses
3. Assets
4. Liabilities
2
Introduction to Governmental Accounting
A. Introduction
3
Introduction to Governmental Accounting
A. Introduction
O Acknowledgements & Thanks
O FGFOA for their efforts to educate and the opportunity to
speak
O List of Source Material
O GASB – Governmental Accounting Standards Board
O GFOA – GAAFR – Governmental Accounting, Auditing &
Financial Reporting – The “Blue Book”.
O NCGA - National Council on Governmental Accounting
O The predecessor of GASB
4
Introduction to Governmental Accounting
A. Introduction
O Course Objectives
O To provide the audience with basic core competencies that
will assist them in fulfilling their duties as a governmental
accountant.
O Obtain a basic understanding of the unique aspects or
characteristics of governmental accounting
O Obtain a basic understanding of fund types and basis of
accounting used by governments
O Obtain a basic understanding of governmental accounting
transactions
5
Introduction to Governmental Accounting
A. Introduction
O Raise your Hand!
O Types of Governments – Federal, State, County,
City/Town/Village, Special Districts, Other
O Governmental Experience – 15+ years, 10-14 years, 5-9
years, 1-4 years, less than 1 year
O Types of Work – CPA’s, CGFO’s, CPFO’s, Auditors,
Accountants, Other
O How many accounting degrees in the class?
O How many hours of governmental accounting did you
take/required to take in obtaining your degree?
6
Introduction to Governmental Accounting
A. Introduction
O Professional Standards & Requirements
O National – All Organizations
O FAF – Financial Accounting Foundation
O www.accountingfoundation.org
O AICPA – American Institute of Certified Public Accountants
O www.aicpa.org
O GAO – Government Accountability Office
O www.gao.gov
O OMB – Office of Management & Budget
O www.whitehouse.gov
O OMB A-133 – Federal Grants & Awards
7
Introduction to Governmental Accounting
A. Introduction
O Professional Standards & Requirements
O National – Business & Non-Profit
O FASB – Financial Accounting Standards Board
O www.fasb.org
O GASB Statement 56 & 62 - FASB & AIPCA – Pre 11/30/89
O FASAC – Financial Accounting Standards Advisory Council
O PCAOB – Public Company Accounting Oversight Board
O www.pcaobus.org
O Government driven – Sarbanes-Oxley Act of 2002
8
Introduction to Governmental Accounting
A. Introduction
O Professional Standards & Requirements
O National – Governmental
O GASB – Governmental Accounting Standards Board www.gasb.org
O GASB update session this week
O Established 1984
O Mission –
O Establish financial accounting and reporting standards for State & Local
Govt’s
O Improve financial accounting and reporting standards for State & Local
Govt’s
O Pronouncements
O 77 statements - 24 statements from 1984-93 / 21 from 1994-03 / 26
from 2004-13 / 6 from 2014-2015
O 6 concept statements / 6 interpretations / 14 technical bulletins
O GASAC – Governmental Accounting Standards Advisory Council
9
Introduction to Governmental Accounting
A. Introduction
O Professional Standards & Requirements
O State
O Florida Statutes –
O www.leg.state.fl.us/statutes
O Budgetary – Auditing – Reporting – Treasury etc….
O Florida Single Audit Act –
O www.myflorida.com/audgen/pages/flsaa.htm
O Auditor General Rules –
O www.myflorida.com/audgen/pages/rules_localgovt.htm
O Uniform Chart of Accounts –
O www.myfloridacfo.com/Division/AA/LocalGovernments/default.htm#.VCLi
h_ldWgY
10
Introduction to Governmental Accounting
A. Introduction
O Professional Standards & Requirements
O GAAP – Generally accepted accounting principles
O GASB Statement 55 - 4 levels of GAAP hierarchy
O GASB Statement 76 (June 2105) – The hierarchy of GAAP for State &
Local Gov’ts – 2 categories of GAAP hierarchy
O GAAS – Generally accepted auditing standards
O GAGAS – Generally accepted governmental auditing standards
O “Yellow Book” – produced by GAO
11
Introduction to Governmental Accounting
B. Governmental Uniform Chart of
Accounts
12
Introduction to Governmental Accounting
B. Governmental Uniform Chart of Accounts
O What is a government?
O AICPA Guide defines it as an entity that has one or more of the
following:
O Popular election of officers or appointment/approval of a controlling
majority of the members of the organization’s governing body by
officials or one or more state/local governments
O Public corporations/bodies – corporate and political
O The potential for unilateral dissolution by a government with the net
assets reverting to a government
O The power to enact and enforce a tax levy
13
Introduction to Governmental Accounting
B. Governmental Uniform Chart of Accounts
O What is a government?
O AICPA Guide definition
O 5 Characteristics of a government
O 1. The profit motive vs. service motive
O Exceptions ?
O 2. Legal Structure
O Collectively “owned” by constituents
O Legislative vs. Executive powers
O Budgetary controls
O Taxation – forced participation
14
Introduction to Governmental Accounting
B. Governmental Uniform Chart of Accounts
O What is a government?
O AICPA Guide definition
O 5 Characteristics of a government
O 1. The profit motive vs. service motive
O 2. Legal Structure
O 3. Fund Accounting
O Outside constraints by grantors, creditors, statutes
O Internal constraints by budget, resolutions etc…
O 4. Compliance & Reporting requirements - transparency
O Three levels of audit standards – GAAS, GAGAS, SA
O Multi-fund structure
O Financial Statements
15
Introduction to Governmental Accounting
B. Governmental Uniform Chart of Accounts
O What is a government?
O AICPA Guide definition
O 5 Characteristics of a government
O 1. The profit motive vs. service motive
O 2. Legal Structure
O 3. Fund Accounting
O 4. Compliance & Reporting requirements – transparency
O 5. Government Environment
O Politics – internal and external
O Press / Media & Public
O Regulators – Federal and State, Other?
16
Introduction to Governmental Accounting
B. Governmental Uniform Chart of Accounts
O The purpose of a uniform chart of accounts?
O Accounting
O “The process of assembling, analyzing, classifying and recording data
relevant to a government’s finances”.
17
Introduction to Governmental Accounting
B. Governmental Uniform Chart of Accounts
O The purpose of a uniform chart of accounts?
O Accounting
O “The process of assembling, analyzing, classifying and recording data
relevant to a government’s finances”.
O Reporting
O “The process of taking the information thus assemble, analyzed,
classified and recorded and providing it in usable form to those who
need it”.
O Financial Statements
18
Introduction to Governmental Accounting
B. Governmental Uniform Chart of Accounts
O The purpose of a uniform chart of accounts?
O Accounting
O “The process of assembling, analyzing, classifying and recording data
relevant to a government’s finances”.
O Reporting
O “The process of taking the information thus assemble, analyzed,
classified and recorded and providing it in usable form to those who
need it”.
O Financial Statements
O To provide financial accountability and compliance - stewardship
O To taxpayers/citizens
O To various legislative / oversight bodies
O Internal & External
O To investors / creditors
19
Introduction to Governmental Accounting
B. Governmental Uniform Charts of Accounts
O Uniform Accounting System Manual
O Florida Statute 218.33 – Dept. of Financial Services tasked with
assuring proper accounting and fiscal management of local
government entities
O http://www.myfloridacfo.com/Division/AA/Manuals/LocalGovernmen
t/2011UASManualCounty122910.pdf
O Governmental Accounting, Auditing & Financial Reporting
(GAAFR – “Blue Book”)
O Appendix E - “Illustrative Accounts, Classifications & Descriptions”
O Legislative Committee on Intergovernmental Relations
O Local Government Financial Information Handbook
O http://www.floridalcir.gov
20
Introduction to Governmental Accounting
B. Governmental Uniform Charts of Accounts
21
Introduction to Governmental Accounting
B. Governmental Uniform Charts of Accounts
22
Introduction to Governmental Accounting
B. Governmental Uniform Chart of Accounts
O Uniform Accounting System Manual
O Establishes uniform classification of accounts
O Local Gov’t. can maintain more detailed records
O Provides consistent reporting
O F.S. 218.32 requires each Local Gov’t to submit an Annual Financial
Report
O Facilitates monitoring by the State
O Provides accountability and compliance
O Provides references to Florida Statutes throughout it
23
Introduction to Governmental Accounting
B. Governmental Uniform Chart of Accounts
O Uniform Accounting System Manual
001-00-00-101-50-00
Cash in Bank
Incorporated Area
Section 6
Object / Subobject
Section 5
Transaction Code
Section 4
Division
Section 3
Department
Section 2
Fund
Section 1
24
Introduction to Governmental Accounting
B. Governmental Uniform Chart of Accounts
O Account Structure – Fund Groups – Section 1
001 – General Fund
005 – Governmental Activities (Government-wide Financial Reporting)
050 - 099 – Permanent Funds
100 - 199 – Special Revenue Funds
200 - 299 – Debt Service Funds
300 - 399 – Capital Projects Funds
400 - 499 – Enterprise Funds
500 - 599 – Internal Service Funds
600 - 649 – Agency Funds
650 - 699 – Pension Trust Funds
700 - 749 – Investment Trust Funds
750 - 799 – Private Purpose Trust Funds
800 - 899 – Revolving / Clearing Funds
O 001 – xx – xx – xxx – xx – xx – General Fund
25
Introduction to Governmental Accounting
B. Governmental Uniform Chart of Accounts
O Account Structure – Account Groups – Section 1
900 - 949 – General Fixed Assets
950 - 999 – General Long-term Debt
O “Although GASB Statement 34 eliminated general capital asset and
general long-term debt account groups, local governments may still use
the groups and related accounts for accounting purposes.”
O Why
O Basis of Accounting
O Cash, Modified & Full Accrual
O Will discuss more in basic transactions
O How many record “off books” i.e. not in accounting
system?
O Excel spreadsheets – pros and cons
26
Introduction to Governmental Accounting
B. Governmental Uniform Chart of Accounts
O Account Structure - Department/Division – Section 2&3
O Department – Public Safety - 02
O Division – Police – 01, Fire – 02, EMS – 03 etc…
O Department – Parks & Recreation - 07
O Division – Parks – 04, Recreation – 05, etc…
O No specific outline provided by UCOA
O Be consistent
O 001 – 07–05 – xxx – xx – xx
O General Fund – P&R/Recreation
27
Introduction to Governmental Accounting
B. Governmental Uniform Chart of Accounts
O Account Structure – Transaction Codes – Section 4
1XX.XXX – Assets and other Debit balances
Balance Sheet Accounts
2XX.XXX – Liabilities and other Credit balances including equity
3XX.XXX – Revenue Accounts
???
I don’t know why the “4’s” were skipped…
"Income Statement" Accounts
5XX.XXX – Expense / Expenditure Accounts
6XX.XXX – Court-related Expenditure Accounts
7XX.XXX – Court-related Expenditure Accounts
O 001 – 07-05 – 1xx.xxx – GF-P&R/Recreation-Asset
O 001 – 07-05 – 5xx.xxx – GF-P&R/Recreation-Expenditure
28
Introduction to Governmental Accounting
B. Governmental Uniform Chart of Accounts
O Account Structure – Transaction Codes – Section 4
O Assets
1XX.XXX Assets and other Debit balances
101.XXX - Cash in bank
102.XXX - Cash on hand
115.XXX - Accounts Receiveable
131.XXX - Due from other funds
133.XXX - Due from other governmental units
155.XXX - Prepaid items
156.000 - Other Assets - Current
156.900 - Other Assets - Non-current
161.900 - Land
162.900 - Buildings
163.900 - Accumulated Depreciation - Buildings
164.900 - Infrastructure
165.900 - Accumulated Depreciation - Infrastructure
In order of liquidity
Current vs. Non-current
Capital Assets
A/D - Credit Balance
O 001 – 07-05 – 101.xxx – GF-P&R/Recr - Cash in bank
29
Introduction to Governmental Accounting
B. Governmental Uniform Chart of Accounts
O Account Structure – Transaction Codes – Section 4
101.100 - First City Bank
101.101 - Second City Bank
101.200 - Third City Bank
131.100 - Due from Building Fund
131.101 - Due from Sewer Fund
131.200 - Due from Golf Course Fund
O The 3 digit extension helps distinguish two like assets
O 001 – 07-05 – 101.200 – GF-P&R/Recr - Cash in 3rd C.B.
O 001 – 07-05 – 131.200 – GF-P&R/Recr - DF GCF
30
Introduction to Governmental Accounting
B. Governmental Uniform Chart of Accounts
O Account Structure – Transaction Codes – Section 4
O Liabilities
2XX.XXX Liabilities and other Crebit balances
201.XXX - Vouchers Payable
202.XXX - Accounts Payable
203.000 - Notes and Loans Payable - Current Portion
203.900 - Notes and Loans Payable - Non-current Portion
207.XXX - Due to other Funds
210.000 - Compensated Absences - Current Portion
210.900 - Compensated Absences - Non-current Portion
216.XXX - Accrued Wages
217.XXX - Accrued Taxes
223.XXX - Deferred Revenue
225.000 - Capital Leases - Current Portion
225.900 - Capital Leases - Non-current Portion
229.XXX - Other current Liabilities
239.900 - Other Long-term Liaibilities
In order of liquidity
Current vs. Non-current
Capitalization
O 001 – 07-05 – 203.000 – GF-P&R/Recr - CP of NP
31
Introduction to Governmental Accounting
B. Governmental Uniform Chart of Accounts
O Account Structure – Transaction Codes – Section 4
203.100 - First City Bank Loan
203.101 - Second City Bank Loan - CP
203.901 - Second City Bank Loan - LTP
210.001 - Administration
210.002 - Public Safety
210.007 - Parks & Recreation - CP
210.907 - Parks & Recreation - LTP
O The 3 digit extension helps distinguish two like liabilities
O 001 – 07-05 – 203.101 – GF-P&R/Recr – CP 2nd City Bank Loan
O 001 – 07-05 – 203.901 – GF-P&R/Recr – NCP 2nd City Bank
Loan
32
Introduction to Governmental Accounting
B. Governmental Uniform Chart of Accounts
O Account Structure – Transaction Codes – Section 4
O Retained Earnings/Equity Section
O Net Assets now called Net Position – 3 possible components
O Fund Balance – 5 possible components
274.000 - Net Assets, Invested in Capital, Net of Debt
275.000 - Net Assets, Restricted
276.000 - Net Assets, Unrestricted
Government-wide &
Proprietary Fund
"Net Position"
277.000 - Net Assets - General Government
280.000 - Fund Balance - Nonspendable
281.000 - Fund Balance - Restricted
282.000 - Fund Balance - Committed
283.000 - Fund Balance - Assigned
284.000 - Fund Balance - Unassigned
Governmental Fund
Statements
33
Introduction to Governmental Accounting
B. Governmental Uniform Chart of Accounts
O Account Structure – Transaction Codes – Section 4
O Net Position – 3 Possible components
O 1. Net Position, Invested in Capital Assets, Net of Related Debt
O “The difference between assets and liabilities of proprietary
funds that consist of capital assets less BOTH accumulated
depreciation and the outstanding balance of debt that is directly
attributable to the acquisition, construction or improvement of
those assets”.
O Used for Proprietary fund statements
O Used for Government-wide statements
34
Introduction to Governmental Accounting
B. Governmental Uniform Chart of Accounts
O Account Structure – Transaction Codes – Section 4
O Net Position – 3 Possible components
O 2. Net Position, Restricted
O “The difference between assets and liabilities of proprietary
funds that consist of constraints placed on their use by EITHER
external parties or through constitutional provisions or enabling
legislation”.
O Used for Proprietary fund statements
O Used for Government-wide statements
O Need to “itemize” the restricted uses and related amounts
35
Introduction to Governmental Accounting
B. Governmental Uniform Chart of Accounts
O Account Structure – Transaction Codes – Section 4
O Net Position – 3 Possible components
O 3. Net Position, Unrestricted
O “The difference between assets and liabilities of proprietary
funds that is not reported as net position, invested in capital
assets, net of related debt OR net position, restricted”.
O Used for Proprietary fund statements
O Used for Government-wide statements
36
Introduction to Governmental Accounting
B. Governmental Uniform Chart of Accounts
O Account Structure – Transaction Codes – Section 4
O Fund Balance – 5 Possible components
O 1. Fund Balance – Non-spendable
O “Non-spendable fund balance includes amounts that are not in
spendable form or are required, EITHER legally or contractually,
to be maintained intact”.
O Used for Governmental fund statements
O “Not in spendable form”
O Inventory
O Prepaid Items
O Long-term loans and notes receivable
O “required to be maintained intact”
O The principal of an endowment fund (permanent fund)
37
Introduction to Governmental Accounting
B. Governmental Uniform Chart of Accounts
O Account Structure – Transaction Codes – Section 4
O Fund Balance – 5 Possible components
O 2. Fund Balance – Restricted
O “Restricted fund balance includes amounts that can be spent
O
O
O
O
only for specific purposes stipulated by EITHER external resource
providers, constitutional laws or regulations or through enabling
legislation”.
Used for Governmental fund statements
“external resource provider” – grantor, creditor, etc…
“constitutional laws, regulations or enabling legislation” – bound
by state or other government entity
Can only be unrestricted by those who restricted it
38
Introduction to Governmental Accounting
B. Governmental Uniform Chart of Accounts
O Account Structure – Transaction Codes – Section 4
O Fund Balance – 5 Possible components
O 3. Fund Balance – Committed
O “Committed fund balance includes amounts that can be used
only for the specific purposes determined by formal action of the
government’s highest level of decision making authority”.
O Used for Governmental fund statements
O Commitment can only be changed or removed…
O By the same governing body
O By the same formal action that imposed the constraint
O Encumbrances approved by the governing body (a contract) are
commitments of resources.
39
Introduction to Governmental Accounting
B. Governmental Uniform Chart of Accounts
O Account Structure – Transaction Codes – Section 4
O Fund Balance – 5 Possible components
O 4. Fund Balance – Assigned
O “Assigned fund balance is comprised of amounts INTENDED to
be used by the government for a specific purpose”.
O Used for Governmental fund statements
O The residual fund balance (total FB less restricted FB and committed
FB) in governmental funds other than the GF is inherently assigned.
O Intent can be expressed by…
O The governing body, an official (Manager or Administrator) or a body
to which the governing body delegated authority.
O Encumbrances incurred as a result of normal purchasing
approved by the appropriate official is an assignment of
resources.
40
Introduction to Governmental Accounting
B. Governmental Uniform Chart of Accounts
O Account Structure – Transaction Codes – Section 4
O Fund Balance – 5 Possible components
O 5. Fund Balance – Unassigned
O “Unassigned fund balance is the residual fund balance for the
general fund and includes all amounts not contained in the other
classifications”.
O Used for Governmental fund statements
O General Fund only for positive amounts
O Can be used to report negative residual amounts in other
governmental funds
O Unassigned amounts can be used for any appropriate
governmental purpose
41
Introduction to Governmental Accounting
B. Governmental Uniform Chart of Accounts
O Account Structure – Transaction Codes – Section 4
O Revenues
3XX.XXX Revenue Accounts
31X.XXX - Taxes
32X.XXX - Permits, Fees & Special Assessments
33X.XXX - Intergovernmental Revenue
34X.XXX - Charges for Services
35X.XXX - Judgments, Fines & Forfeits (Not Court-related)
36X.XXX - Miscellaneous Revenue
37X.XXX - not used
38X.XXX - Other Sources
39X.XXX - Other Sources, continued
Focused on the TYPE
of revenue
O The second digit determines the type of revenue
O 001 – 07-05 – 33x.xxx – GF-P&R/Recr – Intergovernmental
Revenue
42
Introduction to Governmental Accounting
B. Governmental Uniform Chart of Accounts
O Account Structure – Transaction Codes – Section 4
3XX.XXX Revenue Accounts
311.000 - Ad Valorem Taxes
312.XXX - Local Option Taxes
322.000 - Building Permit Fees
325.XXX - Special Assessments
331.XXX - Federal Grant
334.XXX - State Grant
342.XXX - Public Safety Service Charge
347.XXX - Culture/Recreation Service Charge
352.000 - Library Fines
354.000 - Local Ordinance Violations
361.100 - Interest
364.000 - Disposition of Fixed Assets
381.000 - Inter-fund Group Transfers In
384.000 - Debt Proceeds
386.100 - Transfer from Clerk to BOCC
392.000 - Extraordinary Items (Gain)
393.000 - Special Items (Gain)
The 2nd digit
determines the TYPE
of revenue
The 3rd digit
determines the
SOURCE of revenue
O The third digit sometimes determines the source of revenue
O 001 – 07-05 – 334.xxx – GF-P&R/Recr – State Grant
43
Introduction to Governmental Accounting
B. Governmental Uniform Chart of Accounts
O Account Structure – Transaction Codes – Section 4
334.XXX - State Grant
334.100 - General Government Grant
334.200 - Public Safety Grant
334.300 - Physical Environment Grant
334.400 - Transportation Grant
334.500 - Economic Environment Grant
334.600 - Human Services Grant
334.700 - Culture/Recreation Grant
334.800 - not used
334.900 - Other Local Gov't Grant
341.XXX General Government Fees
342.XXX Public Safety Fees
343.XXX Physical Environment Fees
344.XXX Transportation Fees
345.XXX Economic Environment Fees
346.XXX - Human Services Fees
347.XXX - Culture/Recreation Fees
348.XXX - Court-related Fees
349.XXX - Other Charges for Service
O The third digit sometimes determines the function of revenue
O 001 – 07-05 – 334.700 – GF-P&R/Recr – State Recr Grant
O 001 – 07-05 – 347.200 – GF-P&R/Recr – Recr Chg for Srvc 44
Introduction to Governmental Accounting
B. Governmental Uniform Chart of Accounts
O Account Structure – Transaction Codes – Section 4
O Expenditures/Expenses
5XX.XX Expenditure / Expense Accounts
51X.XX - General Government Services
52X.XX - Public Safety
53X.XX - Physical Environment
54X.XX - Transportation
55X.XX - Economic Environment
56X.XX - Human Services
57X.XX - Culture & Recreation
58X.XX - Other Uses
59X.XX - Other Non-Operating
Focused on the
FUNCTION
of expenditure
O 001 – 07-05 – 57x.xx – GF-P&R/Recr – Culture & Recr Exp.
45
Introduction to Governmental Accounting
B. Governmental Uniform Chart of Accounts
O Account Structure – Transaction Codes – Section 4
6XX.XX Expenditure / Expense Accounts
60X.XX - General Administration (Court-related)
61X.XX - Circuit Court - Criminal
62X.XX - Circuit Court - Criminal
63X.XX - Circuit Court - Civil
64X.XX - Circuit Court - Civil
65X.XX - Circuit Court - Family (Exclude Juvenile)
66X.XX - Circuit Court - Family (Exclude Juvenile)
67X.XX - Circuit Court - Juvenile
68X.XX - Circuit Court - Juvenile
69X.XX - Circuit Court - Probate
7XX.XX Expenditure / Expense Accounts
70X.XX - Circuit Court - Probate
71X.XX - General Court-related Operation
72X.XX - County Court - Criminal
73X.XX - County Court - Criminal
74X.XX - County Court - Civil
75X.XX - County Court - Civil
76X.XX - County Court - Traffic
Focused on the
FUNCTION
of expenditure
O 600’s & 700’s are used for court-related expenditures
46
Introduction to Governmental Accounting
B. Governmental Uniform Chart of Accounts
O Account Structure – Transaction Codes – Section 4
513.xx - Financial & Administrative
514.xx - Legal Counsel
521.xx - Law Enforcement
526.xx - Ambulance & Rescue Services
531.xx - Electric Utility Services
534.xx - Garbage/Solid Waste Control
541.xx - Road & Street Facilities
544.xx - Mass Transit Systems
552.xx - Industry Development
554.xx - Housing & Urban Development
561.xx - Hospital Services
564.xx - Public Assistance Services
571.xx - Libraries
572.xx - Parks & Recreation
581.xx - Inter-fund Group Transfers Out
584.xx - Capital Lease Acquisitions
592.00 - Extraordinary Items (Loss)
593.00 - Special Items (Loss)
General Government
Public Safety
Physical Environment
Transportation
Economic Environment
Human Services
Culture & Recreation
Other Uses
Other Non-Operating
O 001 – 07-05 – 572.xx – GF-P&R/Recr – Recr Exp.
47
Introduction to Governmental Accounting
B. Governmental Uniform Chart of Accounts
O Account Structure – Object Codes – Section 5
10 - Personal Services (includes 11-29)
30 - Operating Expenditures/Expenses (includes 31-59)
60 - Capital Outlay (includes 61-68)
70 - Debt Service (includes 71-73)
80 - Grants & Aids (includes 81-83)
90 - Other Uses (includes 91-99)
O The 2 digit object code specifies the detailed expenditure type
O Typically is a 3 digit number to match up with the 3 digit extension on
asset, liability and revenue transaction codes
O 001 – 07-05 – 572.xx – GF-P&R/Recr – Recr Exp.
48
Introduction to Governmental Accounting
B. Governmental Uniform Chart of Accounts
O Account Structure – Object Codes – Section 5
10
11
12
14
21
22
30
31
40
44
46
52
55
59
-
Personal Services (includes 11-29)
Executive Salaries
Regular Salaries & Wages
Overtime
Fica Taxes
Retirement Contribution
Operating Expenditures/Expenses (includes 31-59)
Professional Services
Travel & Per Diem
Rentals & Leases
Repair & Maintenance Services
Operating Supplies
Training
Depreciation
O 001 – 07-05 – 572.46 – GF-P&R/Recr – Recr Maint Exp
49
Introduction to Governmental Accounting
B. Governmental Uniform Chart of Accounts
O Account Structure – Object Codes – Section 5
60
61
62
63
67
68
70
71
72
80
81
82
90
91
92
-
Capital Outlay (includes 61-68)
Land
Buildings
Infrastructure
Works of Art / Collections
Intangible Assets
Debt Service (includes 71-73)
Principal
Interest
Grants & Aids (includes 81-83)
Aids to Government Agencies
Aid to Private Organizations
Other Uses (includes 91-99)
Intragovernmental Transfers (Constitutional Officers)
Advances
O 001 – 07-05 – 572.61 – GF-P&R/Recr – Recr Land
50
Introduction to Governmental Accounting
B. Governmental Uniform Chart of Accounts
O Account Structure – Sub-Object Code – Section 6
.01 - Unincorporated area
.02 - Incorporated area A
.03 - Incorporated area B
O F.S. Section 129.01 requires all counties to separate
expenditures between incorporated and unincorporated areas of
the county.
O How many counties do this?
O How many spend county funds in an incorporated area?
O 001 – 07-05 – 572.61.01 – GF-P&R/Recr – Recr Land in
unincorporated area
51
Introduction to Governmental Accounting
B. Governmental Uniform Chart of Accounts
O Appendix A – Budgetary Financial Reporting and
Disclosure Guidelines
O Appendix B – Text References
O Lists publications and sources of technical assistance
O Appendix C – Statutory References
O Appendix D – Crosswalk for Section 29.0085, F.S.
O Court-related Revenues & Expenditures Report
52
Introduction to Governmental Accounting
Questions on Governmental Uniform Chart of Accounts
53
Introduction to Governmental Accounting
C. Fund Accounting
54
Introduction to Governmental Accounting
C. Fund Accounting
O What is a fund? – A set of self-balancing accounts
O “A fund is a fiscal and accounting entity with a self-balancing set
of accounts recording all financial resources (assets), together
with all related liabilities and residual equities or balances, and
changes”
O Segregated for purposes of
O Tracking specific activities to provide accountability and compliance
O Attaining certain objectives set by outside agencies or internally by
governing body / management
55
Introduction to Governmental Accounting
C. Fund Accounting
O Fund Categories – 3 types
O 1. Governmental funds – 5 types
O 2. Proprietary funds – 2 types
O 3. Fiduciary funds – 2 types
56
Introduction to Governmental Accounting
C. Fund Accounting
O Fund Categories – 3 types
O 1. Governmental funds
O General operations
O Financial resources focus
57
Introduction to Governmental Accounting
C. Fund Accounting
O Fund Categories – 3 types
O 1. Governmental funds
O General operations
O Financial resources focus
O 2. Proprietary funds
O Business type operations
O Economic resources focus
58
Introduction to Governmental Accounting
C. Fund Accounting
O Fund Categories – 3 types
O 1. Governmental funds
O General operations
O Financial resources focus
O 2. Proprietary funds
O Business type operations
O Economic resources focus
O 3. Fiduciary funds
O Trust agreements
O Agency relationships
O Resources held for others
O Economic resources
59
Introduction to Governmental Accounting
C. Fund Accounting
O Fund Categories & Types
O 1. Governmental funds – 5 types
O General fund
O Special revenue funds
O Capital projects funds
O Debt service funds
O Permanent funds
60
Introduction to Governmental Accounting
C. Fund Accounting
O Fund Categories & Types
O 1. Governmental funds – 5 types
O General fund
O Special revenue funds
O Capital projects funds
O Debt service funds
O Permanent funds
O 2. Proprietary funds – 2 types
O Enterprise funds
O Internal service funds
61
Introduction to Governmental Accounting
C. Fund Accounting
O Fund Categories & Types continued…
O 3. Fiduciary funds – 2 types
O Trust funds – 3 types
O Pension & other employee benefit trust funds
O Investment trust funds
O Private-purpose trust funds
O Agency funds
62
Introduction to Governmental Accounting
C. Fund Accounting
O 1. Governmental Funds – 5 types
O 1. General Fund
O “the main operating fund used to account for and report all financial
resources not accounted for and reported in another fund
O Only ONE per reporting entity
O What about “component units”?
O Dependent vs. Independent districts
63
Introduction to Governmental Accounting
C. Fund Accounting
O 1. Governmental Funds – 5 types
O 1. General Fund
O “the main operating fund used to account for and report all financial
resources not accounted for and reported in another fund
O Only ONE per reporting entity
O What about “component units”?
O When NOT to use General Fund
O Always use General Fund unless
O GAAP requires you to use different fund type
O Legally required to use different fund type
O Some substantiated financial reason to use different fund type
64
Introduction to Governmental Accounting
C. Fund Accounting
O 1. Governmental Funds – 5 types
O 2. Special revenue funds
O “used to account for and report the proceeds of specific revenue
sources that are restricted or committed to expenditure for specified
purposes other than debt service or capital projects”
O Required by Grant agency, resolution of governing body or statutory
restrictions
O Grant may be in General Fund
65
Introduction to Governmental Accounting
C. Fund Accounting
O 1. Governmental Funds – 5 types
O 2. Special revenue funds
O “used to account for and report the proceeds of specific revenue
sources that are restricted or committed to expenditure for specified
purposes other than debt service or capital projects”
O Required by Grant agency, resolution of governing body or statutory
restrictions
O Grant may be in General Fund
O 3. Capital project fund
O “used to account for and report financial resources that are
restricted, committed or assigned to expenditure for capital outlays,
including the acquisition or construction of capital facilities and other
capital assets”
O Capital asset may be in General Fund
66
Introduction to Governmental Accounting
C. Fund Accounting
O 1. Governmental Funds – 5 types
O 4. Debt service fund
O “used to account for and report financial resources that are
restricted, committed, or assigned to expenditure for principal and
interest”
O May be required by bond document
O May be within other funds (General Fund, Capital Project Fund)
67
Introduction to Governmental Accounting
C. Fund Accounting
O 1. Governmental Funds – 5 types
O 4. Debt service fund
O “used to account for and report financial resources that are
restricted, committed, or assigned to expenditure for principal and
interest”
O May be required by bond document
O May be within other funds (General Fund, Capital Project Fund)
O 5. Permanent fund
O “used to account for and report resources that are restricted to the
extent that only earnings, and not principal, may be used for
purposes that support the reporting government’s programs – that
is, for the benefit of the government or its citizenry”
O Some type of perpetual care like cemetery, museum, or library
68
Introduction to Governmental Accounting
C. Fund Accounting
O 2. Proprietary Funds – 2 types
O 1. Enterprise funds
O “used to report any activity for which a fee is charged to external
O
O
O
O
users for good and services”
May be required by laws, regulations, pricing policies, lender
Business-type activities
“Profit driven” – intend to recover full cost from user fees
Water, sewer, landfill, airport, etc…
69
Introduction to Governmental Accounting
C. Fund Accounting
O 2. Proprietary Funds – 2 types
O 2. Internal service funds
O “used to report any activity that provides goods or services to other
funds, departments or agencies of the primary government and its
component units, or to other governments, on a cost-reimbursement
basis”
O Motor pool, I.T., Printing, Purchasing Departments, etc…
O Government (internal users) must be the predominant participant
O Intended to perform on a break-even basis
70
Introduction to Governmental Accounting
C. Fund Accounting
O 3. Fiduciary Funds – 2 types
O 1. Trust funds – 3 types
O 1. Pension & other employee benefits
O “used to report resources that are required to be held in trust for the
members and beneficiaries of defined benefit pension plans, defined
contribution plans, other post-employment benefit plans, or other
employee benefit plans”
O Government is acting in trustee capacity for its employees
71
Introduction to Governmental Accounting
C. Fund Accounting
O 3. Fiduciary Funds – 2 types
O 1. Trust funds – 3 types
O 1. Pension & other employee benefits
O “used to report resources that are required to be held in trust for the
members and beneficiaries of defined benefit pension plans, defined
contribution plans, other post-employment benefit plans, or other
employee benefit plans”
O Government is acting in trustee capacity for its employees
O 2. Investment
O “used to report the external portion of investment pools reported by the
sponsoring government
O Must possess 4 characteristics – commingling of assets, external
participation, investment purpose, and benefit to participants
72
Introduction to Governmental Accounting
c. Fund Accounting
O 3. Fiduciary Funds – 2 types
O 1. Trust funds – 3 types
O 3. Private-purpose
O “used to report all other trust arrangements under which principal and
income benefit individuals; private organizations, or other governments”
O Must possess 2 characteristics – specific benefits for specific beneficiaries
73
Introduction to Governmental Accounting
c. Fund Accounting
O 3. Fiduciary Funds – 2 types
O 1. Trust funds – 3 types
O 3. Private-purpose
O “used to report all other trust arrangements under which principal and
income benefit individuals; private organizations, or other governments”
O Must possess 2 characteristics – specific benefits for specific beneficiaries
O 2. Agency funds
O “used to report resources held by the reporting government in a
purely custodial capacity”
O Grant funds
O Taxes and fees
74
Introduction to Governmental Accounting
C. Fund Accounting
O How many funds to create?
O As many and as few…
O As required by law
O That promote sound financial administration
O Too many, unnecessary funds result in…
O Inflexibility
O Unnecessary complexity
O Inefficient financial administration
75
Introduction to Governmental Accounting
Questions on Fund Categories & Types
76
Introduction to Governmental Accounting
C. Fund Accounting
O Measurement Focus – what are we measuring?
O Basis of Accounting – when are we measuring it?
77
Introduction to Governmental Accounting
C. Fund Accounting
O Measurement Focus
O Measurement focus determines WHAT is measured in a set of
financial statements
78
Introduction to Governmental Accounting
C. Fund Accounting
O Measurement Focus
O Measurement focus determines WHAT is measured in a set of
financial statements
O Governmental entities are unique in that there can be TWO
measurement focuses
O 1. Current financial resources measurement focus
O Governmental Funds - General, Special Revenue, Capital Project, Debt
Service, Permanent
O 2. Economic resources measurement focus
O Proprietary Funds – Enterprise, Internal Service
O Fiduciary Funds – Trust, Agency
79
Introduction to Governmental Accounting
C. Fund Accounting
O Measurement Focus
O 1. Current Financial Resources
O Measures assets, liabilities, inflows and outflows that affect near-
term liquidity
O 1 year or less
O Measures increases/decreases in current financial (spendable)
resources
O Focus is on fiscal accountability
O It is a more narrow focus, a “sub-set” of the broader economic
resources focus
O Current Assets – Current Liabilities = Fund Balance
80
Introduction to Governmental Accounting
C. Fund Accounting
O Measurement Focus
O 1. Current Financial Resources
O Modified accrual basis of accounting
O Revenue recognition
O Measurable and available
O Account for expenditures of financial resources
O Measurable
O Liability is incurred
O Plan to liquidate from current resources
O Budgeted
O Capital Assets & long-term liabilities are not recorded on Balance
Sheet but as expenditures on St. of Rev, Exp and Change in FB
O Depreciation expense is not recorded in fund
O Calculated “off-books”
81
Introduction to Governmental Accounting
C. Fund Accounting
O Measurement Focus
O 2. Economic Resources
O Measures all asset and liabilities, both current and long-term
O Measures improvement/diminishment in economic position
O Focus is on operational accountability
O [Current Assets + Non-current Assets] – [Current Liabilities + Non-
current Liabilities] = Net Position
82
Introduction to Governmental Accounting
C. Fund Accounting
O Measurement Focus
O 2. Economic Resources
O Accrual basis of accounting
O For Fiduciary funds there are no revenues but “additions to net assets”
O Account for expenses of economic resources
O For Fiduciary funds there are no expenses but “deductions from net
assets”
O Capital Assets & long-term liabilities are recorded on Balance Sheet
O Depreciation expense is recorded in fund
83
Introduction to Governmental Accounting
C. Fund Accounting
O Measurement Focus
O Difference between Expense & Expenditure
O Expense
O When financial and capital assets are consumed they are called
expenses
O Expenses are reported under the economic resources measurement
focus and the accrual basis of accounting
O Used in Government-wide & Proprietary fund statements
O Fiduciary funds have no expenses
O Expenditure
O When financial resources are expended they are called expenditures
O Expenditures are reported under the current financial resources
measurement focus and modified accrual basis of accounting
O Used in all Governmental funds statements
84
Introduction to Governmental Accounting
C. Fund Accounting
O Measurement Focus
Item
Economic Resources ?
Current Financial Resource ?
Financial resources
Yes
Yes
Capital assets
Yes
No
Liabilities normally expected to be
liquidated currently with expendable
available financial resources
Yes
Yes
Liabilities normally NOT expected to
be liquidated currently with
expendable available financial
resources
Yes
No
85
Introduction to Governmental Accounting
C. Fund Accounting
O Measurement Focus
O Current financial resources is a sub-set of economic resources
Economic Resources
Current financial
resources
86
Introduction to Governmental Accounting
C. Fund Accounting
O Basis of Accounting
O Basis of accounting measures WHEN resources are reported
87
Introduction to Governmental Accounting
C. Fund Accounting
O Basis of Accounting
O Basis of accounting measures WHEN resources are reported
O Governmental entities are unique in that there can be TWO basis
of accounting
O 1. Accrual basis – Proprietary & Fiduciary Fund types
O 2. Modified accrual basis – 5 Governmental Fund types
88
Introduction to Governmental Accounting
C. Fund Accounting
O Basis of Accounting
O 1. Accrual basis – Proprietary & Fiduciary Funds
O Transactions are recognized when they occur regardless of when
cash is received or disbursed
O Record revenue when earned regardless of when it is received
O Used in conjunction with economic resources measurement focus
89
Introduction to Governmental Accounting
C. Fund Accounting
O Basis of Accounting
O 2. Modified accrual basis – 5 Governmental Fund types
O Revenues are recognized only to the extent they are “susceptible to
accrual” or when they become both measurable and available to
finance expenditures of the fiscal period
O Expenditures are recognized when liability is liquidated (incurred)
within current fiscal period
O GASB Interpretation 6
O A/P and the like - Liabilities “normally” paid in a timely manner should be
recognized when incurred (30-60 days)
O Clarifies “early in the following year” (not more than a month) for compensated
absences, claims and judgments and long-term debt
O Used in conjunction with current financial resources measurement
focus
90
Introduction to Governmental Accounting
C. Fund Accounting
O Basis of Accounting
Transaction
Accrual Basis
Modified Accrual Basis
Revenues
Measurable / Earned
Measurable / Available
Expenses / Expenditures
Measurable / Incurred
Measurable / Incurred & Due
Capital Assets
Report in Fund Purchased
Operating Expenditure / G.F.A.G.
Depreciation
Expense in Fund Owning Asset
Optional for G.F.A.G.
Debt Issuance
Liability in the Fund
Other Financing Source / G.LTD.A.G.
91
Introduction to Governmental Accounting
C. Fund Accounting
O Measurement Focus & Basis of Accounting
Statements
Government-wide Statements
Governmental Fund
Statements
Fund Type
Measurement Focus
Basis of Accounting
Economic Resources
Accrual
General
Current Financial Resources
Modified Accrual
Special Revenue
Current Financial Resources
Modified Accrual
Capital Project
Current Financial Resources
Modified Accrual
Debt Service
Current Financial Resources
Modified Accrual
Permanent
Current Financial Resources
Modified Accrual
Enterprise
Economic Resources
Accrual
Internal Service
Economic Resources
Accrual
Trust
Economic Resources *
Accrual
Agency
Economic Resources *
Accrual
ALL
Proprietary Fund Statements
Fiduciary Fund Statements
92
Introduction to Governmental Accounting
Questions on Measurement Focus & Basis of Accounting
93
Introduction to Governmental Accounting
D. Basic Transactions
94
Introduction to Governmental Accounting
D. Basic Transactions
O 1. Categories of Transactions
O 5 types of transactions
O 2. Revenues
O Other Financing Sources / Gains
O 3. Expenses / Expenditures
O Other financing Uses / Losses
O 4. Assets
O Investments, Receivables, Inventories, Capital Assets
O 5. Liabilities
O Payables, Compensated Absences, Leases & Long-term liabilities
95
Introduction to Governmental Accounting
D. Basic Transactions
1. Categories of Transactions
O 5 Types of transactions
O Exchange
O Exchange-like
O Non-exchange
O Extraordinary & special items
O Direct changes to net position
O Why is it important to know the difference?
O Determines when the revenue or expense/expenditure is measurable
and available.
96
Introduction to Governmental Accounting
D. Basic Transactions
1. Categories of Transactions – 5 types
O 1. Exchange
O Each party in a transaction gives and receives something of equal value
O Utility charge for example
97
Introduction to Governmental Accounting
D. Basic Transactions
1. Categories of Transactions – 5 types
O 1. Exchange
O Each party in a transaction gives and receives something of equal value
O Utility charge for example
O 2. Exchange-like
O A seller is willing to sell an item to a related or known party for less than
they are willing to sell to a stranger
O Parties to an exchange may be willing to give and receive values that
are similar, but not equal
O Discounts on bulk purchases or immediate payment for example
O For exchange and exchange-like transactions the receivable and
revenue are recognized when the transaction takes place
98
Introduction to Governmental Accounting
D. Basic Transactions
1. Categories of Transactions – 5 types
O 3. Non-exchange
O What is given or received is not of equal or similar value.
O Governments primarily exist to provide a service and not make a profit or
break even
O Subsidize mass transit or recreation activities
O 4 Types of non-exchange transactions
O 1. Derived tax revenues
O 2. Imposed non-exchange revenues
O 3. Government mandated non-exchange transactions
O 4. Voluntary non-exchange transactions
99
Introduction to Governmental Accounting
D. Basic Transactions
1. Categories of Transactions – 5 types
O 3. Non-exchange – 4 types
O 1. Derived tax revenues
O The government is NOT a party to the transaction but benefits from it
O Sales tax revenue from a transaction between a merchant and a
customer for example
O Recognize receivable and revenue (net) when the underlying
transaction takes place
O If revenue is unavailable or unearned, record related deferral or
liability
O Timing – March (Merchant/Customer) – April (Merchant/State) – May
(State/Government)
100
Introduction to Governmental Accounting
D. Basic Transactions
1. Categories of Transactions – 5 types
O 3. Non-exchange – 4 Types
O 2. Imposed non-exchange revenues
O There is NO exchange that takes place
O Ad valorem taxes, fines, penalties, forfeitures for example
O These transactions are typically subject to time requirements
O Recognize receivable as soon as a legally enforceable claim is obtained
O Taxes – lien date or assessment date
O Fines – when imposed by court
O Record revenue at the start of the period for which tax is levied or when fine is
imposed by court
101
Introduction to Governmental Accounting
D. Basic Transactions
1. Categories of Transactions – 5 types
O 3. Non-exchange – 4 Types
O 3. Government mandated non-exchange transactions
O When one level of Government imposes or mandates that another level of
Government perform a service and at least part of the service is funded by
the Government mandating the service be performed
O Federal programs imposed on State; State programs imposed on
County/Municipality for example
O The related receivable and revenue are recorded as soon as all eligibility
requirements are met
O Same exceptions apply for unavailable / unearned revenue – defer if
unavailable or create liability if unearned
102
Introduction to Governmental Accounting
D. Basic Transactions
1. Categories of Transactions – 5 types
O 3. Non-exchange – 4 Types
O 4. Voluntary non-exchange transactions
O Any non-exchange transactions that do not fit the first three categories –
primarily grants and donations
O Formula grant vs. expenditure driven
O Advanced funded vs. re-imbursement funded
O Recognize receivable and revenue when
O All eligibility requirements are met
O All time requirements are met
O Qualifying expenditures are incurred
O Qualifying contingencies are met – matching requirements
103
Introduction to Governmental Accounting
D. Basic Transactions
1. Categories of Transactions – 5 types
O 4. Extraordinary & special items
O Extraordinary
O An event or transaction that is BOTH unusual in nature AND infrequent in
occurrence
O Outside of control of management
O Natural disaster ?
O Not if a hurricane in Florida or a tornado in Oklahoma
O Special
O An event or transaction that EITHER unusual OR infrequent in occurrence AND
is within the control of management.
O Sale of building or land?
104
Introduction to Governmental Accounting
D. Basic Transactions
1. Categories of Transactions – 5 types
O 5. Direct changes to net position
O Economic resources measurement focus
O Increases in net position are reported as revenues or gains
O Decreases in net position are reported as expenses or losses
105
Introduction to Governmental Accounting
D. Basic Transactions
1. Categories of Transactions – 5 types
O 5. Direct changes to net position
O Economic resources measurement focus
O Increases in net position are reported as revenues or gains
O Decreases in net position are reported as expenses or losses
O Current financial resources measurement focus
O Increases in fund balance are reported as revenues or other financing
sources
O Decreases in fund balance are reported as expenditures or other financing
uses
106
Introduction to Governmental Accounting
D. Basic Transactions
1. Categories of Transactions – 5 types
O 5. Direct changes to net position
O Economic resources measurement focus
O Increases in net position are reported as revenues or gains
O Decreases in net position are reported as expenses or losses
O Current financial resources measurement focus
O Increases in fund balance are reported as revenues or other financing
sources
O Decreases in fund balance are reported as expenditures or other financing
uses
O There are 3 exceptions that directly change net position
O 1. Prior period adjustments
O 2. Cumulative effect of a change in accounting principle
O 3. Change in the balance of material supplies inventories accounted for using
the purchases method
107
Introduction to Governmental Accounting
D. Basic Transactions
1. Categories of Transactions
Category
Exchange Transactions
Exchange-like transactions
Nonexchange transactions
Derived tax revenues
Imposed nonexchange
revenues
Government mandated
nonexchange transactions
Voluntary nonexchange
transactions
Receivable Recognition
when transaction takes place
when transaction takes place
Revenue Recognition*
when transaction takes place
when transaction takes place
when underlying transaction
takes place
when underlying transaction
takes place
enforceable legal claim **
enforceable legal claim AND start
of period intended to finance **
eligibility requirements met
eligibility requirements met
eligibility requirements met
eligibility requirements met
* In governmental funds revenue recognition must be deferred until amounts are available
** In the specific case of property taxes, the start of the period the taxes are intended to finance, if earlier
Source: Governmental Accounting, Auditing, and Financial Reporting, page 116
108
Introduction to Governmental Accounting
Questions on Categories of Transactions
109
Introduction to Governmental Accounting
D. Basic Transactions
2. Revenues
O “all increases in fund balance/net position except those arising from
inter-fund reimbursements, inter-fund transfers or long-term debt
proceeds”
O Reported differently depending on the statement type
110
Introduction to Governmental Accounting
D. Basic Transactions
2. Revenues
O Types of Revenue
O Government-wide - Statement of Activities
O 1. Program revenue
O 2. General revenue
111
Introduction to Governmental Accounting
D. Basic Transactions
112
Introduction to Governmental Accounting
D. Basic Transactions
2. Revenues
O Types of Revenue
O Government-wide - Statement of Activities
O 1. Program revenue
O 2. General revenue
O Governmental funds - Statement of Revenues, Expenditures and
Changes in Fund Balances
O 3. Revenues grouped by type
O Taxes, Licenses, Intergovernmental, Charges for Services, Fines, etc…
113
Introduction to Governmental Accounting
D. Basic Transactions
114
Introduction to Governmental Accounting
D. Basic Transactions
2. Revenues
O Types of Revenue
O Government-wide - Statement of Activities
O 1. Program revenue – 3 main categories
O 2. General revenue – categorized by type
O Governmental funds - Statement of Revenues, Expenditures and
Changes in Fund Balances
O 3. Revenues grouped by type
O Taxes, Licenses, Intergovernmental, Charges for Services, Fines, etc…
O Proprietary funds - Statement of Revenue, Expenses and Changes In
Net Position
O 4. Operating revenue
O 5. Non-operating revenue
115
Introduction to Governmental Accounting
D. Basic Transactions
116
Introduction to Governmental Accounting
D. Basic Transactions
2. Revenues
O Types of Revenue
O Government-wide
O Statement of Activities
O 1. Program revenue
O 2. General revenue
O Governmental funds
O Statement of Revenues, Expenditures and Changes in Fund Balances
O 3. Revenues grouped by type
O Taxes, Licenses, Intergovernmental, Charges for Services, Fines, etc…
O Proprietary funds
O Statement of Revenue, Expenses and Changes In Net Position
O 4. Operating revenue
O 5. Non-operating revenue
O Other Financing Sources / Gains
117
Introduction to Governmental Accounting
D. Basic Transactions
2. Revenues
O Types of Revenue O 1. Program – revenues derived directly from the program itself or from
parties outside the government’s taxpayers, as a whole (higher level
government)
O They reduce the net cost of the program to be financed by the government’s
general revenues
O Categorized by function/program type – General Government, Public Safety,
Physical Environment, Transportation, Economic Environment, Human
Services, Culture & Recreation, Court-related
O Charges for services (exchange & exchange-like transactions)
O Program specific operating grants and contributions
O Program specific capital grants and contributions
118
Introduction to Governmental Accounting
D. Basic Transactions
2. Revenues
O Types of Revenue
O 1. Program – revenues derived directly from the program itself or from
parties outside the government’s taxpayers, as a whole (higher level
government)
O 2. General – any revenue not program revenue
O including ad valorem taxes, sales taxes, state revenue sharing, interest
earnings, debt proceeds and transfers
O #1 & #2 - Used in Government-wide Statement of Activities
119
Introduction to Governmental Accounting
D. Basic Transactions
120
Introduction to Governmental Accounting
D. Basic Transactions
2. Revenues
O Types of Revenue
O 3. Revenues grouped by type
O Taxes, Licenses & Permits, Intergovernmental, Charges for Services, Fines &
Forfeitures, Miscellaneous
O Other financing sources separated
O Sale of equipment, debt proceeds, transfers in
O #3 - Used in Governmental fund Statement of Revenues, Expenditures
and Changes in Fund Balance
121
Introduction to Governmental Accounting
D. Basic Transactions
122
Introduction to Governmental Accounting
D. Basic Transactions
2. Revenues
O Types of Revenue
O 4. Operating revenue
O There is no authoritative definition of what constitutes “operating revenue”
O It is “suggested” that the same rules used to determine “cashflow from
operating activities” be used – GASB St. 34
O Special assessments, charges for services, operating grants
O Report net of discounts and allowances
123
Introduction to Governmental Accounting
D. Basic Transactions
2. Revenues
O Types of Revenue
O 4. Operating revenue
O There is no authoritative definition of what constitutes “operating revenue”
O It is “suggested” that the same rules used to determine “cashflow from
operating activities” be used – GASB St. 34
O Special assessments, charges for services, operating grants
O Report net of discounts and allowances
O 5. Non-operating revenue
O Capital grants, contributions, interest earned, gains on disposal of assets
O Transfer activity is separated
O #4 & #5 - Used in Proprietary fund Statement of Revenues, Expenses
and Changes in Net Position
124
Introduction to Governmental Accounting
D. Basic Transactions
125
Introduction to Governmental Accounting
D. Basic Transactions
2. Revenues
O Gains
O Not excess revenue over expenses / expenditures (net income)
O Proceeds received are greater than carrying value – sale of surplus
property or investments
O Full accrual only – proprietary funds and government-wide statements
126
Introduction to Governmental Accounting
D. Basic Transactions
2. Revenues
O Gains
O Not excess revenue over expenses / expenditures
O Proceeds received are greater than carrying value – sale of surplus
property or investments
O Full accrual only – proprietary funds and government-wide statements
O Other financing sources
O Debt Proceeds & Transfers In
127
Introduction to Governmental Accounting
D. Basic Transactions
2. Revenues
O Example 1 – Taxes
O Ad valorem taxes levied for FY15/16 totaled $30,000,000. Tax bills
were mailed on November 1 and are due April 30.
O Early payment discounts are offered at 4% in November, 3% in
December, 2% in January and 1% in February.
O Historically, 10% of taxes are paid in November, 30% in December,
20% in January, 15% in February, 15% in March, 9% in April and 1%
of total tax levy are remain unpaid as of April 30.
O Penalties ($250/month) and interest (5%) begin accruing on May 1.
128
Introduction to Governmental Accounting
D. Basic Transactions
2. Revenues
O Example 1
129
Introduction to Governmental Accounting
D. Basic Transactions
2. Revenues
O Example 2
130
Introduction to Governmental Accounting
D. Basic Transactions
2. Revenues
O Example 3
131
Introduction to Governmental Accounting
Questions on Basic Revenue Transactions?
132
Introduction to Governmental Accounting
D. Basic Transactions
3. Expenses / Expenditures
O Difference between expense and expenditure
O Types of Expenses / Expenditures
O Other financing uses / Losses
133
Introduction to Governmental Accounting
D. Basic Transactions
3. Expenses / Expenditures
O Difference between expense and expenditure
O Expense
O When financial and capital assets are consumed they are called
expenses
O Expenses are reported under the “economic resources” measurement
focus and the “accrual” basis of accounting
O Used in Government-wide & Proprietary fund statements
O Fiduciary funds have no expenses
O Expenditure
O When “financial resources” are expended they are called expenditures
O Expenditures are reported under the “current financial resources”
measurement focus and “modified accrual” basis of accounting
O Used in all Governmental funds statements
134
Introduction to Governmental Accounting
D. Basic Transactions
3. Expenses / Expenditures
O Types of Expense/Expenditure
O Government-wide
O Statement of Activities
O 1. Function / Program Expense – General Government, Public Safety, etc…
O Separate governmental activities from business-type activities
135
Introduction to Governmental Accounting
D. Basic Transactions
136
Introduction to Governmental Accounting
D. Basic Transactions
3. Expenses / Expenditures
O Types of Expense/Expenditure
O Government-wide
O Statement of Activities
O 1. Function / Program Expense – General Government, Public Safety, etc…
O Separate governmental activities from business-type activities
O Governmental funds
O Statement of Revenues, Expenditures and Changes in Fund Balances
O 2. Segregate by type - current (operating), capital outlay and debt service
O 3. Other financing uses
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D. Basic Transactions
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D. Basic Transactions
3. Expenses / Expenditures
O Types of Expense/Expenditure
O Government-wide
O Statement of Activities
O 1. Function / Program Expense – General Government, Public Safety, etc…
O Separate governmental activities from business-type activities
O Governmental funds
O Statement of Revenues, Expenditures and Changes in Fund Balances
O 2. Segregate by type - current (operating), capital outlay and debt service
O 3. Other financing uses
O Proprietary funds
O Statement of Revenue, Expenses and Changes In Net Position
O 4. Operating expenses
O 5. Non-operating expenses
O 6. Transfer activity
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D. Basic Transactions
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D. Basic Transactions
3. Expenses / Expenditures
O Difference between expense and expenditure
O Type of Expenses / Expenditures
O 1. Operating
O 2. Capital outlay
O 3. Debt service
O 4. Depreciation
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D. Basic Transactions
3. Expenses / Expenditures
O Difference between expense and expenditure
O Type of Expenses / Expenditures
O 1. Operating
O 2. Capital outlay
O 3. Debt service
O 4. Depreciation
O Other financing uses
O Inter-fund transfers
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D. Basic Transactions
3. Expenses / Expenditures
O Difference between expense and expenditure
O Type of Expenses / Expenditures
O 1. Operating
O 2. Capital outlay
O 3. Debt service
O 4. Depreciation
O Other financing uses
O Inter-fund transfers
O Types of losses
O 1. Extraordinary
O 2. Special
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D. Basic Transactions
3. Expense / Expenditures
O Type of Expenses / Expenditures
O 1. Operating
O What is operating expense? No rule. GASB 34 suggests using same rules
for determining “cash flows from operating activities”
O Includes all personnel costs and operating costs
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D. Basic Transactions
3. Expense / Expenditures
O Type of Expenses / Expenditures
O 1. Operating
O What is operating expense? No rule. GASB 34 suggests using same rules
for determining “cash flows from operating activities”
O Includes all personnel costs and operating costs
O 2. Capital outlay
O Land, Buildings, Infrastructure, Equipment, CIP, Collections (Art), Software
O Modified accrual only – governmental funds only
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D. Basic Transactions
3. Expense / Expenditures
O Type of Expenses / Expenditures
O 1. Operating
O What is operating expense? No rule. GASB 34 suggests using same rules
for determining “cash flows from operating activities”
O Includes all personnel costs and operating costs
O 2. Capital outlay
O Land, Buildings, Infrastructure, Equipment, CIP, Collections, Software
O modified accrual only – governmental funds only
O 3. Debt service
O Principal (modified accrual only – governmental funds only)
O Interest
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D. Basic Transactions
3. Expense / Expenditures
O Type of Expenses / Expenditures
O 1. Operating
O What is operating expense? No rule. GASB 34 suggests using same rules
for determining “cash flows from operating activities”
O Includes all personnel costs and operating costs
O 2. Capital outlay
O Land, Buildings, Infrastructure, Equipment, CIP, Collections, Software
O modified accrual only – governmental funds only
O 3. Debt service
O Principal (modified accrual only – governmental funds only)
O Interest
O 4. Depreciation (proprietary only)
O Governmental funds – “off books”
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D. Basic Transactions
3. Expenses / Expenditures
O Other financing uses
O Used in Governmental funds
O Non-expenditure
O Original issue discount on debt
O Payments to advance refunding escrow agent
O Reclassification of demand bonds as fund liabilities
O Inter-fund transfer out
Recorded under “General” section of the St. of Activities
O Recorded under “Other financing sources (uses)” in governmental funds
O Proprietary funds?
O
O
O
Required to segregate operating from non-operating
We record under “Transfer Activity”
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D. Basic Transactions
3. Expenses / Expenditures
O Types of Losses
O Not deficit revenues to expenses / expenditures
O Loss – proceeds are less than carrying value
O Sale of surplus property, investments
O Full accrual only – proprietary funds and government-wide
statements
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3. Expenses / Expenditures
O Types of Losses
O Not deficit revenues to expenses / expenditures
O Loss – proceeds are less than carrying value
O Sale of surplus property, investments
O Full accrual only – proprietary funds and government-wide
statements
O 1. Extraordinary
O The underlying event is unusual AND infrequent
O Out of the control of management
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D. Basic Transactions
3. Expenses / Expenditures
O Types of Losses
O Not deficit revenues to expenses / expenditures
O Loss – proceeds are less than carrying value
O Sale of surplus property, investments
O Full accrual only – proprietary funds and government-wide
statements
O 1. Extraordinary
O The underlying event is unusual AND infrequent
O Out of the control of management
O 2. Special
O The underlying event is unusual OR infrequent AND within control 151
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3. Expenses / Expenditures
O Example 1 – Operating Expense/Expenditure
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D. Basic Transactions
3. Expenses / Expenditures
O Example 2 – Capital Outlay
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D. Basic Transactions
3. Expenses / Expenditures
O Example 3 – Depreciation Expense
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D. Basic Transactions
3. Expenses / Expenditures
O Example 3 – Debt Service
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Questions on Basic Expense/Expenditure Transactions?
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D. Basic Transactions
4. Assets & Inflows
O Asset – “resources with present service capacity that the
government presently controls”
O Control – “the government’s ability to utilize a resource’s present
service capacity and ability to determine the nature and manner of its
use”
O Control does not have to be absolute, i.e. grant restrictions
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D. Basic Transactions
4. Assets & Inflows
O Asset – “resources with present service capacity that the
government presently controls”
O Control – “the government’s ability to utilize a resource’s present
service capacity and ability to determine the nature and manner of its
use”
O Control does not have to be absolute, i.e. grant restrictions
O Inflow of resources – “an acquisition of net position by the
government that is applicable to the reporting period”
O Acquisition – involves either new resources coming under the
government’s control or resources already under the government’s
control becoming newly available
O “Revenue”
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D. Basic Transactions
4. Assets & Inflows
O Deferred Inflows
O Deferred Inflows – “acquisition of net position by the government that is
applicable to a future reporting period”
O Property taxes levied in current year to finance the subsequent year’s budget
O A deferred inflow is not an asset
O GASB Statement 63
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D. Basic Transactions
4. Assets & Inflows
O Types of Assets
O Investments
O Gains and losses
O Book value vs. realized?
O Footnote disclosures
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D. Basic Transactions
4. Assets & Inflows
O Types of Assets
O Investments
O Gains and losses
O Book value vs realized?
O Receivables
O Current portion and non-current portion
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D. Basic Transactions
4. Assets & Inflows
O Types of Assets
O Investments
O Gains and losses
O Book value vs. realized?
O Receivables
O Current portion and non-current portion
O Inventories
O Purchase method vs. Consumption method
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D. Basic Transactions
4. Assets & Inflows
O Types of Assets
O Investments
O Gains and losses
O Book value vs. realized?
O Receivables
O Current portion and non-current portion
O Inventories
O Purchase method vs. Consumption method
O Capital Assets
O Tangible vs. intangible
O Depreciation expense
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D. Basic Transactions
4. Assets & Inflows
O Capital Asset Valuation
O Purchased – record at historical cost or estimated cost if actual is
unknown
O Purchased for resale? Treat as investment
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D. Basic Transactions
4. Assets & Inflows
O Capital Asset Valuation
O Purchased – record at historical cost or estimated cost if actual is
unknown
O Purchased for resale? Treat as investment
O Donated – record at estimated fair market value at time of donation
O Economic substance over legal form (purchased for $1.00)
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Introduction to Governmental Accounting
D. Basic Transactions
4. Assets & Inflows
O Capital Asset Valuation
O Purchased – record at historical cost or estimated cost if actual is
unknown
O Purchased for resale? Treat as investment
O Donated – record at estimated fair market value at time of donation
O Economic substance over legal form (purchased for $1.00)
O Intangible – record at historical cost if purchased
O Different GAAP for self-developed asset (software)
O GASB Statement 51
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D. Basic Transactions
4. Assets & Inflows
O Capital Assets
O Capitalization
O The cost to acquire, construct or improve a capital asset is deferred and
allocated over the estimated useful life through depreciation or amortization
expense
O Depreciation Expense – tangible capital assets
O Amortization expense – intangible capital assets
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D. Basic Transactions
4. Assets & Inflows
O Capital Assets
O Capitalization
O The cost to acquire, construct or improve a capital asset is deferred and
allocated over the estimated useful life through depreciation or amortization
expense
O Depreciation Expense – tangible capital assets
O Amortization expense – intangible capital assets
O Capitalization thresholds – equipment, buildings, etc…
O Costs that don’t extend or preserve life of asset are expensed
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D. Basic Transactions
4. Assets & Inflows
O Capital Assets
O Capitalization
O The cost to acquire, construct or improve a capital asset is deferred and
allocated over the estimated useful life through depreciation or amortization
expense
O Depreciation Expense – tangible capital assets
O Amortization expense – intangible capital assets
O Capitalization thresholds – equipment, buildings, etc…
O Costs that don’t extend or preserve life of asset are expensed
O Exceptions to Depreciation
O Land
O Construction in progress
O Assets with indefinite useful life – collections of art
O Infrastructure reported using the modified approach
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D. Basic Transactions
4. Assets & Inflows
O Capital Assets
O Calculating depreciation
O Must be systematic and rational method
O Allocate net cost over estimated useful life
O Depreciation expense may be calculated for
O Individual assets
O A class of assets – all roads
O A network of assets – a highway with sidewalks and lighting
O A sub-system of assets within a network – separate roads, sidewalks and
lighting
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D. Basic Transactions
4. Assets & Inflows
O Capital Assets
O Modified accrual
O Debit expenditure – capital outlay object codes / credit cash, A/P
O Calculate depreciation expense for government-wide statements and notes
but do not record in fund
O Convert to government-wide – credit expenditure, debit asset
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D. Basic Transactions
4. Assets & Inflows
O Capital Assets
O Modified accrual
O Full Accrual
O Debit asset / credit cash, A/P
O Debit depreciation expense / credit accumulated depreciation
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D. Basic Transactions
4. Assets & Inflows
O Capital Assets
O Modified accrual
O Full Accrual
O Reporting
O General capital assets are reported only in Governmental Activities column of
the Government-wide financial statements
O Proprietary capital assets are reported in both Government-wide financial
statements & Proprietary Fund financial statements
O Fiduciary capital assets are reported only in Statement of Fiduciary Net Assets
at the fund level financial statements
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D. Basic Transactions
4. Assets & Inflows
O Example 1
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D. Basic Transactions
4. Assets & Inflows
O Example 2
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D. Basic Transactions
4. Assets & Inflows
O Example 3
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Questions on Assets & Inflows
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Introduction to Governmental Accounting
D. Basic Transactions
5. Liabilities & Outflows
O Liability – “present obligation to sacrifice resources that the
government has little or no discretion to avoid”
O Avoid – an obligation is only a liability if it is legally enforceable or a
“constructive” liability
O Contract, third-party legislation or regulation, external party
O Constructive – if “social, moral, or economic consequences leave the
government little or no discretion to avoid the sacrifice of resources”
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D. Basic Transactions
5. Liabilities & Outflows
O Liability – “present obligation to sacrifice resources that the
government has little or no discretion to avoid”
O Avoid – an obligation is only a liability if it is legally enforceable or a
“constructive” liability
O Contract, third-party legislation or regulation, external party
O Constructive – if “social, moral, or economic consequences leave the
government little or no discretion to avoid the sacrifice of resources”
O Outflow of resources – “consumption of net position by the
government that is applicable to a reporting period”
O Consumption – involves either using up an existing resource or using up
a resource as it is acquired
O “Expense”/”Expenditure”
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D. Basic Transactions
5. Liabilities & Outflows
O Deferred Outflows
O Deferred Outflows – “consumption of net position by the government
that is applicable to a future reporting period
O Resources provided to grantee before grantee has met related time
requirements but after all other eligibility criteria have been met
O A deferred outflow is not a liability
O GASB Statement 63
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D. Basic Transactions
5. Liabilities & Outflows
O Types of Liabilities
O Payables
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D. Basic Transactions
5. Liabilities & Outflows
O Types of Liabilities
O Payables
O Accrued Liabilities
O Compensated Absences – Current & non-current portions
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Introduction to Governmental Accounting
D. Basic Transactions
5. Liabilities & Outflows
O Types of Liabilities
O Payables
O Accrued Liabilities
O Compensated Absences – Current & non-current portions
O Leases, Notes, Loans payable
O Current and non-current portion
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D. Basic Transactions
5. Liabilities & Outflows
O Types of Liabilities
O Payables
O Accrued Liabilities
O Compensated Absences – Current & non-current portions
O Leases, Notes, Loans payable
O Current and non-current portion
O Order of presentation
O Liquidity vs. Classified
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Introduction to Governmental Accounting
D. Basic Transactions
5. Liabilities & Outflows
O Long term Liabilities
O Modified accrual
O Debit expenditure – P&I object codes / credit cash, A/P
O Calculate loan balances for government-wide statements and notes but do
not record in fund
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Introduction to Governmental Accounting
D. Basic Transactions
5. Liabilities & Outflows
O Long term Liabilities
O Modified accrual
O Full Accrual
O Debit LTD for principal reduction / credit cash, A/P
O Debit interest expense / credit cash, A/P
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Introduction to Governmental Accounting
D. Basic Transactions
5. Liabilities & Outflows
O Long term Liabilities
O Modified accrual
O Full Accrual
O Reporting
O General long-term debt is reported only in Governmental Activities column of
the Government-wide financial statements
O Proprietary long-term debt is reported in both Government-wide financial
statements & Proprietary Fund financial statements
O Fiduciary long-term debt is reported only in Statement of Fiduciary Net Assets
at the fund level financial statements
187
Introduction to Governmental Accounting
D. Basic Transactions
5. Liabilities & Outflows
O Example 1
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Introduction to Governmental Accounting
D. Basic Transactions
5. Liabilities & Outflows
O Example 2
189
Introduction to Governmental Accounting
D. Basic Transactions
5. Liabilities & Outflows
O Example 3
190
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Questions on Liabilities & Outflows
191
Introduction to Governmental Accounting
E. Financial Statements
O Relationship between Basic F.S. & C.A.F.R.
General information on Government
structure, services and environment
Mandatory Reporting
Management's Discussion & Analysis
Government-wide Financial Statements
Governmental Fund Financial Statements
Proprietary Fund Financial Statements
Fiduciary Fund Financial Statements
Notes to Financial Statements
Other Required Supplementary Information
Introductory Section
Financial Section
CAFR - Comphrehensive
Annual Financial Report
Supplementary Information - Individual fund
schedules, Information on discretely
presented component units and any other
supplemental information not required by
GAAP
Trend and non-financial data
Statistical Section
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Introduction to Governmental Accounting
The End!
194