Financial Reporting - Fund Accounting

  1. What is Fund Accounting, what does it emphasize and whom is it used by?
    Fund accounting is an accounting system emphasizing accountability rather than profitability.

    It used by non-profit organizations and governments.

    • In this system, a fund is a self-balancing set of accounts,
    • segregated for specific purposes in accordance with laws and regulations or special restrictions and limitations*.
  2. What defines a current assets?
    Used in operations or converted to cash within 1 year.
  3. How is a capital asset defined?
    –Benefit the organization for more than 1 year (service life)

    Includes intangible assets*

    *GASB # 51 – Accounting & Financial Reporting for Intangible Assets – periods beginning after 6/15/2009 i.e. FY 2010
  4. What are current liabilities?
    –Obligations due within 1 year (includes current portion of long term debt)
  5. What are non-current liabilities?
    –Obligations due more than 1 year hence
  6. How are total assets minus total liabilities defined for governmental, proprietary & fiduciary funds?
    • Net assets – Fund level for proprietary
    • & fiduciary funds

    • Fund balance* – Fund level for governmental
    • funds, i.e. unreserved fund balance

    Owner’s Equity (private business)

    *GASB # 54 - Fund Balance Reporting and Governmental Fund Type Definitions
  7. According to GASB #54, what are the 5 types of fund balances?
    • Nonspendable Fund Balance
    • Cannot be spent because of:
    • Form (e.g. inventory, prepaid assets)
    • Must be maintained intact (e.g. principal of endowment fund)

    • Restricted Fund Balance
    • Externally enforceable limitations on use
    • By creditors, grantors, contributors, laws,
    • By law- constitutional or enabling legislation

    • Committed Fund Balance
    • Limitation in place before end of period
    • Limitation is self imposed (e.g. carryovers)
    • Must be removed by same “highest level” that imposed it

    • Assigned Fund Balance
    • Limitation results from intended use
    • “intended use” delegated to lower level
    • May be removed by same level that received delegation

    • Unassigned Fund Balance
    • Residual net resources
    • Balance in excess of :
    • non spendable/restricted/committed/assigned i.e. surplus
  8. What are the three broad fund classifications?
    • –Governmental funds (5)
    • –Proprietary funds (2)
    • –Fiduciary funds (4)
  9. What are the 5 types of Government funds?
    • –1. General
    • To account for & report all financial resources not (required to be)* accounted for & reported in another fund

    • Only fund required by GAAP
    • Only one ‘General Fund”
    • Small local governments may have only a General Fund

    **GASB 54 drops this phrase

    • 2. Special Revenue (OLD)
    • Resources restricted to specific purpose
    • –Legal or contract (e.g. CRA)

    • 2. Special Revenue (NEW)
    • Account for & report the proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projects

    • 3. Debt Service
    • Resources accumulated to pay long term debt
    • Principal & interest

    • 4. Capital Projects
    • Acquisition/construction of major capital assets*
    • –i.e. not equipment units financed by proprietary funds

    • 5. Permanent
    • Resources restricted to extent that earnings and not principal may be used for support of entity programs

    * GASB # 54 updates
  10. What are the 2 types of Proprietary Funds?
    • 1. Internal Service
    • Services provided by one agency, etc. to another on a cost reimbursement basis

    • 2. Enterprise
    • Operations financed & operated similar to private business
    • –i.e. user fees
    • –Accountability (not “profit “makers)
  11. What are the 4 types of Fiduciary Funds?
    • 1. Pension Trust Fund
    • Resources held in trust for others (others people's money)

    • 2. Investment Trust Fund
    • Pooled resources of legally separate entities
    • Entity holds investments on behalf of others

    • 3. Private-purpose Trust Fund
    • Principal & income benefit specific individuals or organization

    • 4. Agency Fund
    • Pass-through funds (other people's money)
    • –e.g. utility deposits
Card Set
Financial Reporting - Fund Accounting
Fund Accounting