Jennifer Rodenbeck, CPA, CPFO
City of Cedar Falls Finance Manager/City Clerk
July 24, 2013
Jennifer.rodenbeck@cedarfalls.com
Class Today
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Class List with Email
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Definitions
Breaks
Introductions
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What City you are from
Approximate size of City
What is your position
How long in your position
Most difficult thing you are dealing with currently at
work as it relates to finances
You are full of Bologna (Baloney)
On Cloud nine
Try to Understand
Basic Accounting
 Assets – Definition: Resources of the City that may or may not
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be currently available to conduct the activity of the City. Ex.
Cash, investments, equipment (Debit Balance)
Liabilities – Definition: Demands and obligations upon the City.
Ex. Accounts Payable(Credit Balance)
Fund Balance (Equity) – Credit Balance
Revenues – Credit Balance
Expenses – Debit Balance
 Double Entry – Definition: Every entry has two parts, a debit and a
credit
 Journal Entry – Definition: A balanced set of entries used to reflect
transactions.
Assets
Liabilities
Revenues
Expenses
Fund Balance (Net Difference)
Governmental Accounting
Why different???
 Funds
 Double - Double Entries for everything
Manual Accounting
Why is it important???
 Understanding what your software is doing!
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Why???
 Doesn’t Balance
 Make Corrections
 Setting up new software
General Ledger
Why is it important to us???
 Accurate information for annual reporting, budgeting
 Audit
 Public record
MY CITY:
LEDGERS
 Three Ledgers needed
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General Ledger
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Subsidiary Ledger
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Budget Ledger
 Double Entry Accounting: Every entry has two
parts, a debit and a credit within each of the ledger
types.
GENERAL LEDGER
 Definition: The fund summary or monthly recording
of activities which combine the values of the
subsidiary and budgetary ledgers to establish financial
position of the City.
MY CITY FINANCIAL PICTURE
GENERAL
LEDGER/
JOURNAL
Checking
Revenue Control
Expenditure Control
Reserves
Unappropriated
Surplus
Cash/Investments
Accounts Receivable
Long Term Debt
Depreciation
Savings
Investments
SUBSIDIARY LEDGER
 Definition: The record of detail used for individual
accounts within a cost center and/or fund.
 Each line item or account number has a running total
throughout the year
 Each line item or account number must belong to a
larger grouping: revenue type or department or
function
MY CITY FINANCIAL PICTURE
SUBSIDIARY
LEDGER/
JOURNAL
Receipt
Register
Revenue
Line
Items
Transfers
In
Expenditure
Register
Expense
Line
Items
Transfers
Out
BUDGET LEDGER
 Definition: The record of budgetary expenditures
compared to the allocated budget for that function,
fund or project.
 Used to monitor or control revenues by type
 Used to monitor or control expenditures by functions
 Usually some portion of account number or code is
used to generate totals for ledger (chart of accounts)
MY CITY FINANCIAL PICTURE
BUDGET
LEDGER/
JOURNAL
Revenue
Controls
Expenditure
Controls
Property
Taxes
Other
City
Taxes
Intergovernmental
Use of
Money
and
Property
Public
Safety
Public Works
Licenses
and
Permits
Charges
for
Services
Special
Assessments
TIF
Taxes
Community
and
Economic
Development
Business
Type
Activities
Misc
General
Government
Other
Financing
Sources
Health
and
Social
Services
Culture and
Recreation
Debt
Service
Capital Projects
Transfers
Sale
Proceeds of
(In and Out)
of
Bonds
Fixed
Asset
Sales
Budget
City Standard Chart of Accounts
Definition: A standardized method to insure consistency
between budget, accounting, and financial reporting
activities.
Account Numbers
Expense:
001-1010-6010 – General Fund – Police – Full Time Salary
Revenue:
001-1010-1-4765 – General Fund – Police – Misc Revenue - Fines
Cash:
001-1110 – General Fund – Cash
Accounts Payable:
001-2020 – General Fund – Accounts Payable
Fund Balance:
001-3860 – General Fund – Unreserved Fund Balance
A PRACTICAL GUIDE
GENERAL LEDGER
Assets
Revenue Control
Liabilities
Fund Balance
Expenditure Control
SUBSIDIARY LEDGER - Revenue
Property Taxes
Revenue Control
Hotel/Motel Taxes
Interest Income
SUBSIDIARY LEDGER - Expenditures
Office Supplies
Expenditure Control
Professional Fees
Capital Outlay
BUDGET LEDGER
Estimated Revenues
Appropriations
Budget Fund Balance
GENERAL LEDGER
001-2020 Accts Payable
001-1110 Cash
$5,000
001-3860 Unreserved Fund Balance
$5,000
Dr. Cash $5,000
Cr. Equity
$5,000
- To record beginning balance
BUDGET LEDGER
Estimated Revenues
$50,000
Appropriations
$50,000
Budget Fund Balance
$0
Received the following revenues:
$40,000 Property Tax Revenue
$2,000 Building Permits
$1,000 Interest Income
Dr. Cash
$43,000
Cr. P/T Rev
Cr. Bldg Permit Rev
Cr. Int Income
$40,000
$ 2,000
$ 1,000
Total
$43,000
$43,000
SUBSIDIARY LEDGER - Revenue
001-4000 Property Taxes
$40,000
001-1900 Revenue Control
$43,000
001-4122 Building Permits
$2,000
001-4300 Interest Income
$1,000
GENERAL LEDGER
001-1110 Cash
001-2020 Accts Payable
$5,000
$43,000
001-3860 Unreserved Fund Balance
$5,000
$43,000
BUDGET LEDGER
Estimated Revenues
$50,000
Appropriations
$50,000
$43,000
Budget Fund Balance
$43,000
$0
Paid the following expenditures:
$3,000 New City Clerk Desk
$10,000 Audit Fee
$20,000 Police Car
Dr. Office Supp $3,000
Dr. Prof Fees $10,000
Dr. Cap Outlay $20,000
Cr. Cash
$33,000
Total
$33,000
$33,000
SUBSIDIARY LEDGER - Expenditures
001-6506 Office Supplies
$3,000
001-2900 Expenditure Control
$33,000
001-6401 Professional Fees
$10,000
001-6700 Capital Outlay
$20,000
GENERAL LEDGER
001-1110 Cash
$5,000
001-2020 Accts Payable
$33,000
$43,000
$15,000
001-3860 Unreserved Fund Balance
$33,000
$5,000
$43,000
$15,000
BUDGET LEDGER
Estimated Revenues
$50,000
$43,000
Appropriations
$33,000
$50,000
$17,000
$7,000
Budget Fund Balance
$43,000
$0
$33,000
$10,000
Annual Financial Report
City of Boondocks
 Cash on Hand at Beginning of Year = $10,000
 Only One Fund – General Fund
 Received the following revenues:
 Property taxes - $75,000
 Mobile home taxes = $1,000
 Interest Income = $2,000
 Electrical Permits = $5,000
 Swimming Pool receipts = $20,000
 Library donation = $30,000
 Paid the following expenses:
 Staff training = $2,000
 Building repair = $10,000
 Auditor = $25,000
 Engineer Study = $50,000
 Clerk’s desk = $5,000
 Total budgeted revenues = $200,000
 Total budgeted expenses = $180,000
Entries & Annual Financial Report Preparation
Payroll
• Gross Payroll – payroll + city share of benefits =
• TOTAL COST OF PAYROLL
EE
Gross Wages
ER
$500
FICA/Medicare (7.65%)
38
38
IPERS (5.95%/8.93%)
30
45
Fed/State W/H
10
Net Wages
Total Benefits Paid by City
Total Cost to City
$422
83
$583
Dr. Salaries
Dr. FICA
Dr. IPERS
Cr. Cash
Cr. Cash
Cr. W/H Liab
$500
$ 38
$ 45
Total
$583 $583
$422
$ 83
$ 78
GENERAL LEDGER
001-1110 Cash
001-2120 Accrued Payroll Taxes
$422
$78
$83
$505
001-3860 Unreserved Fund Balance
$583
SUBSIDIARY LEDGER - Expenditures
001-6020-6010 Salaries
$500
Expenditure Control
$583
001-6020-6110 FICA
$38
001-6020-6130 IPERS
$45
GENERAL LEDGER
001-1110 Cash
001-2120 Accrued Payroll Taxes
$422
$78
$83
$505
$78
$78
$583
001-3860 Unreserved Fund Balance
$583
Assets + Liab = Equity
Voided Checks
001-1110 Cash on Hand
Journal Entry:
001-4310
001-1110
DR
001-4310 Rents
CR
25.00
Returned: Bad check for
rental
25.00
Sale of Bonds
300-1110 Cash on Hand
Journal Entry:
300-1110
300-4820
DR
300-4820 Proceeds from
Bonds and Premiums
CR
250,000
Bond Fund
250,000
Investment
001-1110 Cash on Hand
001-1140 Investments
$2,500.00
Journal Entry:
001-1140
001-1110
DR
$2,500.00
CR
2,500.00
Purchased a CD for
General Fund
2,500.00
Investment
001-1110 Cash on Hand
001-1140 Investments
$2,500.00
Journal Entry:
DR
001-1140
001-1110
001-4300
$2,500.00
$2,500.00
________
$0
CR
$2,500.00
CD Redeemed for
General Fund
$2,600.00
$100.00
interest income
Co-Mingled Investments
001-1110 Cash on Hand
Journal Entry:
DR
001-1140
2,500.00
051-1140
2,500.00
052-1140
5,000.00
001-1140 Investments
CR
Purchase a CD for
General, Refuse & Sewer
001-1110
2,500.00
051-1110
2,500.00
052-1110
2,500.00
999-1110
10,000.00
999-1140
10,000.00
Petty Cash
001-1110 Cash on Hand
001-1120 Petty Cash
$200.00
Journal Entry:
001-1120
001-1110
DR
$200.00
CR
200.00
Set up a petty cash fund
200.00
Transfers
Journal Entry:
001-6910
DR
20,000.00
001-1110
206-1110
206-4830
CR
Transfers Out
20,000.00
20,000.00
Cash
Cash
20,000.00
Are they authorized or budgeted?
Transfers In
Refunds
 Do you have a revenue line item for refunds?
 Do you allow refunds against expense line items?
 How do you handle credits from a vendor?
Who cares? How can the City monitor and
control it?
Control/monitor?
 Budget Control
 Definition: A limit of expenditures imposed when the
Council adopts the budget.
 Expectation of revenues based upon information availability
during the budget process.
 Budget Amendment
 Definition: Alternation of adopted budget approved by the
Council after conducting a public hearing (384.18)
 Unappropriated Surplus
 Definition: Available cash and investments in excess of all
revenues, expenditures and reserve liabilities.
Type of Reports
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Budget to Actual Reports
Bank Reconciliation
Annual Financial Report
Audit Report
Annual Budget Forms
List of Long-Term Liabilities (Bonds, separate by
type of bond)
 Street Report
 Grant Reports
 TIF Report
Audit Report
 Cash Basis vs. GAAP
 GAAP – Definition: Generally Accepted Accounting
Principles
Fund Balance/Reserves
 Reserves – Definition: Accounts used to earmark funds
designated for a special purpose by the Council.
 GASB – Definition: Governmental Accounting Standards Board
 GASB 54 – New Classifications of Fund Balance (Governmental
Funds only):
 Nonspendable – By nature can’t be spent (Reserved for inventories)
 Restricted – Limitation established by external creditor or law, or
legislation
 Committed – Self imposed - highest level of authority (Council)
 Assigned – Self imposed – intended use by decision making body or
official designated
 Unassigned
GASB 54 Exercise
 Street Fund (Road Use Tax)  Local Option Sales Tax Fund –
 Tourism Fund (H/M Tax) –
 TIF Fund –
 Block Grant Fund –
 Bond Fund –
 Cemetery Perpetual Care Fund –
 Pool Capital Fund  Sewer Fund -
GASB 54 Exercise
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Street Fund (Road Use Tax) – Restricted – Iowa Code
Local Option Sales Tax Fund – Restricted - Voters
Tourism Fund (H/M Tax) – Restricted - Voters
TIF Fund – Restricted – Iowa Code
Block Grant Fund – Restricted – Grantor
Parking Fund – Committed – Council by Ordinance
Bond Fund – Restricted – Bond Restriction
Cemetery Perpetual Care Fund – Restricted – Iowa Code
Pool Capital Fund – Assigned – Internally decide to keep
the capital fund
 Sewer Fund – N/A – only governmental funds
GASB 54 – Fund Types
 GASB 54 also gives more clarification on fund types:
 Special Revenue – used to account for and report
specific revenue sources that are restricted or
committed for a specific purpose
 Capital Projects – used to account for and report
financial resources restricted, committed, or assigned
for capital outlays.
Other Accounts
 Library Funds
 Fire Funds
 Donations – separate foundation
Other Topics
 GASB 63/65 – Use of the term Deferred and Equation
 Capital Assets
 Imaging Systems
 Computer Software
 Internal Controls
 New Audit Requirements
 Other????
Resources
 Code of Iowa – Chapter 384
 Auditors
 State Auditor’s Office
 Government Finance Officers Assoc.
 GFOA
 League of Iowa Cities
 Mentors
 Department of Management
 Software support