Govt. Reporting - 1
GOVERNMENTAL REPORTING
City Council
Budgetary Hearing
Govt. Reporting - 2
GOVERNMENTAL REPORTING MODEL
Government Entity
Reports
Government-Wide
Financial Statements
Fund
Financial Statements
Notes to
Financial Statements
Required
Supp. Information
Statement of
Activities
Government
Funds
Reconciliation
Schedules
MD&A
Statement of
Net Assets
Proprietary
Funds
Other
Notes
Budgetary
Comparisons
Fiduciary
Funds
Infrastructure
Assets
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Overview
 A government should establish those
funds required by law and the specific
operating and management needs of the
government entity
 A general rule is that all activities should
be accounted for in the general fund
unless specifically required by law or the
different measurement focus used for
proprietary and fiduciary funds
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Governmental Funds Worksheets
 Each of the five governmental funds will
report two fund-based financial
statements:
– The balance sheet
– The statement of revenues, expenditures,
and changes in fund balance
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Special Revenue Funds
 Special revenue funds account for the
proceeds of specific revenue sources that
are restricted for specified purposes
 Includes resources and expenditures for
operations, such as public libraries, when
a separate tax is levied for their support
 Accounting for special revenue funds is
the same as for the general fund
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Capital Projects Funds
 Capital projects funds account for
financial resources that are specified for
the acquisition or construction of major
capital facilities or improvements that
benefit the public
– A separate capital projects fund is created at
the time the project is approved and ceases
at its completion
– Uses the modified accrual basis of
accounting
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Capital Projects Funds
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No fixed assets or depreciation are recorded
No long-term debt is recorded
Typically do not have annual operating
budgets
A capital budget is prepared as a basis for
selling bonds to finance a project, and the
capital budget is the control mechanism for
the length of the project
The capital budget for the project may, or
may not, be formally recorded in the accounts
The fund records capital outlays as
expenditures
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Debt Service Funds
 Debt service funds account for the
accumulation and use of resources for
the payment of general long-term debt
principal and interest
 General long-term debt obligations:
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Serial bonds
Term bonds
Special assessment bonds
Notes and warrants
Capital leases
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Debt Service Funds
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The accounting and financial reporting for debt
service funds are the same as for the general
fund
The modified accrual basis of accounting is used
– Only that portion of the long-term debt that
has matured and is currently payable is
recorded
– Interest payable on long-term debt is not
accrued; interest is recognized as a liability
only when it comes due and payable
Budget entries are not required, but often used
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Permanent Funds
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Permanent funds are established in those
cases in which there is a donor restriction
that the fund principal must be preserved
but the income from these permanent funds
is required to be used to benefit the
government’s programs or its general
citizenry
The modified accrual basis of accounting is
used in this fund and the financial
statements for the permanent funds are the
same as for all other governmental funds
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Governmental Funds
Financial Statements
 The required financial statements are (1)
the governmental funds balance sheet
and (2) the governmental statement of
revenues, expenditures, and changes in
fund balance
– The statements will be prepared for each
individual governmental fund and these
individual fund statements are the
foundation for the financial statements
prepared for the governmental entity
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Governmental Funds Financial
Statements
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The fund-based financial statements for the
governmental entity’s annual report separately
report only major governmental funds, not
necessarily individually each of the five
governmental funds
GASB 34 specifies that the general fund is
always a major fund
Some of the other governmental funds may not
be determined to be major funds, and these
non-major funds are aggregated and reported
in a single column as other governmental funds
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Governmental Funds Financial Statements

Both of the following criteria should be met to be
classified as major :
1. 10 percent criterion: Total assets, liabilities,
revenues, or expenditures/expenses of that
individual governmental or enterprise fund are at
least 10 percent of the corresponding total for all
funds of that category or type
2. 5 percent criterion: Total assets, liabilities,
revenues, or expenditures/expenses of the
individual governmental fund or enterprise fund
are at least 5 percent of the corresponding total
for all governmental plus enterprise funds
combined
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Enterprise Funds
 Enterprise funds accounts for operations
of governmental units that charge for
services provided to the general public
– They have a measurement focus of all
economic resources and use the accrual
basis of accounting
– They report fixed assets, which are
depreciated, and long-term debt, if issued,
– They focus on income determination and
capital maintenance
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Enterprise Funds
The financial statements for proprietary funds are
very similar to those for commercial entities:
1. The statement of net assets (balance sheet),
2. The statement of revenues, expenses, and
changes in fund net assets (income statement)
3. The statement of cash flows
 Budgeting in the proprietary funds also has the
same role as in commercial entities

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Enterprise Funds
 Financial statements for the proprietary
funds
– If a governmental entity has more than one
enterprise fund, each must be individually
assessed by both the 10 percent criterion
and the 5 percent criterion tests to
determine whether it is a major fund
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Enterprise Funds
 Statement of net assets
– Proprietary funds report their own fixed
assets, investments, and long-term liabilities
– GASB 34 specifies that the net assets section
be separated into three components:
1. Invested in capital assets, net of related debt
2. Restricted because of restrictions beyond the
government’s control
3. Unrestricted
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Enterprise Funds
 Statement of revenues, expenses, and
changes
– A separation of operating and nonoperating
revenues and expenses is made to provide
more information value regarding the
operations of the proprietary funds
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Enterprise Funds
 Statement of cash flows
– Because of the large number of capital asset
acquisition and financing transactions, the
GASB specified four sections:
1. Cash flows from
2. Cash flows from
3. Cash flows from
activities
4. Cash flows from
operating activities
noncapital financing activities
capital and related financing
investing activities
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Internal Service Funds
 Internal service funds account for the
financing of goods or services provided
by one department or agency to other
departments or agencies on a costreimbursement basis
– These services are not available to the
general public, making it different from the
enterprise fund
– Accounting and financial reporting for
internal service funds are the same as for
enterprise funds or for commercial entities
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Internal Service Funds
 The accrual basis is used to measure
revenue and expenses
– The balance sheet may include fixed assets,
which are depreciated, and long-term debt,
if issued
– The statement of revenue, expenses, and
changes in fund net assets reports the
income for the period
– The statement of cash flows is also required
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Trust Funds
 Trust funds are a fiduciary fund type that
accounts for resources held by a
government unit in a trustee capacity
 The governmental unit acts as a fiduciary
for monies or properties held on behalf
of individuals, employees, or other
governmental agencies
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Trust Funds
 The accrual basis of accounting is used
– The financial statements required are the
statement of fiduciary net assets, and the
statement of changes in fiduciary net assets
– The statement of fiduciary net assets
includes all trusts and agency funds
– The statement of changes in fiduciary net
assets includes only the trust funds because
agency funds do not have a net asset
balance
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Trust Funds
 Private-purpose trust funds account for
trust agreements for which the principal
and/or income benefits specific
individuals, private organizations, or
other governments
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Agency Funds
 Agency funds are a fiduciary fund type
that accounts for resources held by a
governmental unit as a custodial agent
for individuals, private organizations,
other funds, or other governmental units
– Uses the accrual basis of accounting
– Because these funds are custodial in nature,
assets always equal liabilities and there is no
fund equity
– The financial statement for agency funds is
the statement of fiduciary net assets
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The Government Reporting Model
 GASB 34 specifies the reporting model
 What organizations comprise the
reporting entity?
– The primary government
– A component unit for which the primary
government is financially accountable
– Any organization that has a significant
relationship with the primary government
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The Government Reporting Model
 What constitutes financial accountability?
– Financial accountability is evidenced when
the primary government appoints a majority
of the organization’s governing board
– Financial accountability may also exist if the
organization has a separately elected or
appointed board but fiscally depends on the
primary government for the financial
resources required to operate
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GOVERNMENT-WIDE
Statement of Net Assets
 Format: Assets – Liab. = Net Assets
 Columns for:
– Governmental activities (excluding fiduciary)
• Includes Internal Service Fund
– Business-type activities
– Total of the above
– Component units (shown separately)
• Distinguishable
• Own taxing authority
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GOVERNMENT-WIDE
Statement of Activities
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Full accrual
Format: Based on functions or programs
Expenses include depreciation
General revenues (shown at bottom)
– Not tied to specific program
– Includes:
• Contributions to permanent endowments
• Special items
• Extraordinary items
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BUDGETARY COMPARISONS
 Original budget and final budget
 Same format as original budget
 Variance column is encouraged
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OTHER REQUIRED
SUPPLEMENTARY INFORMATION
 MD&A
 Infrastructure Assets
– Roads, sewer systems, etc.
– Modified approach (no depreciation)
• Manages infrastructure assets through up-dated
inventory, periodic assessment, estimates annual
amount to preserve assets
• Documents eligible infrastructure assets are being
preserved
 Other note disclosures
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CONVERSION OF STATEMENTS
Government Funds to Government-wide
 Convert expenses to full accrual
 Change special items (proceeds on sale
of land to gain on sale of land)
 Adding internal service funds to
governmental activities
 Eliminating interfund activities
 Eliminating fiduciary funds
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CONVERSION OF STATEMENTS
Government Funds to Government-wide
 Record capital assets, remove expenditures
for capital outlays, record depreciation
 Change “proceeds on bonds” to liabilities,
change expenditures for principal payments
to debt reduction, adjust for interest accruals
 Convert revenue recognition to full accrual
Continued
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RECONCILIATION SCHEDULES
Fund balances in Governmental Funds
to
Government-wide Net assets
Net change in Governmental Fund Balances
to
Government-wide change in Net assets