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Chapter 13

Chapter 13. Basic Financial Statements. Required Supplementary Information. LEARNING OBJECTIVES. 1. Identify the BASIC FINANCIAL STATEMENTS. 2. Understand the format/content of GOVERNMENT-WIDE financial statements and FUND FINANCIAL STATEMENTS.

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Chapter 13

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  1. Chapter 13 Basic Financial Statements Required Supplementary Information

  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.

  6. 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.

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

  8. 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.

  9. Basic Financial Statements 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

  10. Basic Financial Statements (cont). COMPONENT UNIT FINANCIAL STATEMENTS -Statement of Net Assets (Balance Sheet) -Statement of Activities (Income Statement) NOTES TO FINANCIAL STATEMENTS

  11. Basic Financial Statements 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. Government-Wide Statement of Net Assets

  13. Primary government vs. Component Units

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

  15. Primary government is GOVERNMENTAL VS BUSINESS TYPE activities

  16. FIDUCIARY FUNDS are NOT INCLUDED in Govt Wide

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

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

  19. 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.

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

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

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

  23. Government-Wide Statement of Actitives

  24. Costs of providing services are provided by FUNCTION.

  25. Revenues are presented as PROGRAM REVENUES vs. GENERAL REVENUES

  26. There are (3) kinds of PROGRAM REVENUE:

  27. Expenses are listed first and are NEGATIVE.

  28. Revenues are listed next and are POSITIVE.

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

  30. 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.

  31. Basic Financial Statements 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

  32. 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

  33. Government Fund-Financial Balance Sheet

  34. Major vs. Non-Major Funds

  35. Column for GENERAL FUND

  36. Column for EACH OTHERMAJOR FUND (Iowa doesn’t have any)

  37. One column for ALL OTHERNON-MAJOR FUNDS

  38. 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: • 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. • 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.

  39. Government Fund-Financial Reconciliation of the Balance Sheet- Governmental Funds to the Statement of Net Assets

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

  41. 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.

  42. 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.

  43. 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.

  44. Government Fund-Financial Statement of Revenues, Expenditures and Changes in Fund Balances- Governmental Funds

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

  46. Government Fund-Financial Reconcilliation of the Statement of Revenues, Expenditures and Changes in Fund Balances- Governmental Funds to the Statement of Activities

  47. 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.

  48. 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.

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