Govt + Non profit accounting ACC301

what is a fund

sum of money and other resources separated to carry out a specific governmental purpose or objective

• shows spending resrictions and limits are met

fund types

1. proprietary: provide goods and services in exchange for fee revenue

2. fiduciary: resources held and managed by the government for the benefit of others

3. governmental: track governments’ short-term sources, uses, and balances of resources (uses modified accrual acc)

whats in proprietary fund

1. enterprise funds: sell goods/services to general public (trash pickup, electricity)

2. internal service funds: sell goods/services to other governmental departments (copying center)

whats in fiduciary fund

1. pension: manage amounts for pensions and other employee benefit plans

2. investment trust: manage investments for external parties like other govts or non-profit orgs

3. private purpose: all other trust fund arrangements where principal and interest are managed for benefit of specific individuals, private orgs, or other govts

4. custodial: manage amounts in temporary custody of government; these amounts aren’t actively invested by govt to earn a return

whats in governmental fund

1. general fund: ordinary operations of the govt, routine collections and expenditures

2. special revenue: revenue that must be used for a specific purpose of activity

3. debt service: accumulation of resources and payments for specific debt obligations

4. capital projects: resources that are required to be used for the construction or purchase of major capital assets

5. permanent: resources where the govt. is legally restricted from spending the principal and may only spend the investment income

modified accrual

• revenue recognized when it’s measurable and available

  • considered available if it’s collectible within current period (60 days)

• expense recognized when the related fund liability is incurred

what do you do with purchases of capital assets?

Expensed NOT capitalized

• land, buildings, machinery

modified accrual balance sheet

• only reports current assets and liabilities

• no long term recorded

• no depreciation recognized

deferred outflow

a consumption of net assets that is attributable to a future period (similar to a prepaid expense)

• a postponement of recognizing an expense

• increases funds net position but not technically an asset bc it doesn’t provide future economic benefit

deferred inflow

a receipt of net assets that is attributable to a future period (similar to unearned revenue)

• postponement of revenue recognition upon receipt of resources

• decreases funds net position, but not technically a liability bc isn’t a legal obligation

budgetary accounting - special issues w/ govt. funds

used to demonstrate accountability (only in governmental funds)

• legal constraint on spending, its illegal to spend more than amount appropriated

• no impact on the actual results reported, only a control measure

recorded 2 times during the year:

1. beginning - to recored estimated inflows and outflows

2. end - to reverse entries and close budget

budgeted balance

• debit revenues and credit expenses

Encumbrances - special issues w/ govt. funds

commitments to spend

• important to track spending commitments as it’s illegal to overspend

classification of fund balances - special issues w/ govt. funds

1. nonspendable - amount of fund equity related to assets that cannot be spent (prepaid expenses, inventory, supplies)

2. restricted - amount of fund equity related to assets restricted by external authorities

3. committed - amount of fund equity related to assets committed to a purpose by the govts highest decision-making authority through a formal resolution (legislature, internal commitment)

4. assigned - related to assets the govt intends to obligate, but has not formally committed (internal restriction)

5. unassigned - related to spendable assets (no restrictions)