Financial Reporting: The Basic Financial Statements
ANSWERS TO QUESTIONS
The measurement focus and basis of accounting required for reporting governmental activities is the flow of economic resources measurement focus and the accrual basis of accounting.
GASB Statement No. 34 requires two government-wide financial statements—a statement of net position and a statement of activities. The standard requires presentation of the following eight fund-based financial statements
Statement of Revenues, Expenditures, and Changes in Fund Balances Statement of Revenues, Expenditures, and Changes in Fund Balances—Budget and Actual (for the General Fund and major Special Revenue Funds with legally adopted annual budgets). Governments are permitted to present the budgetary comparison statement as a schedule in the required supplementary information (RSI), instead of as a basic financial statement.
Statement of Net Position (or Balance Sheet)
Statement of Revenues, Expenses, and Changes in Fund Net Position Statement of Cash Flows
Statement of Fiduciary Net Position
Statement of Changes in Fiduciary Net Position
Additionally, GASB Statement No. 34 requires presentation of management's discussion and analysis as required supplemental information preceding the financial statements.
Finally, although not a financial statement, the notes are an essential, integral part of the basic financial statements.
In both the government-wide statement of net position and the proprietary funds statement of net position, net position is required to be presented in three broad classifications:
Net investment in capital assets
Restricted net position
Unrestricted net position
These classifications were defined and discussed in Chapter 10, pages 402 to 405.
Major fund reporting refers to presenting a separate individual fund column for each major governmental fund in the governmental fund financial statements and a separate individual fund column for each major Enterprise Fund in the proprietary fund financial statements. Major fund reporting differs from fund type reporting in that individual major funds are reported in separate columns, whereas in fund type reporting all funds of the same type are combined in a single column. Fund type reporting entails presenting a separate column for each fund type instead of for each major fund.
Major fund reporting is required for Enterprise Funds and for all governmental funds. Fund type reporting is used for Internal Service Funds and for all fiduciary fund types.
First, the General Fund is always a major fund. Second, government officials should identify any other individual governmental fund or Enterprise Fund as a major fund that, in their judgment, is important enough to financial statement users to warrant presentation in a separate column. Finally, the government must apply the size-based criteria required to be used to identify the minimum set of major funds based on the size criteria. Under these criteria, a government determines which additional governmental funds and Enterprise Funds are major funds as follows:
Any governmental fund that meets the following size-based criteria must be treated as a major fund:
Total assets and deferred outflows of resources, liabilities and deferred inflows of resources, revenues, or expenditures (excluding extraordinary items) of an individual governmental fund are at least 10% of the corresponding total (assets and deferred outflows, liabilities and deferred inflows, and so forth) for all governmental funds, and
The same element of the individual governmental fund that met the 10% criterion is at least 5% of the corresponding element total for all governmental and Enterprise Funds combined.
Question 13-5 (continued)...
Please join StudyMode to read the full document