1. Presented by Gregory S. Allison UNC School of Government
Intermediate Governmental Accounting Louisiana GFOA Winter Conference
Presented by
Gregory S. Allison
UNC School of Government

2. What fun awaits…??? Funds, funds, funds
Governmental
Proprietary
Fiduciary
Accounting for governmental fund revenues and expenditures
General capital assets and long-term liabilities

3. General Fund General Fund
The General Fund should be used to account for and report all financial resources not accounted for and reported in another fund
Language for the General Fund being used when another fund is not required dropped
Minimum number of funds principle dropped in GASB 34
Required by GAAP and limited to one per governmental unit
Blended component units
One general fund of primary government only
General fund of blended component unit becomes a special revenue fund for the reporting entity

4. Governmental Fund Type Definitions (cont.)
Special Revenue Fund
Used to account for and report proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projects
Must have 1 or more restricted or committed revenue sources - should be a substantial portion – should be the foundation of a fund – more than significant, but not necessarily a majority
Resources should be recorded as revenues in special revenue funds
Should not include moneys held in trust
Capital reserve funds
Disclose purposes of major special revenue funds and revenues and resources used in those funds

5. General and Special Revenue Funds
Measurement focus
Current financial resources
Basis of accounting
Modified accrual
No capital assets; no long-term debt

6. Property Tax Levy Taxes Receivable Property Tax Revenue
Allowance for Uncollectibles or
Deferred Inflows of Resources – Unavailable Property Taxes
No bad debts expenditure
All revenues net of allowance for uncollectibles
Accounting for motor vehicle property taxes has changed – LGC will issue guidance
Levy is at time of collection
Unregistered vehicles

7. Property Tax Collection
Cash Taxes Receivable or Deferred Inflows of Resources – Unavailable Property Taxes Property Tax Revenue

8. Other Revenues
Accounts Receivable Allowance for Uncollectibles Revenue or Cash Permits and Fees Revenue

9. Expenditures
Expenditures Accounts Payable Liquidate any applicable encumbrances

10. Collection of Receivables
Cash
Accounts Receivable
Delinquent receivables may require any applicable allowance accounts to be adjusted

11. Interfund Activity Two classes of interfund activity
Reciprocal interfund activity (interfund equivalent of exchange transactions)
Interfund loans – balance sheet only
Interfund services provided and used – approximates external exchange value
Non-reciprocal interfund activity (interfund equivalent of nonexchange transactions)
Interfund transfers
Interfund reimbursements

12. Interfund Activity (cont.)
Interfund loans
Interfund receivable/payable reflects current portion of loan
Advances to/from funds reflects long-term portion of loan
Current and long-term definitions mirror private sector in this case
Both current and long-term portions should be fund liabilities

13. Interfund Activity (cont.)
Interfund Services Used / Provided
Evidenced by revenue in one fund and expense/expenditure in other fund
Common in internal service funds
Similar to transactions with outside party
Approximates external exchange value
e.g., water and sewer service provided to general fund

14. Interfund Activity (cont.)
Reimbursements
Reductions of expenditures or expenses in one fund and increases of expenditures / expenses in another fund
Usually correction of error or cost allocation

15. Interfund Activity (cont.)
Interfund transfers
Transfers for any reason
Generally considered to be non-recurring

16. Other Accounting Issues for General/Special Revenue Funds
Sales of capital assets - OFS if material
Special item in some cases
Payments in lieu of taxes
Interfund services provided / used if payment approximates external exchange value
Transfer otherwise
TANs, RANs and GANs are always fund liabilities
Interfund insurance premiums may be reimbursements or interfund services provided / used

17. Extraordinary Items Both unusual and infrequent in nature (APB 30)
Not under management control
Environmental disaster
Natural disaster (location may determine)
Large bequest by citizen to a small government

18. Special Items Either unusual or infrequent in nature
Should be material – materiality may vary between statements
Within management control
Sales of certain governmental assets
Special termination benefits
Early retirement programs
Significant forgiveness of debt
Should be reported before extraordinary items

19. Fund Balance for Governmental Funds
Nonspendable (any governmental funds) Restricted for (any governmental funds) Committed to (any governmental funds) Assigned to (any governmental funds) Unassigned (General Fund only for positive balances, used for negative residuals of other governmental funds)

20. Nonspendable Fund Balance
Not in spendable form
Legally/contractually required to remain intact
Examples
Inventories/Prepaids
Principal of a Permanent Fund
Long-term receivables

21. Restricted Fund Balance
Externally-imposed restrictions
Grantors
Debt covenants
Restricted by law through constitutional provisions or enabling legislation
External resources
Legally enforceable that resources may only be used for specified purposes

22. Committed Fund Balance
Fund balance that is committed by formal actions of the governing board
Formal actions are required to “undo” any limitations placed by formal action (can’t just be appropriations lapsing)
Set in place prior to year end, but amount can be calculated after year end
Similar to a current “high level” designation by a board

23. Assigned Fund Balance
Fund balance amounts that are intended to be used for a particular purpose but are NEITHER restricted NOR committed
Assigned Fund Balance includes the following:
All remaining spendable amounts (positive) in governmental funds except the General Fund
General Fund amounts that have designations (e.g., subsequent year’s budget appropriation)
Assignments may occur any time before the issuance of the financial statements
Assignment ability may be delegated by the board

24. Unassigned Fund Balance
Residual classification for the General Fund
Use for other governmental funds ONLY for negative residuals
Fund balance that has not been assigned to other funds
Fund balance that has not been restricted, committed, or assigned for particular purposes in the General Fund

25. Encumbrances
Should be disclosed by major funds and nonmajor funds in aggregate as part of commitments
No separate fund balance classification

26. Transactions in Which the Item Should Be Reported as a Deferred Outflow of Resources
Resources advanced to another government in a government-mandated or voluntary non-exchange transaction when time requirements are the only eligibility requirement that has not been met (GASB 33) – applies to governmental funds as well
Debit amounts (captioned losses years ago) on current and advance refundings (GASB 23, GASB 62) – excess of reacquisition price of refunding debt over net carrying amount
Recognized as a component of interest expense
Over the life of the old debt or the new debt whichever is shorter
In the future – payments made to a pension plan accounted for under GASB 68 between the actuarial valuation date and the end of the fiscal year

27. Transactions in Which the Item Should Be Reported as a Deferred Outflow of Resources (Cont.)
Amount paid in an intra-entity transfer of future revenues by transferee government (GASB 48) – also applies to governmental funds
Asset and revenue not reported until appropriate revenue recognition criteria are met
Deferred outflow to be recognized over the life of the sales agreement
Decrease in fair value of derivative instrument associated with an effective hedge

28. Transactions in Which the Item Should Continue To Be Reported as an Asset
Resources advanced to another government in a government-mandated or voluntary non-exchange transaction when eligibility requirements (other than time requirements) have not been met (GASB 33) – applies to governmental funds as well
Purchase of future revenues from a government outside of the financial reporting entity (GASB 48, Paragraph 14)
Prepaid insurance cost on debt issuance – set up as an asset and expensed over the life of the related debt in a systematic and rational manner
Pension plan’s net position exceeds total pension liability (GASB 27)
Prepayments (NCGA 1)

29. Transactions in Which the Item Should Be Reported as an Inflow of Resources (Revenue)
Amount received from sale of revenues by transferor government where recognition as revenue is appropriate under the exceptions in GASB 48, Paragraph 14 – also applies to governmental funds
Fees received from purchase of loan(s)
Loan origination fees received (except points)
Commitment fees
When the commitment is exercised
Upon expiration of the commitment period if the commitment is unexercised
In the period received if the likelihood that the commitment will be exercised is remote

30. Transactions in Which the Item Should Be Reported as an Outflow of Resources (Expense)
Debt issuance costs, except for prepaid insurance, (Statements 7 and 62) - note – this change does not affect the calculation of “Invested in capital assets, net of related debt” on the statement of net assets
Initial direct costs of operating leases by lessor – applies to governmental funds (GASB 62)
Acquisition costs for insurance entities and public entity risk pools (GASB 10, GASB 62)
Fees paid on purchase of loan(s)
Direct loan origination costs

31. Transactions in Which the Item Should Continue To Be Reported as a Liability
Resources received in advance from another government in a government-mandated or voluntary non-exchange transaction when eligibility requirements (other than time requirements) have not been met (GASB 33) – applies to governmental funds as well
Resources received in advance on an exchange transaction (GASB 62)
Resources received in advance in relation to a derived tax revenue nonexchange transaction (GASB 33) – applies to governmental funds as well
Premium revenues for insurance entities and public entity risk pools received in advance (GASB 10, GASB 62)
Commitment fees to originate or purchase a loan before the commitment is exercised

32. Transactions in Which the Item Should Be Reported as a Deferred Inflow of Resources
Resources received in advance from another government in a government-mandated or voluntary non-exchange transaction when time requirements are the only eligibility requirements that have not been met (GASB 33) – applies to governmental funds as well
Resources received in advance related to an imposed nonexchange transaction (e.g., prepaid property taxes) (GASB 33) ) – applies to governmental funds as well
Before the period for which property taxes are levied
Before the period when resources are required to be used or when use is first permitted for all other non-exchange transactions in which the enabling legislation includes time requirements
Points received by a lender – recognized in a systematic and rational manner as revenue over the life of the loan

33. Transactions in Which the Item Should Be Reported as a Deferred Inflow of Resources (Cont.)
Credit amounts (captioned gains years ago) on current and advance refundings (GASB 23, GASB 62) – excess of net carrying amount over reacquisition price of refunding debt
Recognized as a component of interest expense
Over the life of the old debt or the new debt whichever is shorter
Amount received from sale of future revenues by transferor government, other than for exceptions in GASB 48, Paragraph 14 – also applies to governmental funds
Amount received from intra-entity transfer of future revenues by transferor government (GASB 48) – also applies to governmental funds
Recognize revenue over the duration of the sales agreement
Asset recorded in governmental fund, but revenue is not available (NCGA 1)
Increase in fair value of derivative instrument associated with an effective hedge

34. Other Items
“Deferred” should only be for deferred outflows and inflows of resources
Major Fund criteria amended
Assets + deferred outflows of resources
Liabilities + deferred inflows of resources
For deferred inflows and deferred outflows of resources – no distinction between current and noncurrent is needed

35. Capital Projects Funds

36. Capital Projects Funds
Used to account for financial resources used to acquire/construct major general governmental capital facilities
Same measurement focus and basis of accounting as all governmental funds

37. Typical Financing Sources
Long-term borrowings (e.g., bonds)
Intergovernmental grants
Transfers
Special assessments

38. Specific Accounting Issues
Records revenues, expenditures and other financing sources/uses
Long-term debt and related capital assets are recorded in the government-wide statements
Either one or several individual funds may be used
Bond premiums, discounts and issuance costs are recorded at time of occurrence

39. Typical Journal Entries
When bonds are issued…..
Cash
Other financing source
When bond funds are expended…..
Expenditure

40. Bond Anticipation Notes
Typically short-term financings
Generally considered a fund liability
May be considered long-term if….
Original maturity is greater than one year OR
Original maturity is less than one year AND all legal steps have been taken to refinance
Refinancing (or irrevocable legal steps taken) between balance sheet date and audit opinion date

41. Other Accounting Issues with Capital Projects Funds
Arbitrage
Fund liability or government-wide (when is payment due?)
Disposition of fund balance or deficit
Not set rules
Usually dependent upon originating funding sources
Same rules for combining/individual stmts.

42. Debt Service Funds

43. Debt Service Funds Required by GAAP as follows
Legally required (e.g., bond order, statutes)
Resources are being accumulated to pay future debt service
Grants restricted for debt service
Current financial resources measurement focus
Modified accrual basis of accounting

44. Expenditure Recognition
Generally recognized when due
Option for early recognition
Payments scheduled early in fiscal year
Resources set aside late in previous fiscal year
Option should be consistently applied
Related bond principal removed from government-wide statements
Defaults require current principal and interest to be fund liabilities

45. Current/Advance Refundings
Legal defeasance
In-substance defeasance
Proceeds of refunding bonds reported as other financing sources
Use of refunding proceeds to escrow agent reported as an other financing use
Use of internal source funds to escrow agent reported as an expenditure

46. Current/Advance Refundings (cont.)
Defeasance results in removal of refunded debt from balance sheet
If defeasance does not occur, both refunded and refunding debt remains (e.g., crossover refunding)
Current refundings accounted for similar to advance refundings

47. Other Accounting Issues for Debt Service Funds
Taxes restricted for debt service fund should be reported directly in the fund
Fund balance in the debt service fund is generally reported as “restricted”

48. Accounting for Revenues and Expenditures in Governmental Funds

49. Revenue Recognition - Modified Accrual
Revenue recognized when “susceptible to accrual” for governmental funds
Measurable and available
Available means collected or to be collected soon enough to pay liabilities of current period
Legal availability must be considered
Availability periods differ among governments
Revenue reported net of bad debt allowances

50. Property Tax Revenue Recognition Issues (Real Property)
Receivable recorded as of the levy date
Property tax revenue “susceptible” when…
Physically collected (as long as revenue is not collected before period intended to finance)
Collections are no more than 60 days after the end of the reporting period

51. Property Tax Revenue Recognition
Record as revenue and adjust deferred inflow at year-end, OR
Record as deferred inflow when levied and as revenue when collected
Either approach acceptable

52. Property Taxes - Other Issues
Prepayments
Taxes levied to finance a subsequent year’s budget
Not intended to finance current period – deferred inflows of resources
Prepayments and uncollected taxes should be separately captioned

53. Sales Tax Revenue Recognition
Sales tax recognized as per GASB #22
Measurable and available criteria apply
Sales taxes “in hands” of government collecting agents (e.g., merchants) should be accrued

54. Miscellaneous Revenue Recognition Issues
Many revenues simply recognized as collected in cash
Permits
Various licenses
Parking tickets and other punitive fees
Other revenues not measurable at year end

55. Recognizing Entitlements and Shared Revenues
Entitlements/shared revenues
Measurable and available criteria appropriate
No recognition for revenue collected in advance of period intended to finance (deferred inflows of resources)
Revenue and receivable possible if not collected, but measurable and available

56. Expenditure-driven Grant Revenue Recognition
Revenue recorded when…
Grant-related expenditures have occurred
Other grant-related requirements have been met
If payment has not been received…
Record revenue and receivable (if measurable and available criteria have been met)

57. Revenue Recognition - Donations
Financial resource donations
Receivable when a legal claim established
Revenue recognized when measurable and available
Most donations, however, are recognized on a cash basis (e.g., become a “claim” once they are actually received in cash)

58. Donation of Capital Assets
Capital asset donations generally affect governmental activities in the government-wide financial statements
For assets for which sale or dissolution has occurred by year-end…revenue recognized
If intent is to sell and sale occurs before statements are issued, reflect an asset (e.g., “assets held for resale”) and revenue

59. Other Types of Revenues - Recognition Issues
Investment income
Interest receivable and associated revenue should be calculated and recorded if measurable and available
Change in fair market value reflected through interest income

60. Other Revenues (cont.) Service-type special assessments
Receivable recorded when service is provided
Revenue recorded using the measurable and available criteria
Revenue not meeting measurable and available should be recorded as deferred inflows of resources

61. Changes in Accounting Principles - Revenues
Effective at beginning of the year of change
Cumulative effect of accounting change reported as fund balance restatement for earliest year presented
Revenues restated for each year presented
Change briefly disclosed in notes
“As restated”

62. Expenditure Recognition
Generally recognized when liability is measurable and has been incurred
There are some regular exceptions to the general rule (related to the fund financial statements)…..

63. Compensated Absences Guidance as per GASB Statement No. 16
Expenditures for amounts to be liquidated with current financial resources
Accrued vacation
Based on past service/past event
Payment must be considered probable
Valuation based upon current salary levels
Salary-related benefits must be included

64. Compensated Absences (cont.)
Sick leave
Liability normally not accrued as most sick plans are based on future events
Liability is accrued if sick plan, or portion of it, converts to a past event basis (e.g., incentive plans with payout provisions) and payout will occur to employee and/or third party
Conversion of sick leave to service time is not accrued

65. Compensated Absences (cont.)
Liability for accrued vacation and appropriate sick leave related to governmental funds is, in almost all cases, simply reported in the government-wide financial statements as governmental activities

66. Claims and Judgments Liability on balance sheet when incurred
Fund liability when to be liquidated with current resources
Government-wide financial statements (governmental activities)for future liquidations
Fund expenditure and liability for adjudicated claims

67. Claims and Judgments (cont.)
Incurred but not reported (IBNR)
Event that has occurred by the fiscal year end
Probable that claim will be made
Probably that claim will prevail
IBNRs are often based upon past history
IBNR liabilities must be reported if material and meet the above-mentioned criteria

68. Miscellaneous Expenditure Issues
Unfunded pension contributions/OPEB
Fund liability and expenditure for portions to be liquidated with current financial resources
Often reflected as a government-wide liability only
Accounting vs. actuarial liabilities
OPEB
Early retirement/other incentive offers
Recognized when employees accept offer
Same rules for fund and government-wide liability reporting

69. Miscellaneous Expenditure Issues (cont.)
Pension types
Defined contribution plans
Expenditure = Required Contribution
Defined benefit plans
Expenditure = Actuarial Required Contribution
ARC must comply with GASB # 27/GASB #45 parameters

70. Miscellaneous Expenditure Issues (cont.)
Landfill closure and postclosure care costs - either fund or government-wide liability
Debt service generally recorded as an expenditure when due
Inventories and prepaids
Purchases method - expenditure when purchased (requires fund balance reservation)
Consumption method - expenditure when used

71. Lease Accounting
Private sector guidance applicable (FASB Statement No. 13)
Includes guidance for both operating and capital leases
Fiscal funding clauses do not affect capitalization criteria

72. Lease Accounting (cont.)
Lessee accounting
Present value of minimum lease payments
Other financing source (reduced by amount of down payment, if applicable)
Expenditure
Year of inception only
Purpose of “phantom entry”
Regular debt service payments accounted for as expenditures

73. Lease Accounting (cont.)
Lessor accounting
Lease receipts reported as revenue once measurable and available criteria has been met
Lease receivables that do not meet the criteria are reported as deferred inflows of resources

74. Changes in Accounting Principles - Expenditures
Expenditures that couldn’t be reasonably estimated earlier
Change in method of applying GAAP
LIFO to FIFO
New GASB standards
Same reporting issues as discussed earlier with revenue changes

75. Accounting for Governmental Capital Assets

76. General Capital Assets
Includes tangible and intangible assets – infrastructure required
Asset valuations
Historical cost (all costs incurred in readying asset for use)
Estimated historical cost
Fair market value for donations
Present value of net minimum lease payments for assets under capital lease
Capitalized interest not allowed – GASB Statement No. 37

77. General Capital Assets (cont.)
Details by asset class reported either on the statement of net assets or in the note disclosures
Land
Buildings
Equipment
Improvements
Intangibles (example - computer software)
Construction in progress
Must separate depreciable and non-depreciable capital assets (if significant)

78. General Capital Assets (cont.)
Accumulated depreciation reported on face of statement or in notes – more detail reported
Capitalization threshold guidance
Useful life guidance
Calculating depreciation
Class of asset
Network
Subsystem
Individual asset

79. Special Accounting Issues
Transfer of assets between funds
Governmental to proprietary
Proprietary to governmental
Foreclosure
Intent to resell (difference between value of tax due and value of property – expenditure)
No intent to resell (expenditure for amount of tax due….asset reported in government-wide statements)

80. Financial Reporting of Capital Assets

81. Basic Reporting of General Capital Assets
Capital assets reported only at the government-wide level for governmental-type assets
Capital asset reported at both government-wide and fund financial levels for proprietary funds

82. General Capital Asset Reporting (cont.)
Government-type asset infrastructure is now reported and capitalized
All capital assets are subject to depreciation at the government-wide level (unless it is a non-depreciable asset)
Note disclosures now focus on changes in all capital assets - by type (e.g., land, buildings) and activity (govt./business-type)

83. Specific Reporting Conventions
Capital assets should be reported net of accumulated depreciation in the statement of net position
Accumulated depreciation may be reported on the face of the statement or simply in the notes
Accumulated depreciation by type of asset reported in the note disclosures

84. Conventions (cont.)
Depreciation expense for both governmental and business-type activities reported in the statement of activities
Depreciation expense reported within functional categories
Note disclosures detail the amount of depreciation expense included in each functional category

85. Conventions (cont.) Summary of significant accounting policies
Policy for capitalizing all assets, including governmental activity infrastructure
Policy for estimating useful lives
Useful lives by category of capital asset

86. Conventions (cont.)
Capital asset activity disclosed by governmental and business-type activities
Beginning and ending balances
Capital acquisitions
Sales or other dispositions
Current period depreciation expense
Reductions in accumulated depreciation

87. Conventions (cont.) Disclosures (cont.)
Changes in accumulated depreciation by type of asset
Summary of depreciation expense by governmental function or business-type activity
Description and rationale for assets not being depreciated

88. Implementation Guide Clarifications
Capitalization of interest applies only to business-type activities
If asset is transferred from enterprise fund to governmental activities, the capitalized interest is not removed
Zoo animals are generally capitalized and depreciated (rare exception – breeding colonies)

89. Capitalization of Software
Purchased software should be capitalized if material
Annual licensing fees should not be capitalized if they are period costs
GASB Statement No. 51 provides guidance on capitalization of externally-developed and internally-developed software

90. General Long-term Liabilities

91. Nature of General LT Liabilities
Liabilities associated with governmental funds
Liabilities NOT reported with governmental funds
Liabilities generally reported only at the government-wide level

92. General Long-term Liability Accounting Issues
Debt to be repaid by proprietary funds is a fund liability for those funds
Government-wide reporting reflects accrual accounting
Discounts, premiums, underwriters fees are deferred and amortized

93. General Long-term Liability Accounting Issues (cont.)
Long-term debt remains in government wide financial statements until due
Common general liabilities
Bonds payable
Claims and judgments
Compensated absences
Unfunded pension obligations
Closure and postclosure care costs

94. General Long-term Liability Accounting Issues (cont.)
Rebatable arbitrage
Fund liability if funded and to be repaid with current financial resources
Government-wide if not funded or to be repaid in the future
Unfunded pension/OPEB obligation
No actuarial liability on the balance sheet
Unfunded employer contribution in government-wide

95. General Long-term Liability Accounting Issues (cont.)
Advances between funds should be shown as fund liabilities
Bond anticipation notes (BANs)
Usually a fund liability
Government-wide liability if…
Refinancing occurs between fiscal year end and audit opinion date
Irrevocable legal steps taken to refinance during this same period

96. General Long-term Liability Accounting Issues (cont.)
Special assessment debt
Governmental commitment… shown in government-wide with special caption
Backed with taxing power…shown as any other GO debt
No commitment…not in government-wide

97. Enterprise Funds
GAAP only requires the use of enterprise funds when any of the following is true for the principal revenue sources:
Activity financed with debt secured solely by pledge of system revenues
Laws or regulations require costs (including capital costs) be recovered with fees or user charges
Pricing policies are designed so fees and charges cover costs (including capital costs)
Enterprise Funds may be used when goods or services are provided to external users and a fee is charged

98. Enterprise Funds (cont.)
Flow of economic resources measurement focus
Accrual basis of accounting
Budgetary considerations
Fixed or flexible budgets common
Budget-to-actual presentation in the individual statements and schedules

99. Required Financial Statements
Statement of Net Position
Statement of Revenues, Expenses, and Changes in Fund Net Position
Statement of Cash Flows

100. Accounting Issues Rate covenant reporting Restricted assets
Coverage issues, special reports, audit
Restricted assets
Common sources are customer deposits and revenue bonds (bond covenants)

101. Accounting Issues (cont.)
Interest capitalization required for proprietary funds
FASB #34 for non-specific borrowings
Capitalization period from beginning of construction
Not offset by interest earnings
FASB #62 for specific borrowings
Usually associated with tax-exempt debt
Capitalization period from date of borrowing
Offset by interest earnings

102. Accounting Issues (cont.)
Arbitrage rebate shown as a fund liability
May be reflected as an offset to interest earnings
Need to determine amount due within 1 yr (not different than other liabilities)
Payments to General Fund
Indirect cost / Administrative services
Expense (NOT a transfer)

103. Accounting Issues (cont.)
Payment in lieu of taxes
Quasi-external transaction
Based on value of services
Refundings (GASB Statement No. 23)
Difference between amount of refunded debt and reacquisition price deferred and amortized over shorter of life of old or new debt
Deferred amount netted with refunding debt on balance sheet (pre-GASB 65)

104. Accounting Issues (cont.)
Landfill closure/postclosure care costs
Required by GASB Statement No. 18
Costs of closure/postclosure recognized over useful life of landfill
Expense based on landfill capacity used to date
Changes in estimates for current and prior periods handled in the current period

105. Misc. Capital Asset Issues
All infrastructure assets must be capitalized
Capital grants reported as capital contributions before transfers
Capitalized interest must be included
Assets transferred (contributed) from other funds should be valued at net book value as if the assets had always been in the proprietary fund

106. Operating Statement Format
Operating revenues
Operating expenses
Includes depreciation and other non-cash items
Non-operating revenues/expenses
Items not generated by operations
Capital contributions
Special items
Extraordinary items
Transfers in/out
NOT other financing sources/uses

107. Statement of Cash Flows
Required for enterprise funds
Four categories
Operating activities
Noncapital financing activities
Capital and related financing activities
Investing activities

108. Other Cash Flow Reporting Issues
Reconciliation to cash and cash equivalents
Cash equivalents
Not a required caption
Pooled cash and investments
If used, strict definition must be followed
Investments with ORIGINAL maturities of 90 days or less
Reconcile to Statement of Net Assets

109. Cash Flow Categories Operating activities
Cash inflows/outflows related to operations
Considered a residual category
Non-capital financing activities
Other financing activities NOT related to capital
Transfers/Grants/Property Taxes
Operating subsidies

110. Cash Flow Categories (cont.)
Capital Financing Activities
Capital purchases
Proceeds of capital debt
Sales of capital assets
Grants for capital items
Investing activities
ALL investment income
Purchases/sales of investments

111. Other Issues Combining statements required for non-major funds
Major funds shown in Basic Financial Statements
Individual fund statements may be shown to provide additional detail
GASB 62 codifies how guidance from FASB and predecessor accounting standards setters applies to proprietary funds and government-wide financial statements
Unbilled receivables should be accrued at year end

112. Fiduciary Funds

113. Fiduciary Funds Pension trust fund Investment trust fund
Private-purpose trust fund
Agency fund

114. Overall Characteristics
Total economic resources measurement focus
Accrual basis of accounting
Reported only in the fund financial statements (i.e., NOT reported in the government-wide statements)
Reported by fund type in the basic financial statements

115. Fiduciary Fund Accounting Issues
Usually all trust funds are evidenced by a legal trust agreement
Budgetary considerations
Annual budget not required under G.S. 159
If budget is adopted, the modified accrual basis would be used

116. Pension Trust Fund
Used when government sponsors a plan for its employees’ and acts as its trustee
Statement of cash flows not required
Equity referred to as net position, though not with same three categories as discussed previously

117. Pension Trust Fund (cont.)
Statement of plan net position
Statement of changes in plan net position
Separate operating statement required
Additions instead of revenue
Deductions instead of expense
Six years of various RSI

118. Investment Trust Funds
Required by GASB Statement No. 31 for external investment pools
Balance sheet and operating statement similar to pension trust funds
Internal portion of external pool may be included

119. Private-purpose Trust Fund
Recipients and/or beneficiaries are outside parties (i.e., not the government itself)
May be expendable or nonexpendable in nature

120. Agency Fund
Required when assets are being held in a strict custodial capacity
Common for tax collecting arrangements
Special assessment debt with no governmental commitment
Certain pass-through grants as per GASB Statement No. 24

121. Agency Fund (cont.) No measurement focus Accrual basis of accounting
Assets
Liabilities
No equity
Accrual basis of accounting
Statement of changes in assets and liabilities required