Académique Documents
Professionnel Documents
Culture Documents
Governmental
Entities:
Introduction and
General Fund
Accounting
McGraw-Hill/Irwin Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved.
Governmental Entities
17-2
Governmental Entities
17-3
Governmental Entities
• The 80,000 local governmental units in the
United States are classified as:
• General-purpose local government,
such as counties, cities towns, villages,
and townships.
• Special-purpose local government,
such as soil conservation districts.
• Authorities and agencies, such as the
New York Port Authority and local
housing authorities.
17-4
Governmental Entities
17-5
Governmental Entities
17-6
Governmental Entities
17-7
Governmental Entities
17-8
Governmental Entities
• Governmental operations have legal
authorization for their existence, conduct
revenue raising through the power of taxation,
and have mandated expenditures they must
make to provide their services.
17-10
Governmental Entities
• The primary emphasis in governmental fund
accounting is to measure and report on
management’s stewardship of the financial
resources committed to the objectives of the
governmental unit.
17-12
Governmental Entities
17-13
Expendability of Resources versus
Capital Maintenance Objectives
17-15
Expendability of Resources versus
Capital Maintenance Objectives
17-17
Fund Accounting
17-18
Fund Accounting
17-19
Types of Funds
17-20
Types of Funds
17-21
Types of Funds
• Most funds obtain resources from taxes on
property, income, or commercial sales; they
may also obtain resources as grants from
other governmental agencies, from fines or
licenses, and from charges for services.
17-23
Types of Funds
17-24
Types of Funds
17-25
Governmental Funds
• General Fund:
– Accounts for all financial resources
except for those required to be
accounted for in another fund.
– Includes transactions for general
governmental services provided by
the executive, legislative, and judicial
operations of the governmental entity.
17-28
Governmental Funds
17-29
Governmental Funds
17-31
Governmental Funds
• Permanent Funds:
17-32
Proprietary Funds
17-33
Proprietary Funds
17-34
Proprietary Funds
– Enterprise Funds
17-35
Proprietary Funds
• Enterprise Funds:
17-37
Proprietary Funds
• Internal Service Funds:
– Accounts for the financing of goods or
services provided by one department or
agency to other departments or agencies of
the governmental unit.
– The services are usually provided on a cost-
reimbursement basis and are offered only to
other governmental agencies, not the general
public. Examples are municipal motor vehicle
pools, city print shops, and central
purchasing operations.
17-38
Fiduciary Funds
17-39
Fiduciary Funds
17-40
Fiduciary Funds
17-41
Fiduciary Funds
17-42
Fiduciary Funds
17-43
Fiduciary Funds
• Agency Funds:
17-44
Permanent versus Private-Purpose
17-45
Permanent versus Private-Purpose
17-46
Reporting Entity
17-47
Reporting Entity
• A governmental unit may have a variety of
boards, commissions, authorities, or other
component units under its control.
17-49
Reporting Entity
17-50
Reporting Entity
17-51
Measurement Focus and
Basis of Accounting (MFBA)
17-53
MFBA
• The current resources measurement focus in on
the flow of current financial resources and the
proper expendability of the resources for
designated purposes and determination of the
available resources remaining to be expended.
• Expenditures recognized under the modified
accrual basis are the amounts that would
normally be liquidated with expendable available
financial resources.
• The five governmental funds have this focus.
17-54
MFBA
17-55
MFBA
17-56
Budgetary Aspects
17-57
Operating Budgets
• Operating budgets specify expected revenue
from the various sources provided by law.
• The operating budget includes expected
expenditures for various line items, such as
payrolls of employees, supplies, and goods
and services to be obtained from outside the
governing unit.
• Operating budgets are used in the general
fund, special revenue funds, and sometimes
the debt service funds.
17-58
Capital Budgets
17-59
Appropriation
• Approval of the budget provides the legal
authority to levy the local property taxes and to
appropriate resources for the expenditures. The
term appropriation is the legal description of the
authority to expend resources. The entry to
record general fund budget is as follows (all
amounts assumed):
Estimated Revenues Control $900,000
Appropriations Control $850,000
Budgetary Fund
Balance – Unreserved $50,000
17-60
Accounting for Expenditures
17-61
Accounting for Expenditures
Encumbrances $15,000
Budgetary Fund
Balance–Unreserved
for encumbrances $15,000
17-62
Expenditure Transactions
17-63
Fund
17-64
Function (or Program)
17-65
Organizational Unit
• Classifying by organization unit maintains
accountability by each unit director.
• The organization unit is determined by the
governmental unit’s organization chart.
• For example, public safety could be broken
down into police, fire, corrections, protective
inspection (such as plumbing and electrical
code inspections), and other protection (such
as flood control, traffic engineering, and
examination of licensed occupations).
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Activity
• Activities within a function are recorded to
maintain a record of the efficiency of each
activity.
• For example, the police function could be
broken down into the following activities: police
administration, crime control and investigation,
traffic control, police training, support service
(such as communication services and
ambulance services), special detail services,
and police station and building maintenance.
Admittedly, each of these activities could be
broken down further, if desired.
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Character
17-68
Object Class
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Object Class (Continued)
17-70
Interfund Activities
17-71
Interfund Activities
• Interfund loans.
• Interfund services provided and used.
• Interfund transfers.
• Interfund reimbursements.
17-72
Interfund Activities
17-73
Interfund Activities
17-74
You Will Survive This Chapter !!!!
17-75
Chapter 17
End of Chapter
McGraw-Hill/Irwin Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved.