Ch17 - CHAPTER 17 UNDERSTANDING THE ISSUES 1. The new...

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CHAPTER 17 UNDERSTANDING THE ISSUES 1. The new reporting model adopts full accrual ac- counting for the government-wide statements for both governmental and business-type activities. Therefore, a conversion of the governmental fund activity is necessary in order to present government- wide financial statements. Since business-type activ- ities are already recorded at full accrual, there is no conversion necessary from fund to government-wide financial statements. 2. Both fund and government-wide financial state- ments are required in the new model. Fund state- ments include (1) the governmental fund balance sheet and statement of revenues, expenditures, and changes in fund balance, (2) the property fund bal- ance sheet, statement of revenues, expenses and changes in net assets, and statement of cash flows, (3) the fiduciary fund statement of net assets and statement of changes in net assets. The fund state- ments provide information on flows of financial rev- enues. Government-wide statements include a state- ment of net assets and a statement of activities. They provide full-accrual, consolidated government- wide reports. Budgetary comparison information may be reported in a statement and in a schedule accom- panying the financial statements. 3. Major funds are those funds which manage- ment chooses to disclose in a separate column in the fund statements either due to their relative size or because they are of particular interest or convey unique information. The general fund is always con- sidered a major fund. Funds whose assets, liabilities, revenues, or expenditures/expenses are at least 10% of all funds in a category (all governmental or all enterprise) and are at least 5% of all government and enterprise funds combined must be considered major funds. 4. The purpose of the MD&A is to give a concise overview and analysis of the information in the gov- ernment’s financial statements. Information required to be included: a brief discussion of the basic finan- cial statements, including how they relate to each other and the significant differences in the informa- tion they provide; condensed current and prior-year financial information from the government-wide fin- ancial statements; an analysis of the government’s overall financial position and results of operations, including impact of important economic factors; an analysis of individual fund financial information, in- cluding the reasons for significant changes in fund balances (or net assets) and whether limitations sig- nificantly affect the future use of the resources; an analysis of significant variations between original and final budget amounts and between final budget amounts and actual budget results for the general fund; a description of changes in capital assets and long-term liabilities during the year; a discussion of the condition of infrastructure assets; and a descrip- tion of currently known facts, decisions, or conditions that have or are expected to have a material effect
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Ch17 - CHAPTER 17 UNDERSTANDING THE ISSUES 1. The new...

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