高级会计学英文版资料：Chap016 ACCOUNTING FOR STATE AND LOCAL GOVERNMENTS (PART ONE)

1、Chapter 16 - Accounting for State and Local Governments (Part 1)16- Copyright 2015 McGraw-Hill Education.All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.Chapter 16accounting for state and local GOVERNMENTS (part one)Chapter OutlineI.Sta

2、te and local government units are different than for-profit entities in a number of specific ways.A. Governments serve a broader group of stakeholders.B. Most government revenues are raised through involuntary taxes and tolls. C. Monitoring compliance with budgeted public policy priorities is centra

3、l to public accountability.D. Governments exist longer than for-profit businesses.E. The primary purpose of governments is to enhance or maintain the well-being of its citizens.II.State and local government units produce two complete and distinct sets of financial statements.User needs for governmen

4、tal financial information are so diverse that the Governmental Accounting Standards Board (GASB) requires two sets of statements to be prepared. The fund financial statements are more for the citizens whereas the government-wide statements are more for investors, such as bondholders.Fund financial s

5、tatements are designed primarily to present information about the General Fund and other major activities. This approach stresses the governments fiscal accountability over its financial resources.For governmental funds, all current financial resources and claims to those financial resources are pre

6、sented using modified accrual accounting for timing purposes.For proprietary funds and fiduciary funds, all economic resources are reported using accrual accounting for timing purposes. Government-wide financial statements (a statement of net position and a statement of activities) are designed to p

7、resent an overview of the government as a whole and emphasizes operational accountability.In these statements, all economic resources are measured using accrual accounting for timing purposes.The governmental funds and most of the internal service funds are combined and reported together as governme

8、ntal activities.The enterprise funds and any remaining internal service funds are combined and reported as business-type activities.Because the government does not have control over the use of the assets held in the fiduciary funds, they are excluded from the government-wide financial statements.III

9、.For internal purposes, governmental accounting records its individual activities within a number of self-balancing sets of accounts known as funds.Governmental funds account for activities where service to the public is the main emphasis.General fundSpecial revenue fundsCapital projects fundsDebt s

10、ervice fundsPermanent fundsProprietary funds account for activities of the government where a user charge is assessed.Enterprise fundsInternal service fundsFiduciary funds account for assets held in a trustee capacity for external parties.Investment trust fundsPrivate-purpose trust fundsPension trus

11、t fundsAgency fundsIV. In reporting current financial resources and the claims to the current financial resources of a governmental fund, the Fund Balance account indicates the use that can be made of these resources by government officials. Fund-BalanceNonspendable the amount of resources reported

12、by a fund that cannot be spent by government officials.Fund-BalanceRestricted the amount of resources held by a fund that must be spent in a manner designated by an external party.Fund-BalanceCommitted the amount of resources designated for a particular purpose by the highest level of decision-makin

13、g authority in the government.Fund-BalanceAssigned the amount of resources designated for a particular purpose internally but not by the highest level of decision-making authority.Fund-BalanceUnassigned the amount of resources where no use has yet been specified. This is only found in the General Fu

14、nd because resources only appear in other funds if there is some intended use for them.V.Governmental accounting has traditionally stressed establishing control over current financial resources to ensure appropriate usage of the publics money.A.Budgets are required to be approved by the citizens of

15、the government, represented by the governing body for example, city council, state legislature. When amendments are made to the budget, the governing body has to approve them also.B. Budgetary entries are recorded for a number of the activities within the governmental funds.The entry is recorded at

16、the start of the year and is then reversed to remove at the end of the year.Budget amendments may be recorded during the year.C. Financial commitments (such as contracts and purchase orders) are recorded during the year as encumbrances.These entries help avoid overspending of appropriated amounts.En

17、cumbrances are removed from the records when the commitment becomes a liability.VI.In government-wide financial statements, acquiring a capital asset is reported as a capital asset and incurring an expense is reported as an expense in the same manner as a for-profit business. However, in reporting t

18、he governmental funds within the fund financial statements, the purchase of a capital asset, incurrence of an expense, and payment of a noncurrent debt are all reported as expenditures to reflect the reduction in current financial resources. Through this reporting, the statements report the usage ma

19、de of the current financial resources held by the government activity.On the fund financial statements, supplies and prepaid items can be reported by either the consumption method (expenditure is recorded as the acquired item is consumed) or the purchases method (expenditure is recorded when liabili

20、ty is incurred). The consumption method is required for the government-wide statements.On the government-wide financial statements, acquisitions of infrastructure items such as bridges and sidewalks are required to be recorded as capital assets.VII.Governments often have nonexchange transactions whe

21、re revenues such as taxes and grants are received without a corresponding earning process. To guide the timing of recognition of such transactions, four separate categories have been identified.Derived tax revenuessuch as income taxes and sales taxesare recognized when the underlying event occurs.Im

22、posed nonexchange transactionssuch as property taxes, fines, and penaltiesare recognized as revenues when the resources are required to be used or in the first period when use is permitted.Government-mandated nonexchange transactions, usually a government grant to fulfill a legally required objectiv

23、e, are recognized when all eligibility requirements have been met.Voluntary nonexchange transactionssuch as most grants and giftsare recognized when all eligibility requirements have been met.VIII. Governments often raise significant amounts of financial resources by issuing long-term bonds.In the g

24、overnment-wide financial statements, the debt is a liability on the Statement of Net Position.In the fund financial statements for the governmental funds, the inflow of financial resources is reported as an “other financing source.” Eventual payment of the debt is shown as an expenditure. Noncurrent

25、 debt balances are not shown in the fund financial statements for the governmental funds. IX. Transfers are separated into three categories: intra-activity transactions, interactivity transactions, and internal exchange transactions. Answer to Discussion QuestionIs it an Asset or a Liability?Even af

26、ter more than 20 years, Mautzs comments go straight to the problem posed by government accounting. State and local governments are just fundamentally different than for-profit businesses. Some students seem to believe that the unique features of government financial reporting are more arbitrary than

27、 substantive. To them, accounting is accounting and the specific type of reporting entity should not be an important consideration. For that reason, this discussion question is placed early in the coverage of governmental accounting to point out that governments do not necessarily view transactions

28、in the same manner as for-profit businesses. Discussing the construction of a new high school building is an excellent example of the essential accounting problems created by a governments unique perspective. The decision to build this facility virtually assures the government that it will incur sig

29、nificant cash outflows for years to come. A business constructs a building in hopes of generating significant net cash inflows. Government officials are aware that the costs of maintenance, heating, etc. of the school will far outweigh any direct cash inflows. Hence, Mautzs questionis it an asset or

30、 a liabilityis not easy to answer. Governmental accounting solves this issue in a very unique way. In the fund financial statements, construction costs are reported as expenditures whereas, in the government-wide financial statements, the high school is reported as a capital asset. The reduction in

31、current financial resources is the focus of one statement whereas the cost of construction is shown as an asset in the other set of statements.Prior to class discussion, students can be asked to read Mautzs entire article as additional background information. In class, students can be encouraged to

32、discuss whether showing this high school building in two such different ways is misleading or actually provides the information needed. Students should be asked their opinion as to the benefit of having two completely different sets of financial statements. A quality, in-depth discussion can certain

33、ly result from the article described here.Answers to Questions1.Individuals and groups who seek information about a state or local government have needs that are often complex and contradictory. Specific procedures in the governmental reporting process are an outgrowth of those needs. Three primary

34、user groups have been identified: citizenry, legislative and oversight bodies, and investors and creditors. The needs of these users are broad and no single set of financial statements and accounting principles can meet all expectations. The satisfaction of diverse user needs is a constant focus (an

35、d challenge) of governmental accounting. This has led to the dual-perspective model which results in the production of two distinct types of financial statements.2.Accountability and control have been a constant goal of governmental accounting over the decades. Governmental accounting provides the c

36、itizenry of a democracy with a method for evaluating the essential government activities of raising and allocating resources. Elected and appointed officials have authority over the publics money. They should be held accountable for first generating and then using those resources wisely in meeting t

37、he publics needs. Control should be established to prevent waste and theft. The accounting system should be structured to help citizens evaluate these officials based on the honesty, wisdom, and stewardship of their actions.3.The traditional approach of government accounting places its priority on i

38、ndividual accountability for the various separate government activities. Unfortunately, the resulting information has not necessarily met all user needs (especially the needs of bond investors who want to know whether a government will be able to repay its debts). Today, government reporting still f

39、ocuses on current financial resources in the fund financial statements (for the governmental funds), but also provides extensive additional data about all assets and all liabilities in the government-wide financial statements. Thus, a broader range of user needs are met.4.Two financial statements ma

40、ke up the government-wide financial statements: The Statement of Net Position and the Statement of Activities. There are a number of fund financial statements. The two fundamental financial statements covered in the current chapter are the Balance Sheet for the governmental funds and the Statement o

41、f Revenues, Expenditures, and Other Changes in Fund Balances for the governmental funds. Additional fund financial statements will be introduced in the following chapter.5.In fund accounting, governmental funds use the current financial resources measurement focus and the modified accrual basis for

42、the timing of revenue and expense recognition. Current financial resources include assets such as cash, receivables, and investments that can be used for spending. Reported liabilities are ones to be paid from current resources. Some deferred outflows of resources and deferred inflows of resources m

43、ight also be reported in these statements. The modified accrual basis recognizes revenues when they become available and measurable. Expenditures are recorded when they create a reduction in current financial resources. Governments must disclose the length of time being used to determine availabilit

44、y. A period of 60 days is common although not required except for property tax revenues.Proprietary and fiduciary funds generally use the economic resources measurement focus and the accrual basis for the timing of revenue and expense recognition. The economic resources measurement focus reports all

45、 assets (including capital and other noncurrent assets) as well as all liabilities (including long-term obligations). Deferred outflows of resources and deferred inflows of resources also might require recognition. 6.Government-wide financial statements use the economic resources measurement focus a

46、nd accrual accounting for the timing of revenue and expense recognition. The accounting is very similar to that of for-profit organizations. 7.Current financial resources are primarily cash, investments, and receivables because they can be quickly turned into cash for spending purposes. These resour

47、ces are expected to be used to meet the current period spending needs of the governmental funds.8.Liabilities are recognized under the current financial resources focus when a claim against current financial resources is created. That normally means that a debt is owed and payment will be made durin

48、g the current period or a short time into the subsequent period. Disclosure is required for the number of days being applied for that time extension. Often, 60 days is used, a time period that is mandated for property taxes.9.Governmental Funds: Account for activities with a service orientationa.Gen

49、eral Fundb.Special Revenue Fundc.Capital Projects Fundd.Debt Service Funde.Permanent FundProprietary Funds: Account for functions that are financed (at least in part) by user charges.a.Enterprise Fundb.Internal Service FundFiduciary Funds: Account for monies held by the government in a trustee capac

50、ity.a.Investment Trust Fundb.Private-Purpose Trust Fundc.Pension Trust Fundd.Agency Fund10.The following fund types fall within the governmental funds classification:a.The General Fund is used to account for ongoing activities such as public safety and sanitation. More specifically, the General Fund

51、 records any activities that do not fall under one of the other fund types. b.Special Revenue Funds account for financial resources that have been restricted as to expenditure for a specified operating purpose (other than debt service and capital asset construction or acquisition). This money often

52、comes from sources such as grants, taxes, and gifts.c.Capital Projects Funds account for monies (and their eventual expenditure) that have been designated (either externally or internally) for the acquisition or construction of government facilities or other capital assets.d.Debt Service Funds accou

53、nt for the accumulation of resources that will be used to pay the principal and interest of long-term debts incurred by the service activities.e.Permanent Funds account for assets conveyed to a government with the stipulation that the principal cannot be spent but any income should be used by the go

54、vernment, often for a designated purpose.11.The following fund types fall within the proprietary funds classification:a.An Enterprise Fund accounts for any governmental activity that is open to the public and financed in whole or in part by user charges, such as a subway system or a toll road.b.An I

55、nternal Service Fund is used to record any activity that provides service to other departments or agencies within the government on a cost-reimbursement basis. A motor pool, a centralized computer operation, or a print shop can be accounted for as Internal Service Funds if a user fee is charged and

56、they only exist to serve the other functions of government. 12.Fiduciary Funds: Account for monies held by the government in a trustee capacity.a.Investment Trust Fund. Accounts for the outside portion of investment pools where the reporting government has accepted funds from other governments resul

57、ting in a larger investment and hopefully a higher return.b.Private-Purpose Trust Fund.Accounts for money held in a trustee capacity, for example, unclaimed property, specifically designated external parties, or money confiscated from illegal operations.c.Pension Trust Fund.Accounts for the employee

58、 retirement system.d.Agency Fund.Accounts for resources held by the government as an agent for individuals, private organizations, or other government units.13.In government-wide financial statements, financial figures are shown as either governmental activities or business-type activities. All gove

59、rnmental funds and most internal service funds are included within the governmental activities. All enterprise funds and any remaining internal service funds are lumped together to form the business-type activities. Internal service funds are grouped in governmental activities or business-type activ

60、ities based on the funds that are primarily serviced. Fiduciary funds are not shown in the government-wide financial statements because those resources are not available in any way to government officials.14.In fund financial statements, for governmental funds, a separate column must be shown for (a