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Introduction

Introduction. Chapter 1: Getting to know you…. Comparison of GNPs with Business. Different mission - no profit motive Budget - legal document most significant financial document budgets drive accounting Level of services - expenditures drive revenues Need to assure interperiod equity.

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Introduction

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  1. Introduction Chapter 1: Getting to know you….

  2. Comparison of GNPs with Business • Different mission - no profit motive • Budget - legal document • most significant financial document • budgets drive accounting • Level of services - expenditures drive revenues • Need to assure interperiod equity

  3. What other Characteristics? • Many different types of GNPs • cities, towns, counties, school districts, special tax districts, states, townships, hospitals, universities • schools, hospitals, social service orgs., universities, civic orgs., cultural orgs., religious orgs., foundations, etc.) • Short-term focus of managers • Business-type activities

  4. What is a Government? • Indicators of governments: • power to tax • right to assess residents’ annual fees • power to issue tax-exempt debt • governing body either elected by the citizens or appointed by another government • another government can dissolve it or assume its assets

  5. Purposes of Financial Reporting • Assess financial condition • Compare actual results with the budget • Determine compliance with laws and regulations • Evaluate efficiency and effectiveness

  6. Uses of Financial Reports • Main users: • 3 main users identified by GASB: • citizens and taxpayers • investors and creditors • governing boards (legislators) • Other users • donors and grantors • regulatory and oversight agencies • employees and other constituents

  7. Objectives of Financial Reporting • GASB Objectives - for S&L governments • accountability (interperiod equity, budgetary and fiscal compliance, service efforts and accomplishments) • current standards - compliance reporting • dual model proposed • FASB Objectives - for not-for-profits • similar to GASB, but with less emphasis on budgetary compliance

  8. Who Establishes Standards? • GASB • FASB • AICPA Hierarchy - pg. 26 - 1989 agreement on GAAP • FASAB- for federal government (GAO, Treasury, OMB)

  9. Problem 1-6 • impact on budget? • impact on YE financial statements? • impact on economic well-being? • Impact: story or status?

  10. Problem 1-10: How to Account? 1. 2. 3. 4.

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