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LEARNING OBJECTIVES 1.Identify the BASIC FINANCIAL STATEMENTS. 2.Understand the format/content of GOVERNMENT-WIDE financial statements and FUND FINANCIAL.

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Presentation on theme: "LEARNING OBJECTIVES 1.Identify the BASIC FINANCIAL STATEMENTS. 2.Understand the format/content of GOVERNMENT-WIDE financial statements and FUND FINANCIAL."— Presentation transcript:

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2 LEARNING OBJECTIVES 1.Identify the BASIC FINANCIAL STATEMENTS. 2.Understand the format/content of GOVERNMENT-WIDE financial statements and FUND FINANCIAL STATEMENTS. 3.Understand the concept/content of REQUIRED SUPPLEMENTARY INFORMATION (RSI). 4.Identify a government’s MAJOR FUNDS. 5.Distinguish PROGRAM REVENUES from GENERAL REVENUES. 6. Understand required information components of MANAGEMENT’S DISCUSSION and ANALYSIS (MD&A). 7.Understand the types of notes to the financial statements required for governments.

3 NOT REQUIRED: Principle 13 suggests it “should be prepared..”

4 SECTIONS OF THE CAFR: 1.Introductory Section. 2.Financial Section. - Independent Auditor’s Report. - Management Discussion & Analysis (MD&A) -BASIC FINANCIAL STATEMENTS (BFS) - REQUIRED SUPPLMENTARY INFORMATION (RSI other than MDA). -SUPPLMENTARY INFORMATION. 3.Statistical Section.

5 SECTIONS OF THE CAFR: 1.Introductory Section. 2.Financial Section. - Independent Auditor’s Report. - Management Discussion & Analysis (MD&A) -BASIC FINANCIAL STATEMENTS (BFS) - REQUIRED SUPPLMENTARY INFORMATION (RSI other than MDA). -SUPPLMENTARY INFORMATION. 3.Statistical Section.

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7 SECTIONS OF THE CAFR: 1.Introductory Section. 2.Financial Section. -BASIC FINANCIAL STATEMENTS (BFS) - REQUIRED SUPPLMENTARY INFORMATION (RSI other than MDA). -SUPPLMENTARY INFORMATION. 3.Statistical Section. - Independent Auditor’s Report. - Management Discussion & Analysis (MD&A)

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9 Management’s Discussion and Analysis (MD&A).

10 SECTIONS OF THE CAFR: 1.Introductory Section. 2.Financial Section. - Independent Auditor’s Report. - Management Discussion & Analysis (MD&A) -BASIC FINANCIAL STATEMENTS (BFS) - REQUIRED SUPPLMENTARY INFORMATION (RSI other than MDA). -SUPPLMENTARY INFORMATION. 3.Statistical Section.

11 GOVERNMENT-WIDE -Statement of Net Assets (Balance Sheet) -Statement of Activities (Income Statement) GOVERNMENT FUND FINANCIAL STATEMENTS -Balance Sheet -Reconciliation of the B/S  Governmental Funds to Statement of Net Assets -Statement of Revenues, Expenditures and Changes in Fund Balance (Lunch) -Reconciliation of Statement of Revenues, Expenditures and Changes in Fund Balances  Governmental Funds to Statement of Activities. PROPRIETARY FUND FINANCIAL STATEMENTS -Statement of Net Assets (Balance Sheet) -Statement of Revenues, Expenses and Changes in Fund Net Assets - Statement of Cash Flows FIDUCIARY FUND FINANCIAL STATEMENTS - Statement of Net Assets - Statement of Activities

12 COMPONENT UNIT FINANCIAL STATEMENTS -Statement of Net Assets (Balance Sheet) -Statement of Activities (Income Statement) NOTES TO FINANCIAL STATEMENTS

13 GOVERNMENT-WIDE -Statement of Net Assets (Balance Sheet) -Statement of Activities (Income Statement) GOVERNMENT FUND FINANCIAL STATEMENTS -Balance Sheet -Reconciliation of the B/S  Governmental Funds to Statement of Net Assets -Statement of Revenues, Expenditures and Changes in Fund Balance (Lunch) -Reconciliation of Statement of Revenues, Expenditures and Changes in Fund Balances  Governmental Funds to Statement of Activities. PROPRIETARY FUND FINANCIAL STATEMENTS -Statement of Net Assets (Balance Sheet) -Statement of Revenues, Expenses and Changes in Fund Net Assets - Statement of Cash Flows FIDUCIARY FUND FINANCIAL STATEMENTS - Statement of Net Assets - Statement of Activities

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15 Primary government vs. Component Units

16 Iowa’s Component Units: Financing the Capital Needs of Iowa's Private Colleges & Universities

17 Primary government is GOVERNMENTAL VS BUSINESS TYPE activities

18 FIDUCIARY FUNDS are NOT INCLUDED in Govt Wide

19 Net Assets are setup like Enterprise Funds: Invested in Capital Assets net of related debt + Restricted + Unrestricted

20 Governmental Activities column is the sum of al the governmental funds (after adjusted from modified accrual to full accrual).

21 Business-type activities column is the sum of all enterprise funds. Internal service funds are blended with either governmental activities or business-type depending upon who uses them more. Very little adjustments since they all full accrual.

22 ELIMINATIONS! INTERFUND PAYABLES AND RECEIVABLES BETWEEN GOVERNMENTAL FUNDS HAVE BEEN ELIMINATED. LIKEWISE, INTERFUND PAYABLES AND RECEIVABLES BETWEEN ENTERPRISE FUNDS HAVE BEEN ELIMINATED.

23 INTERFUND PAYABLES AND RECEIVABLES BETWEEN GOVERNMENTAL FUNDS AND ENTERPRISE FUNDS STILL REMAIN. internal balances

24 INTERNAL BALANCES IN ASSETS Governmental Activities has a receivable coming from Business- Type activities.

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26 Costs of providing services are provided by FUNCTION.

27 Revenues are presented as PROGRAM REVENUES vs. GENERAL REVENUES

28 There are (3) kinds of PROGRAM REVENUE:

29 Expenses are listed first and are NEGATIVE.

30 Revenues are listed next and are POSITIVE.

31 The right side of the Statement Activities totals out Program Revenues – Expenses for Governmental vs Business Type activities.

32 Then all revenues that aren’t program revenues are listed as GENERAL REVENUES down on the lower left side. They are totaled out on the right side of the statement.

33 GOVERNMENT-WIDE -Statement of Net Assets (Balance Sheet) -Statement of Activities (Income Statement) GOVERNMENT FUND FINANCIAL STATEMENTS -Balance Sheet -Reconciliation of the B/S  Governmental Funds to Statement of Net Assets -Statement of Revenues, Expenditures and Changes in Fund Balance (Lunch) -Reconciliation of Statement of Revenues, Expenditures and Changes in Fund Balances  Governmental Funds to Statement of Activities. PROPRIETARY FUND FINANCIAL STATEMENTS -Statement of Net Assets (Balance Sheet) -Statement of Revenues, Expenses and Changes in Fund Net Assets - Statement of Cash Flows FIDUCIARY FUND FINANCIAL STATEMENTS - Statement of Net Assets - Statement of Activities

34 All the governmental funds are presented by MAJOR FUNDS which include: 1.GENERAL FUND (always only 1) 2.Any number of other major funds or non-major funds. Iowa has: * Special Revenue Funds * Capital Projects Funds * Permanent Funds

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36 Major vs. Non-Major Funds

37 Column for GENERAL FUND

38 Column for EACH OTHER MAJOR FUND (Iowa doesn’t have any)

39 One column for ALL OTHER NON-MAJOR FUNDS

40 How to decide what is a major fund? If you pass this test, then the fund MUST be shown as a major fund (not an option then). Quantitative MAJOR FUND CRITERIA are: a.Total assets, liabilities, revenues, or expenditures/ expenses (excluding extraordinary items) of that individual gov fund (or Enterprise Fund) are at least 10% of the corresponding total for all funds of that category or type. b.The same element that met the 10% criterion in (a) is at least 5% of the corresponding element total for all governmental funds and enterprise funds combined.

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42 adds back the value of capital assets – accumulated depreciation.

43 adds in the value of internal service fund assets because they need to be allocated to governmental activities and business activities in the GOVT WIDE. Here they seem to be going all into Governmental Activities.

44 adds back the value of revenues that were not counted in fund accounting (because they weren’t available) but can be accrued for GOVT WIDE.

45 and other necessary adjustments are done to turn these financials from modified to full accrual. This equals the total net assets for governmental activities in the GOVT-WIDE balance sheet.

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47 Presented in same format as lunch statement that we are used to.

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49 Adds back the excess of capital outlay costs (which were treated as expenditures) as compared to the depreciation expense which would be the net charge on the lunch statement.

50 Adjusts for the difference between the gain amount on the sale of capital assets (which should be shown) and the total Other Financing Source that was claimed in fund accounting.

51 Removes the Other Financing Source that was created when Capital Leases and other financing arrangements were created and does not count such as revenue in GOVT WIDE.

52 And all other necessary adjustments to turn this from modified accrual to full acrrual. This matches the changes in net assets from governmental activities on the GOVERNMENT-WIDE STATEMENT OF ACTIVITIES.

53 GOVERNMENT-WIDE -Statement of Net Assets (Balance Sheet) -Statement of Activities (Income Statement) GOVERNMENT FUND FINANCIAL STATEMENTS -Balance Sheet -Reconciliation of the B/S  Governmental Funds to Statement of Net Assets -Statement of Revenues, Expenditures and Changes in Fund Balance (Lunch) -Reconciliation of Statement of Revenues, Expenditures and Changes in Fund Balances  Governmental Funds to Statement of Activities. PROPRIETARY FUND FINANCIAL STATEMENTS -Statement of Net Assets (Balance Sheet) -Statement of Revenues, Expenses and Changes in Fund Net Assets - Statement of Cash Flows FIDUCIARY FUND FINANCIAL STATEMENTS - Statement of Net Assets - Statement of Activities

54 Business type activities are broken down into * University funds * Unemployment benefits * Non-major enterprise funds And then Internal service.

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56 1.MAJOR FUND reporting is used for Enterprise funds but not for Internal Service Funds. Total is the amount shown for Business Type activities in GOVERNMENT WIDE balance sheet

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58 Appears in its familiar format Total change is same as amount for Business-Type activities in GOVERNMENT WIDE.

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60 same setup learned for cash flows when studying enterprise funds.

61 GOVERNMENT-WIDE -Statement of Net Assets (Balance Sheet) -Statement of Activities (Income Statement) GOVERNMENT FUND FINANCIAL STATEMENTS -Balance Sheet -Reconciliation of the B/S  Governmental Funds to Statement of Net Assets -Statement of Revenues, Expenditures and Changes in Fund Balance (Lunch) -Reconciliation of Statement of Revenues, Expenditures and Changes in Fund Balances  Governmental Funds to Statement of Activities. PROPRIETARY FUND FINANCIAL STATEMENTS -Statement of Net Assets (Balance Sheet) -Statement of Revenues, Expenses and Changes in Fund Net Assets - Statement of Cash Flows FIDUCIARY FUND FINANCIAL STATEMENTS - Statement of Net Assets - Statement of Activities

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63 1.Reported by fund type and NOT major fund.

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65 No changes in Agency Fund It doesn’t have Net Assets

66 COMPONENT UNIT FINANCIAL STATEMENTS -Statement of Net Assets (Balance Sheet) -Statement of Activities (Income Statement) NOTES TO FINANCIAL STATEMENTS

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68 $991,878,000 $623,476,000 $88,831,000 The Net Asset balances of the three state universities

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70 Change in NA of (3) state schools $8,902,600$8,686,500$421,400

71 COMPONENT UNIT FINANCIAL STATEMENTS -Statement of Net Assets (Balance Sheet) -Statement of Activities (Income Statement) NOTES TO FINANCIAL STATEMENTS -notes should be presented that are essential to fair presentation of the Basic Financial Statements.

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85 Finally the Budgetary Comparison Statement!!! CAFR also includes a Budgetary Comparison Reconcilliation- Budget to GAAP

86 RSI FOOTNOTES are presented next in the CAFR

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90 CAFR also presents a combining lunch statement.

91 CAFR presents a series of Combining Statements.

92 CAFR presents a series of Combining Statements.

93 CAFR presents a series of Combining Statements.

94 CAFR presents a series of Combining Statements.

95 CAFR presents a series of Combining Statements.

96 Other Pension, Private Purpose Trust Fund and Agency Fund combining statements are offered.

97 NET ASSET BY COMPONENT CHANGES IN NET ASSETS FUND BALANCE OF GOVERNMENTAL FUNDS CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS Tax revenue by source- Govt’l funds Individual income tax returns filed and tax rates Retail sales by business classification Ratios of outstanding debt by type Revenue bond coverage

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