Kế toán, kiểm toán - Chapter seventeen: Accounting for state and local governments

Chapter SeventeenAccounting for State and Local Governments, Part IIMcGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.Accounting for LeasesThe lease transfers ownership at the end of the lease term.The lease has a bargain purchase option.The lease term ≥75% of the asset’s estimated useful life.The minimum lease payments > 90% of the PV of the asset.For accounting purposes, leases must be identified as either Capital or Operating.GASB has adopted the same four criteria applied by FASB to identify a capital lease.LO 117-*Accounting for Capital LeasesGovernment-Wide Financial Statements:Record an asset and a liability at the present value of the minimum lease payments initially.Record an expense for interest and a reduction in the liability when the lease payment is made.Fund Financial Statements:Record the expenditure and other financing source to record the lease.Record an expenditure for interest and the lease principal when the payment is made.17-*Solid Waste LandfillThe operation of a solid waste landfill creates long-term liabilities. The EPA imposes requirements that will require large outlays of resources to close a landfill in the future and to deal with such postclosure activities as groundwater monitoring.LO 217-*Fund Financial StatementsMake no entry to record a liability. Record cash payments made to fund the future obligation as “expenditures”.Government-Wide Financial StatementsRecord a portion of the expected closing costs, pro-rated as a % of capacity used, each year as an expense and a liability.Solid Waste Landfill17-*Works of Art and Historical TreasuresAlthough optional reporting is allowed, governments “should capitalize works of art, historical treasures, and similar assets at their historical cost or fair value at date of donation.”FundFinancial StatementsRecord an expenditure and the cash payment (if purchased). No entry is made if the item is donated.Government-Wide Financial StatementsRecord the asset and the payment (if purchased) or revenue (if donated).LO 317-*Infrastructure AssetsGovernment-Wide Financial Statements:Record all newly acquired assets.Show approximate cost for all major assets previously acquired thatWere acquired after June 30, 1980, or thatHad major renovations, restorations, or improvements since that date.Fund Financial Statements:Record the acquisition as an expenditure.LO 417-*General Purpose Financial StatementsThree distinct sections:Management’s Discussion and Analysis (MD&A)Financial StatementsGovernment-wide Financial StatementsFund Financial StatementsNotes to the Financial StatementsRequired Supplementary Information17-*LO 517-*External Reporting ProcessGovernments prepare a Comprehensive Annual Financial Report (CAFR).17-*GASB Stipulates that the CAFR Include:1.Introductory Section2.Financial Section3.Statistical Section17-*Primary Government and Component UnitsReporting entities must produce CAFRs. These units start with a primary government unit (town, city, county or state)Primary government must then include all funds, activities, organizations, agencies, offices and departments that are not legally separate from itMay be difficult to determine whether certain activities should be includedThe major criterion for inclusion is “financial accountability”17-*LO 617-*Government-Wide Statements - Statement of Net AssetsDesigned to report the economic resources of the government as a whole (except for fiduciary funds that serve a purpose outside the primary government). Include all assets, capital assets, and liabilities (current and long-term).Report investments at fair market value.Assets – Liabilities = Net Assets (not equity)Show restrictions.17-*LO 717-*Government-Wide Statements - Statement of ActivitiesExpenses are shown by function.Interest on general long-term debt is normally an indirect expense, frequently shown as a separate “function”. Related program revenues should be shown for each “function”.Show the net revenue figure for each function.General revenues are shown at the bottom of the statement.17-*17-*Fund Financial Statements - Governmental Funds Balance SheetDoes not include proprietary funds, component units, or fiduciary funds.Reports only current financial resources and uses modified accrual accounting.Separate columns for the General Fund and each major fund.In the Fund Balance section, identify both the “reserved” and “designated” amounts. 17-*17-*Fund Financial Statements - Governmental FundsStatement of Revenues, Expenditures, & Changes in Fund BalancesNet revenues are not identified for specific functions.Report ‘expenditures,’ not expenses.Other financing sources and uses are shown to reflect long-term debt, sale of property, and transfers between funds.Reconcile the ending fund balance and the ending change in net assets.17-*17-*Statement of Net AssetsCombined internal service funds.Assets and liabilities are classified as current and noncurrent.Statement of Revenues, Expenses, & Changes in Fund Net AssetsSame rules as for governmental funds.Capital contributions and transfers are reported here.17-*Fund Financial Statements - Proprietary Funds17-*Statement of Cash FlowsFour sectionsOperating ActivitiesNoncapital Financing ActivitiesCapital and Related Financing ActivitiesInvesting Activities. Note that the Direct Method is required for presentation.17-*Fund Financial Statements - Proprietary Funds17-*Public Colleges and UniversitiesPublic colleges and universities must follow the same guidelines as state and local governments. (GASB retains primary reporting authority)Their statements will differ from those of private colleges and universities, who are following FASB accounting standards.17-*LO 817-*