Government and Non-Profit Accounting
Accounting Standards for State and Local Governments
After Week 1, you should be able to:Demonstrate an understanding of why governmental accounting is–and should be–different from for-profit business accounting.Model the governmental accounting system used to account for revenues, expenditures, encumbrances, expenses, capital, and debt.
Compare and Contrast Governmental Accounting and For-Profit Accounting
MissionsObjectivesCharacteristicsAbsence of a profit motive.No direct link between revenues and expenses.No relationship between resources provided and the benefits received.Restriction on assets.
Governing Standard Setting Bodies
The Governmental Accounting Standards Board’s (GASB) Web site at (www.gasb.org) provides extensive information about the mission, structure, the due-process it follows in setting standards, and the role of its advisory council.Financial Accounting Standards Board (FASB) provides information located at its Web site at (www.gasb.org).
Basis of Accounting
Financial accountingFull accrualFASBGovernmental accountingModified accrualGASBGovernmental budgetsCash basisCommitments
Objectives of Financial Reporting
“Accountability is the cornerstone of all financial reporting in government… Accountability requires governments to answer to the citizenry—to justify the raising of public resources and the purposes for which they are used.”-GASB Concepts Statement No. 1
Comprehensive Annual Financial Reports (CAFR)
Purpose of CAFRComponents of CAFRUses of CAFRGASB 34Reasons for implementationAdvantages and disadvantagesApplies to local and state entities but not the Federal GovernmentManagement Discussion and Analysis (MD&A)
Basic Financial Statements Overview
Government-Wide Financial StatementsStatement of Net AssetsStatement of ActivitiesGovernmental Funds Financial StatementsBalance SheetStatement of Revenues, Expenditures, and Changes in Fund Balances (GAAP basis)Statement of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual
Basic Financial Statements Overview (Cont.)
Proprietary Funds Financial StatementsStatement of Net Assets (Balance Sheet)Statement of Revenues, Expenses, and Changes in Net AssetsStatement of Cash FlowsFiduciary Funds Financial StatementsStatement of Fiduciary Net AssetsStatement of Changes in Fiduciary Net AssetsNotes to the financial statements