Chapter 1-4 - Chapter 1 Introduction to Accounting and...

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1.1 Chapter 1 Introduction to Accounting and Financial Reporting for Governmental and Not-for-profit Entities General purpose governments (cities, towns, villages) Special purpose governments (single or limited function: ISD, soil and water, water district) Distinguishing characteristics of governmental and not-for-profit entities 1. Receive significant amount of resources from those that do not expect to receive repayment or benefits proportionate to resources provided (receive taxes, charitable contributions) 2. Have operating purposes other than to provide goods or services at a profit 3. Absence of defined ownership interests that can be sold, transferred , or redeemed Sources of financial reporting standards 1. Financial Accounting Foundation (FAF) 2. FASB (for profit, not-for-profit) 3. GASB (state and local government related) 4. FASAB (Federal government related) Governmental organizations have one or more of the following characteristics: A. Popular election of officers or appointment, approval of a controlling majority of the members of the org’s governing body by officials of one or more state or local governments B. The potential for the unilateral dissolution by a government with the net assets reverting to a government, or C. The power to enact and enforce a tax levy Also: Presumed to be governmental if has ability to issue directly debt that pays interest exempt from federal taxation.
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1.2 7 Exhibit: Comparison of financial reporting objectives (state and local, federal, not-for-profit) Objectives: 1. Concepts statement # 1: Accountability 1. Compare actual results with legally adopted budgets (original and final) 1. Interperiod equity: Whether current year revenues are sufficient to pay for services provided that year and whether future taxpayers will be required to assume the burdens for services previously provided 2. Assess financial condition and results of operations 3. Assist in determining compliance with laws, rules, regulations 4. Evaluate efficiency (cost to benefit ratios) and effectiveness (quality) 5. Additional objectives by FASB for not-for-profits: 1. Resource allocation 2. Ability to provide services 3. Assess stewardship, performance 4. Assess economic resources, obligations, net sources (and changes to them) Financial reporting of state and local governments (GASB 34) Comprehensive Annual financial report (CAFR) 1. Introductory section: 1. Title page 2. Table of contents 3. Letter of transmittal 2. Financial section: 1. Auditors’ report 2. 3. Government-wide financial statements (for operational accountability) 4. Fund financial statements (for fiscal accountability) 5. Notes to the financial statements 6. Required supplementary information (RSI) 7. Other supplementary information (combining statements, etc.) 3. Statistical section: Social and economic data, trends Exhibit: Financial statements
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1.3 Government-wide statements (accrual basis) : 1. Statements: (columnar format; separate columns for different types of funds)
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This note was uploaded on 02/19/2011 for the course MISC 101 taught by Professor Smith during the Spring '11 term at University of Louisiana at Lafayette.

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Chapter 1-4 - Chapter 1 Introduction to Accounting and...

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