The New Blue Book
Presented by:
Anne A. Fritz, Director of Finance
City of St. Petersburg FL
Agenda
• Using the new Blue Book as a guide
– Overview
– Elements of financial statements
– Entity wide financial statements
– Fund Financial Statements
– Proprietary Funds
Accounting, Financial Reporting and the
Financial Statement Audit: An Overview
• Accounting
– Assembling relevant data on all transactions and
events
– Governments must analyze the economic substance of
events and transactions
– Classifying all various components of a transaction or
event
– Recording the identified transaction
– Thus is the process of assembling, analyzing,
classifying and recording data relevant to transactions
– Is the primary the responsibility of management
Accounting, Financial Reporting and the
Financial Statement Audit: An Overview
• Financial Reporting
– The process of taking the information thus
assembled, analyzed, classified, and recorded and
providing it in usable form to those who need it
– Interim financial reporting
– Special purpose external financial reporting
– General purpose financial reporting
• Display
• Disclosure
• Supporting Information
Supporting information
• Is information designed to provide operational,
economic, or historical context for the financial
statements themselves or for notes to the
financial statements
• Sometimes mandated by GASB (required
supplementary information - RSI), or otherwise is
supplementary information (SI) (SI is optional)
• Includes more detailed information than the
financial statements
(7) Elements of financial statements
• Assets: resources with present service
capacity that the government presently
controls
– Control refers to a government’s ability
• To utilize a resource’s present service capacity; and
• To determine the nature and manner of its use
– Does not have to be absolute
• Normally results from legal ownership
– Control must result from a past event (tax levy)
rather than an inherent power (ability to tax)
Elements of financial statements,
continued
• Liabilities: present obligations to sacrifice
resources that the government has little or no
discretion to avoid
– “Avoidability” is crucial – an obligation that can be
avoided is not a liability.
– Normally an obligation will be deemed
unavoidable because it is legally enforceable:
• Either pursuant to a contract (payables); or
• As a result of third-party legislation (environmental
regulations)
Elements of financial statements,
continued
• Legal enforceability is not essential to liability
recognition
• An obligation may need to be recognized as a
constructive (inferred) liability if “social,
moral, or economic consequences leave the
government little or no discretion to avoid the
sacrifice of resources”
• Commitments from liabilities
• A liability must involve an external party
Elements of financial statements,
continued
• Inflow of resources: an acquisition of net position
by the government that is applicable to the
reporting period
– Acquisition involves either
• New resources coming under the government’s control
(occurrence of a taxable sale); or
• Resources already under the government’s control becoming
newly available (meeting eligibility requirements for a grant
that provided cash in advance)
– Either way, acquisition will always result in either a
net increase in assets or a net decrease in liabilities
Elements of financial statements,
continued
• Outflow of resources: consumption of net
position by the government that is applicable
to a reporting period
– Consumption may involve either
• Using up an existing resource (cash); or
• Using up a resource as it is acquired (employee labor)
– Either way, the result of consumption will always
be a net decrease in assets or a net increase in
liabilities
Elements of financial statements,
continued
• Deferred inflow of resources: acquisition of net position by the
government that is applicable to a future reporting period
– A given item that meets the definition of inflow of resources, but
relates to a future period, is a deferred inflow of resources (property
taxes levied in the current year to finance the subsequent year’s
budget)
– Don’t confuse with liabilities – example: grant received prior to
meeting eligibility requirements does not meet the definition of
deferred inflow because
• It involves no acquisition of resources resulting in either a net increase in
assets or a net decrease in liabilities (the asset cash received) from the grantor
is counterbalances by a related liability to the grantor); and
• It also meets the definition of liability because it represents a present
obligation to sacrifice resources that the government has little or no discretion
to avoid
Elements of financial statements,
continued
• Deferred outflow of resources: consumption of net position
by the government that is applicable to a future reporting
period
– A given item that meets the definition of outflow of resources,
but relates to a future period, is a deferred outflow of resources
(resources provided to a grantee before the grantee has met
related time requirements, but after all other eligibility criteria
have been met)
– Don’t confuse with assets – example: prepaid rent does not
meet the definition of a deferred outflow of resources because:
• It involves no consumption of resources that results in either a net
decrease in assets or a net increase in liabilities (the asset prepaid rent
simply replaces the asset cash)
• It does meet the definition of an asset because it represents access to
present service capacity that is under the control of the government
Elements of financial statements,
continued
• Net position: the residual of all other
elements presented in a statement of financial
position
– The difference between assets + deferred
outflows of resources, on the one hand, and
liabilities + deferred inflows of resources, on the
other, constitutes the net position
Essential accounting data
characteristics
•
•
•
•
•
•
Understandability
Reliability
Relevance
Timeliness
Consistency
Comparability
GAAFR
Government-Wide Financial Reporting
General Rules
• Government-wide financial reporting requires
– Data reported in governmental funds using
current financial resources measurement focus
(modified accrual) be converted to economic
resources measurement focus (full accrual
accounting)
– Redundancy resulting from interfund activity be
eliminated
Converting the Data
• Most accounting systems for local
governments are organized around funds
• Series of steps from “budget-based”
accounting to modified accrual and accrual
– Budget to modified accrual (if necessary)
– Modified accrual to accrual
Balance Sheet vs. Statement of Net
Position
• Two types of differences
• Governmental funds report only those assets
and liabilities that are considered relevant to
flows and balances of current financial
resources. (modified accrual) The
government-wide statement of Net Position
report all assets and liabilities (accrual)
• What does that include?
– Capital Assets of general government
– Deferred charges for debt issuance costs
– Inventories and prepaid assets (if not
otherwise reported)
– Long-term debt
– Liability for accrued interest
– Liabilities for certain accrued obligations not
recognized in governmental funds
– Eliminate liability for earned but unavailable
deferred revenue
Second Difference?
• Internal service funds (proprietary) are to be
included as part of the governmental activities
whenever they primarily serve governmental funds
(which is usually the case)
– Assets & liabilities of internal service funds
• Proprietary fund combining and individual fund
statements will include the internal service funds.
Converting Governmental Fund
Operating Statements to
Government-wide Statement of
Activities
Five Types of Differences
• #1: Accrual accounting: include only
transactions that affect Net Position where
modified accrual (governmental funds)
include transactions that impact net current
financial resources but do not affect total Net
Position i.e. capital outlays, debt service
principal payments
Five Types of Differences
• #2: Proceeds from sale of capital assets are
reflected in their entirety in governmental
fund operating statements. Only the gain or
loss on the sale is reflected in governmentwide statements
Five Types of Differences
• #3: Governmental funds do not report “gains”
and “losses” but difference in sale are
reported as revenue or expenditures.
Government-wide statement of activities
report these activities as gains or losses
Five Types of Differences
• #4: Regarding transactions that occur in one
year and the financial impact results in a
following period (unavailable revenue or
certain accrued liabilities) Government-wide
statements report transactions in the year the
event occurred where governmental funds
defer recognition
Five Types of Differences
• #5: Internal service funds activities typically
are included as governmental activities in
government-wide statements (even though
they are properly classified as proprietary
funds)
Governmental Data Adjustments
• Eliminate expenditures that represent the acquisition
of capital assets
• Eliminate expenditures for debt service principal
payments
• Eliminate other financing sources/uses and
expenditures associated with debt issuance.
• Include donations of capital assets
• Restate sales of capital assets & fund assets on an
accrual basis
• Eliminate revenues and expenditures related to prior
periods.
• Make all regular accrual adjustments
• Include the activities of internal service funds
What was the second requirement?
• Eliminate the interfund activity !
• Four Ways for Primary Government to interact
creating “interfund activity”
– One fund loans money to another
– One fund furnishes goods or services to another
– One fund furnishes resources to another with no
expectation of repayment (interfund transfer)
– One fund reimburse another for cost incurred on its behalf
(interfund reimbursement)
Statement of Net Position
• Elimination of Interfund Payables and Receivables
• Two Step Process
• Consolidation by activities
– General fund to special revenue
– Enterprise fund to enterprise fund
• Interactivity consolidation
– Because government activities and business like activities
are reported separately, the receivables/payables will also
be reported separately.
Government-wide Statement of
Activities Consolidation
Interfund Activity:
Interfund loans
Services provided and used
Reimbursements
Transfers
While all four types of interfund activity affect the
statement of positions, not all of them are
consolidated
Government-wide Statement of
Activities Consolidation
• Interfund loans: Taken care of in statement of Net
Position
• Interfund services provided & used: NOT
ELIMINATED
– Objective of government-wide statements is to provide
information on the net cost of each government function
and revenues and expenses related to interfund services
constitute an essential component of any such cost
calculation services between functions Therefore, GAAP
requires that these NOT be eliminated.
Government-wide Statement of
Activities Consolidation
• Interfund reimbursements: If the government
handles reimbursements the same as
“interfund services” (revenues/expenses),
then elimination of entries must be done. If
reimbursements are done by reallocating
expense (reducing expense in one fund,
increasing it in another) then no entry
Government-wide Statement of
Activities Consolidation
• Interfund transfers: Must be eliminated
– Two step approach
• Elimination between the same activities (i.e.general
fund & special revenue)
• Interfund between government and business- type
activities will be shown but there should be nothing in
total column for primary government (should net to $0)
Government-wide Statement of
Activities Consolidation
• What about internal service funds?
• Internal service funds (theoretically) are
suppose to be “break even” operations
• What if they didn’t break even?
– Allocate the profit or loss to the EXPENSES of the
activity that benefited from the services
– Technique called the “look-back” approach
Government-wide Statement of
Activities Consolidation
• Net profit: Functions paid more for services
than they needed
– Reduce expenses by % (i.e. general fund received
65% of service, then general fund expenses are
reduced by 65% of net profit)
• Net loss: Function didn’t pay enough for
services
– Increase expenses by %
Government-wide Statement of
Activities Consolidation
• BE CAREFUL !!!!
• Based on the assumption that internal service
funds are included with government activities,
net profit (loss) within government activities
works fine
• What happens when % of services are
provided to the business-type activities?
Government-wide Statement of
Activities Consolidation
• Increasing (or decreasing) expenses of
business-type activities creates a receivable
and payable !
One More Thing ! (regarding internal
service fund allocation of profit or
loss)
• Interest Expense:
– Should be reported as its own expense in government
activities.
– Therefore, do not consider interest expense in the net
profit (loss) calculation when allocating expenses back to
the funds
– i.e. subtract out interest expense from other expenses
THEN determine if there is profit (loss)
GAAFR
Financial Statements
What is the Basic Structure of the Financial
Statementsl?
• “Basic financial statements”
– Government-wide financial statements
– Fund financial statements
• Governmental funds (tax-supported activities)
• Proprietary funds (business-type activities)
• Fiduciary funds (not available for programs)
– Notes to the financial statements
• Required supplementary information (RSI)
Governmental Model
Management’s
discussion and
analysis
RSI
+
GOVERNMENT-WIDE
FINANCIAL
STATEMENTS
FUND FINANCIAL STATEMENTS
Governmental
Funds
Proprietary
funds
Fiduciary
funds
Audited
Basic
Financial
Statements
NOTES TO THE FINANCIAL STATEMENTS
+
Other required
supplementary
information
RSI
RSI
• Management’s discussion and analysis
(MD&A)
• Other RSI (as needed)
– Budgetary comparisons
– Infrastructure data (modified approach)
– Pension trend data
– Claims development trend data
Basic Financial Statements
• Government-wide statements (2)
• Fund statements
– Governmental fund statements (2 or 3)
– Proprietary fund statements (3)
– Fiduciary fund statements (2)
• Notes to the financial statements
CAFR
• Introductory Section of CAFR
• Financial Section of CAFR
– Basic financial statement and RSI
– Combining and individual fund presentations
• Statistical section of CAFR
What are the Entity-Wide Statements?
• Two Government-wide basic financial
statements
– Statement of Net Position
– Statement of activities
What is the Statement of Net Position?
• Reports all assets and deferred outflows and
liabilities and deferred inflows
– Both financial assets and capital assets (including
infrastructure)
– Both current and long-term liabilities
• Presentation options
– Order of relative liquidity
– Current versus long-term (i.e., “classified”)
• Difference = “Net Position”
How is Net Position Reported?
• Presentation based on accessibility of
underlying assets
– Net investment in capital assets
– Restricted
– Unrestricted
Components of Net Position
CAPITAL-RELATED DEBT
CAPITAL ASSETS
RESTRICTED RESOURCES
NET ASSETS INVESTED IN
CAPITAL ASSETS NET OF
RELATED DEBT
LIABILITIES RELATED TO
RESTRICTED RESOURCES
RESTRICTED NET ASSETS
OTHER LIABILITIES
OTHER ASSETS
UNRESTRICTED NET
POSITION
What is the Statement of Activities?
• All changes in government-wide Net Position
• Focus on expenses rather than expenditures
• Order of presentation
– Service focus rather than revenue focus
– Expenses (cost of services) precede revenues
• Net cost format demonstrates degree to which an
activity is self-financing
Structure of Statement of Activities
• Start: Expenses by function
• Less: Program revenues (directly related fees,
charges and grants)
• Result: Net expenses by function
• Add: General revenues and other changes
• Result: Increase/decrease in Net Position
Why Entity-Wide Statements?
• Focus on the “big picture” (a government is
more than the sum of its parts)
• Demonstrate the total impact of the shortterm financing decisions reported in the
governmental funds
• Provide cost information (i.e. expenses), for
activities reported in governmental funds
How Wide is “Government-wide”?
• Primary government (government as legally
defined)
• Component units (legally separate entities for
which the primary government is financially
accountable)
• NOT fiduciary funds or fiduciary-type
component units
Why Two Types of Activities?
• Governmental activities
– Tax-supported
– Program revenues not expected to cover expenses
• Business-type activities
– At last partially supported by fees and charges
– Program revenues expected to cover all or a significant
portion of program expenses
• Division avoids inappropriate comparisons
Negative Unrestricted Net Position?
• Accounting versus financing
– Accounting - focus on when liability incurred
– Financing - focus on when liability paid
• Governments typically focus on financing
– Resources raised when needed for payments
• Deficit unrestricted Net Position = commitment of
future taxing power
Does Surplus = Money to Spend?
• Capital assets reported net of related debt
– Capital assets cannot actually be used to pay off debt
– Debt service must be paid from restricted and unrestricted
Net Position
• Therefore, positive balance of unrestricted Net
Position does not necessarily = money to spend
• Look to governmental fund statements for
information on spendable resources
How To Use Cost Information?
• Distinguish direct costs from indirect costs
• Distinguish avoidable costs from unavoidable costs
• Depreciation is based upon historical cost rather than
replacement cost
– Care needed in making comparisons
– “Funding” depreciation expense may not provide
adequate resources for replacement
– Rate setting must consider cash flows
Why Are Some Items Shown Separately?
• Need to avoid artificial fluctuations in trend
data
• “Extraordinary items”
– Unusual in nature and
– Infrequent in occurrence
• “Special items”
– Unusual in nature or infrequent in occurrence
– Subject to management control
What Are Govt. Fund Statements?
• Governmental fund balance sheet
• Governmental fund statement of revenues,
expenditures and changes in fund balances
• Budgetary comparison (optional as basic
financial statement)
What is the GF Balance Sheet?
• Financial assets
• Liabilities to be paid from available expendable
resources
• Difference = fund balance
– Non spendable
– “Spendable”
•
•
•
•
Restricted
Committed
Assigned
Unassigned (GF only)
What Is the GF Operating Statement?
• Statement of revenues, expenditures and
changes in fund balances
• Other financing sources and uses reported
separately to avoid distorting trend data
– Issuance of debt (including capital leases)
– Sale of capital assets (if not “special item”)
– Transfers
– Refunding transactions
What is the Budgetary Comparison?
• Compare
– Original budget to final amended budget
– Final amended budget to actual (presented on the
budgetary basis)
• Options
– Basic financial statement (GFOA recommended
practice consistent with current practice)
– Required supplementary information
Why GF Financial Statements?
• Most decisions in public sector made in context of
operating budget
– Focus on near-term inflows and outflows of spendable
resources
– Includes budgeted items not otherwise reported in
operating statement (e.g., capital outlay)
– Excludes from operating statement items not typically
budgeted (e.g., the incurrence of liabilities payable in
future years, depreciation)
Deficit Unreserved Fund Balance?
• Deficit = claims on current financial resources
exceed the balances of those resources
• Always to be taken seriously
• Situations that may justify deficit:
– Encumbered long-term contracts
– Long-term borrowings from other funds
Deficit of Revenues to Expenditures?
• Deficit may indicate a fund is “living beyond its
means”
• Situations that may justify deficit:
– “Budgeting” excess fund balance
– Up-front contributions for capital projects
– Debt-financed capital projects
– Reimbursement grants
– Planned operating subsidies
Why Are the Numbers Different?
• Difference between governmental funds and
governmental activities in the governmentwide financial statements
– Financial assets versus total assets
– Liabilities that are due and payable versus total
liabilities
– Capital outlay versus depreciation
– Debt issuance and principal repayment
Why Are the Numbers Different? (cont.)
– Immediate recognition versus deferral and
amortization
– Revenue when available versus revenue when
earned
– Internal service fund activities and balances
What are Proprietary Statements?
• Statement of Net Position
• Statement of revenues, expenses and changes
in fund Net Position
• Statement of cash flows
What is the PF Statement of Net Position?
• Essentially the same format as governmentwide statement of Net Position
• Current assets and liabilities separated from
long-term assets and liabilities
• Now also has deferred outflows and deferred
inflows (GASB 63/65)
• Net Position classified based upon accessibility
rather than source (unlike businesses)
What is the PF Statement of Changes?
• Operating items distinguished from
nonoperating items
– Demonstrates the degree to which a fund recovers
the costs of the services it provides
• Nonoperating items
– Capital grants
– Operating subsidies
– Other
What is the PF Statement of Cash Flows?
• Positive or negative cash flow? Not evident
from operating statement (unlike
governmental funds)
• What are the sources and uses of cash?
– Operating activities
– Noncapital financing activities
– Capital and related financing activities
– Investing activities
Operating Income v. Operating Cash
TRANSACTION
EFFECT ON
OPERATING INCOME
EFFECT ON CASH FLOWS
FROM OPERATING
ACTIVITIES
ADJUSTMENT THAT
NEEDS TO BE MADE
TO OPERATING
INCOME IN
RECONCILIATION
SALES ON CREDIT
(I.E., CREATION
OF ACCOUNTS
RECEIVABLE)
INCREASE
NONE
SUBTRACT TO
ARRIVE AT NET CASH
FLOWS
COLLECTION OF
RECEIVABLES
NONE
INCREASE
ADD TO ARRIVE AT
NET CASH FLOWS
Operating Income v. Operating Cash (cont.)
TRANSACTION
EFFECT ON
OPERATING INCOME
EFFECT ON CASH FLOWS
FROM OPERATING
ACTIVITIES
ADJUSTMENT THAT
NEEDS TO BE MADE
TO OPERATING
INCOME IN
RECONCILIATION
INCURRENCE OF
PAYABLES AND
OTHER
OPERATING
LIABILITIES
DECREASE
NONE
ADD TO ARRIVE AT
NET CASH FLOWS
DECREASE
SUBTRACT TO
ARRIVE AT NET CASH
FLOWS
LIQUIDATION OF
PAYABLES AND
OTHER
OPERATING
LIABILITIES
NONE
Operating Income v. Operating Cash (cont.)
TRANSACTION
EFFECT ON
OPERATING INCOME
EFFECT ON CASH FLOWS
FROM OPERATING
ACTIVITIES
ADJUSTMENT THAT
NEEDS TO BE MADE
TO OPERATING
INCOME IN
RECONCILIATION
PURCHASE OF
INVENTORIES
NONE
DECREASE
SUBTRACT TO
ARRIVE AT NET CASH
FLOWS
CONSUMPTION OF
INVENTORIES
DECREASE
NONE
ADD TO ARRIVE AT
NET CASH FLOWS
Operating Income v. Operating Cash (cont.)
TRANSACTION
EFFECT ON
OPERATING INCOME
EFFECT ON CASH FLOWS
FROM OPERATING
ACTIVITIES
ADJUSTMENT THAT
NEEDS TO BE MADE
TO OPERATING
INCOME IN
RECONCILIATION
DEPRECIATION
EXPENSE
DECREASE
NONE
ADD TO ARRIVE AT
NET CASH FLOWS
AMORTIZATION
EXPENSE
DECREASE
NONE
ADD TO ARRIVE AT
NET CASH FLOWS
ELEMENTS OF
RECONCILIATION:
START: OPERATING
INCOME
ADD BACK
DEPRECIATION
EXPENSE AND
AMORTIZATION
EXPENSE
FINISH: NET CASH
FLOWS FROM
OPERATING
ACTIVITIES
Should An EF Always Support Itself?
• Some enterprise funds designed to recover
full cost
• Other enterprise funds designed to recover
only a portion of their cost (subsidy reflects
perceived indirect benefit to general public)
• Must distinguish between the two situations
Surplus/Deficit in Internal Service Fund?
• Role of internal service fund = allocation of
cost
• Ideally “break even” basis
– Exception for “working capital” needs
– Exception for replacement of capital assets
• Substantial ongoing surplus/deficit may mean
that charges are excessive or insufficient
What are Fiduciary Funds?
• Resources not available to support
government programs
– Pension funds
– Investment pools
– Private-purpose trusts
– Agency funds (e.g., tax collections for other
governments)
What are Fiduciary Fund Statements?
• Statement of fiduciary Net Position
• Statement of changes in fiduciary Net Position
Does Pension Surplus = Full Funding?
• Accounting liabilities versus actuarial liabilities
• Present value of pension benefits earned
(actuarial accrued liability) is not an
accounting liability and so is not reported
• Therefore, positive Net Position does not
mean full funding
• GASB 67 AND 68 will be changing all of the
pension reporting
OTHER REQUIREMENTS
• REQUIRED SUPPLEMENTATY INFORMATION
What is the Budgetary Comparison?
• Contents
–
–
–
–
Original budget
Final amended budget
Actual (reported using budgetary basis of accounting)
Variance column (optional)
• Option to report as basic financial statement or RSI
(general fund and major special revenue funds)
Are Budget Amendments Bad?
• Budgeting based on estimates
– Amendments are frequent
• Meaning of significant differences between
original and final amended budget
– Usually, an appropriate response to unforeseen
changes
– May indicate weakness in budget process
• Consult MD&A for analysis of difference
What Do Variances Mean?
• Governments focus on service rather than
profit
– Excess revenue not necessarily “favorable”
– “Savings” achieved by a reduction in planned
services not necessarily “favorable”
• Neutral terminology recommended (e.g.,
“over” and “under”) to avoid
misunderstandings
What is the Schedule of Funding Progress? (PreGASB 67&68)
• Comparison over time of actuarial assets and
liabilities related to pension plans
• Ratio assets/liabilities = “funded ratio”
• Use covered payroll as point of comparison
• Not presented when “aggregate” method used
to determine annual required contribution
Unfunded Actuarial Accrued Liability
UNFUNDED ACTUARIAL
ACCRUED LIABILITY
A/B =
FUNDED
RATIO
A
ACTUARIAL VALUE OF
ASSETS ACCUMULATED
FOR PENSION BENEFITS
(VALUE OF ASSETS
AVERAGED OVER TIME)
ACTUARIAL ACCRUED
LIABILITY
B
(PRESENT VALUE OF
PENSION BENEFITS
EARNED)
What is the Schedule of Employer Contributions?
• All acceptable actuarial funding methods lead
to same point
• Need to compare annual required
contribution (ARC) and actual contributions
over time
• Full funding = pattern of 100% funding of ARC
What is the Modified Approach?
• Infrastructure normally depreciated like other capital
assets
• Option not to depreciate infrastructure if certain
conditions met:
– Up-to-date inventory of infrastructure
– Regular condition assessments
– Annual estimate of cost to maintain at level determined
and disclosed by government
– Document maintenance level
What Needs to Be Reported for Modified Approach?
• Results of 3 most recent condition
assessments
• Annual amount estimated to maintain at
predetermined condition level (past 5 years)
• Actual expense to maintain at predetermined
condition level (past 5 years)
Goal – Notes
• The goal of this session is to familiarize you
with note disclosures required by GAAP, and
recommend resources that will enable you to
meet those disclosure requirements.
Notes – what’s the big deal?
• Notes to the financial statements are
management’s tool for clarifying and
supporting information provided in the
financial statements.
Basic rules in note preparation
• Include required disclosures
• Include only what you need
• Make sure that your disclosures are accurate (modify
templates)
• Make sure the information ties to financial
statements and other applicable section
• Check for changes in authoritative guidance
• Remember – these are your notes
Overview of note preparation
• Obtain a template (you need a starting point)
• Customize notes using your financial
information and resources
• Compare draft to checklist
• Tic and tie
• Consider comments from certificate programs
Basic note disclosures
• Summary of significant accounting policies (SSAP)
• Details of reconciliation
• Stewardship, compliance, and accountability
– Violations of legal or contractual provisions
– Deficits in individual funds
• Accounting changes
–
–
–
–
Prior period adjustments
Changes in accounting principles
Changes in estimate
Changes in entity
Basic note disclosures (continued)
• Bankruptcies
• Detailed notes on all activities and funds
• Assets
–
–
–
–
–
–
–
–
–
–
–
–
–
Cash, deposits with financial institutions
Investments
Derivative instruments
Reverse repurchase agreements
Securities lending transactions
Receivables balances
Capital assets
Collections
Impairments and insurance recoveries
Sponsor for external investment pools
Lease receivables
Right to service mortgage loans
Asset valuation allowances
Basic note disclosures (continued)
• Deferred outflow of resources
• Liabilities
–
–
–
–
–
–
–
–
–
–
Payables balances
Pension plan obligations and opeb
Termination benefits
Construction and other significant commitments
Claims and judgments
Lease obligations (capital and operating)
Short term debt and liquidity
Long-term debt
Landfill closure and postclosure care
Pollution remediation obligations
Basic note disclosures (continued)
– Deferred inflows of resources
– Net position/fund balance
– Interfund receivables and payables and interfund
eliminations
– Revenues and expenditures/expenses
• Discount and allowances
• Interest expense in direct expense
• Future revenues that have been sold
Basic note disclosures (continued)
• Revenues and expenditures/expenses (continued)
– On-behalf payments for fringes and salaries
– Transactions that would be reported as special items had
they been within the control of management
– Significant transactions involving major discretely
presented component units
– Transactions not reported because not measurable
– Foreign currency transactions
– Nonmonetary transactions
– Retail land sales
– Contracts to perform research and development
– Service concession arrangements
Basic note disclosures (continued)
– Donor restricted endowment disclosres
– Interfund transfers
• Segment information for enterprise funds
• Individual major discretely presented component
unit disclosures
• The nature of the primary government’s
accountability for related organizations
• Joint ventures and jointly governed organizations
• Related party transactions
Basic note disclosures (continued)
• Summary disclose of significant contingencies
– Loss contingencies
– Contingent liability for debt
– Gain contingencies
• Significant effects of subsequent events
• Bankruptcies
• Going-concern considerations
SSAP
• Description of the government wide financial
statements
• Brief description of component units
• Basis of presentation – government wide
• Basis of presentation – fund
• Basis of accounting
• Budgetary data
• Assets, liabilities, deferred outflows/inflows of
resources, and net position/fund balance in order
of appearance in the statement of net positions
SSAP, continued
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Definition of cash and cash equivalents
Disclosure of valuation basis
Capitalization policy
Description of modified approach
Explanation of deferred outflows or inflows
Significant or unusual accounting treatment for material account
balances or transactions
• Policy regarding whether to first apply restricted or unrestricted
resources when an expense incurred with both available
• Policy regarding whether to first apply restricted or unrestricted
resources when an expenditure is incurred with both available and
policy for applying the various components of unrestricted fund
balances
SSAP, continued
• Revenues, expenditures/expense:
– Types of transactions included in program revenues in
statement of net position
– Policy for allocation indirect expense to functions in
the government- wide statement of activities
– Unusual or significant accounting policy applied to
material revenues, expenditures, and expenses
– Property tax revenue recognition
– Vacation, sick leave, and other compensated absences
– Policy for defining operating revenues and operating
expenses in proprietary fund statements of revenues,
expenses, and changes in net position
Resources for preparing notes
• 2012 GAAFR
• Comprehensive Implementation Guide : see
“Disclosures” in index
• Governmental Accounting and Financial
Reporting Standards (Codification or Original
Pronouncements): see Notes to the Financial
Statements in Topical Index
Resources for preparing notes - continued
• Web site for checklist:
http://www.gfoa.org/forms/
New Blue Book
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Other chapters overview
Illustrations
Examples and other resources
Web site
Questions?