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E. Management’s Discussion and Analysis

E. Management’s Discussion and Analysis

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902



Module 21: Governmental (State and Local) Accounting

standards provide that (1) deferred outflows should be reported in a separate section following assets, and (2)

deferred inflows should be reported in a separate section following liabilities. The statement then arrives at net

position which includes the net effects of assets, deferred outflows of resources, liabilities, and deferred inflows

of resources. Remember that a deferred outflow of resources is a consumption of net assets that is applicable

to a future reporting period. An example would be where a government hedges a future transaction and the fair

value becomes negative. A deferred inflow of resources is an acquisition of net assets that is applicable to a

future reporting period. An example would be concession arrangement that involves the sale by a government

of the future income from a toll road. The payment from the toll operator represents deferred revenue that

should be recognized in the applicable future periods. Therefore it is similar to a liability.

If deferred outflows or deferred inflows are disclosed in the aggregate, the notes to the financial statements

should describe the different types of deferred amounts. In addition, an explanation in the notes is required if

the amount reported for a component of net position is significantly affected by the difference between deferred

inflows or outflows and their related assets and liabilities.

GASB Statement No. 65, Items Previously Recognized as Assets and Liabilities, clarifies which financial

statement items should continue to be presented as assets and liabilities, which should be reclassified as deferred

outflows and deferred inflows, and which items should be treated as current period expenditures (outflows) or

current period inflows.



Examples of Deferred Outflows of Resources



Examples of Deferred Inflows of Resources



• Grant expenditures paid in advance of meeting timing

requirements

• Deferred amounts from refunding of debt (debits)

• Cost to acquire rights to future revenues



• Grant amounts received in advance of meeting timing

requirements

• Deferred amounts from refunding debt (credits)

• Proceeds from sale of future revenues



Examples of Deferred Outflows of Resources



Examples of Deferred Inflows of Resources



• Deferred loss from sale and leaseback

• Deferred gain from a sale-leaseback transaction

• Negative fair value of government hedge of a future transaction • Positive fair value of government hedge of a future transaction

• Advance of revenue from imposed nonexchange transactions

Examples of Items that Continue to Be Reported as Assets



Examples of Items that Continue to Be Reported as Liabilities



•Prepayments

• Net pension plan position in excess of employer’s total

liability

• Capitalized incurred costs for regulated activities



• Advances of derived tax revenues

• Grant amounts received in advance of meeting requirements

other than timing

• Receipt of prepayment

• Loan commitment fees

• Refunds imposed by a regulator



Examples of Items Reported as Current Outflows



Examples of Items Reported as Current Inflows



• Debt issuance costs

• Initial direct cost incurred by lessor for operating leases

• Fees related to purchased loans



• Loan origination fees related to lending activities

• Commitment fees charged to make a loan

• Loan origination fees for mortgage loans held for investment



Full accrual accounting is to be used on the statement of net position, including the recording and depreciation of

fixed assets, including infrastructure. Capital assets generally are presented in the asset section of the statement of net

position net of related depreciation. Note that “net position” is broken down into three categories: (1) net investment

in capital assets, (2) restricted, and (3) unrestricted. The term “net investment in capital assets” is computed by taking

the value of capital (fixed) assets, less accumulated depreciation, less the debt associated with the acquisition or

improvement of the capital assets. Deferred outflows of resources and deferred inflows of resources that are related

to the acquisition, construction, or improvement of those assets or the related debt should also be included in this

component of net position. The term “restricted,” as defined by GASB means “(a) externally imposed by creditors

(such as through debt covenants), grantors, contributors, or laws or regulations of other governments, and (b) imposed

by law through constitutional provisions or enabling legislation.” Unrestricted net position is a “plug” figure, computed

by taking the total net position and subtracting the net investment in capital assets and the restricted net position.

Note also that the columns are separated into (1) governmental activities, (2) business-type activities, (3)

total primary government, and (4) component units. Governmental activities are those that are financed primarily

through taxes and other nonexchange transactions. Business-type activities are those normally financed through

user charges. The terms “primary government” and “component units” are described above. If a government has

more component units than can be displayed effectively in the Statement of Net Position, then the detail of each

component unit should be disclosed in the notes to the financial statements.



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Module 21: Governmental (State and Local) Accounting







903



2.The Statement of Activities reports revenues and expenses on the full accrual basis. This is a consolidated

statement except that interfund transactions are not eliminated, when those transactions are between

governmental and business-type activities, and between the primary government and discretely presented

component units. Expenses are reported by function. Revenues are also reported on the accrual basis and may

be exchange revenues or nonexchange revenues. Exchange revenues are reported when goods or services

are transferred for payment of (approximately) equal value, as is true for business enterprises. Nonexchange

transactions are reported in accord with Section K. below.

Program revenues, those that are directly associated with the functional expense categories, are deducted to arrive

at the net expense or revenue. Note that program revenues include (1) charges for services, (2) operating grants

and contributions, and (3) capital grants and contributions, although program revenues are not limited to the three

categories. Examples of program revenue would be the fees charged for park operations under “culture and recreation,”

and fines and forfeits, such as fines for traffic violations. Charges for services are deducted from the function which

creates the revenues. Grants and contributions (both operating and capital) are reported in the function to which their

use is restricted. The net expense or revenue is broken out between governmental activities, business-type activities, and

component units, the same as in the Statement of Net Position. General revenues are deducted from the net expenses

to obtain net revenues. General revenues include all taxes levied by the reporting government and other nonexchange

revenues not restricted to a particular program. After that, separate additions or deductions are made for special items,

extraordinary items, and transfers (between categories). If a government had contributions to term and permanent

endowments and contributions to permanent fund principal, these would also be shown after general revenues. Finally,

the net position at the beginning and end of the year are reconciled. (This is called an “all-inclusive activity” statement.)

Extraordinary items are those that are both unusual in nature and infrequent in occurrence (the same as for

business enterprises). Special items are those events within the control of management that are either unusual in

nature or infrequent in occurrence. An example of a special item would be the gain on sale of park land.



Alternatively, the internal balances could

be reported on separate lines as assets and

liabilities. A notation would need to be

added to inform the reader that the “Total”

column is adjusted for those amounts.



Sample City

STATEMENT OF NET POSITION

December 31, 2013

Primary government



Governmental

activities

Assets

Cash and cash equivalents

Investments

Receivables (net)

Internal balances

Inventories

Capital assets, net (Note 1)

Total assets

Deferred outflow

Payment to acquire rights to

future parking revenue



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Business-type activities



Total



Component units



$ 13,597,899

27,365,221

12,833,132

175,000

322,149

170,022,760

224,316,161



$ 10,279,143

-3,609,615

(175,000)

126,674

151,388,751

165,229,183



$ 23,877,042

27,365,221

16,442,747

-448,823

321,411,511

389,545,344



$ 303,935

7,428,952

4,042,290

-83,697

37,744,786

49,603,660



--



27,520



27,520



--



Liabilities

Accounts payable

Accrued and other liabilities

Net pension liability

Noncurrent liabilities (Note 2):

Due within one year

Due in more than one year

Total liabilities



6,783,310

1,435,599

4,563,789



751,430

--



7,534,740

1,435,599

4,563,789



1,803,332

38,911



9,236,000

78,738,589

100,757,287



4,426,286

74,482,273

79,659,989



113,662,286

153,220,862

180,417,276



1,426,639

27,106,151

30,375,033



Deferred inflow

Deferred gain from sale and

leaseback of building



16,300



--



16,300



--



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Module 21: Governmental (State and Local) Accounting



904

Net position

Net investment in capital assets

Restricted for:

Capital projects

Debt service

Community development

projects

Other purposes

Unrestricted (deficit)

Total net position



103,711,386



73,088,574



176,799,960



15,906,392



11,705,864

3,020,708



-1,451,996



11,705,864

4,472,704



492,445

--



--11,056,144

$85,596,714



4,811,043

3,214,302

8,135,415

$209,139,288



--2,829,790

$19,228,627



4,811,043

3,214,302

(2,920,729)

$123,542,574



Assets restricted for capital projects includes approximately $13 million of capital debt for which the proceeds have not yet been used

to construct capital assets.

SOURCE: Revised from GASB 34, page 201.



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Sample City

STATEMENT OF ACTIVITIES

For the Year Ended December 31, 2013



The detail presented for government activities

represents the minimum requirement. Governments

are encouraged to provide more details—for example,

police, fire, EMS, and inspections—rather than simply

“public safety.”



Program revenues



Functions/Programs

Primary government

Governmental activities:

General government

Public safety

Public works

Engineering services

Health and sanitation

Cemetery

Culture and recreation

Community development

Education (payment to

school district)

Interest on long-term debt

Total governmental

activities

Business-type activities:

Water

Sewer

Parking facilities

Total business-type

activities

Total primary government

Component units

Landfill

Public school system

Total component units



Charges for

services



Operating

grants and

Contributions



9,571,410

34,844,749

10,128,538

1,299,645

6,738,672

735,866

11,532,350

2,994,389



$ 3,146,915

1,198,855

850,000

704,793

5,612,267

212,496

3,995,199

--



$ 843,617

1,307,693

--575,000

-2,450,000

--



21,893,273

6,068,121



---



---



105,807,013



15,720,525



3,595,733

4,912,853

2,796,283



Expenses



$



Net (expense) revenue and changes in net position

Capital

grants and

contributions



-62,300

2,252,615

----2,580,000



$ (5,580,878)

(32,275,901)

(7,025,923)

(594,852)

(551,405)

(523,370)

(5,087,151)

(414,389)



---



5,176,310



4,159,350

7,170,533

1,344,087



11,304,869

$117,111,882

$



3,382,157

31,186,498

$ 34,568,655



$



Governmental

activities



Primary

government

Business-type

activities



---------



$ (5,580,878)

(32,275,901)

(7,025,923)

(594,852)

(551,405)

(523,370)

(5,087,151)

(414,389)



(21,893,273)

(6,068,121)



---



(21,893,273)

(6,068,121)



---



4,894,915



(80,015,263)



--



(80,015,263)



--



----



1,159,909

486,010

--



----



1,723,526

2,743,690

(1,452,196)



1,723,526

2,743,690

  (1,452,196)



----



12,673,970

$28,394,495



-$5,176,310



1,645,919

$6,540,834



-(80,015,263)



3,015,020

3,015,020



3,015,020

(77,000,243)



---



$ 3,857,858

705,765

$ 4,563,623



$

-  3,937,083

$ 3,937,083



$



----



----







$



11,397

-11,397



$



Component

units



Total



----



$



---------



487,098

(26,543,650)

$(26,056,552)

(Continued )



905



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Sample City

STATEMENT OF ACTIVITIES

For the Year Ended December 31, 2013



Program revenues



Functions/Programs



Expenses



Charges for

services



Operating

grants and

Contributions



Net (expense) revenue and changes in net position

Capital

grants and

contributions



General revenues:

Taxes:

Property taxes, levied for general purposes

Property taxes, levied for debt service

Franchise taxes

Public service taxes

Payment from Sample City

Grants and contributions not restricted to specific programs

Investment earnings

Miscellaneous

Special item—gain on sale of park land

Transfers

Total general revenues, special items, and transfers

Change in net position

Net position—beginning

Net position—ending



Governmental

activities



Primary

government

Business-type

activities



Total



Component

units



51,693,573

4,726,244

4,055,505

8,969,887

-1,457,820

1,958,144

884,907

2,653,488

501,409

76,900,977

(3,114,286)

126,656,860

$123,542,574



------601,349

104,925

-  (501,409)

204,865

3,219,885

82,376,829

$85,596,714



51,693,573

4,726,244

4,055,505

8,969,887

-1,457,820

2,559,493

989,832

2,653,488



-77,105,842

105,599

209,033,689

$209,139,288



----21,893,273

6,461,708

881,763

22,464

--29,259,208

3,202,656

16,025,971

$19,228,627



SOURCE: Revised from GASB 34, pp. 208-9.



906



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Module 21: Governmental (State and Local) Accounting



907



All governments are required to report those expenses that are directly associated with each function on the

appropriate line. If a government chooses to allocate some indirect expenses to functions, separate columns should

show the direct, indirect, and total costs charged to each function. Direct expenses include depreciation that can be

directly charged. Depreciation expense that serves all functions may be allocated as an indirect expense or charged

to general government or as unallocated depreciation expense. Depreciation expense for general infrastructure

assets (roads, bridges, storm sewers, etc.) should not be allocated but shown as an expense of that function that

normally is used for capital outlay (public works, for example) or as a separate line. Interest on long-term debt

would be included in direct expenses if the interest is due to a single function. Most interest, however, cannot be

identified with a single function and should be shown in a separate line. Interest is capitalized for business-type

activities but not for governmental activities.

A government may choose to use a modified approach for recording eligible infrastructure assets.

Under the modified approach eligible infrastructure assets are not required to be depreciated as long as the

following two requirements are met: (1) the government manages the eligible infrastructure assets using an

asset management system and (2) the government documents that the eligible infrastructure assets are being

preserved approximately at (or above) a condition level established and disclosed by the government. Under the

modified approach, if a government meets the above criteria and infrastructure, assets are not depreciated and all

expenditures (except for additions and improvements) made for eligible infrastructure assets should be expensed

in the period incurred. Expenditures for additions and improvements of eligible infrastructure assets should be

capitalized.













3. GASB No. 68, Accounting and Financial Reporting for Pensions, provides guidance when a state or local

government has an employee pension plan administered through a trust or equivalent arrangement with the

following characteristics:

• Contributions from employers or nonemployer contributing entities to the pension plan and the related

earnings are irrevocable.

• Pensions plan assets are dedicated to providing pensions to plan members in accordance with the benefit

terms, and

• Pension plan assets are legally protected from the creditors of employers and the pension plan administrator.

If the plan is a defined benefit pension plan, plan assets also are legally protected from creditors of the plan

members.

If the entity has a single-employer defined benefit plan or an agent defined benefit plan, the state or local

government should report, in the statement of net position, a net pension liability, which is measured as the portion

of the actuarial present value of projected benefit payments attributable to past periods of employee service

minus the pension plan’s fiduciary net position. The net pension liability should be measured as of a date (the

measurement date) which should be no earlier than the end of the employer’s prior fiscal year, consistently applied

from year to year.

In developing the net pension liability, the entity should use the following guidance:

















1. The selection of all assumptions should be in conformity with Actuarial Standards of Practice issued by

the Actuarial Standards Board.

2. The projected benefits payments should include all benefits to be provided to current active and inactive

employees through the pension plan in accordance with the benefit terms and any additional legal

agreements to provide benefits including automatic or substantially automatic postemployement benefit

changes and cost-of-living adjustments (COLAs).

3. The discount rate should be the single rate that reflects (a) the long-term expected rate of return on

pension plan investments expected to be used to finance the payment of benefits to the extent that the

pension plan’s fiduciary net position is projected to be sufficient to make the projected benefit payments

and the pension plan assets are expected to be invested to achieve that return, or (b) the yield or index

rate for 20-year, tax-exempt general obligation municipal bonds with an average rating of AA/Aa or

higher to the extent the conditions in (a) are not met.

4. The entry age actuarial cost method should be used to attribute the actuarial present value of projected

benefit payments of each employee to periods.

GASB No. 68 requires the recording of an amount for pension expense that includes recognition of annual

service cost and interest on the pension liability along with the effect on the net pension liability of changes in

benefit terms. Other components of pension expense (e.g., changes in economic and demographic assumptions,

and differences between assumptions and actual experience) are recognized over a closed period that is determined



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Module 21: Governmental (State and Local) Accounting



908



by the average remaining service period of the plan members. The effects on the net pension liability of differences

expected and actual investment returns is recognized in pension expense over a closed period of five years.

If the government has a cost-sharing defined benefit plan, it must record a liability and expense equal to its

proportionate share of the collective net pension liability and expense for the plan.

If the government has a defined contribution plan, pension expense should be accrued equal to the amount

of contributions or credits to employees’ accounts that are defined by the benefit terms as attributable to current

period service, net of forfeited amounts that are removed from employees’ accounts. The government should

record a change in pension liability equal to the difference between amounts recognized as pension expense and

the amounts paid by the employer to the pension plan.

GASB 68 requires extensive note disclosure and Required Supplementary Information (RSI), including:









1. Descriptive information about the types of benefits provided.

2. A statement of how contributions to the pension plan are determined.

3. The assumptions and methods used to calculate the pension liability.

Governments with single-employer or agent defined benefit plans must disclose additional information

including: (a.) the composition of the employees covered by benefits terms, and (b.) sources of changes in the

components of the net pension liability for the current year. Governments with these types of plans must also

provide RSI schedules covering the past 10 years regarding











1. Sources of changes in the components of the net pension liability.

2. Ratios that assist in assessing the magnitude of the net pension liability.

3. Comparisons of actual employer contributions to the pension plan with actuarially determined

contribution requirements.

Governments with cost-sharing pension plans must present an RSI schedule of net pension liability,

information about contractually required contributions, and related ratios.

Certain governments are legally responsible for making contributions to pension plans on behalf of another

government. For example a state may be legally obligated to contribute to a pension plan that covers local school

districts’ teachers. In these special funding situations, the nonemployer contributing government must recognize in

its financial statements their proportionate share of the other government’s net pension liability and pension expense.

NOW REVIEW MULTIPLE-CHOICE QUESTIONS 1 THROUGH 25







G. Fund Financial Statements

In addition to government-wide statements, governmental accounting standards require a number of fund financial

statements. Most governments use fund accounting internally and prepare the government-wide statements with

worksheet adjustments from this fund accounting base. A fund is defined by the GASB as

A fiscal and accounting entity with a self-balancing set of accounts recording cash and other financial resources,

together with all related liabilities and residual equities and balances, and changes therein, which are segregated for

the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations,

restrictions, or limitations.



Under GASB standards there are 11 fund types, which are classified into three general categories.

Governmental funds



Proprietary funds



(1) General



(6)  Internal service



(2)  Special revenue



(7) Enterprise



Fiduciary funds

(8) Agency

(9)  Pension and other employee benefit trust funds



(3)  Debt service



(10)  Investment trust funds



(4)  Capital projects



(11)  Private-purpose trust funds



(5) Permanent



Fund financial statements are presented separately for the governmental, proprietary, and fiduciary fund

categories. Each government has only one general fund; each other fund type may have any number of individual

funds, although GASB encourages having as few funds as possible. Fixed assets and long-term debt are not

reported in the fund financial statements for governmental funds. Fixed assets and long-term debt related to

governmental funds only are reported in the government-wide financial statements (statement of net position).



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Module 21: Governmental (State and Local) Accounting



909



The fund financial statements for the governmental and enterprise fund categories report major funds, not all

funds. The general fund is always a major fund. Other funds must be considered major when both of the following

conditions exist: (1) total assets, liabilities, deferred inflows and outflows, revenues, expenditures/expenses of that

individual governmental or enterprise fund constitute 10% of the governmental or enterprise category and (2)

total assets, liabilities, deferred inflows and outflows, revenues, expenditures/expenses are 5% of the total of the

governmental and enterprise category combined. In addition, a government may choose to call any fund major if

it feels that reporting that fund would be useful.1 In governmental and enterprise fund statements, the nonmajor

funds are aggregated and reported as a single column. Combining statements for nonmajor funds are shown as

“Other supplementary information” later in the financial section of CAFR. Internal service funds are reported in a

single column on the proprietary fund statements.

Fiduciary fund financial statements report a separate column for fund type (agency, pension and other

employee benefit trust, investment trust, and private purpose). If separate reports are not available for each pension

trust fund, then the notes must disclose this information. If separate reports are available, then the notes must

disclose how readers can obtain those reports.

A reconciliation between the information presented in the governmental fund financial statements and the

governmental activities column of the government-wide financial statements is required either at the bottom of

the fund financial statements or in a schedule immediately following the fund financial statements. Explanations

should either accompany the reconciliation or be in the notes.

Governmental funds focus on the current financial resources raised and expended to carry out general

government purposes. Governmental funds include the general, special revenue, debt service, capital projects, and

permanent funds. GASB Statement No. 54 provides definitions of the governmental fund types. The General fund

accounts for and reports all financial resources except those required to be accounted for and reported in another

fund. The general fund includes expenditures for functions such as general government, public safety, culture

and recreation, public works and engineering, and other activities not set aside in other funds. Special revenue

funds are used to account for and report specific revenue sources that are restricted or committed to expenditures

for specified current purposes other than debt service and capital projects. An example would include a motor

fuel tax limited by law to highway and street construction and repair. Debt service funds are used to account

for and report financial resources that are restricted, committed, or assigned to expenditures for the payment of

general long-term debt principal and interest. Capital projects funds are used to account for and report financial

resources that are restricted, committed, or assigned to expenditures for capital outlays, including the acquisition

or construction of capital facilities and other capital assets. Capital projects funds exclude capital-related outflows

financed by proprietary funds or for assets that will be held in trust funds. Permanent funds are used to account

for and report resources that are restricted to the extent that only earnings, and not principal, may be used to

support government programs which benefit the government or its citizens. Permanent funds exclude private

purpose trust funds which benefit individuals, private organizations, or other governments.

Financial statements required for governmental fund types include (1) Balance Sheet and (2) Statement

of Revenues, Expenditures, and Changes in Fund Balances. Both of these are illustrated in this module.

Governmental fund financial statements are prepared on the current financial resources measurement focus and

modified accrual basis of accounting (see Section J., “Measurement Focus and Basis of Accounting”). Like the

government-wide statement of net position, the balance sheet of a governmental fund would include deferred

outflows of resources and deferred inflow of resources. GASB Statement No. 54 established fund balance

classifications that are to be used by governmental funds based on the extent to which the government is obligated

to observe constraints imposed upon the use of the resources. Fund balance classifications provided by GASB

Statement No. 54 are nonspendable, restricted, committed, assigned and unassigned balances. The classifications

are based on the relative strength of the constraints that control how specific amounts can be spent. The

nonspendable fund balance classification includes amounts that cannot be spent because they are either

(1) not in spendable form, or (2) they are legally or contractually required to be maintained intact. “Not in

spendable form” includes items that are not expected to be converted to cash, such as inventories and prepaid

 he determination of whether or not a fund is major or nonmajor can be illustrated by the HUD Programs Fund, shown in the

T

governmental funds statements as a major fund. The first step is to determine whether or not the HUD Programs Fund is 10%

of the governmental funds assets ($7,504,765/51,705,690 = 14.5%), liabilities ($6,428,389/16,812,584 = 38.3%), revenues

($2,731,473/97,482,467 = 2.80%), or expenditures ($2,954,389/121,332,470 = 2.44%). The first (10%) criterion is met for assets and

liabilities but not for revenues and expenditures. As a result, the 5% test will be applied for assets and liabilities only. See the statements

for governmental and proprietary funds. The assets do not qualify [$7,504,765/(51,705,690 + 165,404,18) = 3.45%]. However, the

liabilities do exceed 5% [$6,428,389/(16,812,584 + 79,834,989) = 6.65%]. Thus, the HUD Programs Fund must be shown as

a major fund.



1



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910



Module 21: Governmental (State and Local) Accounting

amounts. It also includes the long-term amount of loans and notes receivable, as well as property acquired

for resale. However, if the proceeds from collection of receivables or from the sale of property is restricted,

committed, or assigned, the amounts should be included in the appropriate fund balance classification, rather

than in the nonspendable fund balance. Restricted fund balances include amounts that are restricted to specific

purposes and should be reported as restricted when constraints placed upon the resources are either: (1) externally

imposed by creditors, contributors, or laws or regulations of other governments or (2) imposed by law through

constitutional provisions or enabling legislation. Committed fund balances are amounts that can only be used

for specific purposes pursuant to constraints imposed by formal action of the government’s highest level of

decision-making authority. The assigned classification of fund balance includes amounts that are constrained by

the government’s intent to be used for specific purposes but are neither restricted nor committed. It also includes

any remaining positive amounts that are reported in governmental funds, other than the general fund, that are not

classified as nonspendable, restricted, or committed and amounts in the general fund that are intended to be used

for a specific purpose. To be classified as assigned “intent” should be expressed by (1) the governing body or (2) a

body (i.e., budget or finance committee) or official who has the authority to assign amounts to be used for specific

purposes. Finally, the unassigned fund balance is the residual classification for the general fund. The unassigned

classification represents the fund balance that has not been assigned to other funds and that has not been restricted,

committed, or assigned to specific purposes within the general fund. GASB Statement No. 54 indicates that the

general fund should be the only fund that reports a positive unassigned fund balance amount. The balance sheet

or the notes to the financial statements should disclose the details of the items in each of the five fund balance

classifications. GASB Statement No. 54 indicates that encumbrances are not a specific purpose and should not

be displayed as a separate item on the balance sheet but should be included in the appropriate fund balance

classification based on the definition and criteria for fund balance classifications. Significant encumbrances

should be disclosed in the notes to the financial statements in conjunction with disclosures of other significant

commitments.

Note in the Statement of Revenues, Expenditures, and Changes in Fund Balances that revenues are reported by

source, expenditures are reported by character (current, debt service, capital outlay) and then by function (general

government, public safety, etc.). The category “other financing sources and uses” includes transfers between

funds and proceeds from the issuance of long-term debt and proceeds from the sale of fixed assets. Special and

extraordinary items are reported in this statement in the same manner as in the government-wide Statement of

Activities, and reconciliation between the beginning and ending fund balance completes the statement. Interest

expenditures related to fixed assets are not capitalized.



c18.indd 910



13-05-2014 07:52:32







Module 21: Governmental (State and Local) Accounting



911



Sample City

BALANCE SHEET

GOVERNMENTAL FUNDS

December 31, 2013



Assets

Cash and cash equivalents

Investments

Receivables, net

Due from other funds

Receivables from other

 governments

Liens receivable

Inventories

Total assets

Liabilities and fund balances

Liabilities

Accounts payable

Due to other funds

Payable to other

 governments

Total liabilities

Deferred inflows

Fund balances

Nonspendable

Restricted

Committed

Assigned

Unassigned

Total fund balances



Other

governmental

funds



Total

governmental

funds



General

$3,418,485

-3,644,561

1,370,757



$1,236,523

-2,953,438

--



$





-13,262,695

353,340

--



$ 

-10,467,037

11,000

--



$ 5,606,792

3,485,252

10,221

--



$10,261,800

27,214,984

6,972,560

1,370,757



-791,926

182,821

$9,408,550



119,059

3,195,745

-$7,504,765



---$13,616,035



---$10,478,037



1,596,038

--$10,698,303



1,715,097

3,987,671

182,821

$51,705,690



$3,408,680

--



$129,975

25,369



$



190,548

--



$ 1,104,632

--



$ 1,074,831

--



$ 5,908,666

25,369



-155,344



-190,548



-1,104,632



-1,074,831



94,074

6,028,109



6,273,045



250,000



11,000



--



10,800,775



41,034

1,035,342



100,000

19,314

13,056,173



1,814,122

7,809,350



958,447

100,000

7,707,349

25,470,683

640,327

$34,876,806



94,074

3,502,754

4,266,730







Community

redevelopment



Route 7

construction



HUD

programs



958,447

40,292

640,327

$1,639,066





$1,076,376



5,792,587

3,569,818





$13,175,487





$ 9,362,405



$ 9,623,472



Amounts reported for governmental activities in the

  statement of net position are different because:

Capital assets used in governmental activities are not

 financial resources and therefore are not reported

in the funds.



161,082,708



Other long-term assets are not available to pay

 for current-period expenditures and therefore are

deferred in the funds.



9,348,876



Internal service funds are used by management

 to charge the costs of certain activi­ties, such as

insurance and telecommunications, to individual

funds. The assets and liabilities of the internal

service funds are included in governmental

activities in the statement of net position.



2,994,691



Long-term liabilities, including bonds payable,

 are not due and payable in the current period and

therefore are not reported in the funds.



(84,760,507)



Net position of governmental activities



$123,542,574



SOURCE: Revised from GASB 34, pp. 220-1.



c18.indd 911



13-05-2014 07:52:32



Module 21: Governmental (State and Local) Accounting



912



Sample City

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES

GOVERNMENTAL FUNDS

For the Year Ended December 31, 2013



General

Revenues

Property taxes

Franchise taxes

Public service taxes

Fees and fines

Licenses and permits

Intergovernmental

Charges for services

Investment earnings

Miscellaneous

Total revenues

Expenditures

Current

General government

Public safety

Public works

Engineering services

Health and sanitation

Cemetery

Culture and recreation

Community

 development

Education—payment

  to school district

Debt service

Principal

Interest and other

 charges

Capital outlay

Total expenditures

Excess (deficiency)

  of revenues over

 expenditures

Other Financing

Sources (Uses)

Proceeds of refunding

 bonds

Proceeds of long-term

  capital-related debt

Payment to bond

  refunding escrow agent

Transfers in

Transfers out

Total other financing

  sources and uses



$51,173,436

4,055,505

8,969,887

606,946

2,287,794

6,119,938

11,374,460

552,325

881,874

86,022,165



Other

governmental

funds



Total

governmental

funds



-------270,161

2,939

273,100



$ 4,680,192

----2,830,916

30,708

364,330

94

7,906,240



$ 55,853,628

4,055,505

8,969,887

606,946

2,287,794

11,529,045

11,405,168

1,823,411

951,083

97,482,467



HUD

programs



Community

redevelopment



Route 7

construction



$



$



$



-----2,578,191

-87,106

66,176

2,731,473



-------549,489



-549,489



8,630,835

33,729,623

4,975,775

1,299,645

6,070,032

706,305

11,411,685



--------



417,814

-------



16,700

-------



121,052

-3,721,542

-----



9,186,401

33,729,623

8,697,317

1,299,645

6,070,032

706,305

11,411,685



--



2,954,389



--



--



--



2,954,389



21,893,273



--



--



--



--



21,893,273



--



--



--



--



3,450,000



3,450,000



- 

-88,717,173



--2,954,389



-2,246,671

2,664,485



-11,281,769

11,298,469



5,215,151

3,190,209

15,697,954



5,215,151

16,718,649

121,332,470



(2,114,996)



(11,025,369)



(7,791,714)



(23,850,003)



(2,695,008)



(222,916)



--



--



--



--



38,045,000



38,045,000



--



--



17,529,560



--



1,300,000



18,829,560

(37,284,144)

5,680,510

(5,004,068)

20,266,858



-129,323

(2,163,759)



--(348,046)



--(2,273,187)



----



(37,284,144)

5,551,187

(219,076)



(2,034,436)



(348,046)



15,256,373



--



7,392,967



(Continued )



c18.indd 912



13-05-2014 07:52:32



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