Ac

count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s

C hapter One
Introduction to A ccounting and F inancial R eporting for
Governmental and Not-for-Profit E ntities
T opics to Be Discussed:
 Wha tIsaNFPEnt i
ty?
 Simila
rit
iesandDi f
fe r
enc e
sBe tweenGove rnme nt
alandOt herNFPEnt
it
ies
 Crit
eri
aforDe t
e r
mini ngNFPa sGove r
nme ntalEnti
ty
 Ma j
ortypesofgove rnme nta
la ndnot-
for-
prof i
tent
iti
es
 Simila
rit
iesandDi f
fe r
enc e
sG&NFPEnt i
tiesandBus ines
sEntit
ie
s
 Object
ivesoffinancialreport
ingforGa ndNFPEnt iti
es
 SourcesofAc c
ountinga ndFi nanci
alReportingStandardsforG&NFPe nti
ti
es
 Fina
n ci
alReporti
ngf orSt at
ea ndLocalGove rnment
 Compa ri
sonsofGASBSt anda rdNo.34Re porti
ngMode lwitht
heOldRepor
ti
ngMode
l

L earning Objectives:
Af
terstudyi ngthischa pt er
,y oushouldbea bleto:
 Ide nt
ifya nde xplaint hec ha r
acter
ist
ic stha tdist
ingui s
hg ove r
nment
ala ndnot -for-profi
te nti
tie
s
fromf or-profi
te ntitie
s.
 Ide nt
ifyt hea uthor ita
tivebodi esres
pons i
blef orsettingGAAPa ndfina
nc ialrepor t
ingstandards
fora llgove rnme ntala ndnot -
for-pr
ofite nt
ities
.
 Cont ras tandc ompa ret heob j
ecti
vesoff i
na ncialreporti
ngf orSLG,thef ederalgove r
nme nt,and
not -f
o r-profi
torga nizations.
 Expl ainhow ma na geme nt
’sdi sc
ussiona nda na l
ysis( MD&A) ,basi
cf inanci
als tat
eme nts,and
require ds uppleme nt a
ryi nformati
on( RSI )ofSLGr ela
tetot hei
rcomprehens i
vea nnualfinancial
reports .
 Expl aint hedi f
fe r
e ntobj ec
tives,mea sureme ntfocus ,andba sisofac
count i
ngoft hegove rnme nt
-
wi def inancialstateme ntsandf undfina nci
a lst
a t
eme ntsofSLG.

1.1) W hat Is a Not-F or-Profit E ntity?

Anyorgani
zat
ion,whichise s
tablis
hedwit
hobject
iveot
hertha
nprofi
tmakingi
sre
fer
redt
oasNot
-
f
or-
Profi
tEnti
ty.Not
-for
-profi
te nti
ti
esi
ncl
ude:
 Gove rnment
 Ot herNot-for
-Pr of
it(
NFP)Ent
ityorNon-
Profi
t(NP)Ent
it
y
W hat is a Government?
Agove r
nme ntisabodythathasthepowertoma keandtheaut
hori
tytoenfor
cerul
esa ndlawswithi
n
acivi
l,corporat
e,rel
igi
ous,academic,orotherorganiz
ati
onorgroup.Forthepurpos ethecours
e
Governmenta ndNFPAc c
ounting,Gover
nme ntcana l
sobedefi
neda sanenti
tythatprovide
ssuch
majorservi
cesa sadminis
trat
ive,soc
ial
,economic,a ndothe
rseit
herfreefrom chargeorwi t
ha

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 1
 I
ntr
oduc
ti
ont
oAc
count
inga
ndFi
nanc
ialRe
por
ti
ngf
orSLGs
“
toke
n”c
har
ge.

A government is an organized entity which, in addition to having governmental character, has

sufficient discretion in the management of its own affairs to distinguish it as separate from the
administrative structure of any other governmental unit. To be regarded as a government, an entity
must possess all three of these critical attributes: existence as an organized entity, governmental
character, and substantial autonomy. Each is explained below.

1. E xistence as an Organized E ntity -Evidenceofthisat

tr
ibutei sprovidedbyt hepr e
senceof
somef ormofo rganizat
iona ndtheposs
e ssi
onofs omec or
porat
epowe r s
,sucha spe r
petua
ls ucces
sion,
therighttosuea ndbes ued,ha veaname ,makec ont
rac
ts,ac
quirea nddispos eofproperty,andt he
like
.De signa
ti
onofac lasso fgover
nme ntsinl
awa s“munici
palcorporati
ons,”“ publ
iccorporat
ions ,
”
“bodiescorporat
ea ndpublic,”andthel
ikei ndi
catesthats
uchunit
sa reorganizede nti
ti
es.

2. Governmental C haracter -t hisc har a

c te
rist
icisi ndi
c a
tedwhe reof fi
cer
soft hee nti
tya re
popul arl
ye lectedora r
ea ppointe
db ypubl icof fici
als.Ahi ghde greeofr esponsi
bi l
it
yt ot hepubl i
c
demons t
ratedbyr equir
eme nt
sf orpublicreportingorf oraccessi
bilit
yofr ecordstopubl icins pect
ion,
isa ls
ot akena scri
ti
calevidenceofgove r
nme nt alchara
c t
er.Gove rnmentalc har
ac t
erisa t
tributedt o
anye nti
ti
e sha vi
ngpowe rt olevypr opert
yt axe s,powe rtoissuede btpa yinginteres
te xemptf rom
Fe deraltaxation,orres
pons i
bili
tyforpe rf
ormi ngaf unct
ionc ommonl yr egardeda sgove r
nme nt
ali n
nature.Ane nti
tycana l
sober ec
ognizeda sha vinggove rnme nt
alc haract
e rifitme et
st hei ndicated
requireme ntsa st
ooffic
e r
sorpubl i
cac countabil
ity.Thus,somedi stric
tsorz onalgovernme ntswi thno
taxingpowe rsa rerec
ognizeda slocalgove rnme ntsbe c
aus eofpr ovis
ionsa stot hei
ra dmi nistr
ation
andpubl ica ccounta
bili
ty.

3. Substantial A utonomy - thisrequi

rementisme twhe r
e,subjectt
os t
at
utoryli
mitat
ionsanda ny
supervi
sionofl ocalgovernmentsbyt hesta
te,ane ntit
yha sconsider
ablefis
calanda dminis
trat
ive
independence.Fis
calindependencegene r
all
yde r
ivesfrompowe roft heent
itytodete
rmineitsbudget
withoutrevi
ewa ndde t
aile
dmodi f
ica
ti
onbyot herlocaloffi
ci
alsorgove r
nme nt
s,todet
erminetaxesto
beleviedforitssupport,t
of i
xa ndcollectc
hargesforitsser
vices,ortoiss
uede btwit
houtreviewby
anotherloca
lgove r
nme nt.

Somegove rnme nta ge nciesha vingc onside rabl

ef is c
a lautonomya rec l
assi
fi
edasdependentagenci
es
ofanot
he rgo vernme ntr athe rt hana sgove rnme ntsbe causeofoneormor eoft hef ol
lowing
cha
rac
teri
stics:
 Co ntroloft hea ge ncybyabo a
rdc ompos e dwhol l
yorma i
nlyofpa r
entgover
nmentoffi
c i
al
s.
 Co ntrolbyt hea genc yove rfacilitiestha ts uppleme nt
,s erve,ortaketheplaceoff aci
li
ti
es
ordina r
ilypr ovide dbyt hec reat
inggove rnme nt.
 Pr ovis i
ont ha ta genc ypr ope rt
iesa ndres pons ibi
li
tiesre ver
ttot hec r
eat
inggover
nme ntaft
er
age ncyde btha sbe enr epaid.
 Re quireme ntsf ora pprova lofa genc ypl
a nsbyt hec r
ea t
inggove rnment.
 Le gi s
lativeore xe cutives pecifi
ca t
i onbyt hepa r
entgove r
nme ntastotheloc
ati
ona ndtypeof
facili
tiesthea ge ncyi st oc onst
ruc ta ndma intain.
 De pende nceofa na genc yf ora l
loras ubs t
a nt
ialpa r
tofi t
sr eve
nuesona ppr
opriat
ionsor

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 2
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
al
loca
tionsmadeatt
hedis
cre
ti
onofanot
hers
tat
eorlocalgover
nme nt
.
 Provi
si
onf orthere
vie
wa ndthede
tail
edmodif
ica
tionofa genc
ybudge
tsbya
not
herl
oca
l
gover
nme nt
.

ForE xample: Nationa

lBankofEt hiopi
aisnotagove
rnme
nt
E xample of Governments in E thiopia:
 Fe
der
algove
rnme
ntofEt
hiop
iaa
ndi
tsa
genc
ies
 TheNi
neRe
giona
lSt
at
eGove
rnme
ntsa
ndTwoAdmi
nis
tra
ti
veCi
tyc
ounc
il
s
 76Zona
lLe
velLoc
alGove
rnme
nts
 587Di
st
ri
ctLe
velLoc
alGov
ernme
nts
 Muni
ci
pal
it
yandTownGove
rnme
nts
 Ke
bel
ele
vell
oca
lgove
rnme
ntsi
.e
.Ke
bel
eist
hel
owe
rle
velgove
rnme
nti
nEt
hiopi
a

Gove
rnme
nt i
scl
ass
ifi
e s Special
d a Purpose Government a
nd General Purpose
Governments.TheSpe
cia
lPur
pos
eGove
rnme
nti
sagove
rnme
ntt
hatpr
ovi
desas
ingl
ese
rvi
ceor
fe
ws ervi
cestotheciti
zenry.ForExampl
e:Tr
ans
por
tat
iona uthori
ti
esca
nbetake na
sSpeci
alPurpose
GovernmentEntit
y.TheGe neralpu
rpos
egover
nmentprovide sawidecol
le
ctionofse
rvi
cest othe
ci
ti
zenry.E xamples: Federalgover
nment
,sta
tegovernme nt
s,zonegovernment,c
it
ies
,t owns,
vi
lla
ges,et
c

W hat is Not-F or-Profit (NF P) E ntity or Nonprofit (NP) E ntity?

NF P E ntities a
reenti
ti
e sothertha nthegove r
nmentandt ha
tprovide scommuni
tys
ervi
cese
it
herf
ree
f
rom chargeorwi t
ha“ token”c harge.Ac cordi
ngt oAus t
ral
ianAc c
ountingStandar
dsBoard,
e
ssent
ia
lstoclas
sifyane nti
tya sanot-for
-prof
itare:
 Le gal
lysepar
a t
eor ganizat
ions
 I tsopera
tingpurpos eisothert
ha ntoprovidegoodsorser
vic
esataprofit
.
 I tma ynotdistr
ibutesurpluses
 Ge ner
ati
ngpr ofi
tisnota nobjec t
iveoutl
inedinit
slegi
sl
ati
on,re
gula
tionsorc
onsti
tut
ion
 I tdoesnotpa yincomet a
xori ncomet a
xe quiva
lent
s–usuall
yexemptf r
omfedera
l,st
at
e,a
nd
l
ocalta
xation
 I tisnotabletotransferowne r
ship
E xamples: Re
li
gious
,communi
tys
ervi
ce,pr
iva
tee
duc
ati
ona
landhe
alt
hca
re,mus
eums
,and
f
rat
erna
lands
oci
alor
gani
zat
ions
,amongma
nyot
herki
ndsofor
gani
zat
ions

InEthiopi
a,thereareabout660Non gover
nmenta
lNFPe nt
it
ie
sre
gis
ter
edbyMi
nis
tryofJ
ust
ic
eas
2006.Example s
:
 Sa vet heChil
drenUKa ndCa nada
 Fa milyGui danc
eAs soci
at
ionofEthi
opi
a
 Da wnofHopeEt hiopia
 Me nschenforMe ns
chen
 Ri ftVa l
leyChil
drenandWome nDevel
opmentFund

Ma
jorType
sofGove
rnme
nta
landNo
t-For
-Pr
ofi
tEnt
it
ie
s

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 3
 I
ntr
oduc
ti
ont
oAc
count
inga
ndFi
nanc
ialRe
por
ti
ngf
orSLGs
 Ge
ner
alGove
rnme
nt–i
ncl
ude
sfe
der
al,s
tat
e,c
ount
y,c
it
y,t
own,vi
ll
age
,spe
cia
ldi
st
ri
ct
s
 Educ
ati
ona
l–i
ncl
ude
ski
nde
rga
rte
ns,pr
ima
rya
nds
econda
rys
chool
s,voc
ati
ona
l&t
echni
cal
schools,col
leges
,andunive r
sit
ie
s
 He al
tha ndWe l
fare–Hospi t
als
,Orphanage
s,t
heRedCrossandRedCres
cent
,et
c
 Re l
igious–churches
,mos ques,mis
sions
 Cha ri
table–inc
ludesmanyNGOs
 Founda ti
ons-privat
eorga ni
zati
onsthatpr
omoter
ese
archanddevel
opmentf
orimpr
ove
ment
ofhuma nli
fe.

1.2) Similarities & Differences – Governmental and Other NF P E ntities

Similarities
 Luc
kofc
ompe
ti
ti
vema
rke
tpl
ace.
Gove
rnme
nta
landNFPe
nti
ti
esope
rat
eina
nenvi
ronme
nt
whichisdif
ficul
ttos e
tthequa
li
tyandquant
it
yofse
rvic
eorproduct
 Us eoffunda ccounti
nga sacontr
oldevi
cebot
hc l
ass
esoforganiz
ati
ona
reor
gani
zeda
nd
operat
edonf undbasis
 Signi
fic
antinvestmentinnonr
evenuepr
oduci
ngact
ivi
ti
esora
s s
ets

Differences
Government di ff
ersfromOt herNFPe nti
tiesinthef oll
owi ngma nners:
 Po we rul ti
ma telyrestsint heha ndsoft hepe ople–publ i
cof fic
ial
sa r
ea ccountabletothe
generalpubl i
ca ndthelegi sl
ati
ve,judicial,ande xec uti
vebodi eswillha vea nimpac tonthei
r
operation
 Pe oplevot ea ndde l
egatet hatpowe rtopubl icoffici
als
 Go vernme ntisc re
atedbya ndacc ounta
blet oahi ghe rlevelgovernment
 Go vernme ntha sthepowe rtotaxc it
izensf orrevenue–c i
ti
zens( t
axpa yers)aretheprovide
rs
ofr es
our cesb utthec ontribut
ionma ynotbevol untarya ndt hetaxpa yersha velit
tlesayin
decidi
n ghowt ous ethere sourc
es.
 Th ebudge tisa nexpressionofpubl icpolicya ndme thodofpr ovidi
ngc ontrol.
 Th ena t ur
eoft hepol i
ti
c a
lpr ocessha sasignific
a ntinfluenceont hei
rope rat
ion
 Th e yma yhavemonopol ypowe rons omei t
sservices
Other NP Organization di
ff
ersf
romgove
rnme
ntwi
thr
espe
ctt
othef
oll
owi
ngpoi
nts
:
 The
yar
eac
count
abl
etot
her
esour
cepr
ovi
der
s(donor
s)
 Thebudge
tisa
nexpr
ess
ionoft
hei
nte
res
toft
hebe
nef
act
ors
.
 Thena
tur
eoft
hepol
it
ic
als
yst
emma
ynoti
nfl
uenc
ethe
iro
per
ati
on
 Ther
esour
cep
rovi
der
sar
edonor
s,orvol
unt
eer
sandt
hec
ont
ri
but
ioni
smos
tl
yvol
unt
ary

C riteria for Determining NF P E ntity as Government

ANFPEnt
it
yissaidt
obeagove rnmentifoneoft hefoll
owi ngcondit
ionsar
emet
:
 Publ
iccorpor
ati
onsandbodie
sc orporat
ea ndpoli
tic
 Otheror
ganiz
ati
onswi t
honeormor eoffoll
owingc hara
cteri
st
ics:
 Popul a
relec
tionofoff
icers,orappointmentofac ontr
olli
ngmaj
ori
tyoft
hegove
rni
ng
bodybyoffi
cial
sofanothergovernme nt

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 4
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
 Pot
enti
aldis
soluti
onbyagove
rnmentwi
thne
tas
set
sre
ver
ti
ngt
oagove
rnme
nt
 Powertoenactandenf
orc
eataxle
vy

GASBf urtherdist
inguishesgove rnme ntalenti
tiesf romnot -f
or-pr
ofi
tenti
ti
esa ndf r
ombus ines
sesby
stre
s singt hatgovernme ntsex is
tina ne nvir
onme ntinwhi chthepowe rul
ti
ma telyrest
sinthehandsof
thepe op le
.Vot ersdelegatet hatpowe rt opublicof ficial
sthroughtheele
ctionpr oces
s;thepowe ris
divide da mongt hee xe c
utive,legisl
ative,andj udic i
albranchesofthegovernme ntsothattheacti
ons,
financ iala ndot herwise,ofgove rnme nt
ale xe cuti
ve sa r
ec onst
rai
nedbyl egisla
ti
vea cti
ons;a nd
exec utivea ndlegisl
a t
iveac t
ionsares ubjectt
oj udi ci
a lre
view.Furt
herconst
raintsareimposedonsta t
e
andl oca lgovernme ntsbyt hee xist
en ceoft hef eder alsys
temi nwhichhighe rle
ve l
sofgove r
nme nt
encour a geord i
c t
ateac t
ivi
tiesofthel owe rle
ve lsa ndf i
nancetheact
ivi
ti
es.

1.3) Similarities and Differences G & NF P E ntities and Business E ntities

Si
mila
rit
ie
sGa ndNPEnt it
iestoBus inessEntitie
s
 Bot hareintegr
alpa rtofanec onomics ystem
 Bot hacquireresourcestoprovidegoodsors ervi
ces
 Bot husefinancialma nagementpr ocesses
 Bot hneedf i
nanc i
alinformat
ions ystems
 Bot hundergoesc ostanalys
es,c ontr
ola ndevaluat
ionte
chni
que
s
 Bot hma yprovides i
mi la
rservices–e .
g.t r
ansport
ati
onsyst
ems
;sa
nit
at
ions
ervi
ces
;ut
il
it
ie
s,
s
tadiums,arenas,etc

Differences between G& NP & Business

 Organizati
ona lobje
ctives–a bsenceofprofi
tmotive
;mos tar
etaxe
xempt
 Operat
iona lfocus
 SourcesofFi nancia
lRe sources–be nefi
tsarenotproporti
onalt
ores
our
cespr
ovi
ded
 Accountinga ndFinanc ia
lRe porti
ng
 Eval
ua t
ingPe r
formanc eandOpe r
ati
ngRe s
ults
 Regulati
ona ndCont rol
 OtherDis t
inguishi
ngCha ra
cteri
sti
cs
 Consensuspol icy-
set
tingbye l
ectedorappoi
ntedove r
sightbody
 Absenceoft ransfer
ableowne rshipri
ghts

1. Organizational Objectives
 Busi
ness
es-wa nttomaxi
mizeincomefromreve
nuesandothe
rres
ource
s.
 G&NP Or gani
zati
ons-wa ntto maximizeser
vic
espr ovi
dedfrom re
venue
sand ot
her
r
esour
ces.Theyprovi
deser
vicesa
sr e
sourc
esper
mittoser
vecons
ti
tuenc
y

2. Operational F ocus
 Bus
ine
sse
s–busines
sesmus
trepor
tshor
t-t
ermbutl
ooktothelong-
ter
ma swel
l
 G&NPOr ga
niz
ati
ons–oper
ateonannua
lbudget
,socur
rentye
a ri
sofpri
maryi
mpor
tanc
e
3. Sources of F inancial R esources
 Bus
ine
sse
s–r
ais
ere
sour
cesf
rom s
ale
sorf
rom c
api
ta
lst
ock& de
btt
rans
act
ions
.The
ymus
t

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le
dBy:TheG&NPAc
count
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s 5
 I
ntr
oduc
ti
ont
oAc
count
inga
ndFi
nanc
ialRe
por
ti
ngf
orSLGs
accountfordi
ff
ere
nts ourc
es–invest
edcapi
talandre
venuetransa
c t
ion–diff
ere
ntl
y.
 G&NP Or gani
zat
ions–r ai
ser e
sourc
esf r
om s a
lesorde btt rans
acti
ons–t ypi
cal
lyno
dist
inct
ionmadeins ource
s.Ownerinvest
mentsandsal
esa r
ei ns
ignif
ica
ntornonexi
st
enta
nd
taxat
ionisuni
ques ourceofr
evenuetogovernment
.Grantsands hare
drevenuesa
recommon
forG&NP.
4. A ccounting and F inancial R eporting
 Bus
inesses
 Obj ect
ive-s eekingt oinc r
ea s
ea ndma i
ntai
nwe a
lth
 Ac countinga ndr epor t
ingf ocusesonne ti
nc ome
 G&NPOr ganiz at
ions
 Obj ect
ives-a cquiringa nds pendingres
ourc eslegall
yanda ppropri
ate
ly
 Ac counting & r epor ting focuson budge tsa nd appropri
ationsand fundsa nd fund
accounting,e tc
 Us eofs pe ci
ala ccountingf orrestri
ct
eda ct
ivities
 Dua lba sisofa c counting& r eport
ing-budge t
aryaccountsi sint
egrat
eddi re
c t
lyinto
accountings ystemsl e dgera ccountstocont rolandde mons t
ratebudgetcompl i
ancea nd
moni t
ore xpe ndi
tur ea uthorit
y.GAAPba sisf ol
lowsde f
inedme a
surementstandardsfor
reporti
ng;a ndBudge tba si
sf ol
lowsme t
hodus edtoauthorizebudgetssucha sc a
sha nd
commi t
me nts
 Presentationofbudge t
a rycompa ris
onsinconne ct
ionwit
hr egularf
inanci
alreport
ing
5. E valuating Performance & Operating R esults
 Bus
ines
se s
 Continui ngapr oductors ervic
ede te
rmi nedbysuc ce
ssi nma rket
pla c
e.Bus i
nes
ses
 Ablet omodi fyorwi t
hdra wunpr ofi
tablegoodsa nds ervicesfromt hema r
ketpl
ace
 Re s
pondst ova lueofr e sour
c e
spr ovi dedt otypea ndqua l
it
yofgoodsa nds e
rvi
ces
provide d
 Profi
tmot i
vea ndme asure mentresulti na nall
oc at
iona ndr e
gul a
tionofr e
sourc
esvs.
goodsa nds ervicesprovide d
 G&NPOr ga niz
a t
ions
 Profi
tnotamot iveandf r
e quentl
yc annotbeme asured
 Servicesnotf ounde ls
e whe resothereisnoc ompetit
ion
 Facer ule sandr egulat
ionsnotf oundi npr ivat
esector
 Nota bl et o modi f
y orwi t
hdraws omeunpr of i
tablegoodsa nd s ervi
cesfrom the
ma r
ke tplace
 Va l
ueofr esourc esprovidedof t
e nnotr e
latedt
ot ypea ndqua l
it
yofgoodsa nds e
rvi
ces
provide d
 Goodsa nds e r
vic espr
ovide dof t
enuni quea ndwithoutc hargeora ta“ token”char
ge
6. R egulation and C ontrol
 Busi
nes
ses-pres
enceofsupply,demandandprof
itde
vic
esi
sus
eda
scont
rola
ndr
egul
at
ion
ove
rbusi
nesse
s
 G&NPOr gani
zat
ions
 Control
s-useofst
at
utory,fundandbudge
tar
ycont
rol
s

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ingI
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s 6
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
 G&NP Re gul
at
ed by Fede
ral/s t
at
es t
at
utesand laws;Gra
ntr egul
at
ions
;Judic
ial
dec
isi
ons;Chart
er,by-l
aws,& ordinances
;Contractua
lobli
gat
ions;Trust/donor
agr
eements
;Organiz
ati
onstr
uct
ure-e lect
edgovernance
,li
neofa uthor
it
y;Per
sonnel
pol
ici
esandpr
ocedur
es–whohire
s/fire
s,compensa
tion

7. Other Distinguishing C haracteristics

 Bus
inesses
 Perfe c
tcompe ti
tion;ope nma rketforgoodsa ndservi
c es
 Allt heservi
cesa repr ovideda tarm’ slengthpr i
ces
 G&NPOr ganizat
ions
 Monopol is
ti
cs er
vi ces;noope nma rket–E. g.Policeandf i
reser
vices
 Us erchargesba s
e donc ostwi t
houtpr ofit–E. g.Heal
tha ndsocia
lservi
ces
 Cha rgesoftenonl yc overpa r
tofc os t–E. g.Transi
t,coll
egesorunivers
it
ie
s
 I
ncaseofG&NP,t hef ollowingt erminologiesha vediff
erentme a
ning
 Ac countingEntityme ansFund
 Re porti
ngEnt it
yr eferstot heEnt i
reOr ga niz
ation
 Periodici
tyr e
ferstoFl owofAnnua lFinanc i
alRe s
ources
 Ma tchingisac onc eptus edinBus ine s
s-TypeAc t
ivit
iesOn l
y
 Goi ngConc ernonl yf orBus iness-
TypeAc ti
viti
es

1.4) Objectives of F inancial R eporting for G& NP E ntities

1. Objectives of F inancial R eporting F or State and L ocal Governments (SL Gs)
Governmenta
lfi
nanci
alr
epor
ti
ngobjec
ti
vesa
rei nfl
uencedbythecha
ract
eri
st
icsofthes
tat
eandl oc
al
government
aloper
ati
ngenvir
onmentandbyt hene edsofthosewhous egove r
nmenta
lf i
nanci
al
repor
ts.GASB ConceptSta
tementNo.1s etf or
tht hefol
lowi
ngt hr
eefinanc
ialre
porti
ng( FR)
objec
tive
s:

A ) F inancial R eporting s houl

da ssis
tinf ulf
ill
inggove rnment
'sdutytobepubl ic
lya cc
ount
able
ands houlde na bl
eus erstoa ss
essthataccountability by:
 Pr ovidingi nforma t
iont odeterminewhe thercurrent-
yearr
evenueswe r
es uf
fici
enttopayfor
curre
nt-ye arservices(Interperiod E quity)
 De mons trati
ngwhe therresourceswe reobt a
ineda ndus e
di na c
c or
dancewi t
ht heent
ity'
s
legal
lya doptedbudge t,andde mons trati
ngc ompl i
ancewi t
hotherf i
nance-r
ela
tedlegalor
contr
a ctualrequireme nts
 Pr oviding i nforma t
ion t oa s
sist us ersi na sse
ssi
ng the servic
ee ff
ort
s,c ost
s,a nd
accompl ishme ntsofthegove r
nme ntale nti
ty

B) F inancial R eporting s houlda s

sistusersi n evaluating the operating results ofthe
gove r
nme nta
le nt
ityforthey earby:
 Pr ovidi
nginforma t
iona boutsourcesandusesoffinanci
a lr
esourc
es
 Pr ovidi
nginforma t
iona bouthowi tfi
nancedit
sactivit
iesandme tit
scashr e
quir
eme nts
 Pr ovidi
ngi nformationne cessa
ryt ode t
erminewhe t
heri t
sf i
nanci
alpos it
ionimpr ove
dor

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ingI
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s 7
 I
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ti
ont
oAc
count
inga
ndFi
nanc
ialRe
por
ti
ngf
orSLGs
de
ter
ior
ate
dasar
esul
toft
heye
ar'
sope
rat
ions

C ) F inancial R eporting s houldassistuser

sina sse
s si
ngt helevel of services t
hatcanbeprovided
byt hegove rnme nta lent
itya ndit
sa bili
tytome eti
tsobl i
gati
onsa st heybe comedueby:
 Pr ovidinginfor ma ti
ona boutitsfinanci
alposit
iona ndcondi t
ion
 Pr ovidinginf orma ti
ona boutitsphys i
calandot hernon-financ i
alresour ceshavi
ngusefulli
ves
thatextendbe yondt hec urr
entye ar
,includi
ngi nforma ti
ont ha tc anbeus edtoassessthe
servic
epot entia lofthoseresources
 Di scl
os i
ngl e ga lorc ontra
ctualr est
ri
cti
onsonr e s
ource sa ndt her iskofpot ent
ia
ll os
sof
resources.

A C C OUNT A BIL IT Y isthec orners

toneofa llfi
nanci
alreport
ingi ngovernment(GA SB C oncepts
Statement No.1, Par. 56).Ac countabil
ityari
sesfr
omt heciti
zens’“rightt
oknow.”I timposesadut y
onpubl icoffic
ial
st obea ccountabletoc it
ize
nsf orrai
si
ngpubl icmoni e
sa ndhow t heyarespe nt
.
Interperiode quit
yr e l
at
e stoa ccountabil
it
y.Gove rnmentofficial
sa reac c
ount
ablea ndhavea n
obliga t
iontodisclosewhe t
herc urrent-
yearrevenuesweresuff
icienttopayforcurr
ent-yearbe
ne f
itsor
not.I fi nt
erperi
ode quit
yi snota chieved,thec urr
entciti
zensa rede f
erri
ngpa yme ntst
of uture
taxpa yers.

I
nge
ner
al,f
inancialre
portsa r
eus edinSLGspr imarilyto:
 Compa reac t
ualfinanci
a lr
esult
swithlegall
ya doptedbudg
et
 As s
essfinanci
alc ondi
tionandr es
ult
sofope r
ati
ons
 As s
isti
nde ter
mini ngcompl i
ancewithfinance-r
e l
at
edlaws,r
ule
s,a
ndr
egul
at
ions
 As s
isti
ne valuat
inge f
ficie
ncya ndeff
ectiveness

2. Objectives Of F inancial R eporting F or F ederal Government

Account
a bi
li
tyi sal
sot hef oundationofFe dera
lGove rnme ntf i
nanci
alreport
ing.Inaddi
ti
ont o
acc
ountabil
it
y,Fe de
ralAc count i
ngSt andardsAdvi soryBoa rd( FASAB) ident
ifie
sthefol
lowing
fi
nanci
alrepor
tingobje
c t
ivesf orFe der
alGove rnmenta ndi t
sage nci
es:
 FRs houldass
istus e
rsi neva l
uat
ingbudge tar
yi nt
e gri
ty
 FRs houldass
istus e
rsi neva l
uat
ingOpe r
ati
ngPe rforma nce
 FRs houldass
istus e
rsi neva l
uat
ingSt ewardshi
p
 FRs houldass
istus e
rsi neva l
uat
inga dequacyofs ystemsa ndcontr
ol
Theus e
rsoff inanci
alre porti ncl
udec iti
zenry,legisla
tivea ndove rs
ightbodie
s ,andi
nvest
orsand
cr
edit
ors

3. Objectives of F inancial R eporting for NF P E ntities

NFPf
ina
ncia
lre port
ings houldpr ovi
dei nforma ti
onusefulin:
 Ma kingr es
our c
ea ll
oc at
iond e
c i
s i
ons
 As s
essings e
r vi
cesa nda bil
it
yt opr ovideservi
ces
 As s
essingma nageme ntstewardshipa ndpe r
formanc e
 As s
essinge conomi cresources
,obl igations
,netresource
s,a
ndc
hange
sint
hem

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le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 8
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s

1.5) Sources of A ccounting and F R Standards for G & NP E ntities

F inancial A ccounting
F oundation
(F A F )

F inancial A ccounting Governmental

Standards Board A ccounting Standards
(F A SB) Board (GA SB)

Business (F or- Non-governmental Governmental Governmental

Profit) Not-for-Profit Not-for-Profit Organizations
Organizations Organizations Organizations
Sources of A ccounting and F inancial R eporting Standards for G& NP Organizations
The FASB e stabl
is
hesa cc
ounting and fina ncialreporti
ng s ta
nda r
dsf orbus i
ness( For -
Profit
)
organi
z a
tions
;theGASBe s
tabl
ishess t
andardsf orgovernme ntalor ga
nizat
ions.Authorit
yt oestabli
sh
accounti
ngpr i
ncipl
es(accounti
nga ndfinancialreport
ings tandards)fornot-for
-pr
ofitorganizat
ionsis
spli
tbe t
we entheGASB a ndt heFASB be causeas izablenumbe rofnot -f
or-
profi
tor ganizati
ons
(part
icul
arlycol
legesanduni ve
rsiti
es,andhos pital
s)areg overnme ntall
yrelate
d,butma nyot hersare
essent
ialtounderst
andingtheuniquea ccountinga ndfinancialre port
ingprinci
ple
st hathavee volved
forgovernmentalandnot-f
or-pr
ofitorganiz
ations .

1.6) F inancial R eporting (F R ) for State and L ocal Government

1. Minimum E xternal F inancial R eporting
Themi nimumr equi
rementsforge neralpurposee xter
nalf i
nancials t
atementsunderthegove rnmental
financialre
por t
ingmode lspeci
fie
dbyGASBSt a t
e mentNo.34i ncludeMa nageme nt
’sDiscussionand
Ana lysis(MD& A) ;Ba s
icFi nancialSt at
eme nts( Gove r
nme ntWi deFi nanci
alSt at
eme nts,Fund
Financ i
alStateme nt
s,andNot estoFi nanci
alSta t
eme nts)
,a ndRe qui r
edSuppl e
me ntar
yI nformati
on
(RSI )otherthanMD& Aa sshowni nt heill
ustrati
onbe low.Ce ntraltothemi nimum requirementof
thene wr eportingmode li
st heMD & A .TheMD&Ai srequireds upple
me nt
aryinforma t
ion(RSI)
de s
ignedt oc ommuni c
atei nna rra
tive ,easi
lyr eadablef ormt hepur poseoft heba si
cf ina
ncial
stat
e mentsandt hegovernme nt
’scurre ntfi
nancialpositi
ona ndr es
ul t
soff i
nancia
la ct
ivi
ti
esc ompa r
ed
wi t
ht hoseprioryear.GASBSt at
e me ntNo.34pr e sc
ribestwoc ategoriesofbasi
cf i
nancia
ls t
a t
ements,
gove rnment-widef i
nanci
alstat
eme ntsa ndfundfinancialstat
eme nts:

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 I
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ont
oAc
count
inga
ndFi
nanc
ialRe
por
ti
ngf
orSLGs

Management’ s Discussion and A nalysis

Government-W ide F und F inancial

F inancial Statements Statements

Notes to the F inancial Statements

R equired Supplementary Information other than (MD & A )

Government-W ide F inancial Statements a

rei
nte
nde
dtopr
ovi
deahi
ghl
yaggr
ega
tedove
rvi
ew
ofagove rnment’
sne tas
set
sa ndre
sul
tsoff i
nanc
ialact
ivi
ti
es.Thegovernment
-widefi
nancia
l
st
at
eme nt
sr e
portonthegove
rnmentasawholeandassi
sti
na ss
ess
ingopera
ti
ona
la c
count
abi
lit
y–
whet
herthegove rnmenthasusedit
sresour
ceseff
ici
ent
lyande ff
ect
ive
lyi nmeeti
ngoperat
ing
obj
ect
ives.

F und F inancial Statements –– t

heot
herc
ate
gor
yofba
sicf
ina
nci
als
tat
eme
ntspr
esc
ribe
dbyt
he
ne
wr e
port
ingmode
l,as
sis
tinass
essi
ngf
isc
ala
ccount
abi
li
ty–wi
thbudge
tpl
ansa
ndi
ncompl
ia
nce
wit
hper
ti
nentl
awsandr
egula
ti
ons.

2. C omprehensive A nnual F inancial R eport (C A F R )

Ge nera
lpur posefinanci
alre port
ingi ncludesnotfinanci
alstat
eme ntsbutalsoa l
lot herme a
nsof
communi c
atinginfor
ma ti
ont ha
tr elat
edi rect
lyori ndir
ect
lytot hei nfor
ma t
ionpr ovidedbythe
accountingsystem.Inadditi
ont ot hemi nimumf i
nanciali
nformat
ion,GASBSt andardsstate
:“Ever
y
governme nt
a lenti
tyshouldpubl i
sh,a sama tt
erofpublicrecor
d,ac ompre
hensivea nnualfi
nanc
ial
report(CAFR) .ACAFRi ncludesintroduc t
orysec
ti
on,financi
alse
ction,andsta
ti
s t
ic
als ect
ion

A ) C A F R : Introductory Section
I
ntr
oduc
toryse cti
onincludess
uc hit
emsa s
 Titl
epa ge
 Conte ntspage
 Letteroft ra
nsmi t
ta
l–al et
te
rfrom thechie
ffinanc
eoff
ice
raddre
sse
dtothechi
efexecut
ive
andgove r
ningbodyoft hegovernmentaluni
toritmaybeanarr
ati
veove
rthesi
gnat
ureofthe
chiefe xecut
ive.Thelet
terorna rr
ati
vema te
ria
lshouldc
it
elega
landpoli
cyre
quir
eme nt
sfor
therepor t
 Other( asdesir
edbyma na gement)

B) C A F R : F inancial Section (GA SB Statement No. 34)

Thef
ina
nci
als
ect
ionofaCAFRs
houl
dinc
lude
:

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 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
 Audit
or’
sreport
 MD&A
 Basi
cFinancia
lStat
eme nt
s
 Requi
redSupplement
a r
yI nfor
ma t
i on(
RSI)othe
rthanMD&A
 Combini
nga ndindi
vidualfunds t
atement
sa nds
chedul
es
 Bri
efobject
ivena r
rati
vepr ovidingma nagement
’sanal
ysi
soft
hegove
rnme
nt’
sfi
nanc
ial
per
for
ma nce

Basic F inancial Statements

 Government-W ide F inancial Statements
1. St ate
me ntofNe tAs s
ets
2. St ate
me ntofAc ti
vit
ies
 F und F inancial Statements
Governmental F unds
1. Ba l
anceSheet
2. St ate
me ntofRe venues,Expendi
tur
es,andChangesi
nFundBal
ances
Proprietary F unds
3. St ate
me ntofNe tAs s
ets
4. St ate
me ntofRe venues,Expense
s,andChangesinFundNetAs
set
s
5. St ate
me ntofCa shFlows
F iduciary F unds
6. St ate
me ntofFi duciaryNe tAsse
ts
7. St ate
me ntofCha ngesinFi du
cia
ryNe tAss
ets
 Notes to the F inancial Statements

C ) C A F R : Statistical Section
ACAFRs houl
dcontai
nas t
ati
st
icals
ect
ion.Thest
at
ist
ica
lsect
iontypic
allypre
sent
stabl
esandcha
r t
s
showi
ngandchar
tsshowingsoci
alandeconomicdat
a,fi
nanc
ialtr
endsa ndthefi
scalca
paci
tyofthe
gover
nme
ntindetai
lneededbyreader
swhoa remorethanca
suall
yi nt
erest
edintheact
ivi
ti
esofthe
gover
nme
ntunit
.

1.7) C omparisons of the New and the Old R eporting Model

Compa
ris
onsoft
heGASBSta
tementNo.34Repor
ti
ngMode
l(TheNe
wRe
por
ti
ngMode
l)a
ndt
he
OldRe
port
ingMode
lha
ves
imil
ari
ti
esanddi
ff
ere
nce
s.

Similarities
 Fundfi
nanci
alst
at
ementsar
ethes
ame
 There
porti
ngent
iti
esa
rethesame

Differences
 NoMD&Ai srequi
redundert
heOl
dRepor
ti
ngMode l
 Onl
yFundFina
nc i
alSt
atement
swer
ere
quir
ed;gove
rnme
nt-
widef
ina
nci
als
tat
eme
ntswe
renot

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ont
oAc
count
inga
ndFi
nanc
ialRe
por
ti
ngf
orSLGs
requir
edunde rtheOl dRe porti
ngMode l
 Ther equiredf i
nanc i
als t
ate
me ntst hatc onst
itutemi nimum GAAPunde rtheOl dRe por
ting
mo delar
er efer
redt oasGe neralPurpos eFinancialSt a
teme nts.
 Abudge ta nda ctualc omparis
ons t
ateme ntisr equiredun dert heOl dRe portingMode lfora l
l
governmentalfundsf orwhi c
habudge twa sadopt ed.Thisc ompa ris
onc a
nber e porte
da spartof
RSIunde rtheNe wRe porti
ngMode l
 Asnogove rnme nt-widefinancialst
a t
eme ntsarer equire
dunde rt heOldRe portingMode l
,thus
thatmodelpr ovidesfort woa ccountgr oups,aGe neralFixe dAs setsAccountGr oup( GFAAG)
tor e
cordf i
xe da sset
sa cqui
redf rom gove rnme ntalfundr esourcesandaGe ne ralLong-Te r
m
De btAc countGr oup( GLTDAG)t or ecordl ong- t
erml i
abilit
iesa r
isi
ngf rom a cti
viti
esof
governmentalfunds .GFAAGa ndGLTDAGa r
enotne ededunde rtheNewRe por t
ingMode l

Acc ount
inga ndreportingf orgove rnme nt a landnot-f
or-pr
ofitenti
ti
e sdi
fferfrom thoseoff
or-
profi
t
entit
iesbecaus eeacht ypeofe nt
ityha sdi f
fere
ntpurpose sandr eport
ingobj ec
tives
.“Evenwhe n
deve l
opedtot heult
ima tes t
a geofpe rfec tion,governmentalaccount
ingc annotbecomeagua r
antyof
goodgove r
nme nt
.Atbe st,itcanne verbemor etha
nava l
uabletoolforpromotionofsoundfi
nanci
al
ma nagement
...”Professor R. M. Mikesell, 1951

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 Ac
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orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s

C hapter T wo
Principles of A ccounting and F inancial R eporting
for State and L ocal Governments (SL Gs)
T opics to Be Discussed:
 Act
ivi
ti
esofGove r
nme nt
 GASBState
me ntofPrinc
ipl
esofAccount
inga
ndFina
nci
alRe
por
ti
ng(
FR)f
orSLGs
 Gover
nmenta
lRe port
ingEnti
ty
 CommonAc counti
ngCha r
act
eri
st
ic
sofFundTypes

L earning Objectives:
Af
ters
tudyingthischapter
,y oushouldbea bl
et o:
 Explaint hena t
ureoft hethre
ema jora cti
vit
yc ate
gori
esofas tateorloc
a lgovernment
:
governme nt
alacti
viti
es,busines
s-typea cti
viti
es,andfi
duci
aryact
ivi
ti
es
 Discusstheba s
icaccountingandFi nanc i
alreport
ingpri
nci
plesf
orSLGs
 Explaint hec ompone ntsofGASB’ si ntegr
ateda c
count
ing and fi
nanci
alreport
ing model
,
incl
uding the r e
porti
ng e nti
ty,gove rnme nt
-wide fi
nanci
alstat
eme nt
s,and fund fi
nancia
l
sta
teme nt
s
 Definefunda ndprinci
plesoffunda ccount i
ng
 Type soffundsinea c
hf undcategorya ndc haract
eri
st
ic
sofeachfundtype

2.1) A ctivities of Government

Therearet hreema jora c t
ivi
tycat egor
iesofas t
a t
ea ndl
oca
lgove
rnme
nts–Governmental A ctivities,
Business-T ype A ctivities,a
n dF iduciary A ctivities.

1. Governmental A ctivities
Aspe rGASBConc e
pt sSt a
teme ntsNo. 1,governme ntprovidesc er
tai
nc ores
er vi
cescal
ledGene
ral
Act
iviti
es.Gene r
alAc tivi
tiesprovide dbymos tge neralpurposegovernmentsar
er el
ate
dto:
 Pr otect
ionofl ifeandpr ope r
ty,pol
icea ndf i
reprotect
ion,
 Publ icwor ks( st
reetsandhi ghways,br i
dge s
,andpublicbuildi
ng),
 Pa rksandr e c
re a
ti
onf acilit
iesandprograms ,
 Cul tura
la nds ocialservices
Governme nt
sa l
soinc urc ost
sf orge neraladmini
st r
ati
ves upportsuchasda t
aproc e
ssi
ng,fi
nanc
e,a
nd
pe
rsonnel.Cor egove rnme ntals e
rvices,toget
herwi t
hge ner
aladmi ni
str
ati
ves upport
,compri
sethe
majorpartofgove r
nme nta lt
ypea ctivit
iesorsi
mpl yGove rnmentalActi
vit
ies

2. Business-type A ctivities
Gove
rnme
ntsa
lsoe ngageinbusi
nesst
ypeact
ivi
ti
es.The
sei
nclude:
 Publi
cut il
it
ies(el
ect
ri
c,wat
er,ga
sands e
werut
il
it
ies)
 Transporta
tionsyst
em;

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 Pr
inc
ipl
esofAc
count
inga
ndFi
nanc
ialRe
por
ti
ngf
orSLGs
 Tollroadsa ndtol
lbri
des
;
 Airports
;
 Hos pit
al
s ;
 Parkingga r
a ge
sandlot
s;
 Liquorstores;
 Swi mmi ngpools;
 St
a diumsa nda r
enas

Manyoft he
sea c
ti
viti
esarei
nte
nde
dtobeselfs
uppor
ti
ngbycha
rgi
ngusersfort
heservi
cesthey
r
ecei
ve.Operat
ingsubsi
die
sfr
omgener
alr
eve
nuesar
enotunc
ommon,pa
rti
cula
rlyf
ort
ranspor
tat
ion
s
yst
ems .

3 . F iduciary A ctivities
Governmentsofte
na ctinaf iduci
arycapacit
y,e it
hera sa na gentort rust
ee,f
orpa r
ti
esout s
idethe
government.A gover
nme ntma yserveasa gentf orot hergove rnme ntsinthea dminist
eri
nga nd
coll
ecti
ngoft axes
.Gove rnme nt
sservea l
soa st rus
teesf ora mountspl a
cedintrustfrom pri
va t
e
cit
iz
ensforparksandotherpurposes
,forescheat propertiesthatreverttothegover
nme ntwhenthere
arenolegalcl
aimant
sorhe ir
stoade cea
sedindividual’
se stat
e,andf oras s
etsbe
ingheldforemployee
pensi
onplans.

Ac count inga ndfinancialrepor t

ingp r
inc
iplesfortheGovernmental A ctiviti
esha veevolvedtome et
thel egalbudge tarya nd f inancia
lc ompliancene edsofgove rnment– F iscal A ccountability.
Ge ne rall
y,t hes
epr i
nciplesi nvolvesegre
gatingt hea ccounti
ngf orther ec
eipta ndexpe ndit
uresof
restricted use resources from general use resources.Ite mphasizesonr eport
ingthei nf
lowsa nd
outflowsofc urr
entf i
na nci
a lresource
s(cashori temse x pect
edtobec onver
tedintoca shduringt he
curre ntpe r
iod,ors oone nought hereaft
ertopa ycurrentpe r
iodli
abili
ti
es).

Ac countinga ndf inanci

alr eporti
ngp ri
nciplesf ortheBusiness-T ype A ctivities ofgovernme ntsa re
quitesimi la
rtot hoseforcomme rcia
lbusinesse ntiti
es.Asi nbus i
ness,ifgove rnme ntinte
ndst ocha rge
usersforgoodsors e
rvicestheyr ece
ive;itneedst oknowt hef ul
lcostofgoodsa ndservice
sinor de rto
determinea ppropriateprices.Knowi ngt hef ul lc ostisa ls
oe ssenti
ali nde ci
dingwhe t
hert he
gove r
nme ntshouldc onti
nuet oproduceorpr ovi depa rti
culargoodsors e r
vic es,orc ont
ractfort hem
wi t
ha nouts ideve ndor.Thus ,asincomme rc
ialbus inessaccounting,accruala ccountingisessenti
a lto
me asuri
ngt hef ullcostofpr ovidi
nggove rnme nta lbusiness-
types er
vices,andr eport
ingont hee xtent
towhi che achbus i
nesst ypea cti
vit
yi ss el
f-suf fi
ciento rha stobes ubsidiz ed.Thepr incipl
e sof
accounting f orbus inesst ype’sa ct
ivit
iesa rei ntendedt o me asurea nd r epor ton Operational
A ccountability.

Ac counti
ngandreport
ingfortheF iduciary A ctivities ofthegovernmentusepri
nci
ple
ss i
mila
rto
thoseofbusine
sstypea c
ti
vit
ie
s.Cer t
ainf i
duciarya ctivit
ies
,t hos
erela
tedtodef
ine
dbenefi
tpensi
on
plansa ndsi
mil
arpost-
employmenthe al
thc arepl ansus euni querec
ognit
ionst
anda
rdspre
scri
bedby
GASB.

GA SB Statements No. 34 r
epor
ti
ngs
tanda
rdsr
efl
ectt
heGASB’
svi
ewt
hatus
erss
ucha
sci
ti
zens
,

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 Ac
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ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
legisl
a t
ivea ndove rsi
ghtbodi esa ndi nvest
orsa ndc r
edit
orsha vedi ver
seinformationne e ds.I n
pa rt
icul
a r
,us erswa ntandne edinf orma t
ionaboutt heme dium tol ongt e r
mf i
nancialperforma nceof
gove rnme nta swe l
la sinforma t
iona boutshorttermf inanci
a lc ompl ia
nc ewithbudge ta ndf inance
re l
atedlawsa ndregulat
ions.Toa chieveope r
ati
ona laccountabili
tyr eporti
ngforthegove r nme nta sa
whol e,St at
eme ntNo34r equi
reshi ghl
ya ggre
ga t
edf inanci
als tateme nt
s( cal
le
dGovernment-W ide
F inancial Statements)thatr e
por tb othGovernmental A ctivities andBusiness-T ype A ctivities on
thea ccrualba sis(t
hea ccounti
ngba sisusedbybus inessorganiza t
ions),inaddit
iontot het radi ti
onal
di sa
ggrega t
edf ina
nc i
alst
a t
eme nt
s( c al
ledfundfinanc i
alsta
teme nts).

2.2) GA SB Statement of Principles of A ccounting and F R for SL Gs

Atitsince pt
ioni n1984,t heGASBa dopted12a ccount i
n ga ndf i
nancia
lr eport
ingpri
nc i
ple
sf orst
ate
andl ocalgove rnme nt
stha tha dbe ene stabli
shedbyi t
spr edecessors t
andards-
set
tingbody.The
st
anda r
dspr e s
c ribedbyGASB St a t
eme ntNo.34r e t
ain,wi thc ert
ai
nmodi fic
ati
ons,theor igi
nal
pri
nciples.As e pa ra
tepr
incipleha sbe ena rt
iculate
df orl ong-terml i
abil
it
ies,bri
ngingthetotalnowto
13principlesasf ol l
ows:
1. Pr inc ipl
eofAc count inga ndRe port
ingCa pabili
ties
2. Pr inc ipl
eofFundAc c ounti
ngSys tems
3. Pr inc ipl
eofType sofFunds
4. Pr inc ipl
eofNumbe rofFunds
5. Pr inc ipl
eofRe por t
ingCa pit
alAs s
ets
6. Pr inc ipl
eofVa lua t
ionofCa pitalAs set
s
7. Pr inc ipl
eofDe pr ec
iationofCa pitalAs s
e ts
8. Pr inc ipl
eofRe por t
ingLo ng-Te rmLi abilit
ies
9. Pr inc ipl
eofMe a sureme ntFoc usa ndBa s isofAc c ounti
ng
10. Princ ipl
eofBudge ti
ng,Budge t
a r
yCont rol ,andBudge t
aryRe porti
ng
11. Princ ipl
eofTr ansfer,Re venue ,Expe nditure,andExpe nseAcc ountClass
ifi
cati
on
12. Princ ipl
eofCommonTe r
minol ogya ndCl a s
sifi
ca t
ion
13. Princ ipl
eofAnnua lFi nancialRe ports
Eachoft hea bovepr i
nci
plei sexpl ainedins ubseque nts e
c t
ions .

Principle No. 1: A ccounting and R eporting C apabilities

A governmentalaccounti
ngsyste
m mustmakei
tposs
ibl
eboth:(a)topres
entfairl
ya ndwit
hfull
dis
c l
osu
ret hef undsa nd a
ctivi
ti
esofthegover
nmentinc onf
ormit
y with genera
llyacc
epte
d
account
ingpri
nciples
,and(b)todete
rmi
neandde
monst
rat
ecomplia
ncewithfi
nancerela
tedl
egala
nd
contr
act
ualprovisi
ons.

Adhe r
e ncetoGAAPsi se s
senti
altoensuri
ngar e
asonablede greeofcompa ra
bil
it
ya mongthege ner
al
purposef i
nanci
alreportsofstat
eandlocalgover
nme nt
alu nit
s.
Insomec ases
,howe ver,la
wsr equi
rethestat
egovernme ntandt helocalgover
nmentswit
hinthes ta
te
tof ol
low practi
ces( s
uc hasc ashbasisofa c
counti
ng)notc ons
ist
entwi t
hGAAP.I nthosec ases
,
fi
na nc
ia lst
atementsa ndr epor
tspreparedinc ompliancewi thstat
el awa reconsi
der
ed“ Speci
al
report
s”or“ Supple
me ntaryschedul
es”anda r
enottheba sicfinanci
alst
a t
ements
.Thus,Governme nt
al

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 Pr
inc
ipl
esofAc
count
inga
ndFi
nanc
ialRe
por
ti
ngf
orSLGs
uni
tsmaypreparet
woset
soffi
nancials
tate
ments
:(a)ones
eti
nc ompli
ancewithGAAP(Gener
al
pur
posef
ina
nc i
alst
at
eme
nts
)and(b)onesetinc
ompli
anc
ewit
hle
galrequi
rement
s(Spe
cia
lRe
port
s).

Principle No. 2: F und A ccounting Systems

Gove r
nme nt
alac counti
ngs ys
temss houl dbeor gani
zedandope r
ate
donaf undba si
s.A F und i
s
defi
neda safiscal andaccounting entity witha s e
lf-
bal
anci
ngs e
tofa cc
ount srepor
ti
ngc ashand
otherfi
nancialresources
,togetherwitha l
lr elat
edli
abil
it
ie
sa ndresi
dualequiti
esorba l
ance s
,and
changesther
ein,whi chares e
gregatedf ort hepurposeofcarr
yingonspeci
fica ct
ivit
ie
sora tta
ini
ng
cert
ainobjec
ti
v esina c
cordancewithspe cialregula
ti
ons,r
est
ri
cti
onsorli
mitat
ions.

Conc ept
ua l
ly,afundi sa nenti
tywi thi t
sowns etofbooksa ndst
ate
me nts(i
.e.
,char
tofaccounts
,
generaljournal
,generalle
dger,t
ri
a lbal
a nces
,a ndfina
ncialstat
ement
s).
Thet ermf und,asitisus edinc omme rc
ialac c
ounti
ngr efersto(a
)segregat
ionofc as
hforspecia
l
purpose( e.
g.pett
yc as hfundandc hangef und);(b)thea mountofc a
sha ndma rket
abl
esecuri
ti
es
segregat
e dt opayl ong-te
rm obligati
ons( e .
g.s i
nkingf und);and(c)wor kingcapi
tal(c
asha nd
ma r
ke t
ables e
curi
ty)

Ina c count
ingforgovernmentala
cti
vit
ie
s,t
hetermF und ref
erstofiscal a
ndaccounting e ntit
yt hati
s
usedt oa ccountforre
sourc
e st
hatarese
gre
gatedforachievi
ngc e
rtainobject
ives
.F iscal E ntity r
efer
s
toa nye nt
itytha
ti sconce
rnedwi t
hsomea ss
etssetas i
def oras pecifi
cpurpose,a ndA ccounting
E ntity ref
erstoa nyt
hingthatusesadoubleentr
ya ccounti
nge nt
ityt obalanc
et her esour ceswi t
h
claimst oresourc
e s
.

J ustification for using fund and fund accounting

 To c ontrol and s egr
egater esour
cest hata
ree
xte
rna
ll
yre
str
ict
eda
nd i
nte
rna
ll
y
(manageri
al
ly) des
igna
ted.External
lyrest
ric
tedre
sou
rcesand int
ernal
ly de
signa
ted
res
ourceshavea
c c
ounta
bili
tyobl
igat
ion
 Toe ns
ureanddemonstr
atecompl
iancewit
hlegala
nda
dmini
st
rat
iver
equi
rement
s

Principle No. 3: T ypes of F unds

Stat
ea ndloc
a lgove rnments
,bothgenera
lpurposeandspeci
alpurpose
,shoulduse11f undtype sa
s
needed.Thes
ef undtypesareorganiz
edintothr
eecate
gori
es;government
alfunds,propr
iet
aryfunds,
andf i
duci
aryf unds.Princi
pleNo.3di sc
ussesthe
sefundtypes.However,fundsshouldbeuse dby
stat
ean dl
ocalgove rnmentstot
hee xt
entthatt
heyhaveact
ivi
ti
esthatmeetthecri
ter
iaforusi
ngt hos
e
funds.

A ) Governmental F unds: - accountf ora c

tivi
ti
esofagove r
nme ntthatarecarri
e doutpr imar
il
yt o
provi
des er
vice
st oc i
ti
zensa ndth atarefinancedprimari
lythroughtaxes.Governme ntalFundsare
clas
sifi
edintofive :Ge neralFu nd,s pec i
alrevenuefunds,c apit
alproject
sf unds
,de btser
vice
funds,per
ma ne
ntf unds,whi charedi scussedasfoll
ows:
1. T he General F und (GF ) – a ccountf orallfinanci
alre s
ourcese xceptthosere quiredtobe
accounte
df ori
na notherf und.Itisus edt oaccountforresourcesrequi
redtopr ovi
demos tofthe

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ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
ba sics ervi cespr ovide dbyt h ego vernme nt a
luni ts uc ha spubl ics a f
e t
y,publ icwor ks ,e duc a tion,
etc.Onl yoneGFi sus edpe rgove rnme nta ndmos tf ina ncia lt ransa ct
ionsr e
latedt oge ne ral
gove rnme ntope rati
nga ctiviti
e sa r
er e
c orde di ntheGF.
2. Special R evenue F unds (SR F s) –t oa cc ountf orpr oc ee dsf rom s pec ifi
cr eve nues our ce s( othe r
tha npr iva tepur poset r
ustsorma j
orc apitalpr oje cts)t ha ta r
el ega ll
yr e st
rictedt ous ef ors pe c i
f ied
pur pos es.Thepur pos eofs pec i
alr eve nuef undi st ode mons trat
et hata llreve nue sfromt hats our ce
areus edf ort hes pec ialpur pos eonl y.SR F s a reus edwhe nr equi redbyl aworbypol icyt oa cc ount
forf ina ncialr esourc ese arma rke df oras pe cifiedope r atingpur pos e.Iff ore xa mpl e,agove rnme nt
ea rma rked25% ofc urrentye arr e
ve nuef romva luea dde dta xf ordr aughta f fectedpe opl e,s pe c i
al
reve nuef undma ybee stablishe dtoa ccountf orthi sr eve nu e.
3. C apital Project F unds (C PF s) – a ccount sforf ina nc ialr esour ce st obeus edf ort hea cqui sitionor
cons truc t
ionofma jorc api talpr ojectf aciliti
e s(ot he rt ha nt hos ef inanc edbypr oprietaryf undsor
fiduc iaryf unds ).The ya reus edt oa c countf orf ina ncia lr e sourc ess e grega t
e dt o pa yf or
cons truc t
ionora c quisit
ionofl ong- l
ive dc apita la sse t
ss uc ha st hec ons tructi
onofbr idge ,
bui l
di ngs,r oa d,da ms ,rail
wa y,hydr oelectricpowe re tc .
4. Debt Service F unds (DSF s) – a r
eus edt oa ccountf ort hea ccumul ationofr e sourcesf or,a ndt he
pa yme ntof ,ge nerall ong-te r
mde btpr incipa la ndi ntere st.De bts ervicef undsdoe snota ccountf or
agove rnme nt’slong- t
erm de bt.Ra the r,itmoni tor sthef ina ncia lr es
our c e
sc urr e
ntlya va ilablet o
satisfyl ong- t
erml iabi l
it
iesa nda lsor ecor dst hee ve ntua lpa yme nts .
5. Permanent F unds (PF s) – t oa ccountf orl ega ll
yr e
s t
r ictedr es our cespr ovide dbyt r usti nwhi ch
thee a rningsbutnott hepr incipa lma ybeus edf orpur pos est hats uppor tthepr ima rygove rnme nt’s
prog ra ms( thoset ha tbene fitthegove rnme ntori tsc itiz enry)( Not e:s imilarpe rma nentt rus t
st hat
be nefitpr iva t
ei ndivi duals,or ganiz ati
ons ,orot he rgove rnme ntst hatis ,priva tepur pos et rus tfunds
arec la ssi
f ieda sfiduc iar
yf unds ).

B) Proprietary F unds – a cc ountf oragove rnme nt’songoi ngor ga nizati

onsa nda cti
vitie sthata re
simi lart ot ho seope ra
te dbyf or-pr ofi
tor ganiz ati
ons .Thi sf undt ypenor ma l
lye nc ompasse s
ope rationswhe r
eaus erc ha r
gei sa ssesseds ot ha tde t
e rminingope rat
ingi nc omeorc os t-r
ecovery
isimpor t
ant.Fore xampl e:aTol lRoa dwoul dber eportedwi t
hint hepr oprietaryf unds .Twot ype s
off undsus edbys t
a t
ea ndl oc algove rnme ntsa r
ec lassifieda spropr i
etaryf unds .
6. E nterprise F unds (E F s) – t oa cc
ountf orope ra t
ions( a )thata r
ef inanc eda ndope rat
edi na
ma nne rsimila rtoprivatebus ine ssenterprises–whe ret hei ntentoft hegove rningbodyi sthatthe
costs( expense s,i
nc l
udingde preciati
on)ofpr ovidinggoo dsors ervicest othege ne ralpubl icona
cont inuingba s i
sbef i
na nc edorr ecove redpr i
ma ril
yt hroughus erc hange s
;or( b)whe r
et he
gove r ningbodyha vede cide dt ha tperiodicde t
ermi nationofr eve nuese arne d,e xpens esi ncurr
e d,
and/ orne tinc omei sa ppr opriatef orc apitalma intena nce ,publicpol i
cy,ma nage me ntc ontrol,
accou ntabil
ityorot herpur pos es.
 Th eya reus edwhe nr esour cesa r
epr ovi dedpr i
ma r
ilyt hrought heus eofs a l
esa nds er
vic e
cha r
ge stopa rt
iese xte r
na ltothegove rnme nt.
 Ac crualba si
sofa ccount ingi sus edt oa ccountf orope r
a t
ionsofe nterprisef unds .Exa mple s
ofa cti
v it
iesthatc anbea ccounte dthroughe nter
pr is
ef undsi ncludewa te
ra ndot he ruti
li
ti
e s,
airports,swimmi ngpool sa ndt r
ansitsys tems .
Accordingt oGASB,apa r
ticul ara ctivi
tyi sac count edt hroughe nterprisefundi fitme etsa nyoneof

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le
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count
ingI
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s 17
 Pr
inc
ipl
esofAc
count
inga
ndFi
nanc
ialRe
por
ti
ngf
orSLGs
thef ol
lowi ngc rite r
ia:
 Ne tre ve nue sge ne ratedbyt hea cti
vitypr ovi dethes ol esecur ityfort hedebtsofthes e
curi
ty
 La wsorr egul ationsr e quiret hea ct
ivity’sc os t
stober ecovere dthr oughf e
e sorcharge
s
 Fe esa ndc ha rge sa r
es eta tpr i
c esintende dtor ecove rc ost
si ncludingde preci
ati
ona nddebt
service .
7. Internal Service F unds (ISF s) – t oa ccountf ort hefina nc i
ngofgoodsors ervicesprovi
dedby
onede partme ntora ge ncyt oot he rde partme nt sora genc iesoft hegove r
nme ntalunit
,ortoother
governme nta lu nits,onac os treimbur s ementba sis.
 Ac crua lba s i
sofa cc ount ingi sus edfori nt er
na lservicef unds .
 Li ke ,e nte r
pr isef unds ,f eesa rec hargedbutt hese rvicei spe rforme df ortheprimarybenefi
t
oft hegove rnme ntra thert hanf orout s
i deus e r
s.
Exa mpl e
sofa c
tivi ti
e stha tc anbea ccount edthroughi nternals ervicef undsi nclude:
 Ce ntralda tapr oc essingf a cili
ty( i
nforma ti
ons er
vice sfund )
 Ce ntraliz edve hi clema inte nanceorGa ragef acil
it
y( Fleetse rvice sfund)
 Ph otoCopys ervi cea c ti
vities(c opys ervic efund)
 Pr ovi dings eve raltypeofi ns ur
a ncepr ogr ams( Insur ancer e
vol vingf und)
 Ce ntraliz eds up plys tor es( Wa rehouser evolvingf und) .
 Ce ntralPr i
nt i
ngShop
ISF s areus ua ll
yr eporte da sgove rnme ntala ctivitie
si nt hegove rnme nt-widef i
na nci
alstat
ements
beca us
et he ypr i
ma rilys ervede pa rtme ntsf i
nanc edbygove rnme ntalfunds .

C ) F iduciary F unds – t hesea ret r

usta nda gencyf undsthata reus e
dt oa c countf ora s
setshe l
dbya
gove rnme ntaluni tinat rusteec apac i
tyora sa na gentfori ndivi
dua l
s,pr i
va teor ganizations,and
ot hergove rnme ntaluni t.Fort hesef undsthegove r
nme ntisa cti
nga sac oll
ec ting/disbursinga gent
ora sat rustee.The sei nclude :
8. A gency F unds-a reus e dt oa ccountf ors it
ua t
ionsi nwhi chthegove rnme ntisa c t
inga sa
col lecting/disbursi
nga ge nt.Ane xa mplewoul dbeaSt a t
et axa genc yf und,whe ret heSt ate
col lectspr ope rt
yt a xesf orot hert axinguni t,sucha sFe deralGove r nme nt .Thea ccountingi s
simpl e :ass e
ts=l iabi l
iti
esa ndnor evenuea nde xpensea c
c ountsuseds inc ethe rea renone tasset
s
9. Pension (and Other E mployee Benefit) T rusts F unds- a reuse dtoa c
c ountf orpe ns i
ona nd
empl oye ebe ne f
itfundsf orwhi chthegove r
nme ntalunitisthet r
ustee.
10. Investment T rust F unds – a ccountf ore xt
ernalinve s
tme ntpoolsi nwhi cht hea s
setsa rehe l
df or
ot her( exte r
na l
)gove rnme nts,alongwi t
hf undsoft hes po nsori
nggove rnme nt.As sets,liabil
iti
es,
ne ta ssets,andc hange sinne ta s
setsr el
atedtothee quit
yoft heexternalpa rti
c ipa nt
sa rerepor t
edi n
thi sfiduc i
a r
yf und.
11. Private Purpose T rust F unds- r e portallothe rtr
usta rrangeme ntsunde rwhi c
hpr i
nc ipaland
inc omebe nefiti
ndi vidua ls,privateor ganizat
ionorot hergove rnments.

Thesef undt
ypes(Governmenta
l,proprie
tarya ndfiduci
ary)c or
respondtot hetypesofacti
viti
esin
whichgove r
nmentsengage:Gove rnmenta
lf undsa reusedt oa cc
ountf orgove r
nme nt
alacti
vit
ie
s,
propri
e t
aryf
undsareusedtoa ccountforbus i
ne s
s-typea c
tivit
ies
,a ndfiduc i
aryfundsa r
eus edto
accountforf
iduci
aryact
ivi
ti
es.Botht hedefi
nitionoffunda ndthede sc
riptionofe achgovernment
al
fundt ypesemphasi
zethes egr
egati
onofa ccountingforr estr
ict
edc urrentf i
nancialres
ourcesto

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le
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s 18
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
faci
lita
tereport
ingonf i
scala c
c ountabi
lit
y.Creat
ingas elf
-bal
ancingsetofa cc
ounts(f
und)foreach
businesstypeacti
vit
ype r
mi tsthosea ct
ivi
tie
stobea ccountedforusingaccounti
ngpri
ncipl
essimil
ar
tothoseofc omme rci
albusinessratherthanusingthepr i
nci
plesforgover
nme ntalf
unds.Account
ing
forfiduci
aryfundsfol
lowsthepr i
nciple
sofa cc
ounti
ngf orbusi
nesstypeact
ivit
ies
.

Principle No. 4: Number of F unds

Governme nt
a lunit
ss houldes t
abli
shandma i
nta i
nt hosefundsr e
quiredbyl awa nds oundfinancia
l
adminis
trati
on.Onl ythemi nimumnumbe roff undsc onsis
tentwi thlegalandope rat
ingr equi
reme nt
s
shoul
dbee stabl
is
hedbe causeunn ec
e s
saryf undsr es
ultini nflexibi
lit
y,unduec ompl exit
y,a nd
inef
fi
cientfinanci
aladmi nis
trat
ion.Thef undtype sde f
inedint het ypesofFundsPr i
nc i
plearetobe
usedifneededbyagove r
nme nt
alunitt
ode mons t
rat
ec ompliancewi thlegalrequir
eme ntsorifneeded
tofaci
li
tat
es oundf i
nanc i
aladminist
rat
ion.Iflega lr
e quir
eme nt
s ,GASBs t
a ndards
,ors oundfinancia
l
adminis
trati
ondonotr equi
retheuseofagi venf undtype,itshouldnotbeus ed.

Principle No. 5: R eporting C apital A ssets

Ac leardistincti
ons houldbema debe twe engene ra
lcapit
a lassetsandc api
tala s
setsofpr opri
etaryand
f
iduc iaryf unds .Capi t
alassetsofpr opriet
aryfundss houldber eportedinbot hgove rnme ntwidea nd
f
undf inanc ialsta
teme nts
.Ca pita
lAs setsoffiduc i
aryfundss houldber eport
edi nonlyt hes t
ate
me ntof
f
iduc iaryne tasset
s.Al lotherc api
talassetsoft hegove r
nme nt
aluni taregene r
alc apit
ala s
sets
.The y
shoul dnotber eporteda sa s
setsingove r
nme ntalfundsbuts houldber e
por t
edi nt hegove r
nme nta
l
activit
iesc olumni nt heGovernment-W ide Statement of Net A ssets.General capital assets i
nc l
ude
l
a nd,bui l
di ngs,impr oveme nt
sot herthanbuildings,ande quipme ntusedbya ct
iviti
esa cc
ountedf orby
t
hef undt ype sclass
ifiedasgove rnme ntalfunds.Ca pi
tal
izeda s
setswi l
lbere port
e dinthegove rnment
wi des tat
e me ntofNe tAs s e
ts,c l
assif
ieda sbe ingapa r tofgove rnme ntala c
tivit
ies,businesstype
activit
ies,orc ompone ntunits.Ca pit
alizedfixeda sset
sa r
enotr eport
e dint hegove r
nme nta
lf und
f
ina ncials tatementsbuta r
er eportedint hepropr i
etar
yf undf inancialstat
eme ntsandf iduciar
yf und
f
ina ncialsta t
eme nts
.

C apital A ssets and F und-Based F inancial Statements - oneintere

sti
ngresultofme asur
inga nd
reportingonl yt hee xpendi
tur
eswi t
hingove rnme ntalfundsi
st ha
tvirt
uall
ynoa s
se t
sarerecor
dedother
thanf i
nanc ialr esourcessucha sc ash,re ceivables,andi nvest
me nt
s.Allca pi
tala s
setssucha s
buildings,e quipme nt,vehi
cles
,a ndthel i
keha vebee nrecor
deda sexpendi
tur
esatthetimeofpurchase
andt henc lose douta ttheendoft hefisca
lpe riod.

Wi t
ht hec r
eat
ionofGASB s tat
eme ntNo.34,ar e
cordofa llc a
pitalassetsc anbef oundi nt he
stat
eme ntsofne ta s
s et
swi t
hinthegove rnme nt-widef inancialstatements.Thus ,r ecordingonl y
Expend itur
esint hef und-basedfinanc i
alstateme ntsdoe snotl eaveaga pi nthei nforma t
ionbe ing
present
e d.Howe ver,priortostat
eme ntNo- 34,ar ec or
doft hec apit
ala s
setscouldnotbef oundwi t
hin
thegove rnmentalfunds.Att heti
me ,todi s
closeinf ormati
on,as epa r
ateaccountgr oupwa sma inta
ined
forsucha ss
ets(aswe llasthelong- t
e rmliabil
iti
e soft hegove rnme ntalfunds).The set woa c
count
groups( theGene r
alFi xedAs set
sAc countGr oupa ndtheGe nera
lLong- Te r
m De btAcc ountGr oup)
we r
enomor ethanal isti
ngoft heindi vi
duala ccounts,ba l
anc e
snotot he r
wisere cordedorpr ese
nted

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le
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count
ingI
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tor
s 19
 Pr
inc
ipl
esofAc
count
inga
ndFi
nanc
ialRe
por
ti
ngf
orSLGs
bythet
radi
ti
onala
ccount
ingmode
l.GASBSt
at
ementNo.34eli
minat
edthene
edfort
histwoa
ccount
gr
oupssincefi
xeda s
set
sa ndl
ong-
ter
mli
abi
li
ti
esarerepor
tedinthegover
nment
-widefi
nanci
al
st
at
e me
nts.

Principle No. 6: V aluation of C apital A ssets

Capit
alasset
sbes houldrepor
te dathi st
ori
calcost
.Thec ostofac a
pita
la s
sets houl
di ncl
ude
capi
ta
liz
edinter
estandanci
ll
aryc har
gesne ce
ssar
ytorepl
acetheass
etintoit
sinte
ndedl ocat
ionand
condi
ti
onforuse.Donat
edc a
pit
a las
setsshoul
dber e
port
edatthei
rest
imatedfai
rvaluea tt
hetimeof
t
hea c
quisi
ti
onplusanci
ll
arychangesifany.

Principle No. 7: Depreciation of C apital A ssets

Capit
a lassetsshoul dbede preci
atedoverthe
iresti
ma t
edlivesunlesstheyar
ee it
herinexhaust
ibleor
arei nfra
structurea ss
etsa ccordi
ng tot he modi f
ieda pproach ofGASB St a
teme ntNo.34.
Inexhaustible assets s
uc hasland,la
ndimproveme nt
s,hi
storica
lhe r
it
ageora nti
qui
ti
es,a ndfi
nea rt
s
shoul
dnotbede pre ci
ated.Depreci
ati
onexpenseshouldbereportedinthegovernmentwides t
atement
ofactivi
tie
s;t hepr opri
etaryfundstat
ementofrevenues,e
xpe nsesandc ha
ngesinfundne tass
ets;and
thest
a te
me ntofc ha ngesinfi
duc i
arynetas
set
s.

Inf r
astructurea ssetsa rel ong-liveda ss etsthatnor ma l
lya restat
ionaryi nna tureandnor ma ll
yc anbe
pr ese
r vedf oras ignificantl
y gr ea
te rnumbe rofye arstha n mos tc a pi
tala ss
ets.Exa mpl esof
infrastructurea s
s e
t sarer oads,br idges ,tunnels,dra i
nages yst
ems ,wa tera nds ewersys te
ms ,da ms,and
lightings ystems .Wi tht hee xce pti
onofi nfr
astructureassetsreporte
dunde rthemodi fieda pproach,all
ca pi
ta l
izeda ssetsa ret obede pr e
c iated,us ingage neral
lya cceptedde pr e
ciat
ionme t
hod,ove r
es t
ima tedus efullives.Thi sde pr e
c i
ationc har
gei sincludeda sane xpe nsei nthes t
ateme ntofAc t
ivi
ties
int hegove rnme ntwi def i
na ncials tate mentsa nda sa ne xpensei nt hes tat
eme ntofRe venues,
Expe ns es,andc ha nge sinFundNe tAs setsinthepr oprietar
yfundf ina ncia ls
tatement.Infrastructure
A ssets mus tbec api t
alized.Howe ver,agove rnme ntma yc hoosenott ode preciat
einfrastr
uc t
urea sse
ts,
choos ingi nsteadtous ethemodi f
ieda ppr oa
che s
tablis
he dbyGASB.I fthemodi f
ieda pproachi sused,
thegove rnme ntwi lle xpe nsee xpe nditurest oe xte
nd t hel i
ve soft hosea ss
ets.Addi t
ionsa nd
impr ove me ntwi l
lc ontinuet obec apital
ized.Thel ogicbe hindt hi
si st hatifi nfrast
ructurei s
ma i
nta i
nedpr ope r
ly,t heus efull i
feisi nde fi
niteandde pr eci
at
ionc harge swoul dnotbene c es
sary.

Infund- basedfinanc i
a lstate
me nts,depr
eciatione xpe ns
eha sneverbeenne ededinwi thgove r
nme nta
l
fundsf ortwor easons:
1. The sef undsr e corde xpendit
uresr at
he rthane xpense
sa ndthee ntir
ec ostoft hea ssetwa s
re
por t
eda se xpe ndit
urea tthet i
met heor iginalc l
ai
ma gai
ns tc urr
entf i
nancialr e
s ources
.
Thus,t hei mpa ctoft hea cquisit
ion wa sr ecorde
d whe n obt aineds ot hatr epor t
ing a
DepreciationExpe nseaccountwoul dme asurethei mpacttwice-onc ewhe nacquireda ndonc e
whe ndepr eci
a t
e d.
2. The sefundst raditi
onall
ydonotr ecor dexpe nses.Thus,thereporti
ngofde pr
e ci
ati
one xpense
(r
athert hane xpe ndit
ure)i snotc ons is
tentwi thme asuri
ngt hec ha ngei ncurrentf inancia
l
re
sources .
Howe ver,thegove rnme nt-
widef i
nancia
ls tat
eme ntsl i
sta s
setsrathert hane xpendituress ot ha
t
deprec i
ati
onona lllong- li
veda s
setsotherthanl ands houldbec al
cula
teda ndr eport
ede ac
hpe r
iod.

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le
dBy:TheG&NPAc
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ingI
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 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s

Principle No. 8: R eporting L ong-T erm L iabilities

Ac lea
rdi st
inctions houldbema debe twe enf undl ong-ter
ml iabil
iti
e sa ndge ne rall ong-t er
m
li
abili
ties.Lon gt e
rml i
abil
iti
esdi rectl
yr elatedt oa nde xpect
edt obepa idf r
om pr oprie t
aryf unds
shouldber eportedi nt hepr opri
e taryf unds tateme ntofne ta ss
e t
sa ndi nthegove rnme ntwi de
stat
eme ntofne tassets.Long-terml iabi
litiesdire ctl
yr elat
edtoa nde xpe ctedtobepa idf r
omf iduc i
ary
fundss houl dber e
por t
edi nthes t
a teme ntoff iduc i
aryne tasset
s.Al lot herunma t
ure dge nerallong-
terml i
abiliti
esoft hegove r
nme nta
lu nitshoul dnotber eport
edi nthegove rnme ntalfundsbuts hould
ber eportedi nt hegove rnme ntalac t
iviti
esc olumni nt hegove rnme ntwi des tateme ntofne ta ssets
.
Stat
ea ndl ocalgove rnme nt
sa rerequ ir
e dt or epor talllong-t
erm de bta ndl ong-ter
ml iabilit
iesint he
stat
eme ntofNe tAs sets
.Thi sinclud esde btt ha tist obepa idoutofge neralgove rnme ntr e
sour ces
,
sucha sge ne ra
lobl i
ga t
ion(G. O)de bt,whi chispa idoutoft axre venues .Thisde btisr eflectedi nthe
governme ntt ypea c t
ivit
iescolumnoft hes t
a t
eme nt.Thes tat
eme ntofne tAs setsa l
s oi nc l
udesde bt
paidfromr evenue sraisedbypr oprietaryf unda c ti
vities
,whi chwoul dber eporte
di nt hebus i
nes stype
acti
viti
esc olumn.Whe nr e
por t
ingl ong- t
e r
m de bta ndot herliabil
itie
s ,adi sti
nc t
ionmus tbema de
betwe e
nt hos epor t
ionstobepa i
dinl at
erye ar s
.I na ddit
ion,long-ter
mde btpaidfrompr opr iet
aryf und
revenuesi srepor t
eda sal i
abil
ityint hepr oprieta r
yf unds t
a t
ementofne tAs sets
.

Principle No. 9: Measurement F ocus and Basis of A ccounting

Measurement F ocus
Me as
ure
mentFocuse xpl
ainstheit
emsme as
ured,account
edfor,a
ndr eport
edtoprepa
reba s
ic
fi
nanci
alst
at
ementsandde te
rmineaccount
abi
li
tyf ortheent
rus
tedr
esour
c es
.Theret
wot ypesof
Me as
ure
mentFoc
uses
:Ec onomicResourceMeasure
me ntFoc
usandCurr
entRe s
our
cesMeasur
ement
Focus
1. E conomic R esources Measurement F ocus
Itme as
ure
s,a c
countsf
or,andr epor
tinflowsandout fl
owsofe conomi
cr es
ource
s(c
urr
entand
noncurr
ent
).Itisals
ocall
edAl lRe s
ource
sMe asur
eme ntFocus
.Itma i
nlyfocus
esonope
rat
iona
l
account
abi
li
ty;whet
hermanage
me nteff
ici
entl
yus
esresourcesi
nprovi
dingse
rvic
es
2. C urrent F inancial R esources Measurement F ocus
I
tmeasur
es,ac
c ount
sfor
,andrepor
tinfl
owsandoutfl
owsofcur
rentre
sourc
e s(
expa
ndabler
esour
ces
i
.e
.,cas
horot herit
emse xpec
tedtobec onver
tedint
oc a
shduringthecurre
ntperi
od).I
tma i
nly
f
ocus
esonf is
ca lac
count
abil
it
y;whe t
herma na
gershavemetbudgetar
ya ndothe
rl e
galfi
nanci
al
r
equi
rement
s
Basis of A ccounting (A ccounting Method)
I
tgi
vesa
nswe
rtot
heque
sti
onwhe
nshoul
dre
venue
sande
xpe
nse
sore
xpe
ndi
tur
esber
ecogni
zed?
1. A ccrual Basis of A ccounting
AccrualAc counti
ngme a
nstha
t(1)reve
nuesshoul
dberecordedintheper
iodi
nwhic
hthese
rvic
eis
given,althoughpa ymentisre
ceivedinapr i
ororsubsequentperi
od,and(2)e
xpens
eshoul
dbe
recordedi nthepe ri
odinwhicht hebene
fiti
sr e
cei
ved,althoughpaymenti
smadeinapr i
oror
subsequentpe r
iod.
2. Modified A ccrual Basis of A ccounting
Unde
rmodi
fi
eda
ccr
ualba
sisofa
ccount
ing,Re
venue
s,s
houl
dber
ecogni
zedi
nthea
ccount
ingpe
riod

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le
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ingI
nst
ruc
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s 21
 Pr
inc
ipl
esofAc
count
inga
ndFi
nanc
ialRe
por
ti
ngf
orSLGs
i
n whichthe
y becomeavailable a
nd measurable. Expe
ndi
tur
ess houl
d berecogniz
edinthe
a
ccount
ingpe
riodi
nwhic
hthef undliabi
li
tyi
sincurred,i
fmeas
urabl
e,exceptf
orunmatur
edi
nte
res
t
onge
ner
all
ong-
ter
mli
abi
li
ti
es,whi
chs
houl
dber
ecogni
zedwhe .Measurable me
ndue ansc
apa
ble
ofbe i
nge xpr
essedinmone ta
ryter
ms ;available i
sdefi
neda s“coll
ecti
blewit
hinthec urrentpe ri
odor
soone noughtherea
ftertobeusedtopa yliabil
it
iesofthec ur
rentper
iod.GASBs t
anda rdsr equir
et he
accr
ua lofr eve
nuef r
om propert
yt axesi nthepe ri
odf orwhi chthet a
xesa r
el evie d.Forot her
cate
gor i
esofnon- exchange r
evenue transact
ions,exceptwhe nc er
tai
nt i
me r equi reme ntsa nd
eli
gibil
ityrequi
reme ntshavenotbe enme tr evenue
ss houldbea ccr
uedifbot hme a surablea nd
avail
able.Inrespecttoexpendi
turerecognit
ion,themodifieda c
crualbasi
sisalmosti de nti
ca lt
ot he
accr
ua lbasi
swhe ntheonlyasse
tsofaf unda r
efinanci
alresour
c e
s.

3. C ash Basis of A ccounting

Unde rCas hBasi
sofAccount
ing;(
1)re
venuesshoul
dber ecordedintheperi
odinwhic
htheser
vicei
s
given,althoughpaymentisrecei
vedinapr i
orors ubsequentpe r
iod,and(2)expens
eshouldbe
recordedi ntheperi
odinwhi chthebene
fiti
sr ec
eived,a l
thoughpa ymenti
sma deinapr i
oror
subsequentperi
od.

A ) Government-W ide F inancial Statements

Thegove r
nme ntwidestat
eme ntofnetAs s
e t
sands tat
ementofa cti
viti
ess houldbepr epar
edusingthe
economicme asure
me ntfocusa ndthea c
crualbas i
sofa c
c ounti
ng.Re ve
nue ,e xpens
es,gai
ns,los
e s
,
asset
sandliabil
it
iesr
e s
ult
ingfromt heexchangea ndexchange-liketransacti
onss houldbere
cognized
whe ntheexc h
angetakespl a
c e
.Re venues,expenses,as
setsa ndliabi
liti
esr esulti
ngfrom t
henon–
exchangetr
ansacti
onsshouldber ec
ognizedina c
cordancewi t
h“ Non–e xchanget rans
acti
ons
”.

B) F und F inancial statement

InFund,f inancialss t
ateme nt
s,t hemodi fi
eda c c
rualora ccr
ualba si
sofa cc ounti
ng,a sa ppropri
ate,
shouldbeus edinme asuri
ngf ina ncia
lposi
tiona ndoper at
ingresults.
(1) Fi nancialsta t
eme ntsforgove rnmentalfundss houl dbepr esentedusingt hec urr
entfinancia
l
renouncesme asure mentfocusa ndt hemodifieda ccr
ualba si
sofa ccounting.
(2) Pr oprie
taryf unds tateme ntsofne tasset
sa ndr evues,expe nses,a ndcha ngesi nfundne tasset
s
shouldbepr esentedus ingt hee c
onomicr esourcesme asure
me ntf ocusa ndt hea ccr
ualba sisof
accounti
ng.
(3) Fi nancials tate
me ntsof f i
ducia
ry f undss houldber epor t
e dus i
ngt hee c onomicr esourc
es
me asur
eme ntfoc usa ndt hea c crualbasi
sofa ccountinge xceptf ort herecognitionofc ert
ainpost
employme nthea l
thc areplans
(4) Tr ansfers(be tweenf unds )s h
ouldber eportedint hea c
co untingpe ri
odi nwhi chtheinterfund
recei
vablesandpa yablearise.

Summary of Measurement F ocus and Basis of A ccounting

F inancial Statements Measurement F ocus Basis of A ccounting
Gove
rnme
nt-
WideSta
tement
s(GASB34) EconomicResource
s Accr
ual
Gove
rnme
nta
lFundFina
ncia
lSta
teme
nts Cur
rentFina
nci
alRe s
ource
s Modi
fi
edAccrua
l

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count
ingI
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s 22
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
Pr
opr
iet
aryFundFi
nanci
alSt
at
ement
s Ec
onomi
cRe
sour
ces Ac
crua
l
Fi
duc
iar
yFundFinanci
alSt
at
ement
s Ec
onomi
cRe
sour
ces Ac
crua
l
Inabus inessor gani zat
iona ccount ing,t hea c cr
ualbasisi semploye dtoobt a i
nama tchingofc osts
aga instther evenuef lowingf r
om t hosec oststherebypr oducingamor eus efulincomes tat
eme nt.In
gove r
nme nt
ale nti
tie s,howe ve r,e ve nforgove r
nme ntwi definanci
a lr
epor t
inga ndthos efundst hat
attemptt ode t
ermi nene ti nc ome ,t heobj ect
ivei stoprov ideser
vicestot hepubl ic
,nott oma ximize
economi cga inorpr ofit.Ra thert hegove rnme nta sawhol eandt hefundst ha tuset hee conomi c
resour cesme asureme ntf oc usa nda ccrua lba si
sofa c
count i
ngma keus eofr evenuea nde xpense
acc ountst oassistina ssessingope ra t
iona lac countabi
li
tya ndtogua rdagainsti mpa i
rme ntofa bil
it
yt o
rende rthes er
vicesde s
ired.Fort he sere asons ,thegovernme ntwideope ratings tateme ntisc al
leda
statement of activities andt h oseofpr opr ie
taryf undsarec all
edstatement of revenues, and expenses
rather than income statements.

Mos tofthegove r
nmentalf
undt ype s(Gener
alfunds,spe
c i
alrevenuef unds,capi
talproj
ectfunds,and
debtservicefunds)arenotc oncernedwi t
hi nc
omede t
erminati
on.The sefundsa r
ec oncernedwi t
h
ma t
chinge xpendi
ture
sofl egala ppropri
ati
ons,orl e
gala ut
horizat
ions ,withrevenuesa vail
ableto
fi
nancee xpendit
ures
.GASBs tandardsrequir
ethatgovernmentalfundt ypesusethemodi fie
da ccrua
l
basi
s.Themodi f
iedaccr
ualba s
isrequire
sr e
cognit
ionofr e
venuesint hepe ri
odinwhi chtheybe c
ome
avai
lableandme asur
able.

Principle No. 10: Budgeting, Budgetary control, and Budgetary R eporting

a. Ana nnualbudget(
s)shouldb eadoptedbye ve
rygove r
nme ntalunit
b. Thea ccount
ingsyst
ems houldp rovidet
heba s
isfora ppropriat
ebudge t
aryc ontrol
.
c. Budge t
aryc ompass
ions c
he dul
e sshouldbepr esenteda sr equi
reds uppl
e me nta
ryinformati
on
(RSI)forthegenera
lfunda nde achma j
orspecia
lre venuef undthathasale gallyadopt
eda nnual
budget.Thebudgetar
yc ompa ri
sons che
duleshouldpr es
e ntboth(a)theoriginaland(b)thefinal
appropria
tedbudget
sf orreport
ingpe ri
odaswe llas( c)a ct
ua li
nfl
ows ,outflows,andba l
ances,
sta
tedont hegover
nme nt’
sbudge t
arybasi
s.

Part(a)oftheprinci
pleisabovenota naccounti
ngorf i
nan c
ialreport
ingprinci
ple,butitisanece s
sary
preconditi
ont opart
s(b)a nd(c.)Abudge twhe nadopte
da ccordingt oprocedure
ss pecif
iedins t
ate
laws,i sbi ndi
ng up on t hea dmi ni
st
rat
orsofagove r
nme ntaluni t
.Ac cordi
ngly adi s
tinct
ive
charact
e ri
st
icsofgove r
nme nt
ala c
c ount
ingresulti
ngfrom thene edt odemons tr
atecompl i
ancewi th
lawsgo ver
ningthes ourcesofr evenuesavail
a bl
et ogove r
nme ntalunitsandl awsgove r
ningt he
uti
lizat
ionoft hoserevenuesisthef ormalreporti
ngoft helega l
lya ppr
ovedbudge tc omparedwi th
actualresult
sfortheGe neralfunda nda l
lma jorspeci
alrevenuef undst ha
tha veal egall
ya dopted
annualbudge t.

Principle No. 11: T ransfers, R evenue, E xpenditure and E xpense A ccount C lassification
a. Tr
ansf
e r
ss houl
dbec lassi
fi
eds e
parat
elyfrom revenuesa nde xpendit
ure
sore xpens
e sinthe
ba
sicfi
nancials
tat
ements.
b. Pr
oceedsofge ner
allong-t
erm debtis
sueds houl
dbec la
ssifi
eds epar
atel
yfrom reve
nue sand
ex
pendit
uresinthegovernment
alfundfi
nancialst
ate
me nts.
c. Gover
nme ntalf
undrevenuesshouldbec l
assif
iedbyf unda nds ourc
e.Expendi
ture
ss houldbe

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s 23
 Pr
inc
ipl
esofAc
count
inga
ndFi
nanc
ialRe
por
ti
ngf
orSLGs
cl
a s
s i
fi
edbyf und,func t
ion(progra
m)orga ni
zati
onunit
,a c
tivi
ty,char
acterandpr i
ncipalcla
s s
es
ofobj e
cts
.
d. Propriet
aryfundr e
ve nuess houl
dber eport
edbyma j
ors ources
,a nde xpensess houldbe
cl
a s
s i
fi
edine ss
e nt
ial
lythes amema nnerasthoseofsimila
rbus i
nessorganiza
tion,functi
ons,or
acti
viti
es.
e. Thes t
at
ementofa ct
ivit
iesshouldpres
e ntgovernmentalacti
vit
iesatl
easa tthelevelofde tai
l
re
qui re
di nthegove rnme ntalfundsta
teme ntofrevenuese xpendi
turesandc ha
nge sinf und
balancesatami nimumbyf uncti
on.Gove r
nme nt
sshouldpresentbusi
nesstypea ct
ivit
iesatleas
t
bys egment.

Thispr
incipl
eisint
ende dt
oe ns
urethata
ccountcla
ssi
fi
cat
ionsprovi
deforse
par
atef
inanci
alst
ate
ment
re
porti
n goft
ransf
ersfromrevenuesandexpendi
tur
es(ore
xpe ns
es)andfora
ppr
opri
atele
velsofi
nthe
basi
cfinanci
alst
ate
me nts.

Principle No. 12: C ommon T erminology and C lassification

Ac ommont er
minologya ndc l
assif
ica
tions houldbeus edc onsi
stent
lythroughoutthebudge t
,t he
accounts
,a ndthefinanc
ialrepot
sofe achf und.I tisapr i
ncipleofcommons ensethati
fthebudge t
ing,
budgetar
yc ont
rol
,a ndbudge tar
yRe portingPr inci
pleist oi mpl
e mente
d,,pe r
sonsresponsibl
ef or
prepari
ngt hebudge t
sa ndpe rs
onsr es
pons iblef orprepari
ngt hef i
nanci
als t
atementsa ndfina
nc ia
l
report
sshoul dwor kwit
ht hepersonsrespons ibl
ef orde s
igningandope rat
ingthea cc
ount i
ngsyst
em.
Agr ee
me ntonac ommont e r
minologyandc l
a ssi
ficat
ionsche meisneededtoma kesurethea cc
ounting
systemp r
oduc edtheinf
orma t
ionne e
dedf orbudge tprepara
tionandf orf
inancia
ls t
ate
me ntandreport
prepara
ti
on.

Principle No. 13: A nnual F inancial R eports

a. A C ompressive A nnual F inancial R eport (C A F R ) s
houl
dbepr
epa
reda
ndpubl
is
hed,
coveringa llact
iviti
esoft hepri
ma r
ygove r
nme nt(inc
ludingit
sblendedc omponentuni
ts
)a nd
providinganove rviewofa l
ldis
cre
tel
ypresent
edc omponentunit
softhereporti
ngenti
tyi
ncl
uding
intr
oduc tor
ys ections,ma nage
me nt
’sdiscuss
ion and a nal
ysi
s( MD & A) ,basi
cf i
nancia
l
stat
eme nts,requireds uppl
ementa
ryi nf
ormati
onot hert hanMD & A,c ombi
ningandf und
fina
nc ialst
ate
me ntsschedule
d,nar
rat
iveexpla
nations
,ands t
at
ist
ic
alsect
ion.

b. Themi
nimum r
equi
reme
ntsf
orMD& A,ba
sicf
ina
nci
als
tat
eme
ntsa
ndr
equi
reds
uppl
eme
nta
ry
i
nformat
ionothert
ha nMD&Aa re:
1. Ma nagement’sdiscussiona nda nal
ys i
s
2. Ba si
cfi
nanc i
alstat
e ments.Theba sicfi
nanc
ialst
at
eme
ntss
houl
dinc
lude
:
 Gove rnme nt–Wi deFi nancialSta
tements
 FundFi nanc i
alSt at
eme nts
 Not e
st otheFi nancialSt at
eme nt
s
3. Re qui
redsuppleme nta
r yinfor mati
onotherthanMD&A.

2.3) Governmental F inancial R eporting E ntity

I
npr
oduc
ingf
ina
nci
als
tat
eme
nts
,as
tat
eorl
oca
lgove
rnme
ntof
tene
ncount
ersauni
quepr
obl
em–
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le
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ingI
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tor
s 24
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
det
erminingthespeci
fi
ca c
tiviti
estobei ncl
uded.A s t
ateorl oc
algove r
nmentma yinte
ractwith
numerousde pa
rtme
nts,agencies,boards,inst
it
utes
,c ommi s
sionsa ndthelikethathaveva ri
ous
rel
ati
onshipswit
hthesegov ernments
.Shoul dthesefunctionsbei ncl
udedase i
thergover
nme nta
l
act
ivi
tie
sorbus i
nes
stypeactivit
ieswithi
nt heCAFRoft hegove r
nme nt
?Ingovernmentaccount
ing
andreporti
ng,t
hefi
nanci
alreporti
nge nti
tymus tbeide
ntifi
e d.Thef ina
nci
alre
port
ingenti
tyc ons
ist
s
ofprimary government a
ndcomponent units.

Primary Government
Aprimary government i ncludesanysta
tegove rnme ntorge ne r
alpurposel oc a
lgove r
nme ntsuchasa
ci
tyorcount y.Ita l
soi ncl
ude saspeci
alpur poseloca lgovernme ntsucha sas choolsystema ls
oma y
bedee
me dapr ima r
ygove rnme nti
fitmeetsthreec ri
teri
a:
 I tha sas eparat
e l
ye l
ectedgover
ningbody.
 I ti slegall
yi ndependentwhichc anbede mons tr
atedbyha vi
ngc orporatepowe r
ss uchast he
righttos uea ndbes uedinitsonna mea swe llasther ighttobuy,s e lla
ndl eas
epropertyini t
s
onna me.
 I ti sf is
c al
lyi ndependentofot hers tat
ea ndl ocalgove rnme nts.Fi scalindependencyi s
nor mallyde mons t
ratedbya nacti
vityofi tsleadershipc andetermi nei t
sownbudge twithout
ha vingtos eeka pprovalfr
om anout sidepa r
ty,levyt axesors etr ateswithouthavingtos eek
out si
dea pproval,andissuebondedde btwithoutha vingtos eekout sideapproval.

Thepr imarygove r
nme nti nc
lude sandmus treportal
lfunds ,acti
vit
ies,orga
nizat
ions,agencies
,
offices ,andde part
me nt
stha tarenotl e
gall
ysepar
atefr
om it.Ac it
yisc l
earl
yapr i
mar ygovernment
buti tspol i
cede part
me ntandf i
rede part
mentarenot
.Howe ver,ifaschoolsyst
emisle gal
lysepara
te
entitya c
cordingtot helawsofi tsst
ateandhasapublicl
ye le
c t
edboa r
dwhi chset
sitsownbudge t
,
leviesi t
sownt ax,a ndissueitsownbonds ,i
tisapr i
ma rygove r
nme nttha
twouldi s
sueitsown
C A F R .Inc ontr
a s
tas c
hools ystemt hatwhic
hmus thavei t
sa nnualbudgetandtaxl evie
ss etor
appr ove dbyt helocalcit
ycounc ilisnotapri
marygover
nme nt.

C omponent Units
ACompone ntUniti
s(1)organi
zat
ionsforwhi
chthepri
marygovernmentisf
inanci
al
lyaccounta
ble
and(2)anyotheror
gani
zat
ionsforwhichthenat
ureandsigni
fi
canceofthei
rrela
ti
onshipwiththe
pri
marygovernmentaresuc htha
te xcl
usi
onwouldc aus
et herepor
tingenti
ty’
sba si
cf i
nanci
al
st
ate
me nt
stobemisl
eadi
ngo ri
ncomplet
e.

Somea ct
ivit
iesc anbelegal
lyse pa
ratefrom apr imarygovernmentbutsti
llbes ocloselyconnected
t
hatomissionfromt hest
atementsofthepr i
ma r
ygove rnmentcannotbejusti
fi
ed.Thee lecte
doffici
a l
s
t
heprima r
ygove r
nme nt
sa r
es t
illfi
nancial
lya ccount
ableforthes
es e
pa r
ateorgani
za t
ionsknowna s
componentuni t
soft heprimarygove rnme nt
.Be ca
usec omponentunitsarei nc
lude dwi t
hint he
fi
nanci
als ta
teme ntsoft heprima r
y gove rnme nt
,identi
fic
ati
on ofs ucha ct
ivit
iesc an bequi te
i
mportant
.Twos etsofcr
iter
iahavebe enesta
blishedforthi
spurpose
.Ifeit
hersetofcrit
eriaisme t
,the
act
ivi
tyinquestionisacompone ntunittober e
por t
edwithi
ntheCAFRoft heprimarygove r
nme nt
.

C riterion One: t
hesepar
ateorgani
zat
ioni
sfi
sca
ll
ydepe
ndentonthepri
mar
yorganiz
a t
ionre
gar
dle
ss
oft hee xtentofothe
rr e
lat
ions
hips.Asdef
ine
dearl
ie
rfi
sca
ldependenc
ymeansthattheorga
niz
ati
on

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 Pr
inc
ipl
esofAc
count
inga
ndFi
nanc
ialRe
por
ti
ngf
orSLGs
cannotdooneormor eofthef
oll
owingwithoutappr
ovaloft hepri
ma r
ygove r
nment:adoptitsown
budget,l
evytaxe
sors e
trat
esori
ssuebondeddebt.Fore xample
,ifthebudgetofalegall
ys epar
ate
mus e
umboa r
dmus tbeappr
ove
dbythecit
ygove r
nme nt
,thisboar
disclas
sif
iedasacompone ntuni
t.

C riterion T wo: Fir st

,t heof fici
alsoft heprima r
ygove rnme ntmus ta ppoi ntavot ingma jorityoft he
gove rningboa rdoft hes epara t
eorga ni
z ati
on.Ands econd,e i
therthepr ima rygove rnme ntmus tbea ble
toi mpos eitswi l
lont heboa rdoft hese par
ateorganizat
ion,ort hes epa rateorga nizat
ionmus tbea ble
toi mpos eitswi l
lont heboa r dofthes eparateorganiz
a t
ion,orthes e pa r
a t
eor ganiza t
ionmus tprovi de
af i
na nc ialbenefi
tori mpos eaf inancialburdenont heprima r
ygove r nme nt.
GASBs tandardspr ovidet wome t
hodsf orincludi
ngc omp onentunitf ina nc i
alinforma ti
onwi ththatof
prima rygove r
nme nt s
.Thef i
rstisk nowna sblending.Bl endingi nvol vess ummi ngt hef inancial
informa tionoft hec ompone ntunitswi ththatthepr i
ma rygove r
nme nti nt hea ppropriat
ef undgr oups .
Fore xa mpl ea ne nterpr i
sea ct
ivi
tyofac ompone ntuni twoul dbe comea ne nt
e r
prisef undoft he
repor t
inge nti
ty.Bl endi ngisdoneonl ywhe nc ompone ntuni t
sa re“ s oi ntert
wi nedwi tht hepr ima ry
gove rnme ntthattheya re,i
ns ubst
ance,t hesamea sthepr i
ma rygove rnme nta nds houldber eporteda s
partoft hepr i
ma rygove rnme nt.TheGe neralFundoft hec ompone ntuni twoul dnor ma ll
ybeas pecial
reve nuef undoft her e port
inge nt
ity,andt heGe neralfundoft hepr ima r
ygove rnme ntwoul dbet he
Ge ne ralFundoft her eportinge ntit
y.Theot herme thodofpr esentingc ompone ntuni t
si st hrough
Discrete Presentation.The s ec ompone ntunitsarepre s
entedint hegove rnme ntwi des t
ateme nt
sa sa
sepa ratec olumn.

Ther eport
inge nt
ity’sgove r
nme ntwi def i
nanci
alsta
tementshoulddispla
yi nf or mati
ona boutthe
repor
ti
n ggovernme ntasawh oledis t
inguishi
ngbe t
weenthetota
lprimar
ygove rnme nt’sgovernmenta
l
andbus inesstypea c
ti
vit
ies.Ther eporti
nge nt
it
y’sfundfinanc
ialstat
eme ntss houldpres e
ntthe
primar
ygove r
nme nt’s(i
ncludingitsbl endedc omponentunit
s,whicha r
e,ins ubs tance,partofthe
primar
ygove r
nme nt)major funds i
1
ndivi
dua l
lyandnon–major funds i
nthea ggr egat
e.Fundsa nd
compone ntunit
stha tar
efiduciar
yinna t
ures houl
dber epor
tedonl
yi nt
hes t
ateme ntsoffiduciar
ynet
asset
sandc hangesinf i
duci
aryne tassets
.

Thenot i
onoff i
nancia
la c
c ount
a bil
it
yisba sictothede fi
nit
ionofagove rnme nta
lfinanci
a lre
por t
ing
enti
ty.Apr ima r
ygove rnme ntis,ofcourse,fina
nc i
a l
lyaccountablefortheorganizat
ionsthatma keup
i
tsl egalentit
y.I tisalsof i
nanc i
all
ya ccountableforl e
gallys eparat
eor ganiz
ati
onsi fitsof f
icial
s
appointavotingma jor
ityofa norganiza
tion’sgoverningbodya nde it
heritisabletoimpos eit
swi llon
t
ha torgani
zationortherei sapot enti
alfortheor ga
nizat
iontopr ovidespecifi
cf i
nancialbenefi
tsto,or
t
oi mpos espec i
fi
cfinanc i
alburde nson,thepr i
ma rygovernme nt.Apr i
ma rygove r
nme ntalsoma ybe
fi
na nci
all
ya ccounta
blef orgo ver
nme ntalorgani
z at
ionsthatar
ef isca
llydependentoni t
.

Thenucleus of a financial reporting entity us

uall
yi sapri
mar
y gove
rnme nt
.Howe ver
,a
gove
rnmenta
lorgani
za t
ionothe rt
hanapr i
ma r
ygove rnment(
suc
hasac
omponentunit
,joi
ntvent
ure
,

1
Af undi sc la
ssif
iedasma j
ori f(a)tota lass
e t
s,li
abil
it
ies
,r e
ve nues,ore xpendi
tur
esore xpensesoft heindividua
l
governme nt
a lorente
rpri
sefunda reatleast10% oft hecorres
pondingt ot
a lass
ets
,lia
bil
it
ie
s ,revenues,orexpendi
turesor
expensesfora l
lfundsofthatcat
egory(tot
a lgovernmenta
lortotalenter
prisefunds)
,and(b)t
ot a
la s
sets,li
abi
li
tie
s,revenues
,
orexpe ndit
uresorexpensesoftheindi
vidua lgovernment
alfundore nter
prisefundareatl
east5% oft hecorr
espondi
ngt ota
l
forallgovernmentalandenter
pris
efundsc ombi ne
d.

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ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
j
oint
lygover
nedor
gani
zat
ionsorothe
rs t
andalonegover
nme
nt)s
ervea
sthenuc
leusf
ori
tsown
r
eport
ingent
it
ywhe
niti
ssuesse
par
atefi
nanci
als
tate
ments
.

2.4) C ommon A ccounting C haracteristic of F und T ypes

1. C ommon A ccounting C haracteristics Governmental F unds
 Foc usonf i
sca la c
c ountability
 Me a s
ureandr e portc urrent( exp enda bl
e)f ina ncialr e
sources
 Us emodifieda ccrualba sisofa ccount i
ng
 Ac countfora ndr e portreve nue sa nde xpe ndi t
ures
 Noc api
tala sse t
sorl ong- terml iabili
ti
e sa c count edfori nfunds ;node preci
at
ionre
port
edin
funds
 Budge ta
rya ccount sintegratedi ntot hefundst oac hievelegalbudge t
a r
ycont r
ol
 Re quir
edFi nan cialSt at
eme nts:
 Ba l
a nc eShe et
 St ateme ntofr evenue s ,expe nditures ,andc hangesinfundba lances
 Re conc ili
a ti
onoft ota lf undba lanc esofgove rnme nta
lf undst ot ota
lnetasse
tsof
gove rnme ntalactiviti
e sa tthegove rnme nt -widelevel
 Re conc ili
a ti
onoft otalc ha ngesi nf undba lancesofgove rnme nta
lf undstot
ota
lchange
s
inne ta ssetsofgove r
nme ntala c
t i
vitie satthegove rnme nt-
wi delevel
2. C ommon A ccounting C haracteristics Proprietary F unds
 Focusonope rati
onala ccount abil
it
y
 Me as
ureandr eportec onomi cr es
ources(asinbus i
nessa cc
ounti
ng)
 Usefullaccrualbasisofa c c
o unti
ng
 Accountfora ndrepor trevenue sandexpe nses
 Accountforc apit
alass e
tsorl ong-te
rml iabil
iti
eswithinthefunds;r
epor
tdepr
eci
at
ion
 Budgetar
ya ccountsnoti ntegrat
edi ntot hefunds;s houldusebudgeti
ngforplanni
nga
nd
cont
rolpurpos es
 Requir
edFi nan c
ialSta t
eme nts:
 St a
teme ntofne ta s
s et
s
 St a
teme ntofre venue s,expenses,andc hange
si nnetasset
s
 St a
teme ntofc ashfl ows
3. C ommon A ccounting C haracteristics F iduciary F unds
 Acc ountingf orfiduciaryf undsi ss i
milartot hatforpropr
iet
aryfunds,i.
e.
,ful
lacc
rua
l
accountinga ndfocusonf lowsofe conomicresourc
es
 Capi ta
las s
etsandlong- t
erml iabili
ti
esarerec
ordedinthefunds
,ifappl
ica
ble
 Addi ti
ons( t
one tasset
s)a ndde ducti
ons(fr
omne tass
ets
)arere
cordedins
teadofr
eve
nue
sand
expe nses
 Requi re
dFi nancia
lSt ate
me nts:
 St ate
me ntoffiduciaryne tasset
s;and
 St ate
me ntofcha ngesinf iduci
arynetasset
s

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inc
ipl
esofAc
count
inga
ndFi
nanc
ialRe
por
ti
ngf
orSLGs

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 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s

C hapter T hree
Governmental Operating Statement A ccounts
and Budgetary A ccounting
T opics to Be Discussed:
 ConceptsandRul e
sforRe cogni
tionofRe venue sandExpenses
 Class
ifi
c at
iona ndReporti
ngofRe venuesandExpe ns
esatGove r
nment-WideLe vel
 St
ructurea ndCha ract
eris
ti
c soft heGe neralFund:Cl ass
ifi
cati
ona ndDe sc
ripti
onofOper
ati
ng
St
ateme ntAc counts
 BudgetaryAc counts
 Terminologya ndCl a
ssi
ficat
ionforGove rnme ntalFundBudgetsandAc count
s
 BudgetaryAc counti
ng
 Budgeti
nga nditsusef
ulnessingove r
nme ntorganizat
ion
 Hist
oricalsketchoftheEthiopia
ngove r
nme ntalbudget
 Legalbasisoff ort
hefederalgovernme ntofEthiopia(FGE)a c
counts
 Class
ifi
c at
iono fgover
nme ntalr
eve nuesande xpendit
urewithspeci
alref
erencetoEthi
opi
a

L earning Objectives
Af t
erstudyingthisc hapt
er,yous
houl
dbea
blet
o:
 Explainhowope rat
ingreve nuesa nde xpensesr e
latedt
og overnmenta
lacti
vit
iesar
eclass
ifi
edand
report
edinthegove rnme nt-widef inanci
als t
ateme nt
s
 Disti
nguish,a tthef undl evel,be tweenRe venue sandOt herFinanci
ngSour cesandbe t
ween
Expenditure
sa ndOt herFina ncingUs es
 Explainhowr evenue sande xpe nditur
esarec la
s s
ifie
dintheGe ner
alFund
 Explainhowbudge tarya ccountingc ontr
ibutestoa chi
evingbudgetar
yc ont
roloverr
e ve
nuesand
expendit
ures,includings ucha spectsasr ecordi
ngt hea nnualbudget
;a cc
ounti
ngforr e
venues
;
accounti
ngf orencumbr ancesa nde xpenditur
e s
;a ndaccounti
ngforall
otments
 De sc
ribecomput eri
zeda ccountin gsyst
ems

3.1) C oncepts and R ules for R ecognition of R evenues and E xpenses

 E xchange T ransactions
GASB s tandardspr ovidegui danc ef ora cc ounti
ngr ecogni
ti
onofr e venuesa ndexpe ns
e sont he
accrualba si
si nt hegove rnme ntwi def i
na ncials t
ateme nt
sa ndr evenuesa nde xpendi
turesont he
modi f
ieda ccrualbasisinthegove rnme ntalfundf inancialst
ate
me nts.Re cognit
ionrul
e sf
orexchange
transactions and exchange like transactions –t hoseinwhi chea chpa rt
yr ece
ivesvaluesesse
nti
ally
equaltot heva luegi ven,arege ne ra
ls tar
lightf orwa r
d.Fore xcha nget r
ansact
ions,t
hepa rtysel
li
ng
goodsors ervicesrecognizesa na sset(receivable or cash)andr evenuewhe nthetransact
ionoccurs
andr evenueha sbe ene arned.Thepa rtypur c
ha si
nggoodsors e r
vicesr ec
ognizesa nexpenseor

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rnme
nta
lOpe
rat
ingSt
at
eme
ntAc
count
sandBudge
tar
yAc
count
ing
expendi t
ur ea ndl i
a bi
li
ty(or reduction in cash).Underthemodi fi
eda c
crualbasisofa ccount
ing,ifa
gove r
nme ntalf undpr ovidesgoodso rs ervi
cest oanotherpa rt
yf und;itshouldre cognizeana sse
t
(r
e cei
va bleorc a
sh)a ndar evenuei ft hea ssets(f
inancialresources
)a redeeme dmeasurable a nd
available.I fgove rnmentalfundsr e c
e i
ve sgoodsors ervi
c e
sf rom anotherpart
yorf und,itshould
recogni z
ee xpe nditure
s( note xpens e
)whe nt hefundl iabi
lityha sbee nincurr
ed.I nmos tc ases
,
excha nget r
a nsactionsofgove rnment alfundsr esul
tinme asurableandava i
la
bleassetsbeingre ce
ived
oraf undl iabil
itybe ingi ncurr
edwhe nt het r
ansacti
onsoc cur
sa ndt husr esultini mme diat
e
recogni t
ionofr eve nuesande xpendi t
ur es.Fore xamplet h
eGe neralFunds houl
dr ecognizerevenue
imme di at
elywhe nac it
izenisc hargedaf e eforabuildingpe rmitande xpendit
urewhe napur chase
orderf orsuppl iesha sbeenfil
led.

 Non-exchange transactions
None xchangetransacti
onsarede fi
neda se xternale ve ntsinwhichagove rnme ntgivesorr ec e
ives
valuewi thoutdirec
tlyrecei
vingorgi vinge qua lvaluei ne xc
hange.Non-exchanget ra
ns a
ctionsa re
contrast
edf rom exchangeande xchangel iket ransactionsi nwhiche ac
hpa rt
yr ecei
vesa ndgi vesup
essenti
allyequalvalues.Bytheirnaturegove rnme nt
a lf unds,i
ncl
udingtheGe neralFunda ndSpe ci
al
Reve nuesFun dsa r
emos t
lye ngagedi nnon- exc hanget ra
nsact
ions
.Ac counti
ngf ornon- exc hange
tr
ans act
ionsr ai
sesanumbe rofc onceptua li s
sue s
.Thet woke yconcept
st hata f
fectar esource
recipi
ent’srecognit
ionofr e
venuesa ndr es ourcepr ovi der’sre
cognit
ionofe xpensesore xpendi t
ures
aretime requirements andpurpose restrictions.

T ime requirement r el
atee i
thertot hepe riodwhe nresour ce
sa rerequi re
dt obeus edorwhe nus e
ma y be gi
n.Thus ,t ime r e
qui r
eme ntsde termine t i
mi ng ofr e
ve nue ore xpense( expendit
ure)
rec ogniti
ont hatiswhe thertheseeleme ntss houldber ecognized( r
e cordedint heaccounts)inthe
cur rentperiodordef e
rredtoaf utur
epe riod.Purpose restrictions refertos pe
cifi
cati
onsbyr esource
pr ovidersoft h
epur poseorpur posesforwhi chre s
ourcesa rerequire
dt obeus ed.Forexampl egrant
ma ys peci
fythatresourcescanbeus e donlyt opr ovidetransport
ati
onsf orseni
orc i
ti
zens.Thet i
ming
ofr eve nuerecognit
ionisuna ff
ectedb ypur poser est
rict
ions.Rutherthepur poserest
ri
cti
ons houldbe
cle ar
lyr eporte
da sr es
tric
ti
onofne ta sset
si nt hegove r
nme ntwi des tatementsofne tassetsora s
res er
va ti
onsoffundba lanceinthego vernme ntalfundsba lancesheet.

Forc ertai
nc l
assesofnon- e
xchangetra
nsa
cti
ons,revenueandexpenserecognit
ionmaybede laye d
untilPr ogra
m El igibil
ityRe qui
rementsar
eme t
.Aspe rGASB St a
tementNo.33,E ligibility
R equirements mayi ncludethefoll
owingf
ourgeneralcla
ssi
fi
cat
ions:TimeRe quir
eme
nts;Requir ed
ors peci
fiedchara
ct e
r i
st
icsoftheProgramReci
pient
s;Re i
mburs
eme ntProvi
sions
;andConti
ngenc ies
whi charediscus
seda sfol
lows:

 T ime R equirements–Pr ogramsc anspecifywhe nmone yistobeus ed.Ift

imerequir
ementf
or
(expe ndit
ures)ar
es pecif
iedbyr e
sourcepr ovi
de rorl e
gi s
lati
on,thoseti
mer e
quirement
smustbe
me t.Fore xa mpl
ea ssumet hatinApr il
,as t
atepr ovidesagr anttoac i
tysothatmilkcanbe
boughtf ore achchil
ddur i
ngthes ubsequentsc hoolyea rstar
ti
ngi nSeptember
.Whe nshoul
dthe
gr antberecogniz
e dasr e
venue?Re cognit
ions houldbei nt heperiodofuseorintheperi
odwhen
us eo ft
hefundsisf i
rstpermit
ted.

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ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
 R equired C haracteristics of Program R ecipients –t her e ci
pi e
ntmus tha vet hec ha rac
teri
s t
ics
spe ci
fiedbyt hepr ovi de r.Fore xampl eas tatema ypr ovidef undingonape rs t
ude ntba s
ist o
publ i
cs chool.I nor de rt or e
cogni zer evenueora na s se
tr eci
pientmus tbeapubl ics choola s
definedins tat
es tatue sa ndr egul a
t i
ons
 R eimbursement Provisions –ma nygr antsa ndot he rpr ogr amsa rede signe dtor eimbur sea
des i
gnatedgove rnme ntf ora mount sa ppropr iatelys pe nt
.The s ea rr
a ngeme ntsa r
eof t
enc all
e d
“expe ndit
ure-driven”pr ogr ams .Fort hosegr a nta ndgi ftst hata r
epa ya bleonl yupont he
incurrenceofqua lifyingout layspe rmi ssi
bleunde rt hegr ant ,receivabl esa ndr evenue swoul dbe
recognizedonl ywhe nt hee xpe ndituresha vebe eni nc urred.Fore xa mpl e,a ssumet ha tt
hes t
ate
informsal ocalit
yt ha ti twi llreimbur sethec itygove rnme ntf ormone ypa idtopr ovi demi lkt o
scho olchil
drenwhoc ouldnotot herwisea ffordi t.Ins uc hc ase s
,nor evenuei srec ogni zedunt i
l
themone yiss pent.Thust hee xpe nseshoulde qua lthea mountofr eve nuer e cognized.
 C ontingencies –Re ve nue sple dgedt hatha veac ont inge nc ya tt
ac heda r
enott ober ec
ogni z
e d
untilthec ontinge ncyha sbe enme t.Invol unt arynon- excha nget rans act
i ons,r e
ve nue sma ybe
wi t
h hel
dunt ilas pe cifieda c
tioni st aken.A gr a
ntma ybegi vent obuypa rke qui pme nts
,f or
exa mple,butonl ya ftera nappr opr i
atepieceofl andha sbe ena cquire df orthepa r
k.Unt ilt
hel otis
obtained,ac ont i
nge nc ye xistsa ndt her e venues houl dnotber ec ogniz ed.I fa lsoadonor
indicatedthat$100, 000wi llbedona t
e dtobui lda na dditiont othec it
yl ibrarywhe nfundsa n
equa lamountha vebe enpl edgedbyot hers,tha trec eiva blea ndr evenuewoul dber ecogni zedonl y
afterthe$100, 000ha sbe enr ai
se dfromot he rs.

Allappl
ic
ableprogram eligibility requirements mustbemetbef
orereve
nuescanberecor
dedfr
om
ei
the
rgovernment-
ma ndat
e dnon- exc ha
nget r
ansacti
onsorvol
unt
arynon-e
xchanget
rans
acti
ons
.

C lasses of Non-exchange T ransactions

Foror gani za
ti
ona lpurposes,theGASB c l
assi
fi
eda l
lnon-exc
hanget
rans
act
ionsi
ntof
ourdi
st
inc
t
classifi
c at
ions,eachwithitsownr ulesastoproperr
ecogni
ti
on:
1. Derived T ax R evenues –Exa
mpl
es:Sa
lest
axe
s,Pe
rso
nala
ndCor
por
atei
ncomet
axe
sexc
ise
t
axes,a nds imi l
art axe
sone arningsorcons umption.I naderived tax revenue t
ransa
ction,atax
a
ssessme ntisi mpos edbe c
a usea nunde r
lyinge xcha ngetakesplace.Whe nas al
eoc cursanda
s
alestaxi simpos edorwhe ni ncomei searneda nda ni nc
omet axisa s
sessed.
 A sset R ecognition –peri
odwhe nunderlyingexcha ngehasoccurredorwhe nresour
ces( as
set
s)
arer ece i
ved,whi cheveristhef i
rst
 R evenue R ecognition –pe r
iodwhe nunde rlyinge xchangeha soc curred.Unde rmodi fi
ed
acc r
ua la ccounting,res
ourc e
sa lsoshouldbea va i
lable.

Inge neralrevenuea nda s

setsarere cogni
zedi ntheperiodi nwhic hi nc
omei sea r
nedf orincome
t
a xes.Li kewise,whe nas aleisma de,thegove rnments houldrec ogni
zet her esul
tings a
lestax
revenue.Obvi ousl
y,agove r
nme ntcannotane ntr
ye ver
ytimet hati
nc omei searnedoras a
leisma de
.
Forc onvenie
nc e,recogni
ti
on ofs uchr evenuesi snorma ll
y ma dewhe ni nforma t
ion becomes
availa
ble.As sume,forexample,thatsa l
eswithi
nagove rnme ntamountt o$10mi l
li
onf or2005a nda
salestaxof4pe r
centisasses
sed.Int hepe r
iodinwhi chthes al
esa rema de,thef oll
owinge ntr
yis
requir
e d
.Thea mountsshouldbereportednetofa nyest
ima t
edr e
fundsorunc ollect
iblebalance
s.

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nta
lOpe
rat
ingSt
at
eme
ntAc
count
sandBudge
tar
yAc
count
ing

Government- W ide F inancial Statements J ournals

Re ce
iva bles–Sa lesTax...
......
..
..
..
..
..
...
..
..
..
..
..
..
..
.400,
000
Re venue s–Sa le
sTa x. ..
..
..
..
..
..
...
..
..
..
..
..
..
..
. 400,
000
Tor ec ogniz ea mountofs a
lest
a xt hatwillbec ol
lec
tedinconne
cti
onwit
hsa
les

Intheaboveent
ry,i
f–becaus
eoft henatureofthetaxorasses
sment–cashisr
ecei
vedpri
ortothe
occur
renceoft
heunder
lyi
ngexchange;defe
rredrevenue(l
ia
bil
it
y)isr
ecogni
zedi
nit
ia
lly.La
terwhen
theunder
lyi
ngexcha
ngeoccur
s,theli
abil
it
yi sr
eclas
sifi
edasre
venue.

Forfund–base
df i
nanci
als t
ate
me nt
s ,theaboverul
esarea l
sousedexceptf oronea ddi
ti
onal
re
qui
reme ntt
hatt
heresour
cesmus tbea vai
la
blebe
for
ethereve
nuecanberecognized.Inthatway,
t
heessenceofmodi
fiedacc
rualacc
ou nti
ngisst
il
lbe
ingut
il
iz
eda tt
hef
undle
ve lofreport
ing.

As e
par
ateissu
ea nyt axrevenueifgovernmentof fi
ci
alshavespec i
fi
edtha tacerta
inusemustbe
ma deoftheresources.Forexample,i
nthea bovee ntr
ya ss
umet hatthecitygovernmenthasst
ated
that25perce
ntoft hetaxmu stbeusedforparkbe auti
fi
cat
ion.Thus,$100,000wi l
lhavetobespent
inthisdesi
gnatedf a
shion.Accordi
ngtoSt at
eme ntNumbe r33,s uchpurpos er
e s
tri
cti
onsareonly
dis
c l
ose
di nthefinancialst
ate
me nt
sbyr ecl
assi
fyinga nappropr
iateamountoft hefundbalanc
eor
equityt
odiscl
osetheintendedusage
.Asi ndi
cate
dhe r
e,re
venuerecognit
ionisnotalte
red:

Purpose restrictions do not affect the timing of recognition for any class of transactions. Rather,
recipients of re sources with purpose restriction should report resulting net assets (or equity or fund
balance, as appropriate) as restricted until the resources are used for the specified purpose or for as
long as the provider requires the resources to be maintained intact ( for example endowment
principal.)

Cons e
quentl
y,inthest at
ementofnetasset
sfort
hegove r
nme ntwidefina
nc i
alst
at
ements$100,000
shouldbereport
edint henetass
etssect
ionasres
tri
cte
df o
rpa r
kbe aut
if
ica
tion.Asimi
la
rtreat
mentis
properthebala
nceshee tcr
eat
edaccordi
ngthefund-bas
edfinanci
alstat
ementsexc
eptt
hattheamount
isshownas epara
tefundba l
ancefi
gurerese
rvedforpar
kbe aut
if
icat
ion.

Ifre
ve nu
eisrec
ogni
zeda ndapurpos
eres
tri
ct
ionisnotful
fil
led,t
hemoneywi
llpr
obablyhavetobe
ret
urnedaspert
herequi
reme nt
s.I
nsuchasit
uat
ion,i
fthereturni
sma dei
nas
ubsequentpe
riod,t
he
governments
houldr
ecognizeanexpe
nser
athert
hanarevenuereduct
ion

2. Imposed Non-E xchange R evenues – Exa

mpl
es:Pr
ope
rtyt
axe
s,f
ine
sand pe
nal
ti
es,
f
orfeit
ur e
s.Th esea revieweda simposednon-exchangerevenuesbecausethegove rnment
i
mpos esa na ssessme ntwit
houtexist
enc
eofunde r
lyi
ngt r
ansa
cti
on.Realest
at
eorot herprope
rty
i
sowne da ndapr ope r
tytaxislevi
edeachperi
od.Owne rs
hipisbei
ngtaxedbyt hegovernment
a
ndnotas pecif
ict ra
ns a
cti
on.
 A sset R ecognition –pe r
iodwhe nane nf
orc
eablelegalcl
aim hasari
senorwhe nresour
ces
(assets)a r
erece ived,whichevert
hefi
rst
 R evenue R ecognition –pe ri
odinwhichtheresourc
e sar
er e
quir
edtobeus e
dori nthefir
st

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 32
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
pe
riodt
hattheuseoft
her
e s
ourceisper
mit
ted(f
orexampl
e,forpr
ope
rtyt
axes
,theper
iodf
or
whichl
evi
ed).I
ngover
nmenta
lfunds,t
hecr
it
eri
onofavai
la
bil
ityf
orus
emustbeme t
.

Be c
ausethegovernmenti mpos ess uchta xes,theperiodf orwhi chthepr oceedsa retobeus edisnor mal
ly
speci
fie
d.Thepe ri
odofus eidentifie
st hepe r i
odofr evenuer ecogniti
on.I fat axi sasse
ssedandus ageis
notall
owe dforfiveyears,de fer
re dreve nuei srecognize duntilthet i
mer estrict
ionpa s
ses.Forpr oper
ty
taxes
,whicha r
ethelargestsour ceofi nc omef orma nygove r
nme nts,revenuer ecognit
ionisforthepe r
iod
forwhichthetaxesarelevied.As sume ,f ore xamplethatac i
tya s
ses s
es$900, 000i nproper
tytaxesont he
fir
stdayoft hefisc
alye ara nde xpe ctst oc oll
ect$830, 000.Thei nit
ialent
r yf oreit
hers etoffinancia
l
stat
ementswouldbea sfoll
ows :
Propert
yTa xRe ceivables...
...
..
..
..
..
..
..
..
...
..
..
...
...
..
..900,000
Allowancef orUnc ol l
ectibleTa xes.
..
..
...
..
..
...
...
..
.. 70,000
Re venue s–Sa lesTa x.
...
..
..
..
..
..
...
..
..
...
...
..
.. 830, 000
Tor ecorda ssessme ntofprope rt
yt axesforthec urr
entye ar

Ac ommons etofr ecogni t

ionr ulesappliest other emaini
ngt woc lassesofnon- exchanget ransacti
on;
gove rnme ntma ndateda ndvol untar
ye xcha nge.Ana s
set(ar e ceivableorc as h)isrecognize
dwhe na l
l
legibili
tyr equir ementsha vebe enme etorwhe nc ashisr eceive d,whi che veroc cur
sf ir
st.Fore xample
althoughc a shha snotbe e nr eceivedfromagr antor,whe napr ogr amr ec i
pientme et
sma tchi
ngi mpos edby
thegr antora ge ncyi nor de rtobe c
omee li
gibleforas oci
alservic esgr ant,receivable(
Duef rom( Grantor)
)
woul dber ec or
de d.Re ve nue ss houldber ecognizedonl ywhe na lleli
gibi l
it
yc r
iteri
ahavebe enme t.Unt i
l
eligibil
it
yha sbe ene sta blished,s omede gre eofunc ert
aintye xis t
stha tpr ecludesrecogniti
on.Thus ,in
gove rnme nt-wi def inanc ials ta
teme ntsrevenuer e
c ognit
ionoc cursa tt het imeofe l
igibil
itye veni fthe
mone yisa c tuallyreceive de ar
lier.Forfundf i
nanc i
als t
atement s,thea mount smus tals
obea va il
ablefor
revenuer ec ogni ti
oni nt hes a mema nnerasmodi fi
eda cc
rualac counting.I fcas hisrecei
vedi nt heperiod
priort ointe nde dus e( t
ha t,t hereisat i
mer e
str
iction)orbe foree li
gibilit
yr equirementsha vebe e nme t
,
defer r
edr eve nue sshouldber eportedratherthanr evenue s
.Int hepe r
iodwhe nthetimer est
rict
ione xpires
,
thea ccountDe fe rr
edre ve nue swi l
lb edebit
e dandRe venueswi llbec redi t
ed.

3. Government Mandated Non-E xchange T ransactions – gr

ant
stha
tar
econve
yedf
rom
highergovernmenttolowergove rnme nttohe l
ppa yforthec ostsofr e
quire
dpr ograms( e.
g.
cert
aineducati
on,soci
alwelf
are,transport
ationser
vice
sma ndat
e da ndfundedbyahi gherlevel
ofgove r
nment).I
fas t
at
especi
fi
e sthatac i
tymus tcr
eat
eas hel
te
rf orhome l
essandthenprovides
agrantof$400,000tohelpdef
rayt hec ost
,thatmoneyshouldberecordedusingthesepres
c r
ibed
rule
sbe causethefina
lgoalfort hemone yha smandatedbyt hes ta
te.Cit
yof fi
cial
sha veno
choice;t
hestat
egove r
nmenthasre qui
re dt
hes hel
te
rtobec ons
tructedandprovidedpartorallof
thefunding.

4. V oluntary Non-E xchange T ransactions – i

nthi
sfi
nalc
las
sif
ica
ti
on,mone
yha
sbe
en
conveyedwil
li
nglytothesta
teo rloc
algover
nme ntbya nindividual
,anothergover
nment,oran
organiz
ati
onusual
lyf
orapa r
ti
c ula
rpurpos
e.Examples:gra
ntsa ndenti
tle
me ntsfr
omhigherlevel
ofgove r
nmentandc e
rtai
np r
iva t
edonati
ons)
.Fore xample ,assumethatas t
ategra
ntsac it
y
$300,000tohelpimprovereadingprogra
msi nitsschools.Unl es
sthes ta
teha smandate
da n

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 33
 Gove
rnme
nta
lOpe
rat
ingSt
at
eme
ntAc
count
sandBudge
tar
yAc
count
ing
i
mproveme ntint heserea
dingprogr
ams,thisgrantwouldbeacc
ounte
dfora
savolunt
ary
e
xchanget rans
action.Thede c
isi
onhasbe e
nma det ha
tuseofthemoneywil
lpr
ovi
dea n
i
mportantbenef
itbutnogovernmentr
equi
remente
xist
sledtot
hec
onveya
nce.

Forbot
hgove rnme ntma ndat
ednon-e
xchanget
ransac
ti
onsa ndvol unt
arynon-exc
hangeTra
nsactions:
 A sset R ecognition –peri
odwhe na
lleli
gibi
li
tyre
quireme ntshavebeenme torwhenre
s ources
a
rer eceive d,whichi st
hefir
st
 R evenues and E xpenses or E xpenditures R ecognition – period whena l
le l
igibili
ty
r
equireme ntshavebe enmet

Apa r
ti
cul
a rnon-
exchangetra
nsact
ionmayleadtorecognit
ionofr
eve
nuesi
noneper
iodi
nthegover
nment
widest
ate
me ntofacti
vit
ies,b
utreport
edasdef
e r
redrevenuesi
nagover
nment
alf
undbec
ausei
tisdeemed
nott
obea vail
abl
etopa ycurr
entperi
odobli
gat
ions.

3.2) C lassification and R eporting of R evenues and E xpenses at the

Government–wide L evel
TheGovernment-W ide Statement of A ctivities displa
yst hee xpenseandrevenueofe achf unct
ion
orprogramc ompri
singthegovernme nta
la ctivitiesoft heg ove r
nment.Thenetexpe nseornetrevenue
ofeachbus i
ne s
s-s
egme ntanddis c
retel
ypr esente dc omp one ntunit
sisreport
eds eparat
elyfrom the
func
tions(pr
ograms )ofthegove
r nme nt
ala ctiviti
es .Ac c
ordingt oGASB,r eport
ingt henetexpenseor
netrevenuef or
ma t“identi
fi
esthee xtentt owhi c he a
chf uncti
onofgove rnmentdr awsf rom the
generalr
evenuesofthegove r
nme ntoriss elffinanc ingthroughf eesandint
ergovernme nt
alaid.”

R eporting Direct and Indirect E xpenses

Exc eptfore xtraor
dina r
yors pecialexpense
s,expensesshoul dber eportedbyf uncti
onorpr ogram.
Direct E xpense –t hosetha ta respecif
ica
llyass
ociate
dwi t
ht hef unctionorpr ogra
m –s houldbe
reportedont hel i
nef orthatf uncti
onorpr ogra
ms .Indirect E xpenses –t
hosetha tar
enotdi rect
ly
linkedtoa ni dent
ifi
ablef unctionorpr ogram –canber eportedi ntheva ri
etyofwa ys
.A t ypi
cal
indirec
te xpens eisinteres
tonge ner
allong-t
ermliabi
lit
ies.Inmos tcases,i
nterestongenerallong-
terml i
abi l
it
iess houldber eportedas epara
teli
nei te
mr at
he rthanbe inga l
locatedtofunct
ionsor
pr ogr
ams .

Forc api
tala s
set
sthatarecle a
rlyi de n
t i
fiedwithaf unc t
ionorpr ogram,depre
c ia
ti
one xpensef
ort hos e
assetsshouldbei nc
ludedi ne xpe nseoft hatfunc t
ionorpr ogra
ma sadi recte xpe nse.Si
mi larly,
depreciat
ione xpensef ori nfrast
ruc tures houldber eport
eda sadi r
ecte xpenseoft hefunc t
ion
responsi
blef ortheinfr
a st
ructurea s s
e ts(forexampl e,publ i
cwor ksortransportation) .Depr
e c
ia t
ion
expensefors haredassetsshoul dbea ssociate
dt of unctionona ppropr
iat
eba sis(fore xample
,s quar e
footageofbui l
dinguse).Ifagove rnme ntoptstorepor tunall
oc at
eddepreci
ationexpe nsesassepa r
a te
li
nei tem,i tshouldindicatet hatt hea mountr eportedo nthatlinedoe snoti nc ludede pr
e c
ia t
ion
expensere port
edaspa r
tofdi recte xpe nseoffunc t
ionsorpr ograms .

Toa
chi
evef
ullc
ost
ing,s
omegove
rnme
nta
ll
oca
test
oot
herf
unc
ti
onsorpr
ogr
amsc
ert
ai
nce
ntr
al

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 34
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
administr
ativecos t
st hatothe rgove r
nme nt
sma yr e
portint hege neralgove r
nme ntf unct
ion,t he
all
ocatede xpens
e sshouldber eportedinas e
pa rat
ec ol
umnf r
omt hedirecte
xpe nses
,s othatthedi r e
ct
expensewi llbemor ec omparablewi ththedir
e ctexpensesofs i
mi l
arfuncti
onsofot hergove rnme nts
.
Onot herha nd,ifagove rnme ntregularl
ya s
signsa dministr
ati
veove rheadcost
st ofunctionst hrough
aninternalservi
cefundorot herbill
ings,iti
snotr equiredtoe l
iminatethos
ec ostsfromt hee xpe nses
offunctionsort ore portthe
mi nas epar
atec ol
umn.Ra therthegove r
nme ntshoulddi sclosei nt he
notestothef i
nancialstat
ement sthatsuchoverhe a
dc hargesareincludedaspartoffunc t
ion/pr ogram
dir
ectexpe nse.

Program R evenues and General R evenues

Progr
amr evenuesarere
port
edinthef unct
ions/
progr
ams ec
tionofthest
at
e mentofact
ivi
ti
es,whe
re
theyre
ducethene te
xpenseofeac
hf uncti
onorprogra
morpr oducenetr
evenue.Gener
alre
venuesa
re
notdir
ect
lylinkedtospeci
fi
cfunct
ionorpr ogr
ama ndthusa
rer e
port
edont hesepa
rat
esect
ionatt
he
bott
omofthes ta
tement.

Thr e
ec at
egor i
esofpr ogramr evenuesa r
ere port
edint hestat
ementofact
ivi
ties:charges for services,
operating grants a ndcontributions a ndcapital grants and contributions compr isepr ogram
revenues.C harges for services includec hargestoc ust
omersorotherforbot hgove rnme ntaland
businesstypea ct
iviti
es.Ch a
rgesf ors ervices
,wi thi nthegovernmentala ct
ivi
tiesc ategor y,a re
exchangetrans a
c t
ionsa ndi ncludefe eschargedf orsuc hit
emsaslice
nsesandpe r
mi t
s( fore xa mple,
businessli
ce nsesa ndbuildi ngpe rmits)andope ra
ti
ngs pec
ialas
sess
me nt
ss omet ime sc ha rgedf or
servic
esprovi dedouts i
det henor ma lservi
cea reaorbe yondthenor
ma ll
evelofs er
vices.

Grants and contributions a ndot he

rnon- exchanger evenuesr estr
icte
dbyot hergovernments
,
orga
nizati
ons,andindividualsfortheoperating purpose ofpar
ticularfunct
ionorprogr
ams houldbe
re
porte
di nt hes e
paratec olumnf rom thoser est
ri
ctedf orcapital purposes.GASB require
st ha
t
multi
purposegrantsandc ontr
ibut
ionsber eportedaspro gra
mr eve nuesiftheamountsres
tric
tedto
eachprogrami ss pecia
llyi denti
fie
di ne i
thert hegranta wardorgr a
nta ppl
ic
ati
ons.Otherwise
,
multi
purposegrant
sa ndc ontri
buti
onsshouldber eport
eda sgeneralrevenue.

Ea r
ningf rom endowme nts,pe r
ma nentfunds ,orothe rinvestmentsthatar
er e
str
icte
df oraspe c
ifi
c
purposei nthee ndowme nto rperma nentfundc ont
ra c
tora greementshoul
dber eportedasprogra
m
revenuei nt hea ppr
opr ia
tegr a
ntsa nd c ontr
ibution c a
tegory.Unr e
str
ict
ede arni
ngsf rom such
resourc
e sshouldber eporteda sgene ra
lrevenue .Ina ddit
ionalltaxe
s,eventhos
espe cif
iedbylawfor
apa rt
icularuse( forexa mpl e,mot orvehicleful lt
a xesthatc anonlybeus edforr oadandbr i
dge
purposes),shoul
dber e porteda sgeneralre
ve nue.

R eporting Special Items or and transfers

Accor
dingt
oSt at
ementNo.34,ext
raor
dinaryit
emsandspec
ialit
emsmustbere
por
tedasse
parat
e
l
ineit
emsbe low Ge
nera
lRe ve
nueinthes tat
ementofac
ti
vit
iestodi
sti
ngui
sht
hes
enonrec
urri
ng
i
temsfrom normalr
ecur
ringgener
alrevenues
.Separ
ater
eport
ingofsuchit
emsse
rvest
oinform

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 35
 Gove
rnme
nta
lOpe
rat
ingSt
at
eme
ntAc
count
sandBudge
tar
yAc
count
ing
cit
izensa ndot he rre portuse
rwhe ngove rnme nte ngagei ntheunus ualpr a
cticeofba l
ancingthe i
r
budge tbys el
li
nggove rnmentasset
sorothers imilarpracti
ces.E xtraordinary Items ar
etransa
c t
ions
ore ve ntst hata rebot hunusuala ndinfrequenti noc c
urre
nc e.Special Items a reitemswi thi n
ma nage me ntcont rolt hatmaybee it
herunus ualinna tureori nfrequentinoc currenc
ebutnotbot h
(e.
g.one -shortr eve nuef r
omt hesaleasignificantgove r
nme ntalas s
et).Ext r
aordinar
yitemss hould
ber eporte dast hel astitem onthes ta
teme ntofa ct
ivit
y;spe cial,it
ems houldber eport
edbe fore
extra
or dinaryite ms .Spe ci
alit
emst hatar
ebe yondma nageme nt’
sc ontrolshouldbedi scl
osedint he
notesint hef i
na ncials ta
tements.

Otherite
mst hatshoul
dber eport
edont heseparateli
nesbelowGe ne r
alRe venuearecont
ributi
onsto
theprinci
pala mountofe ndowme ntsa ndpe rma nentfundsandtransfer
sbe tweenfundsre por
tedas
partofgove rnmentalactivit
iesandf undsr eport
e daspa rtofbus i
nesst ypea ct
ivi
ti
es.I nt
erf
und
tra
nsacti
onsbe tweengove rnmentala ndbus inesstypea ct
ivit
ie
stha tinvolvethes al
eofgoodsor
servi
ce(sucha sthes al
eofwa terfrom ut i
li
tye nterpr
isefundtot heGe neralfund)asreportedas
progra
mr evenuea ndexpense,notastr ansf
ers.

3.3) Structure and C haracteristics of General F und: C lassification and

Description of Operating Statement A ccounts and Budgetary A ccounts
TheGe neralFundha slongbe enthea ccountinge nti
tyofas t
a teandlocalgove rnme ntsthatac counts
forc urrentfinancia
lre s
ourcesrai
sedande xpende dforthecor egove r
nme nta
ls ervicesprovidedt ot he
pe ople.General F unds ar
es ometime sknowna sOperating F unds orC urrent F unds;t hepur pos e
,
nott hena mei sthetruetestofident
ity.Thet ypicalgove r
nme ntunitcane nga gei nma nya ctivit
ies
tha tforlega landhistor
ica
lr ea
sonsaref inancedbys ourcesot herthanthosea va i
labletotheGe neral
Fund.Whe neverat axorot herrevenues ourceisa uthori
z e
dbyal egisl
ativebodyt obeus edf or
spe ci
f i
edpur poseonlyagove r
nme nt
aluni tava i
li
ngi t
se l
foftha tsourcema yc reateSpecial R evenue
F und inor de rtobea blet
ode mons t
ratet hatallrevenuef r
omt hatsourcewa susedf orthes pec i
fied
pur poseonl y.Ac ommone xampleofSpecial R evenue F und i soneus edtoa ccountf orstat
ega soline
taxr eceiptdi s
tri
butedtoal oca
lgovernme nt,inma nyc ases;theus eofthismone yi srest
rict
edt ot he
construction and maintenance of street, high ways, a ndbridges.Thea ccountings tructure
spe ci
f i
edf orSpe ci
alRe venueFundsbyGASBs t
andardsisi de nt
ica
lwi ththa tspec i
fi
edf orge neral
funds .

Governmental F und Balance Sheet and Operating Statement A ccounts

Itshouldbee mphasiz
edt hatthegenera lfund,speci
a lrevenuef unds,anda llotherf undsc la
s s
ifi
eda s
governme ntalfundsaccountforonlyf inancialres
ourc es(cash,recei
vable s
,ma r
keta blesecurit
iesand,
ifma terial
,pr epai
di temsa ndinve ntories
).Ec onomi cr esources,s ucha sl a nd,bui ldings,a nd
equipment sutil
izedinf undope r
ations ,arenota ccountedf orbyt hes efundsbe c ausetheya r
enot
norma l
lyc onvertedintoc ash.Similarly,thesecategoriesoff undsa c
c ountf oronl yt hoseliabil
it
ies
incurr
edf ornor maloperati
onsthatwillbel iquidat
edbyus eoff unda s
s ets
.Ge nera lca pi
talasset
sa nd
generallongt er
ml ia
bil
itiesarere
por t
edi nthes ta
teme ntofne tasset
satt hegove rnme nta
lwidel evel.

1. Balance Sheet A ccounts

Compi
le
dBy:TheG&NPAc
count
ingI
nst
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tor
s 36
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
TheA rithmetic Difference bet
we ent hea mountoff inanc
ialresourcea ndt heamountofl i
abi
li
ti
es
recor
de dinthefundi st heF und E quity.Re s
identsoft hegovernme ntalunithavenolegalclai
mon
anye xcessofliquida ss
e t
so vercurrentl i
abil
iti
e s
;the r
efor,thef unde quitynota na
logoustothe
capit
a la
ccountsofinve storsownede ntity.Account si
nt hefunde quit
yc ategoryofgenera
lfundsand
speci
a lr
evenuefundsc onsist
sofreservea ccountsestabli
shedtodisclosethatporti
onoftheequit
yare
nota vai
labl
efora ppr opria
tions
;thepor ti
onofe quit
ya vai
labl
ef ora ppropriat
ionisdis
close
di nan
accountcall
edF und Balance ( a
lsor e
fe r
redtoa sUnreserved F und Balance) .

2. Operating Statement A ccounts

Ina ddi
t i
ont otheba l
anc es heeta ccounts,theGe ne r
alFunda nds pecialreve nuef undsa ccountf or
financ i
a lact
ivit
iesdur ingaf i
scalye arinope r ati
ngs tat
e menta ccountsc l
assifieda sRevenues, Other
F inancing Source, Expenditures, and Other F inancing Uses. R evenue isdefine dasi ncreas
esi nfund
financ i
a lres
ourcesot he rthanfromi nter
fundt ransf
ersa ndde bti s
suepr oceeds .Trans f
e r
sintoaf und
andde bti s
suepr oce e
dsr e c
e i
vedbyaf unda rec la
ssifieda sOther F inancing Sources oft hef und.
Ac c
ount ingstandardss pec i
fytha tther e
ve nue sofa llgov ernme ntalfundtype sa reber ec
ogni ze
don
themodi f
iedaccrualba sis.Be c
aus etheope rationsofgove rnme ntalfundsares ubj e
c ttode t
ai
le dle gal
re st
rict
ions,go vernme ntalfundr evenuess houl dber ecognizedi nt hefisca
lye arinwhi cht heya re
ava ila
blet of i
nanc eexpe nditures.I naf ewj ur i
sdict
ionsla wsr equirethatta xe sbec ollec
tedi nt he
ye arbe foretheye arinwhi chthe ya reava il
a bletof inancee xpe ndit
ures.Ins uchj uris
dict
ions,t ax
col l
e c
tionss houldbec re
ditedt oDe fer
redRe venueswhe nc ashi sdebit
ed;i nthef oll
owingye ar
De f
e r
redRe venue sshoul dbede bi t
eda ndre ve nueshoul dbec redited.

E xpenditure isatermt ha treplacesbotht hetermscosts and expenses us e dina c

count ingforprofit
-
seekinge nt i
ti
es.E xpenditures a redefineda sde c r
easei nfund financial resources ot hert han
throughint er
fundtransfe rs
.Interfundtransfersoutofaf u nda r
ec l
assifi
eda sOther F inancing Uses.
Unde rthemodi f
ieda c
c rualbas i
s,expenditureisrecognizedwhe nal iabi
lit
yt obeme tf romf undas s
et
isincurr
e d.Itisimportantt onot ethatana ppropri
ationisc onsi
de redtobee xpendedint hea mountof
al i
abili
tyi ncurr
edwhe therthel iabil
it
yi sfors al
ari
e s(ane xpense),fors upplies(acur rentass
et),or
forland,bui l
dings,ore quipme nt( l
ong-l
ive dcapit
ala sse
ts).Ofc ours e
,a tthegove r
nme nt -
widelevels
suchi t
emsa ssala
riesandut il
itiesa r
erecordede it
hera sexpe ns
esr atherthane xpendi
ture s;it
emss uch
ass uppli
e sma yber ecor dede it
he rasexpe nsesora sset
sa tyear-e nd.Ca pitalasset
sa rer ecor
deda s
assetswhe na cqui
reda nda ree xpenseda sthec api
talasset
sa rede preci
a t
ed.

Ane xa
mpl eoft heus eoft ransfe ra ccountsoccursinthosej uris
dicti
onswhe reapor tionoft het axes
recognizeda srevenuebyt heGe ne r
alFundofauni tist ransfer
redtoade btservi
c ef undt hatwi l
l
recorde xpendit
uresf orpa yme ntofi nter
estandpr inci
pa lofge ne r
alobligati
onde bt.TheGe ner
al
Fundwoul drecordthea mount str ansfer
redasInterf
undTr ansfer
sOut ;theDebt Service F und woul d
recordthea mountr eceiveda sI nte rf
undTr ansfe
rredIn.Thus ,useofthet ransf
erac countsa chieves
t
hede s
iredobj e
c t
ivethatr evenuei srecognize
di nthef undt hatlevie
dt hetaxes,ande xpenditureis
recognizedi nthef undt hate xpe ndsther evenue.Other F inancing Sources a ccount sandOt her
FinancingUs e
sa c c
ount sa rec los edtoFundBa l
ancei nama nne ridenti
c a
lwi t
ht hec losi
ngof
Re venuesandExpe ndit
ure s
,buta r edis
closedseparate
lyi ntheSt ate
me ntofRe venue,Expe nditure
s,
andCha ngesinFundBa lances.

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le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 37
 Gove
rnme
nta
lOpe
rat
ingSt
at
eme
ntAc
count
sandBudge
tar
yAc
count
ing

3. Budgetary A ccounts
Thef actthatbudgetsa r
el egallybindi
ngupona dministr
a t
orsha sledt othei ncorporat
ionoft he
budgetaryaccountsint heGe neralFund,a ndinSpecial R evenue F unds andallotherfundsre quir
ed
bys t
atelawstoa doptabudge t
.GASBSt at
ementNo.34r e
quiresthatabudge tt oa c
tualcompa ris
on
schedulebeprovidedf ortheGe nera
lFunda ndeac hmajor Spe c
ialRe venueFundf orwhichabudge t
islegallyadopted.St ate
me ntsNo.34r ecomme ndsthatt hesesc hedul
esbepr ovideda sre quir
ed
supplementar
yi nforma ti
on( RSI ),whichs houl
dbepl acedi mme di a
telyfoll
owi ngt henotest othe
fi
nanc i
alstat
eme nts
.St ateme ntNo.34a l
soprovi destheopt i
onf orgove r
nme ntstot hebudge tar
y
compa ri
soninformationi nabudge t
aryc ompa r
isons t
ateme nt
,as tatementofr evenues,expenditures
andc hangesinfundba lance– budg et
sa nda c
tua l
,whi c
hwoul dt henbepa rtoft heba s
icfinancial
stat
eme nt
s.

Thebudge ta r
yc ompa r
isons chedul
esmus tpr ese
nta tminimum s epar
atecol
umnsf orbot ht he
original
lya doptedanda me ndedbudgetsandf oractualamountsofi nfl
ow,outf
lows,andba la
nc es
.
Thepr e
sentati
onoft heva r
ianc
ec olumnisencourage dbutnotrequir
edbyGASBs t
andards.Inorder
toa c hi
eveme ani
ngfulbudg et
a r
yc ompari
sons,thea c
tualamount sinthebudgeta
ryc ompa r
isons
sche dul
es houldber eportedus ingthegove rnme nt’
sbudge t
a r
yba sis
.Somegove r
nme nts
,f or
exa mple,budge tthe
irrevenuesont hecashbasis.Iftheactualcolumnofthebudgeta
ryc omparison
sche dul
e(or ,st
atement)usesanon- GAAPbudge ta
ryba si
s,sucha scashbasi
s,t
hecolumnhe adings
shoul dsoindicate
.

Budge t
aryprac t
ic
esofagov ernmentma ydi f
ferfrom GAAPa ccount
ingpr act
icesinr espect
sot her
thanba s
is.GASB s t
a ndardsidenti
fytimi ng,e nti
ty,andpe r
specti
vedi ff
erences.GASB s tandards
requir
ethatthea mount sshowni ntheAc t
ua lc olumnofthebudge tar
yc ompa r
isonschedul econform
ina l
lrespectswi t
hpr ac
ticesusedt ode velopt hea mountsshowni nt heBudge tcolumnsoft he
schedul
e,s othe r
ei sat ruec ompa ri
son.St anda r
dsfurthe
rr equir
et hateit
heront hef aceoft he
budgetar
yc ompa ris
onoronas epar
a t
es chedulethea mountr epor
t e
di nAc t
ualc olumnoft he
budgetar
yc ompa ri
sons che d
ulemus tber econc il
edwi t
hGAAPa mount sshowni nthes tate
me ntof
revenues
,expe ndi
ture,andc hangesinfundba l
anc e
s.

Inor de
rt opr ovidethei nforma t
ionne ede dt opre par
ebudge tsa ndt hebudge t
aryc ompa ri
son
schedul
es(ors t
atements)a ccount ings ys
tem off undsf orwhichbudge tsarele gall
ya doptedi ncl
ude
Budgetary A ccounts,ina dditi
ont othenor ma lbal
anc esheetandope ra
tingstateme ntaccounts.Only
thre
ege ner
all edge rbudge ta
r yc ont r
olaccounta r
ene e
dedi nthege neralfund( andot herf undsin
whichbudge ti sa dopted)t opr ovidebudge t
aryc ontr :Estimated Revenues, Appropriation, and
ol
Encumbrances.Subs i
diaryl e
dge ra cc
ountss houldbepr ovidedinwha teve rdetailisrequir
edbyl aw
orsoundf i
na ncialadminis t
rationt os upporte achoft hethreecontrolac c
ounts .Budge t
edi nter
fund
tra
nsfer
sandd ebtproceedsmus tber ecor
de dint woa ddit
ionalbudgetar
yc ontrola c
c ount
s;Es ti
ma t
ed
OtherFinancingSour c
esa ndEs t
ima te
dOt he rFinancingUs es.Thiscontrolac countsshoulda lsobe
support
edbys ubsidia
ryde tai
la cc ountsasne eded.

TheBudgetary A ccounts ar
ea l
lte
mpora
rysubf
undbal
anceacc
ount
sa ndli
ketheOperating
Statement A ccounts a
recl
osedtoFundBal
anceatye
ar-
end.Compa
ringtheac
tualR evenues

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le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 38
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
accountba lancet ot heircorrespondi ngE stimated R evenues accountba lancepr ovide sbudgetary
controlove rr evenue s
.Si milarly,c ompa ri
ngt hea ctualE xpenditures ac countba l
a nc eplusthe
E ncumbrances A ccount ba l
anc e( esti
ma ted budge t
arya mountf orgoods oror der)t ot he
A ppropriations accountba lance( l
egalauthori
zati
onst oincurexpe nditure
s)pr ovide sf orbudgetary
controlovere xpenditures.
 Ba lanc eShe etAc c
ount sa repe r
ma nentaccountsa ndincludeFundAs se
ts,FundLi abil
iti
es
andFundBa lanceAc count s
.
 TheFundBa lanc eAc count sarec l
assif
iedfurtherint
otwoa ccounts:Re servedFundBa lance
andUnr eser
ve dFundBa l
a nce.
 Budge taryAc c
ountsa ndOpe r
ati
ngSt at
eme ntAc count
sa retempor arya ccountsa ndcl
o se
da t
theye ar-e
ndt oUnr eserve dFundBa lanceAc counts.
 Ope rati
ngSt a t
e mentAc c ountsincludeRe venue s
,Expe nditures,Ot herFi nanc ingSour ces
(OFSs ),andOt herFinanc ingUs es(OFUs )
 Budge taryAc countsinc ludeEs timatedRe venue s
,Appr opriat
ion,Enc umbr anc e,Estimated
OFSs ,a ndEs ti
ma tedOFUs

3.4) T erminology and C lassification for Governmental F und Budgets and

A ccounts
Budge t
sa stheya r
ei ncorpora
tedinlegaldoc ume nt
sandi nfinanci
alre portsr
equire
df orconformity
wi t
hGAAPma ybede scri
beda slegal
lya pprovedpla nsoff i
nancialope rat
ionsembodyi ngthe
authori
za ti
onofe xpenditure
sf orspe
c i
fi
edpur posestob ema dedur i
ngt hebudgetpe ri
oda ndthe
proposedme a
nsoff inancingthem.Thes eque nceofbudg etpr epar
ati
oni npract
iceisoftenthesame
asthes eque nceinthepr ecedi
ngs e
ntence:E xpenditures are planned first;t
henplans are made to
finance the expenditures.

C lassification of appropriations and E xpenditures

Re c
alltha ta na ppr opr i
ati
on,whe ne nac t
edintol a
w,i sa na uthori
za t
iont oincuronbe ha l
foft he
governme nt aluni tliabi l
it
iesforgood s,se r
vices,andfacil
itiestobeus edf orpur pose
sspec i
fie
di nt he
appropri
a tionor dina nce,ors ta t
ute,ina mountsnoti ne xcessoft hoses pe ci
fiedfore a
c hpur pos e
.
Whe nl i
a bili
tiesa uthor i
zedbya na p
propr i
ati
onha vebe e ninc urre
d,t hea ppropri
at
ioniss aidt obe
expended.Thusbudge t
eda ppropriat
ionsa re oftenc alle
d E stimated E xpenditures,a nd t he
appropri
a tionbudge tisc al
ledt heE xpenditures Budget.Ac cordingtot heGASBTr a
nsfer,Re venue,
Expe ndi
tur e,ande xpe nseAc countCl assifi
cat
ionsPr i
nciple,e xpendituress houldbec l
assifi
edby( 1)
fund,(2)f unc tionorpr ogram,( 3)o rganizat
ionuni t
,(4)a ct
ivity,(5)c hara ct
er,and(6)obj ect.The
GASBCommonTe rminologya ndCl assif
icat
ionpr i
ncipl eshoul da ls
ober ecall
eda tthistime .It
providest hatac ommont ermi nologya ndc la
ss i
fi
cati
ons houldbeus edc onsiste
ntl
ythroughoutt he
budge t
,thea c count s,a ndthef inancia
lre port
sofe achfund .

1. C lassification by F und
Thepri
ma r
yc l
ass
ifi
cat
ionofgover
nmentalexpe
ndit
ure
sisbyf und,s
incefundsarethebas
icfis
cal
andacc
ounti
ngenti
tyofagovernment
alunit
.Withi
neachfund,theot
herfi
vec l
ass
ifi
cat
ioni
temized
i
nt hepre
cedi
ngpa r
agraphar
eus e
dtof aci
li
tat
etheaggr
egati
ona ndanal
ys i
sofda t
atome etthe

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le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 39
 Gove
rnme
nta
lOpe
rat
ingSt
at
eme
ntAc
count
sandBudge
tar
yAc
count
ing
obj
ect
ive
soff
ina
nci
alr
epor
ti
ng.

2. C lassification by F unction or Program

TheGASBdi s
ti
ngui s
hesbe twe enf unc t
ionsandprogramsinthefollowingma nner.F unctions gr
oup
relateda c
tivi
ti
est hata rea ime da ta ccomplishi
ngama j
ors erviceorr egula
toryr e
spons ibi
li
ty.
Exa mpl esofF unctional C lassifications c
ommonl yfoundare
:
 Ge neralgove rn me nt  Hi ghwaysands tr
e et
s
 Publ i
cs afet
y  He alt
handwe lfare
 Publ i
cWor ks  Cul t
ureandrecreation
Programs a regroupofa ctivities,ope rat
ions,ororgani
zati
ona lunitsthata r
edi rectedt othe
attainme ntofspecifi
cobj ec t
ive s.Thebudge tcanbesumma r
izedaccordingtothefollowingProgram
C lassification:

 Poli
cyfor
mulati
onandAdmini
st
rat
ion  Trans
port
at
ion
 Prot
ect
ionofPers
onsandPr
oper
ty  Socia
lenr
ichmentopport
uni
tie
s
 Envir
onmenta
lProte
cti
on  Physi
calr
esour
cedevelopment

3. C lassification by Organization Unit

Cla
ssif
ica
ti
onofe xpe ndit
uresbyorganization unit i
sconsider
ede sse
ntia
ltoma nagementc
ontr
ol,
as
sumingt he or ga nizat
ionalstr
uctur
e ofa gi ven governmentalunitpr ovidesc l
earli
nesof
r
esponsi
bil
it
ya nda uthorit
y.Somee xamplesofor ganizat
ionunit
sthatmightbef oundinoneci
tyar
e:
 Pol i
c eDe pa rt
me nt  Ci tyAt t
orney
 Fi r
eDe partme nt  Ci tyClerk
 Bui ldingSa fetyDe part
ment  Pe rsonnelDepartment
 Publ icWor ksDe pa r
tment  Pa rksandRe creati
onDe par
tme
nt

Thekeydistincti
onbe tweenclassi
fi
cat
ionofe xpendi
tur
esbyor gani
zat
ionunitandc l
ass
ifi
c a
ti
onby
pr
ogramorf unc t
ionisthatres
ponsibi
li
tyforade par
tmentisfixe
d,whereasanumbe rofdepart
me nts
ma ybeinvol vedint hepe rf
ormanceofapr ogram oraf uncti
on.Ma nagementcontr
olwi thi
na
depar
tment,a ndr a
ti
ona lal
locat
ionofr e
sourceswi t
hinthegove r
nmentalunit
,bothr e
quiremuc h
morespeci
fici dent
ifi
cati
onofe xpendi
tur
e s(
andc ostsandexpenses)t
hani spr
ovidedbyt hema jor
cl
assi
fi
cati
ons .Thenexts t
epneedediscla
ssif
icati
onbya c
tivi
ty.

4. C lassification by A ctivity – ana

cti
vit
yisas
pec
ifi
canddi
st
ingui
sha
blel
ineofwor
kpe
rfor
med
byorgani
zat
ionuni
t.Forexa mple,withinthePubl
icWor
ksDe
par
tme
nt,a
cti
vit
ie
ssuc
hast
he
fol
lowi
ngma ybeper
formed:
 Soli
dwa s
tecol
lec
tion–resi
dentia
l
 Soli
dwa s
tecol
lec
tion–comme rcial
 Soli
dwa s
tedis
posal–l
andfil
l(Burying)
 Soli
dwa s
tedis
posal–i
nciner
ati
on( Burni
ng)

Act
ivi
tyclas
sif
icationi smor eme ani
ngfulifrespons
ibi
lit
yf ortheper
formanceofe ac
ha ct
ivi
tyis
f
ixe
d,perf
ormanc es tandar
dsa rees
tabli
shed,andagoodma nage
me nta
ccounti
ngsyste
mi sinst
al
led
t
ome as
ureinput of resources (
dol
lars
,personnelt
ime,equi
pme ntandfac
ili
ti
esused)vers
usoutput

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le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 40
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
of services.Suc
hinf
orma
ti
oni
susef
ultothoseint
ere
stedi
nass
essi
ngtheef
fi
ci
encyofgove
rnme
nt
ope rat
ions.TheGASBrec
ommendst
hatexpendi
tur
esals
obecl
ass
ifi
edbycha
ract
er.

5. C lassification by C haracter
Clas s
ificati
onbyCha rac
ter,asde fi
nedbyt heGASB,i sbasedont hefisc
a lpe r
iodthatbe nef
itsfroma
particula
re xpendit
ure.A c ommonc lass
ifi
ca t
ionofe xpendituresbyc ha r
acterrecognize st hr
ee
groups :
 Cur r
entExpe nditure
 Ca pit
alExpe ndit
ure
 De btServiceExpe nditure
Cur rentexpe ndit
uresa r
ee xp e
c t
edt obe nefi
tt heperiodinwhi cht hee xpe ndit
ureisma de.Ca pit
al
outlaysa ree xpect
e dtobe nefitnoto nlythepe ri
odinwhi cht hec apit
ala ssetsareac quir
edbuta s
ma nyf uturepe r
iodsa sthea ss
e t
sprovi deservice.Debtservicei ncludespa yme ntofinte r
estonde bt
andpa yme ntofde btprincipal;ifthede btwa swi s
elyincurred,r eside
ntr e cei
vedbe ne f
it
si npr i
or
periodsf rom thea ss
etsa c
qui r
edbyus eofde btfina
nc i
ng,arer e ce
ivingbe ne f
itscurr
ent l
y,a ndwi l
l
continuet oreceivebenefit
sunt i
lthese rvi
celive soft
hea sse
tsexpi re.

Cha ract
e rc lassific
a t
ionofe xpenditure
si spot ent
iall
yofgr eats i
gnif i
cancet otaxpa yersandot her
citizens.Pr ope rlyus ed,itcouldgi vethemva luableinforma t
ionf orappr a
isi
ngt hec ostofgove rnme nt
dur ingagi venpe riod.Ge nerall
ys peaking,expenditur
e sforde btse r
vicerelatetoa ctionsi nc
urr edby
pre viousa dmi nistrati
ons.Ca pitaloutlaysarec urrente xpenditurese xpecte
dt opr ovi debene fit
si n
futur epe riods;butt hepresents tatementofgove r
nme nt
ala ccounting“ Principl
es”doe snota l
low
de preciatione x pens etober ecordedi ngovernme nta
lfundsa l
though,de preciat
ione xpe ns eonge ner a
l
ca pitalasse tisr eportedinthegovernment wide statement of activities.I tappe a
rst ha texpendi t
ures
int hec urrente xpendituresc l
assa rethemos tinfl
uentialont hepubl icmi nd,strongl yinf
lue ncing
popul a ra ttit
ude st owa rdr espons i
bleof f
ici
als.A fourth character c las
s ,intergove rnment al
,i s
sugge st
edbyt heGASB f orus ebygove rnme nta
luni t
stha ta ctasa ni ntermedi aryi nfede r
ally
fina ncedpr ogr amsort hattra
ns fer“shar
e drevenues”toot hergove rnme nt
aluni t
s.

6. C lassification by Object – t
heobj
ectofe
xpe
ndi
tur
eist
het
hingf
orwhi
cht
hee
xpe
ndi
tur
ewa
s
made.Objectcl
ass
esma ybevie
weda ssubdi
visi
onsofcha
ract
e rcl
ass
ifi
cat
ions.Onesc
hemeof
obj
ectcl
assi
fic
ati
oninc
ludest
hefol
lowingmajorcl
ass
es:
 Pe r
sonalser
vice
s  De btser
vice
 Ca pi
taloutl
ays  Ot herse
rvic
esandc har
ges
 Supplies

C lassification of E stimated R evenues and R evenues

Inorderforadmini s
tra
torst
ode t
erminethatproposede xpendi
ture spres
entedintheAppr opri
ations
budgetcanbefinancedbyr es
our ce
sa vai
labl
eunde rthelawsoft hebudge ti
ngjuri
sdi
cti
ona ndhi gher
jur
isdi
ct
ion,aRe venuesBudge tshouldbepre pare
d.R evenue,int hesenseinwhichitiscus t
oma ri
ly
usedingove r
nme ntalbudget
ing,includesallfinanc
ialresourcei nfl
ows—a llamountsthatincrease
thenetas
setsofaf und––i
nter
fundt r
ansfe
rsandde btissuepr oc
ee ds,aswellaswellastaxe
s ,li
censes
andpermitfee
s,fines,for
fei
ts
,a ndotherrevenuesources,

Compi
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count
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 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s

Itshouldbee mphas i
zedthatagove r
nme ntaluni
t,andthefundsther
eof,ma yr a
iser
evenuesonly
fromsou r
cesavail
abletothembyl aw.Of t
en,thelawtha
tauthori
zesagove rnmenta
luni
ttoutil
iz
ea
givenrevenuesourc
et ofi
nancegeneralgovernmenta
lact
ivi
ti
es,orspec
ifi
ca cti
vit
ies
,al
soesta
bli
shes
thema ximum ratethatmaybea pplie
dt ospecif
iedbas
ei nutil
iz
ingthes ourc
e,orest
abli
shesthe
ma xi
mu ma mountthatmayb era
isedfromt hesourc
eduri
ngthebudgetperiod.

Theprimary classification ofgove r

nmentalrevenuei sbyf und.Wi thi
ne a
c hfund,thema jor
cl
assi
fic
ati
oni sbys ource.Wi thi
ne ac
hma jorsourcecla
ss,iti
sdesirabletoha veasma nysecondary
cl
assesasneed edtof aci
lita
terevenuebudgeti
nga nda c
counti
ng.Se condaryc l
assesrel
ati
ngtoe a
c h
majorsour
cea rediscussedbe l
owunde reac
hs ourc
ec apt
ion.Majorrevenues ourceclas
sescommonl y
use
da re
:
 Ta xes  Ch argesf orservices
 Spe cialasses
s ments  Fi nesa ndf orfeit
s
 Li ce
ns esandPe rmi t
s  Mi scellaneousr evenues
 I nt
ergove r
nme ntalrevenues

Ther evenue sbudge ta ndt hea ccountings ystemf oreachgove rnment a

lf unds houl di ncludea ll
revenuesour ce sava i
labletof inancea ctivi
tiesoft hatfund.Thege neralfundofmos tgove r
nme ntal
unitswillor dina r
ilyne edseven major classes itemized above;a lt
hougha dditi
onalma jorc lass
e s
ma ybene e ded.Ea chspec i
alre venuef undwi l
lne edt obudgetanda ccountf oronlyt hoser evenue s
legall
yma ndate dforus eina c hievingthepur posef orwhichthes peci
a lrevenuef undwa screated.
Similarl
y,de bts ervicefundsbudge tanda ccountf orthosesource
sofr evenuet hataret obeus edfor
payme ntofi nterestandpr incipa loftax-suppor te
da nds peci
alassess
me ntlong- te
rmde bt.Re venue s
andot herf i
na ncings ourcese arma rkedf orc onstructi
onora cquis
iti
onofge ne r
alc apit
ala s
setsar e
report
eda sbe ingbudge tedanda ccounte dforbyc apit
alproje
ctsfunds.Inor dertode termi neduring
af i
scalyea rtha trevenuesa rebe ingrea li
zedf rome achbudgete
ds ourceina mount sc onsis t
entwith
thebudge ta ct
ua lrevenue sshoul dbea c countedf oront hesamec las
sifi
c a
tions yst
ema sus e
di nthe
esti
ma te
dr eve nuesbudge t.

1. T axes
Taxe
sa r
eofpa rt
icul
arimport
anceb ecaus
e( 1)theyprovideaverylargepor
ti
onofthereve
nueof
gove
rnme nt
aluni
tsonalll
evel
sa nd(2)theyarecompulsorycontr
ibut
ionst
othecos
tofgover
nment
,
whet
hertheaffe
ctedt
axpayerapprovesordis
a ppr
ovesofthelevy.

A d valorem (basedonva l
ue)propert
yta xesa reama insta
yoff inanci
ngf orma nyunitsofl oca
l
gove rnmentbuta renotus edasas ourc
eofr evenuebyma nys tategovernme ntsorbyt hefedera
l
gove rnment.Adva l
oremt axesma ybel evieda gai
nstre a
lpr opertyandpe rsonalpropert
y.Some
prope rt
ytaxesarelevi
e donaba si
sotherthanpr oper
tyva l
ues,onei ll
ust
rat
ionbe ingtheta
xons ome
kindsoff inanc
ialinst
itut
ionsinrel
ati
ontot hede posi
tsa taspe cif
ieddate
.Ot herkindsoftaxesa r
e
salest a
xes,incomet axes,gros
sreceipt
st axes
,de at
ha ndgi fttaxes,andi nte
restandpe nal
ti
eson
delinquenttaxes.Theva l
uati
onofeach parcel oftaxablerealpr opert
y,andoft hetaxabl
epe r
s ona
l
prope rt
yowne dbye achtaxpayer
,isassi
gne dbyapr oces
sknowna spropert
ya ssess
me nt
.

Compi
le
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count
ingI
nst
ruc
tor
s 42
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
Thea ssessme ntproc essi sdiffe
r e
ntf roms t
atet ostateandi ns omestate
sbyj uri
sdicti
onswit
hinthe
state.Thet axr at
ei ss etbyon eoft wowi delydifferentpro ce
dures:
(1) T he governmental body simply multiplies the assessed valuation of property in its
jurisdiction by a flat rate—e itherthema ximumr a t
ea l
lowa bleunderst
atelaworar at
edete
rmined
bypol i
cy—or
(2) T he property tax is treated as a residual source of revenue.Inthelat
terevent,re
venuestobe
recogni zedfrom a lls ourc e
sot hert hanpr opertyt axesmu stbebudge t
ed;thetotalofthosesourc
es
mus tbec ompa r
edwi ththet otalpr opos edappr opriat
ionsi nordertode t
erminet heamountt obe
raisedfrom property taxes.

Off
ici
al
ss ervesa
sa nagentfora l
lfundsforwhichproper
tytaxe
sha vebeenle
vied;t
heTa xe
s
Rec
eivablearepr
operl
yaccountedforasasse
tsofthefundsforwhic
ht heyar
elevi
ed,andthos
e
f
undsrecogniz
ereve
nuesf
romt hetaxe
stotheext
enttha
tthet
axesar
eexpe c
tedt
obecoll
ect
ibl
e.

Illustration: Comput
ationofthetot
alamountofreve
nuestober
ais
edf
rom pr
ope
rtyunde
rthe
as s
umpt iont hatpr
ope
rtytaxe
sareare
sidua
lsour
ceofre
venue
s.

T own of J imma
General F und
Statement of A mounts to be raised By Property T axes for 2001
Hamle 1, 2000
R equirements:
Es t
ima t
edExpe ndit
ur esfor2001. .
..
...
..
...
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..Br4,
200,
000
Propos eda ppro pri
ationsf or2002...
...
..
..
....
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..Br8,
460,
000
Es t
ima t
edbe ginningwor kingba l
anc efor2003...
..
..
..
..
...
..
..
..
..
..
..
..
..
.. 510,
000
Tot alEsti
ma te
dRe qui r
eme nts..
..
..
...
..
..
...
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..Br
13,
170,
000
R esources other than tax levy for 2002:
Ac tualBa l
a nceHa mle1,2000. ..
...
...
..
..
...
..
..
..
..
..
..
..
..
..
..Br654,000
Install
me ntf or
mi ncomet axes.
...
..
..
...
..
...
...
..
..
..
..
..
..
..
..
..
.2,430,000
Mi scell
ane ousRe cei
pt s.
..
...
..
..
..
...
..
..
...
..
...
...
..
..
..
..
..
..
..
..
..
.1,960,000
Re venuef or mot hers ources.
...
..
..
..
...
..
..
...
...
..
..
..
..
..
..
..
..
..
.4,544,000
Tot alEsti
ma te
dRe sour c
e sotherthanPr opert
yTa x..
..
..
..
..
..
..
..
..
..
..
..
..Br9,
582,
000
AmountRe quiredfromPr opertyTa xesin2002. .
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..Br3,
582,
000

Oncet hea mountr equir

edf r
ompr oper
tyta xisde t
ermined;thes econdstepisthede t
ermi
nati
onfrom
his
tori
c aldataa nde conomicfore
c as
tsoft hepe rcentageoft hetaxlevye xpec t
edtobec ol
lect
ible
.
Event houghpr ope r
tytaxesareal i
ena gainstt
hepr ope r
ty,personalpropert
yma yberemovedfrom
thetaxingj uri
sdictiona ndsomepa rcelsofr ealpr opertyma ynots al
ablee noughforthetaxing
jur
isdi
c t
iont ore covera cc
umulat
e dtaxesa gainstthepr operty.Therefore
,thel evymus tbelarge
enought oa ll
ow f ore st
imateduncoll
ec t
ibletaxes.Fore xampl e
,a s
sumet heTownofJ i
mmac an
reas
ona blyexpec ttocoll
e c
tonly96 percent oftheye ar2002pr opert
yt axle
vyf orit
sGe ner
alFund.

Compi
le
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count
ingI
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ruc
tor
s 43
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
Thus,ift
axr
eve
nuei
stobeBr3,
582,
000,t
hegr
ossl
evymus
tbeBr3,
582,
000/0.
96,whi
chi
sBr
3,
731,250

Whe nt hegr osslevyi sknown,t heta xra t

ema ybec omp ute
dont heba si
soft hea ssessedval
uati
on
oft a
xa bl epr opert
yl yingwi t
hint het axingjuri
sdiction.Thet ermtaxablepr opertyi susedinthe
precedi ngs ent e
ncei nr ec ogniti
ono ft hefacttha tpr opert
yowne dbygove r
nme nt
alunitsand
property us ed by r eli
giousa nd c harit
ableorga nizati
onsa reof t
en nott axableby t heloca
l
governme nt.I nadditi
on,s omei ndividua l
sma yha ves tat
utor
ye xempti
onf romt axationforalimit
ed
porti
onoft hea sse
ssedva lua t
ionofp ropert
y.Assumene tass
essedvaluat
ionofpr ope r
tytaxa
bleby
theGe neralFundoft heTownofJ immai sBr214, 348,000.Inthatcase,t
hegr osspr opertyta
xlevy
(Br3, 73 1,250)i sdividedbyt hene tas s
e s
sedvalua t
ion( Br214,348,
000)t ode t
ermi netheproper
ty
taxrate .Ther atewoul dbee xpresseda sBr1. 75pe rBr100a ssesse
dva luat
ionorr oundingupthe
actualde cima lfract
ion,itis1.75%.

Interest and Penalties on Delinquent T axes

Apenalty i salegal
lymandateda ddit
iontoat axont heda yitbec
ome sdel
inque
nt(generall
y,t he
dayafte
rt hetaxisdue)
.Penalties shouldberecognizedasrevenuewhe nt
heyareasse
ssed.Interest
atalegal
lys peci
fie
drateals
omus tbea ddedtode l
inquentta
xesforlengt
hoftimebetweentheda y
thetaxbe c
ome sdeli
nquentunt i
lt heda yitisul t
ima te
lypa i
dorot her
wisedischar
ged;intere s
t
reve
nues houldbea ccr
uedatthef inancials
tat
eme nt
sa retobeprepa
red.

Sales T axes, Income T axes, and Gross R eceipts T axes –GASBSt at

ementNo.33pr
ovi
dest
hat
re
ve nuef rom s al
est a
xes,inc omet a
xes,a ndgr ossr e
ceiptstaxe
sberecogni
zedne
tofes
tima
ted
re
funds ,inthea ccount
ingpe riodinwhichunde rlyi
ngt r
ansacti
onsocc
ur.

2. Special A ssessments
Spe ci
alassessme ntsdif f
erf r
omad valorem r ea
lpropertyt axe sintha tt
hel at
terarelevieda ga i
nsta l
l
taxablepropertywi thint hege ogr
aphicbounda r
iesofthegove rnme ntlevyingthet axes,whe re
ast he
formerarelevi eda gainstc ert
ainpropert
ie
stode fr
aypa rtora llofthec ostofas pec i
fi
ci mpr oveme nt
ors er
vicetha tispr es ume dt obeofpa r
ti
cularbenefitt ot hepr ope rt
ie
sa gainstwhi cht hes pe cia
l
assessmentsa relevied.Br iefl
y,whe nrouti
nes er
vices(streetc leani
ng,s nowpl owi ng,ands oon)a re
extendedtopr ope r
tyowne rsouts
idethenorma lservi
cea reaoft hegove rnme nt,ora r
epr ovi deda ta
higherleve lora tmor ef reque
nti nte
rval
st hanf ort hege neralpubl i
c ,“service-
type ”s pe cia
l
assessmentsa relevied.Service-type speci
alassessment sarea c
count edforbyt hef undt hata ccount
forsimilarservicesr ende redtothege ner
alpublic
––us ua ll
yt heGeneral F und orSpecial R evenue
F und.Spe ci
a lassessme nt sforcapita
limproveme ntsshoul dbea c
c ountedforbyac apitalprojec t
s
fundduringt hec onstructionpha s
ea ndbyde btser
vicef unddur i
ngt hede btdevicepha s
e .

3. L icenses and permits

Licensesandpermit
sincludethoserevenuesc ol
lec
tedbyagove rnmentaluni
tfrom i
ndividua
lsor
busines
sc onc
ernsforvariousright
sorpr ivi
legesgrant
edbyt hegovernment.Somelicensesand
permitsarepri
ma r
il
yr e
gul at
oryinna t
ure,wi t
hmi norcons
idera
tiontorevenuederi
ved,whe re
as
othersarenotonl
yr e
gulatorybutprovidelargeamountsofrevenueaswe ll
,andsomea r
ea l
most

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count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
exc l
usivelyreve nuepr oduc e
rs.Li censesa ndpe rmit
sma yr ela t
et ot hepr ivi
legeofc arr
yingon
bus i
nessf orst
ipul at
edpe ri
od,ther i
gh ttodoac e r
tai
nthi
ngt hatma yaffectthepublicwe l
far
e,orthe
righttous ecertainpublicpropert
y.Ve hicl
ea nda l
cohol
icbe vera gelicensesa r
efounde xtens
ivelyon
thes t
a t
el evela nds ervebot hre gulatorya ndr evenuef unc t
ions .Statesma kewi des
preadus eof
professionalandoc cupati
onallicensesf orpur posesofc ontrol.Loc algove r
nme ntsma keextensi
ve
us eofl icens
esa ndpe rmitstoc ontrolthea cti
viti
esoft heirc iti
z ens;andf rom somet heyde ri
ve
substantialamount sofr evenue.Commonl yf ounda mongl icense sandpe r
mi t
sa r
ebui l
dingpermits
,
ve hi
clel i
censes,a museme ntli
cens e
s,bus i
ne ssa ndoccupa t
iona llicenses,animallicens
es,ands t
ree
t
andc urbpe rmits.

Re gar
dles
soft hegove r
nmentalleve
lorthepur poseofalicenseorpe rmi
t,therevenueitproduc
esis
ordinar
il
ya ccounte
df oronac ashbasi
s.Appl i
cablerat
esors chedulesofchargesforafutureper
iod
ma ybee s
tabl
ishedwe llina dvance
,a ndf ai
rlyreli
abl
ei nforma t
ionma ybea vail
ablea stothe
numbe rofli
c e
ns e
sorpe rmit
stobei ss
ue d,buttheprobabl
ede greeoff l
uct
ua t
ioninthelatte
rfact
or
issogreatastopreventsati
sfa
c t
oryuseoft heaccr
ualbasis
.

4. Intergovernmental R evenue
Inte
rgove r
nme nt
alre venue si nc l
udegr a ntsa ndot herf i
na nc i
ala ssis
ta nc e
. Gr ant
sa r
eus ually
int
endedf ore it
herope rat
ingorc a
pitalpur poses.GASBs t
anda rdsprovidet hef oll
owi ngde finit
ions .
 Grants and other financial assistance a re define da st rans acti
ons i n whi ch one
gove rnmentale nt
ityt r
a nsfersca shorot heri temsofva lueto[ orinc ursal iabili
tyfor]a nother
gove rnmentale nti
ty,a ni ndividua l,ora nor ganizat
iona same ansofs haringpr ogramc osts
,
subs i
dizi
ng ot hergove rnme ntsore nt i
ties,orot he rwiser ealloc at
ing r esourcest ot he
recipient
s
 Acapital grant i sac ontributionorgi ftofc ashorot hera s
s et
sr e st
rictedbyt hegra nt
orf or
thea cquis
iti
onorc ons t
r ucti
onoff ixed( capital
)a s
sets.
 Anoperating grant i sonet ha tisi nt
e nde dtof i
na nc eope rat
ionsort hatma ybeus edf or
eitheroperat
ionsorf orc apitalout laysatthedi scret
ionoft hegr antee .
Gove r
nme nt a
lf undsge nera l
lys houldr ecognizes uchr eve nueswhe na llt i
mer e
s t
ri
ctionsa nd
eli
gibil
ityr equire
me ntsha vebe e nme ta ndt her esour
c e
sa rea vail
a blet opa yc urre
ntpe riod
obli
gations.Ifas tat
eorf ede r
ala genc ynot ifi
esal ocalgove rnme ntaluni ttha tagr antofas pe cif
ied
amountwi llber e
ceive da tas pe cifi
edda te,andt hepr ecedingr e c
ogni tionr ulesa reme t
,thel oc a
l
governme nts houldre cordt hea ccrualoft her eve nuebyde biti
ngDuef rom s t
a tegove rnme ntor
simil
art i
tl
ea ndc r
editingRe venue s.Inot he rcases,recogniti
oni snotpos sibleunt ilca s
hi sreceived.

5. C harges for services

Char
gesforservi
cesofthegovernme nt
alf unds(andgove rnme ntalact
iviti
esa tt
hegove r nment-wide
l
evel
)i nc
ludea l
lchargesforgoodsa nds ervi
cespr ovide dbyagove r
nme ntalfundt oe nterpri
se
f
unds,indivi
dual
sa ndorganiza
tions,andot hergove r
nme nts.A f e
w oft hema nyr e venuei te
ms
i
ncl
ude dinthisc a
tegor
ya recourt costs;special police service;solid waste collection charges
(
unle
ssa cc
ountedforinane n
ter
pr i
sefund) ;str
eet
,s i
dewa lk,a ndc ur
br epair
s;receiptsf rompa rking
met
ers;li
brar
yusef e
es(butnotfi
ne s
);andt uiti
on.

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ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s

Thegr oupingofcharge sforser

vicesrevenuema ybecorre
latedwit
hthefunct
ionalc l
assifi
cati
onof
expenditures
.Fore xampl e,onef unct
ionalgroupofe xpendit
ure
si snamedge neralgove rnment
,
anotherpubl i
cs af
ety,a nds oon.A gove rnmentalunit
,inc onnect
ionwithpr ovidingge nera
l
governme ntservi
ce,c oll
ectssomer evenues uchasc our
tc ostchar
ges,fe
esf orr e
cor di
ngl ega
l
docume nts,andzoninga ndsubdivis
ionf ee
sa ndshouldrelat
ether e
venuestot hee xpendit
ures
.
Cha r
gesf orser
vic
ess houldberecognizedasrevenuewhene ar
ned,ift
hati
spriortothec oll
ecti
onof
cash.

6. F ines and forfeits

Revenu efrom finesa ndf orf
eit
sincludesf i
nesa ndpe na
lti
esforcommi s
sionofstat
utoryoffenses
andforne glectofof fic
ialdu t
y;forf
e i
turesofa mountshe l
dass e
c ur
it
ya ga i
nstl
ossorda ma ge,or
coll
ecti
onsf r
ombondsors ur
eti
espla
c edwi t
hthegove rnmentfort
hes amepur pos
e;andpe nal
tiesof
anys ort
,exc eptthosel eviedonde linquenttaxes.Libraryfi
nesa reincludedinthisc a
tegory.If
desi
red,fi
ne sandf orf
e i
tsma ybethet it
lesoftwoa ccountswit
hinthisr
e venuecla
ss,ortheyma ybe
subgrouphe adi
ngsf ormor ed et
ai
ledbr e
akdowns .

Reve
nu esofthiscla
s s
ifi
cat
ions houl
dbea ccr
uedtotheextentpracticabl
e.Indirec
tcontr
astwit
h
ge
neralprope
r t
ytaxes,nei
therratesnorbas
eorvolumema ybepr ede t
erminedwithanyreas
onabl
e
de
greeofa ccurac
yf orthi
st ypeofr eve
nue.Beca
useoftheseunc erta
inti
es,iti
softendif
fi
cultt
o
de
ter
mi newhe t
heral
la mountspaidbyt r
ans
gres
sor
sonthecash basis i
fa c
crua
lisnotpra
cti
cabl
e.

7. Miscellaneous revenues
Althoug hthewor dmi scella
neousisnoti nforma tivea ndshoul dbeus eds pari
ngly,i
tsus ea sthetit
le
ofar evenuec ategor yisne ces
saryit( 1)s ubstit
utesf orotherpos sibl
es our c
ec la
ssesthatha ver a
ther
sli
ghta ndi nfreque ntus ageand( 2)mi nimiz est hene edf or f orcings omeki ndsofr evenuei nto
sourcec lassi
fic
a ti
onsi nwhi chthe ydonotge ne r
icall
ybe l
ong.Whi l
emi scel
laneousr evenuesi n
it
selfrepresentac ompr omise,it
se xistencea idsins ha r
peningt heme aningsofot hersourc eclass
es.
Thehe t
erogeneousna tureofi t
emss ervedbyt het itl
eisi ndicatedbyt hef ol
lowingl i
sti
ng:i nter
est
earnings(othertha nonde li
nquenttaxe s);rentsa ndr oyal
ties;salesof ,andc ompe ns
a t
ionf orlossof,
capit
a lassets;c ontri
but i
onsf r
om p ublice nterpris
e s(utili
ties
,a irports,etc.)
;e sc
he at
s( takingof
prope r
tyinde faultofl egall
yqua l
ifiedc laima nt
s )
;c ontr
ibutionsa nddona ti
onsfrompr ivatesources;
and“ other”.Somei temsofmi sc
ellan eousr evenue s
,s ucha sintereste a
rningsoni nvestme nts
,mi ght
we l
lbea ccrued,butmos t
lytheyarea c countedf oront hec ashba sis.

3.5) Budgetary A ccounting

Atthebeginningofthebudgetperi
od,theesti
ma t
edreven uescontrolaccountisdebit
edforthetotal
amountofr evenuesexpect
edtober e
cognized,asprovide dinther evenuesbudget.Theamountof
re
venuee xpectedfrom eachsourc
es pecif
iedint hereve nuesbadge risr ec
ordedinas ubsidiar
y
le
dgerdetai
la gree
swi t
hthedebitt
othec ont
rolaccount,andbot ha gre
ewi ththeadoptedbudget.I
f
asepar
ateentryistobema detorec
ordther e
venuesbudge t,thegene r
alledgerdebi
ttotheesti
ma t
ed
re
venuescont r
olaccounti
soffse
tbyac redi
ttoF und Balance.Re callt
hatthefundba l
anceaccount,
bef
orethebud getisrecor
ded,woul
dnor mall
yha veac reditbalancerepresent
ingtheexcessoffund
Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 46
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
assetsove rt het ot alofl i
a bi
liti
esa ndr eserve dfunde quity––referred to as a surplus.I ffund
liabi
lit
iesandr e s
e rve df unde quitye xceedfunda s
se ts
,thef undba lancea ccountwoul dha veadebit
balance—referred to as a deficit.Af terther evenue sbudge tisr ecorded,fundba l
a ncer epresents
thee xcessoffund assets plus the estimated revenues and other financing sources for the budget
period over liabilities and reserves.Thec r
e di
tba l
a nceoft hef undba lancea ccount,the r
efore,isthe
totalamounta vaila blet ofi nancea pp r
opri
a ti
ons.Cons e
que ntly,thea ccountinge ntr
yt or e
c ordthe
legall
ya pprove da ppr opria
tionsbudg etisade bi
ttof undba lanceandac r
edittoa ppr opri
ationsf or
thetotalamounta ppr opriat
e df ort
hea ct
ivi
tiesa cc
ount edforbyt hefund.Thea ppropr iat
ionsc ontrol
accounti ssuppor te dbyas ubsidia
ryl edgerke ptint hesamede t
ailaspr ovi
de dint hea ppropr i
at
ions
ordinance,s ot hatt het ot
aloft hes ubs i
diar
yl edgerde tai
lagr eeswi t
ht hec r
edittot hea ppropr i
at
ions
controlaccount ,andbot hagr e
ewi tht headopte dbudge t.

Theus eofbudge t
aryaccount
spe rmitscompa r
isonofa c
tualr
eve nuesa
nde xpendit
urestobudgeted
amount s.Budget
arycontroli
sf ur
there nhance
dbyc l
earandlogi ca
lcl
assi
fica
tionofr e
venuesa nd
expenditur
e s
,andbyf or
ma ll
yr ecordi
ngt hebudge ti
nt heaccountsofthegene r
alfundandot her
fundsf orwhi c
habudge tisa pproved.Theus eofs ubsi
dia
ryl e
dger
s,whic hpermitrecording
revenuesa ndexpendi
tur
es —botha ct
uala ndbudge t
edamounts–i nthesamel evelofdetai
last he
budget,alsohel
pstoachi
e vesoundbudge tar
ycontrol.

R ecording the budget

Inor dertoillustr
at eentr
iesinjournalformt orecordabud get
,assumethea mountsshownbe l
owa re
thea mount st hatha vebe enlegall
ya ppr
ove da stheb udgetfort heGe ne
ralFundofac erta
in
gove rnmenta lunitforthefisca
lye arendingDe cembe r31,2001.AsofJ anuar
y1,2001,t hefi
rstday
oft hef i
scalye ar,t hetotalEsti
ma tedRe venuess houl
dber ec
or de
di ntheGe neralFundge nera
l
ledgerc ont
r olacc ount,andthea mou ntsexpectedtober ecogni
zeddur i
ng2001f rom eachrevenue
sources pecifie
dint hebudgetshouldber ecordedinsubsidia
ryledgeraccount
s.Ana ppropr
iat
ee nt
ry
woul dbe :

General L edger Subsidiary L edger

De
bit
s Cr
edi
ts De
bit
s Cr
edi
ts
1.Es
ti
mat
edRe
venue
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..1,
277,
500
FundBa l
anc e..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 1,
277,
500
R evenues L edger:
Ta xes..
..
..
...
..
..
...
..
..
. .
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 882,
500
Intergovernme nt
alRe venues.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 200,
000
Lic e
ns e
sa ndPe rmi t
s...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 195,
000

ThetotalAppr
opr
iat
ionsa ndOt he
rFi nanci
ngUse sle
gall
ybudgete
df or2001fortheGener
alFund
ofthesamegover
nme ntalunitshoulda l
soberecordedintheGeneralFundgenerall
edge
rc ontr
ol
acc
ounts,andt
heamount sappropriat
edforeachfunct
ionit
emizedinthebudgetshoul
dberecorded
insubs
idia
ryle
dgeraccounts
.Ana ppropri
at
eentr
yus i
ngassumedbudgetamountswouldbe:

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 47
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
General L edger Subsidiary L edger
De
bit
s Cr
edi
ts De
bit
s Cr
edi
ts
2.FundBa
lanc
e..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..1,
. 636,
500
Appropria t
ions...
..
..
..
..
..
. .
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 1,
362,
000
Es ti
ma tedOt herFinanc ingUs e
s...
..
..
..
..
..
..
. 274,500
A ppropriation L edger:
Ge neralGove rnme nt.
..
..
. .
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 1,
150,
00
PublicSa fety.
..
....
..
..
..
..
..
. .
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 212,
000
Other F inancing Uses L edger:
Interf
undTr ansferOuttoOt herFunds..
..
..
..
..
. 74,
500
Interf
undTr ansferOuttoCompone ntUnit
s.
.. 200,
000

Itwoul
d,ofcourse,beacceptabletoc ombinethet woe ntri
esil
lustrat
eda boveandma keoneGe ner
al
Fundentr
ytor ecordEs t
ima te
dRe venues,Appr opria
tion,andEs ti
ma tedOt herFinanc
ingUs es;in
t
hiscas
etherewoul dbeade bitt
oFundBa l
ancef or$359,000(thea mountbywhi chAppr opr
iati
ons
andEst
imate
dot herFinancingus ese xc
e e
dEs ti
ma tedRe venues).Eve nifasinglecombinedentryis
madeintheGe neralFundge neralledgeraccounts,thatentr
ymus tprovideforentr
yoft hebudgeted
amount
sineachi ndivi
dualsubs i
diaryledgeraccounta sshowni nthei l
lust
rat
ionsofthetwos epara
te
ent
ri
es.

Budgetary C ontrol of R evenues

Int hepr ec edings ec t
ion,e ntr
iest or e
c ordt hebudge tinge ne ralledgera ccount sa ndi ns ubsidiary
ledgera ccount sarei llustr
ated.Dur ingaf iscalye a
r,actualr evenuess houl dber ec ognizedi nthe
gene r
a lledge ra cc
ount sofgove r nme ntalf undsbyc re
ditstot heRe venue sa ccounts( offsetbyde bits
tore ceivablea ccount sf orrevenue st hata rea ccrue dorbyde bitstoCa shf orr evenue srecogniz edon
thec ashba sis).Thege nerallege rsr eve nuesa cc ountisac ontrola ccounts upportedbyRe venue s
subs i
dia r
yl e dgera ccountske pti ne xa c t
lyt hes amede taila ske ptf ort heEs t
ima t
edRe venue s
subs i
dia r
yl e dgera c c
ount s.Fore xampl e ,assumet heGe neralFundoft hegove rnme ntalunitf or
whi chbudge tarye ntriesa r
ei l
lustra t
edi nt hepr ece di
ngs ecti
onc ol
lecte
dr e venue sinc a
shdur ingthe
mont hofJ anua ryfromLi ce nsesa ndPe rmi t
s,$13, 200,andI nt e
rgove r
nme nt alRe venue s,$61,900.I n
ana ctua lcase ,ent
r iesshoul dbema deonac urrentba si
sa ndc ashre c
eiptss houl dbede positede a
c h
wor kingda y;howe ver,thef ollowi nge ntryi l
lustratesthee ffectont heGe ne ralFunda ccountsof
collecti
onsdur i
ngt hemont hofJ anua r
y2001:

General L edger Subsidiary L edger

De
bit
s Cr
edi
ts De
bit
s Cr
edi
ts
3.Ca
sh.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 75,
100
Re ve nues...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 75,
100
R evenues L edger:
Licens esandPe r
mi t
s..
..
..
..
..
..
..
..
..
..
..
..
. 13,
200
In
te rgovernme nt
alRevenues..
..
..
..
..
..
. 61,
900

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 48
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s

Compa ra bili
tybe t
we enEs t
ima tedRe ve nue ss ubsidia
ryaccount
sa ndr evenue ss ubs idiarya ccountsis
nece s
sarys othatpe r
iodical
lyt hroug houtt hef i
sc a
lye a
ra c
tualr e
ve nuesf rom e achs ourcec anbe
compa re dwi the st
ima t
edr evenue sfr om t hatsource.Ma t
eria
ldi ff
e rencesbe t
we ene st
ima te
da nd
actualre ve nue sshouldbei nve st
igatedbya dmini s
trat
orstodetermi newhe ther( 1)e sti
ma teswe re
ma deont heba si
sofa ssumptionst hatma yhavea ppe a
redreal
ist
icwhe nthebudge twa spr epa r
edbut
arenol onge rr eal
ist
ic( i
nt hate vent,t hebudge tne e
dstober eviseds ot hata dmi nist
ratorsa nd
legisl
ator sha vebe t
terknowl edgeofr eve nuestober e
ali
zedduringt her ema inde roft hes caleye ar)
,
or( 2)a c tionne edstobet ake nsot ha tr evenuese st
imate
dwi thr ea s
ona bl
ea c cura c
ya rea ct
ua l
ly
realiz
ed( i.e.
,Oneormor eempl oye e
sma yha vef ail
edtounderst
a ndtha tcertainr eve nuei t
emsa reto
bec oll
e cte d).Il
lust
rat
ion3- 5s howsaf ormofRe venuessubsi
diaryledge rinwhi c ht hede bitcolumn
iss ubsidi arytot heEs timat
e dRe venue sge neralledgercontr
ola cc ounta ndt hec reditcolumni s
subs i
diaryt otheRe venuesge neralledge rc ontrola c
count.

Illustration: Budgetary C ontrol of R evenue

NA ME OF GOV E R NME NT A L UNIT
R E V E NUE S L E DGE R
GE NE R A L F UND
Clas
s:Li
cens
esa
ndPe
rmi
ts Number
:351.
1
Subcl
ass
: Ti
tl
e:
Es
timate
d
Revenue
s Reve
nue
s Bala
nce
Dat
e I
tem Re
fer
enc
e DR CR. DR.(
CR)
2001
Janua
ry1 Budge
tEs
ti
mat
e J
1 $195,
000 $195,
00
Janua
ry31 $13,
200 181,
800

Budgetary C ontrol of E ncumbrances and E xpenditures

Whenenact
edi ntolaw,anappropr
iat
ioni
sana uthor
iza
ti
onf
ora
dmini
st
rat
orst
oincurobe
halfof
t
hegover
nme nt
a lunitl
iabi
li
ti
esintheamount
ss peci
fi
edint
hea
ppr
opri
at
ionor
dina
nceorst
at
ure,
f
ort
hepurposessetfort
hinthator
dina
nceor

Stat
ute,dur ingt hepe riodoft imes peci
fi
e d.Ana ppropriati
oni sc ons
iderede xpende dwhe nt he
aut
horizedl iabili
tiesha vebe eni ncurred.Be causepe nalt
iesa r
eimpos edbyl awona nadmi nis
trat
or
whoi ncursl iabi
litiesf ora nya mounti nexc essoft ha tappropria
ted,orfora nypur posenotc overed
bya na ppropr iati
on,orwhoi nc ur
sl i
abil
itie
sa ftert hea uthori
tyt odos oha se xpire
d,pr udence
dic
tat
e sthate achpur cha seorde rande a
chc ontra
c tber e
viewe dbeforeiti
ss i
gne dtode termi
net hata
val
ida nds uf fic
ie ntappr opr
iatione x is
tstowhi c ht hee xpe ndit
urec anbec hargedwhe ngoodsor
ser
vicesa r
er eceived.I ft herevi ewi ndica
testhatava li
da ppropri
ati
one xist
sandi tha sa navaila
ble
bal
anc eine xc essoft hea mou ntoft hepur c
ha seor derorc ont r
actbeingreviewed,thepur chaseorder
orcontractle gall
yma nybei ssued.Whe napur cha s
eor derorc ontractbeingreviewe d,thepurchase

Compi
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count
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count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
orderorc ontr
actlegallyma ybei ssue
d.Whe napur chaseor derorc ont racthasbe e
ni ss
ue ditis
importanttor e
cordt hef actthatt hea ppropr ia
tionha sbe ene nc umbe r edi nt hea mountoft he
purchaseorderorc ontractbeingr evie
we d,thepur c
haseor derorc ontra ctlegallyma ybei s
sued.
Whe napur chas
eor de rorc ontractha sbe eni ssueditisi mpor tantt or ecordt hef ac
tt hatthe
appropria
ti
onha sbe ene ncumbe r e
di nt hea mountoft hepur chaseor de rorc ont r
act.Thewor d
encumb ere
di sused,ratherthant hewor de xpe nded,becauset heamounti sonl ya ne sti
mateoft he
li
abili
tythatwi l
lbei ncurr
e dwhe nthepur chas eorderisf ill
edort hec ontra
c texecuted.(Itis
reas
ona bl
yc ommonf orqua ntit
iesofgoodsr e ceivedtodifferf r
om qua ntiti
e sordered,andi tisnot
uncommonf orinvoicepr ic
e stodi ffe
rf rom uni tpri
cess hownonpur c haseor de r
s).Theus eof
appropria
ti
ona uthori
tyi salsos ome whatt entativeinasmuc ha ss omes uppliersa reunabletof il
l
ordersortope r
forma ss ti
pulate
di nac ontract:ins uchcase s
,re l
atedpur cha seorde r
sorc ontra
c t
s
mus tbecancele
d.

Not i
c ethei ssua nc eofpur chaseorde ra nd/orc ontractsha stwoe f
fects
:( 1)t hee nc umbr anceoft he
appropr i
ation( s )tha tga vet hegove r
nme ntaluni tthea uthorit
yt oor dergoodsors e
r vi
cesa nd( 2)the
star
tingofac ha inofe ve ntsthatwillresulti nthegove rnme ntinc urr
ingal iabi l
it
ywhe nthepur chase
ordersa ref i
lleda ndt hec ontrac
tse xe cuted.Bot he ffectsshoul dber e cordedi nor dert oa ssis
t
admi nist
ra t
orst oa voi dove rexpendinga ppropr i
ationsa ndt opl a ntobea blet opa yliabili
tie
sona
ti
me lyba sis.Thea c count ingpr oc
edur eus edt or ecordt hetwoe f f
ectsisi l
lus t
ratedbyEnt ry4.The
fi
rste ffe
c tisr ec ordedbyt hede bi
ttot hege neralle dgera ccountEnc umbr anc es.Enc umbr ancesisa
controla ccountt hati sr elatedtotheAppr opria
tionsc ont r
ola ccountdi scusse dpr eviouslya ndt othe
Expe nd i
turesc ont r
ola ccountdi sc
uss edi nr el
ationt oEnt ries5aa nd5b.I nor de rtoa ccompl ishthe
ma tchingofAppr opr iations,Expe nditure s
,a ndEnc umbr ancesne cessaryf orbudge taryc ontr
ol,
subsidiarya c countc las s
ificati
onsofa l
lt hreemus tc orresponde xactl
y.Thege ne ralledge raccount
creditedi nEnt ry4.Re servef ore ncumbr ances,i sus edt or e cordthes e conde ff
e ctofi ssuing
purcha seor dersa ndc ont ractsthecreationofa ne xpe ct
e dliabil
ity.Re ser
vef orEnc umbr ances,some
ti
me sc alledout standi nge ncumbranc es,isnotac ont r
ola ccount ;theba lanc eoft hea ccounta tthe
balances hee tda tai sre por t
eda sareserva t
ionofFundEqu ity.

Entri
e s4,5a,and5bi l
lustrateaccount
ingforEncumbr anc
esa ndExpe nditure
sfort heGe neralFund
ofthego vernment
alunitf orwhi c
he nt
rie
sareil
lust
ratedinpr eviouss ectionsofthischa pter.Entry4
isma deont heass
umpt iont hatearl
yinJanuar
ypur chaseorde rsarei ssuedpursuantt othea ut
hority
containedint heGenera lFunda ppr
opri
ati
ons;assume damount sc har geabl
etoe achf unc ti
onf or
whichpur chaseor
dersarei ssuedonthisdat
aareshowni nthede bit
st otheEnc umbr ance ssubs i
diary
accounts.
General L edger Subsidiary L edger
De
bit
s Cr
edi
ts De
bit
s Cr
edi
ts
4.En
cumbr
anc
es-
2001.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
4
..
5
..
,
.
4.
00
ReserveforEnc umbrances-2001..
..
..
..
..
..
..
.. 45,
400
E ncumbrances L edger:
GeneralGove r
nme nt..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 38,
000
Publi
cSa fe t
y..
..
....
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 7,
400

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 50
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
Whe ng oodso rse rvicesforwhi chenc umbr ance shavebe e
nr e cordeda r
er ecei
ve da ndthesupplie
rs’
invoic
esa rea pprove dforpa yment,theac countss houldrecordt hef actt
ha tappropriat
ionshavebe en
expended,notme r
e l
ye nc umbered,a ndtha ta na ctualli
a bil
ity,notme relya ne xpectedliabi
li
ty,
exist
s.Ent r
y5ar eve r
sesEnt ry4t othee xtentt hatpurchaseor dersa refil
led(ordina r
il
ys omeoft he
purchaseor dersr e cordedi nonee ncumbr anc ee ntr
ywi llbef ille
di nonet imepe riod,ands omei n
othertimepe riods );iti si mpor t
antt o not et hats incee sti
ma teda mount swe reus ed whe n
encumb ranceswe rer ecorded,thereve r
singe ntrymus tals ous et hees t
ima t
e da mounts.Thust he
balancer ema iningi nt hee ncumbr ancesc ont rolac c
ount,a ndi nt her eservef ore ncumbrances
account,ist het otale sti
ma te
ddol laramountofpur chaseor der sa ndc ontr
a ct
sout sta
nding.The
esti
ma t
eddol l
a ra mountofpur chas
eor dersout st
andinga gainste acha ppropriat
ioni sdiscl
osedby
thesubsidiarya cc ounts.

General L edger Subsidiary L edger

De
bit
s Cr
edi
ts De
bit
s Cr
edi
ts
5a. ReserveforEnc umbra nc e
s -
2001..
..
..
..
..
..
..
.4
.
.2
.
.,
.
0
..
0
..
0
..
..
Enc umbr ances- 2001...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 42,
000
E ncumbrances L edger:
Ge ner
a lGove rnme nt.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 35,
000
PublicSa fet
y.....
...
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 7,
000
5b. Expenditures––2001. .
. .
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
4
..
2
..
,
.
4.
.
0.
.
0.
..
Vouc he r
spa yabl e.
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 42,
400
E xpenditures L edger:
Ge ner
a lGove rnme nt.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 35,
100
PublicSa fet
y.....
...
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 7,
300

Expendit
uresandtheliabil
it
ya c
countmustbot
hber e
c or
dedatt
heactualamountthegovernmenta
l
unitagr
eest opayt hevendorswhoha vefil
le
dt hepurcha
seorder
s( s
eee ntr
y5b) .Thefacttha
t
est
imatedandactualamountsdif
fercaus
esnoaccount
ingdif
fi
cul
ti
esaslonga sgoodsorse
rvice
sa r
e
rec
e i
vedinthesamef i
scalper
iodasorder
ed.

Thee ncumbr a
ncepr ocedurei sno ta l
wa ysne ededt oma kes ur
et ha
ta ppropri
ati
onsa r
enot
overextende d.Fore xampl e,althoughs al
ari
esa ndwa gesofgove r
nme ntale mpl oyeesmus tbe
chargeablea gai
nstvali
da ndsuffici
entappropria
tionsinor dertogiver iset olegale xpendi
tur es
,
ma nygove r nmentalunit
sdonotf i
nditnec es
saryt oenc umberthede par
tme ntalpersonalservices
appropriati
onsf orest
imate dpayrollsofrecur
ring,relat
ivelyconst
antamount s .Departmentsha ving
payroll
st hatf l
uct
uategreatlyfr
omon eseasont oanotherma yfoll
owt hee ncumbr anceprocedur eto
ma kesuret hepe r
sonalserviceappropri
at
ionisnotove re xpende
d.

Itshouldbeappa
rentt
hatadmini
st
rat
orsofgover
nment
aluni
tsne
eda
ccount
ings
yst
emsdesi
gnedto
provideatanygi
vendateduri
ngafisc
alyearcompa
ris
onsforea
chi
te
mi nthel
ega
lappr
opri
at
ions

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 51
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
budgetof( 1)t hea mounta ppropria
ted,(2)theamountofout st
andingencumbrances,a
nd( 3)t he
cumulat
ivea mountofe xpe ndit
ur e
stot hi
sdate.Thenetofthethreeit
emsisaccurat
elydescri
beda s
“unencumbe re
d une xpe nde d Appr opria
ti
ons” butc a
n be labe l
ed mores implya s“ avail
able
appropr
iat
ions”or“ a vailableba lance.
”I nordertoprovideneededc ompari
sons,cl
assi
ficat
ionof
expendi
tur
e sa nde ncumbr anc e
smus tagreewiththeclas
sif
ica
tionsofappropri
at
ionsma ndatedby
law.Inmanyj ur i
sdictions,goodf i
nancialmanagementmaydictateal
lthr
eeelementsbeclassi
fie
di n
great
erdet
a ilt
ha nrequi redbyl a w.

TheI l
lust
rat
ionbe l
ow showsaf orm ofsubsi
diar
yledgerthatsupport
sa l
lthreegener
alledger
controlaccount
s:appropr
iat
ions
,expe
ndit
ures,a
ndencumbrance
s.Atinter
valsdur
ingthefi
sca
lye a
r,
as ta
teme ntofbudgetedanda ct
ualexpe
ndit
uresandencumbranc
e sshouldbeprepare
dtoinform
adminis t
rat
orsandme mbersofthele
gisl
ati
vebranchofthedat
acontainedinthesubsi
dia
ryledger
records

Illustration: Budgetary C ontrol of E xpenditures

NA ME OF GOV E R NME NT A L UNIT
A PPR OPR IA T IONS, E X PE NDIT UR E S, A ND E NC UMBR A NC E S C ONT R OL
GE NE R A L F UND
CodeNo.060703
Fund:Gener
al
Y ear: 2001 Funct
ion:Gene
ralGove
rnme
nt
Mont
h Re
fer
enc
e E ncumbrances E xpenditures A ppropriations
a
ndDay DR. CR. Open DR. Cum. DR. Ava i
lable
Tota l Ba lance
J
anua
ry2Budget(Ent
ry2) $1,
150,000 $1, 150,000
POI ss
ued(Entry4) $38,
000 $38,
000 1,112,000
Invoi
cesApproved
(Entr
ies5a&5 b) $35,
000 $3,
000 35,
100 35,
100 1,
111,
900

A ccounting for A llotments

I
nsomej
uri
sdi
ct
ions
,iti
sne
ces
sar
ytor
egul
at
etheus
eofa
ppr
opr
iat
ionss
oonl
yspe
cif
ieda
mount
s

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 52
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
ma ybeus edf r
om montht omont horf r
om quart
ertoqua rt
er.Thepur poseofsuchcontr
olist o
preventexpendit
ureofallormostoft heaut
hor
izedamou ntearl
yi ntheyear,wit
houtpr
ovidi
ngf or
unexpectedrequi
rementsari
singlate
ri nt
heyear.Ac ommonde viceforregul
at
ingexpendit
uresis
theuseofa l
lotments
.Ana ll
otmentma ybedescr
ibedasani nt
ernalall
ocati
onoffundsonape r
iodic
basisusual
lyagreeduponbythede par
tmenthea
dsa ndthechiefexecut
ive.

Al l
otmentsma ybeformall
yr ec
ordedinledgeraccount
s.Thi spr oc
eduremi ghtbe gi
nwi ththe
budgetar
ye nt
ry,i
nwhichUna l
lot
tedappr
opri
ati
onswouldrepl
acea ppropri
ati
ons.Ift hisi
sde s
ire
d,a
combi ne
de nt
rytorec
ordthebudgetwouldbe(usi
ngthenumbe rsgiveninEnt r
ies1a nd2,omi t
ti
ng
entri
esins ubsi
dia
rya c
count
s––whichwouldbea sill
ust
rat
edpr evi
ousl
y,e xceptt hes ubsi
diar
y
ledgerc r
edit
si n Entr
y 2 woul d be des
ignat
eda s Unallotted A ppropriations inste
ad of
appropri
ati
ons):

General L edger Subsidiary L edger

De
bit
s Cr
edi
ts De
bit
s Cr
edi
ts
Est
imat
edRevenues.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
1.
.
,.
.
2.
.
7.
.
7,500
FundBal
anc
e..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
3.
.
5.
.
9,000
Unal
lott
edAppr opri
ati
ons..
..
..
..
..
..
..
..
..
..
..
..
..
. 1,362,
000
Est
ima t
edOtherFinanci
ngUs es..
..
..
..
..
..
..
..
. 274,500

I
fiti
sass
umedtha
t$342,000isthea
mountf
ormallyal
lottedf orthefi
rstpe
riod,thef ollowingent
ry
c
ouldbemadea
nda mountsal
lot
tedf
ore
achfunc
tionares howni nthesubsi
diaryledge re nt
rie
s:
General L edger Subsidiary L edger
De
bit
s Cr
edi
ts De
bit
s Cr
edi
ts
Unal
l otte
dAppr opria
tions...
..
..
..
..
..
..
..
..
..
..
..
.
3.
.
4.
.
2.
.
,.
0
..
0
..
0
..
..
..
.
Allot
me nt
s....
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
3.
.
42,000
A llotments L edger:
Genera lGove rnment.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 289,
000
Publi
cSa f
ety...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 53,
000

Illustration 2:
T own of A dama i nvolvesthef oll
owingbudge t
aryt ransact
ionsduringFi sca
lYe ar/BudgetYe ar
2001.
1. Itbudge t
edore st
ima te
dr evenuesofBr500, 000whi chinclude
sBr300, 000taxes
,Br60, 000
l
ice
ns ea ndpe r
mi t
s;Br40, 000i nt
ergovernmentalreve nues;Br50,000se r
vicechar
ges;Br30,000
f
inesa ndforfei
ts;andBr20, 000mi s cel
lane
ousre venue s.
2. Itbudge t
ede xpenditure(appropri
ation)ofBr450, 000whi c
hc ompr i
sedofBr120, 000Ge nera
l
Governme nt;Br150, 000Pu blicSa fet
y;Br100, 000Publ i
cWor ks:andBr80, 000Sporta nd
Cul
tur e
3. Br4, 000Ha llRe nta ndBr5, 000Pa r
kSe rvi
ceRe venueise ar
ne dandc oll
ect
eda sperCa sh
ReceiptsJournalPage1a ndPa ge2,r e
spect
ivel
y.

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 53
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
4. Ci tyofAda maPolic
eOffic
eOr derane wPr int
eronMe s
kere
m10,2001whic
hhadalis
tpr
icein
thesuppl i
er’
scat
alogBr10,000
5. TheCi tyPoliceOffi
cere
ceivedthePrinte
ronMe ske
rem24,2001
Instruction: Recor
dthefore
goingbu dget
a r
ya ndoperat
ingt
rans
acti
onsa
ndshowbudge
tar
ycontr
ol
overr evenues;andoverenc
umbr anc
esa ndexpe ndi
tur
es

Illustration 3:
1. As sumet hef or
goingbudgeta
rya ndoper
ati
ngtrans
act
ionse xc
epttha
tthegovernme
ntuses
a ll
otme nts ys
tem.TheTownCounc i
lall
ott
edBr100,000f orthefir
stthr
eemonthswhich
c ompr is
esBr30, 000publ
icsaf
ety;Br30,
000publ
icworks;Br20,000Gene
ralGove
rnment
;and
Br20, 000Cul t
ureandRecre
ati
on.
Instruction: Re
cor
dthea
bovet
rans
act
ionsa
nds
howbudge
tar
ycont
rolus
ingt
hes
ubs
idi
aryl
edge
r
a
ccount
.

C omputerized A ccounting Systems

 Comput er
ize
da ccounti
ngs yst
emsha vee volve
dt ome etthef unda c
countingne edsof
gover nment
 Reve nuea ndexpendi
turecl
a s
sif
ica
ti
onsa r
ea chi
evedthr
ought heus eofana ccountnumber
havingdi f
fer
entsegmentsorfi
elds
 A c urre
nt chall
enge isr edesi
gning fund-ba
seda ccount
ing i nfor
ma t
ion s ys
tems to
accommoda t
ethegove r
nme nt
-widea c
counti
nga ndfi
nancia
lre port
ingrequir
edbyGASBS
34

3.6) Budgeting and Its Usefulness in Government Organization

Budgeti
ngha sagrea t
erroleingove r
nme nt
ala ccountingt haninFor-Profi
tAc counti
ng.Budge t
si n
profi
tmakingente
rpr i
sesareusuallyfairl
yfle
xi bl
e ,andc anbec hangeda sconditi
onswa r
ra ntduri
ng
theyear
.InaFor -
Pr ofi
tEnterpris
e,mone yiss pentf orthepur poseofma kingmor emone y.Asl ong
astheFor-
Profi
tEnte r
pris
eispr ofi
table
,thespe ci
ficpur poseofthespendingdoe sn’
tma tt
ers omuc h,
aslongasiti
she l
pingtoc ont
ributetothebottoml ine.Simi l
arl
y,ifi
tisfeltthatapart
icul
a rusageof
mone yi
snotge nerati
nga ddi
tionalp r
ofit
s,andt he ns pendingmone yont ha tit
emc anc eased.The
profi
tmoti
veprovidestheguidet oempl oyres
our cesi nthe" r
ight"way.

Ont heot herhand,governme ntshavenopr ofi

tmot i
vetogui dether e
sourcesrepresentedbyt heir
budgetsintothe" ri
ght"usa ge.The ref
ore,theyrelyonlegalr e
quirementstoinsur ethatmone yi s
usedfort heappropri
atepur pose. Gove rnmentalbudget
s,onc ef ixe
dbyl awf ortheye ar,a re
genera
llyunc hangeablewi thoutmuc he f
fort
. Al ter
ingore xceedingthebudge tt ypic
a l
lyc a
rri
e s
sever
ep enal
ti
esf orthea dmi nist
ratorwhodoe sso.Givent heunc hangi
ngna tureofgove rnme nt
budgets,andthepe nal
ti
esf ornon- compliance,i
tlogic
all
yfoll
owst ha tt
hea c
countings yste
ms houl d
supportthebudge t
.Thea cc ounti
ngs yst
em,a ttheveryle
ast
,s houldgivethenec essaryinfor
ma ti
on
forkeepingwithinthebudge taryrestri
ct
ions.

Thepr
ima
ryus
eful
nes
sofFor
-Pr
ofi
tEnt
erpr
isebudge
tsi
spl
anni
ng,i
.e
.“Wha
tre
sour
cesdoweha
ve,

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 54
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
andhowc a
nwepl ant os pendt hemi nor dertoma ximizeprofi
t?”I ngove rnme nt
sals
o,t hebudge tis
alsous edforplanning,e speciall
yi nc l
arif
yingpr iorit
ygo al
s.Howe ver
,gove rnmentadmi nist
rators
oftenove r
lookthepl anninga spectsofabudge tandus ethegovernme ntbudgetprimaril
ya sac ontrol
device. Thegove rnme ntwi llha vec er
tainobj e
c t
ives,anditass
ignsr esources–mone y,pe r
sonne l
,
etc.–f orthea c
compl ishme ntoft hoseobj ect
ives.Thebudge tisawa yofc ontr
oll
ingt hea ssi
gne d
resources;ensur
ingt hatt heya reus edf orthei nt
e ndedpurpose
.I na ddit
iont otheprima r
yus eof
controlandt heseconda ryus eofpl anning,thebudge tprovi
desinformation t
ode ci
sion-ma kersand
indicat
estothepubl i
cwha tdecisions havebe enma dea bo
uttheobjectivesofthegovernme nt.

C lassification of Budget
Federal,Statea ndl ocalgove r
nme nt
sprepareandutil
izediffe
rentbudge t
s.Thus,Budge t
sa re
cl
as s
ifi
eddi f
fer
e ntl
yc onsi
deringdimensi
onssuchasExpendit
ureProgram,LegalSta
tus;Fle
xibi
li
ty;
Sourc eonFi na nce;a ndPrepa r
ers
.Budge t
sa r
ec l
assi
fie
da sCa pita
lorCur r
entba s
edont he
Expe ndit
ureProgram;Te ntat
iveorEna c
tedbase
donlegalstat
us;GeneralorSpeci
albasedonsource
ofFi nance;Flexibl
eorFi xe
dbudge tba s
edonf l
exi
bil
ity;andExe cut
iveorLe gi
slat
ivebasedon
preparersofbudge t
.
1. C urrent or C apital Budget
C urrent budgets,ofc ourse
,a r
econc ernedwi ththec urre
ntye ar
’sopera
tinge xpendit
ur es
,some ti
me s
calledRe currentExpe nditur
e sorOpe rati
ngBudge t,be c
auses i
milars
ortsofe xpendituresarene e
de d
yea raft
e rye ar.C urrent E xpenditures includes mone ys penttopa yf orgoodsors er
vices.The
currentexpe ndituresincludes a
lar
ies,wa ge s
,r e
pa i
rsa ndma int
enance,t
ele phones,petrol
,stati
onery.
Cur re
ntExpe nditur
e sarec a
tegori
ze dintwol ar
gegr oups :Sala
ryandBe ne fi
tsandNon- sal
ary.Non-
salaryisa l
soc all
edOpe rat
ingandMa intenance.O&M i ncl
udesexpenda blema t
e r
ialsands uppli
es,
tr
a vel
,repa i
ra ndma i
ntenance.

C apital budgets,obvi ously,de alwit

ht hea c qui
s it
ionoff ixeda sset
s.Thel egislaturewi lllike l
yt o
planf ort hea cqui s
iti
onsf ixeda sset
ss everalye arsi nadva ncewhi chisc a
ll
e dtheCa pitalPr ogr am.
Thisi sve ryhe lpfult owi sema nageme ntofr esources.TheCa pit
alProgrami sa c compl ishedby
incurringCa pit
alExpe nditurewhi chme ansa nout l
ayf orthea cquisi
ti
onofori mpr ove me ntoff ixed
assets,a ndi nclude se xpendituresma def orCons ultancys ervic
es.Thef oll
owinge xpe nditur es,for
mor etha nBr .200. 00,r e
qui r
ec apit
albudge tinEt hiopia:
 Thea cquisit
ion,r eclama ti
on,enhanc eme ntorl ayingoutofl andexclusi
veofr oa ds,bui ldingsor
othe rstr
uc t
ure s
 Thea cq uis
ition,c onstructi
on,pre parat
ione nha nc ementorr epl
acementofr oa ds,bui ldi ngsor
othe rstr
uc t
ure s
 Thea cqui s
ition,ins ta
llati
onorr e pla
c eme ntofmove a bleori mmova blepla nt,ma c hiner ya nd
appa rat
us ,vehiclesa ndve ssel
s.
 Thema kingofa dva nces,grantsorot herf i
na ncialass
is t
ancet oanype r
sont owa rdse xpe nditure
incur r
edort obei ncurredbyhi m/he ront hema t
tersme ntionedinthethreeabovepa ragraphs .
 Thea cquisit
ionofs harec api
talorloanc apitalina nybodyc orporat
e.Anya ssoc iatedc ons ultancy
costsofa l
loft hea bove

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it
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s
2. T entative or E nacted Budget –Asthenameimpli
es,tentative budget i
sabudge
twhichis
inst
illinpr ocess
.Thi sbudg etha
snotyetbeenoff
ici
al
lyapprove d.Anenacted budget ha
sbe en
off
ici
a l
lyapprove da ndisabi ndi
nglega
ldocument
.TheEna ctedBudge tcre
a t
esac
count
abi
li
tyfor
exec
ut i
ves.
3. F ixed or F lexible Budget –Af ixedbudgetaret
hoseinwhi chappr
opria
ti
oni sf
ixedfortot
al
amountBr .a ndt hee xpendi
tur
ec annotbeexceeded.Aflexiblebudget
,ontheotherhand,fi
xesthe
costpe runitofgoodsa ndser
vices.I fmoreunitsofgoodsa ndservi
cesaredesi
redbe c
auseofa
changei nci
rc ums t
anc esorne
ed,thedolla
ramountofaf l
exiblebudgetc
anbeincrea
sed.
4. General or Special Budget–t hebudgetsof“ GeneralGovernme nt
”Ac t
ivit
ie
swhi cha r
e
commonl yfinance
dt hroughtheGe nera
lFundsa rer ef
erre
dt oa sGeneralBudget
.InEt hiopia,t
he
Consolida
tedFundi saGe ne
ra lFundwhichfinanc e
sge nera
lgove r
nme ntact
ivi
ti
es."Cons ol
idat
ed
Fund"me ansa l
lpublicmoneyst hatar
eonde positatthec re
ditofanypubl i
cbodywhe ret hebank
accounthasbe enope nedbyt heMi ni
str
yofFi nanc eunderPr ocl
amati
onNo.17/ 1995;a llpubli
c
mone yshel
di ncashbya nypublicbodypendi
ngdi sburs
eme nt;a
nda l
laidinkind.Abudge tprepar
ed
foranyotherfundisrefer
redt
oa saSpeci
alBudget.
5. E xecutive or L egislative Budget – budge tsarea lsocategorizedbypr epar
e rs
.Budge t
prepar
ationisa nexecut
ivefunc t
ion,thoughthelegisl
ati
vema yrevi
s ethebudge tpri
ortoa pproval
.I n
somei nstance
s ,however,thel egis
lati
vebr anchprepare
st hebudget,pos s
iblysubjecttoe xecutive
vote;i
not herinst
ances,thebudge tma yorigi
natewithjoi
n tle
gis
lat
ive-executi
vec ommitt
e e(possibly
withciti
z e
nr eprese
ntati
ves)orwi t
hac ommi t
teecompos edsol
elyofc i
ti
zensorc onsti
tuents.Suc h
budgetsa r
efrequentl
yr efe
rredtobyt ermss ucha s“Executi
veBudge t
,”“ Legi
slati
veBudge t,”“Joint
Budget,”and“ CommonBudge t,
”r es
pe c
tivel
y.

A pproaches to Budgeting
Therea retwoa pproachest obudge ti
ng:Mode r
na ndTr aditiona l
.Themode r
na pproachtobudge ti
ng
issome ti
me sca l
ledRa tionalAppr oacht oBudge ting.Tha ti sbe c
a uset heya lladvoc aethinking
t
carefully aboutther el
ati
ons hipofi nputstoout puts,wi thas pecialconc er
nf ortheout puts
.Out puts
arethegoodsors e r
vicesa ctua l
lyprovided,input sa r
et her e source
st hatgoi ntotopr ovidi
ngthos e
goodsors e r
vices.Thi nkingc areful
lya ls
oi nvolve sa nalyzingt hec ostsa ndbe nefi
tsofa l
te
rnative
me t
hodsofa chievingobj ectives.Th eide athatl aw- ma kingbodi ess houl dfocusonbroad policy
objecti
ve sr at
hert handetails ofs pendingf orpa r
ticularde part
me ntsise mpha s
ized. Long- t
e r
m,
ult
ima t
egoa lsares tres
sedr a therthana nnualbudge tr eque sts. At tenti
oni sdir
e c
tedt ocontinual
evaluationofs erviceswhi cha rebe i
ngpe rforme d.Thet hre emode rna pproa c
hestobudge t
inga re
Performa nceBudge ti
ng;Planni ng-Programmi ng-Budge ti
ng( PBB) ;andZe ro-Base-
Budge ti
ng( ZBB) .

1. Modern A pproaches to Budgeting

A . Performance Budgeting – th
epe r
for
manc
ebudge
tfoc
use
sont
heout
put
sge
ner
ate
dbyt
he
de
pa r
tme
ntororganiza
ti
onalunit,ratherthanlookingprima r
ilyatthecostoftheinput
s. The
pe
rforma
ncebudgetismainl
yc oncernedwi t
honl yoneye a
ra tati
me .Ba s
ica
ll
y,theproce
ssof
makingt
hebudge
tma ybesumma ri
zeda sfoll
owsa ndtheproces
sissi
mi l
art
othefl
exi
blebudge
t:
 Thegovernment
alentit
yde ci
deswha ttypeofservi
cest
oof f
er
 Thecostofoneuni
toft heservic
eisca l
cula
ted

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 Theent
ityde
cide
showma nyuni
tsoft
heser
vicet
ooff
er
 Thebudgeti
sdet
ermi
nedbymulti
plyi
nguni
tsofs
ervi
cebyt
hec
ostpe
runi
t

ForExample,apri
sonholds1,000pris
oners
.Thec os
tofkeepi
ngapr i
sonerises
tima
tedat$5,000
peryear
.Thebudge tforthepri
sonfor1999thenwouldbe$5,000,000f orayear
.Howe ver,i
fthe
pri
sonactual
lyi
mprisoned800pris
onersin1999,thenth
ebudgetwoul dber educ
edto$4,000,
000,
andtheheadoft
heprisonwouldbeexpect
edtoreturnt
heext
ra$1,000,000.

B. Planning-Programming-Budgeting (PPB) – PPBe mphasi

z e
sbr oadpolic
ygoa ls
,strat
egie
s
andobj ecti
ves,ratherthandeta
ilsofs pending. Inl ookinga tt
hesebr oadgoa l
sa ndobjecti
ves,it
consi
de rslong-range plans. Int hoselong-ra
ngepl ans,bothul t
ima t
egoa lsa ndintermediat
e
objec
t i
ve smustbee xplici
tl
ys t
ated.Af terformula
ti
ngt helong-
rangepl ans,i
tthene val
uatescost
s
andbe nefi
tsofdi f
fer
e ntways ofme eti
ngt hegoa l
sa ndobjecti
ves . Ita l
soe mpha s
izesthe
governme nt’
sove ral
lprogram,rat
he rthanas peci
fi
cde pa rt
ment.Fori nstance
,boththeMi nist
ryof
He a
lt
ha ndtheMi nis
tryofEd uc
a t
ionmi ghthavesomes ortofAIDSpr ogram–onef ortr
eatmentand
onef ore ducat
ion.I ftheideaofPPBwe r
ea dopted,bot hofthesepr ogramswoul dbel ookeda t
toget
hert oseeiftheycompl e
me nt
e de a
chotherinme eti
ngt hegovernme nt’
soveral
lobject
ives.

C . Z ero-Base-Budgeting (Z BB) – ZBBi soneme t

hodofconti
nual
lye valuat
ingprogramsa nd
services.Thepr imar
yide aofZBBi sthateach program mustj
usti
fyitsexiste eevery year.No
nc
progr amisassume dt
obec onti
nui
ngf rom oneye artothenext
.I nthi
sa pproach,thest
arti
ngpoint
fort hebudgete a
chyeari szero.Fi rs
ttheprogrami tsel
fmustbej us
ti
fied,thendi f
fer
entwa ysof
ca r
ryingouttheprogr
ama ree xami
ne dandthebestisc hose
n.

L imitations of the Modern A pproaches to Budgeting

Alloft hesemode rna pproa che sa r
ethe oreti
c a
llysound.The yha veverygoodi deasaboutimproving
performa nc
ea nda na lyzi
nge xisti
ngpr ograms ,whichma ybeus edi nbudge t
ing. Howe ver
,t hey
ignoret wopr ac
ticalr eal
itiesofbudge ting.Onei sthatthebudge tproc e
ssitsel
fi sverypolit
ical
.
Thos ewhoc ont
ributet othebudge tproc essareof t
ennotobj ecti
ve,ands ometi
me strytoma ni
pul at
e
thepr ocessforthe i
rownga in.Ea c
hoft hea bovea ppr
oac hesma ybee asi
lyma nipula
tedint he
polit
icalprocess
.Thes e
c ondpr acti
calr ealit
yt heyignoreist hene e
df orave ryhighlevelofskill
,
unde r
standing,time,a ndpa pe rworkt oi mpleme ntthesea pproaches.Ca rr
yingouta nyoft hese
mode rnbudge tapproac hesc ons ume sma nys c
arceresourcesbyi t
s e
lf.

2. T raditional A pproaches to Budgeting

Forther ea
sonsstat
eda bove,themode r
napproacheshav enotbeenadopteda swidelyasmi ghtbe
expect
ed.Thet radi
tionalapproa chtobudgeti
ngisc a
lledObject-
of-
Expenditure(OOE)a nditisst
il
l
themos twidel
yus e
d.I tisals
oc all
edLine-i
temExpe ndit
ureBudgeti
ng.Tha tis,i
temsareli
stedli
ne
bylinea l
ongwi t
hthea ppropriationtohaveinbuil
tcontrolinthebudget
ings yste
m.Thea i
m ofthe
OOEbudge tiscontr
olli
nge xpe ndit
ures.TheOOEi sno tsoconcer
neda boutthenumbe rorquali
ty
ofoutputsgener
atedbyt hespe nding;iti
sconcernedwiththeitempurchased.Appliedtotheconte
xt
ofaunive r
sit
y,OOEwoul dbemor econcer
nedwi t
hma kingsureeachdepartmentusednomor ethan
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it
ie
s
it
ssupplyofpaper,rat
hert
hanwit
hthequa
li
tyofeduca
ti
ongi ve
n,ort
henumberofdiplomasand
degre
esawarded.Theobjec
ti
veoftheOOEbudgeti
stosimplyli
ste
xpe
ctedexpe
ndit
ure
s,andthen
sayhow muc hisr e
quir
edforea
chone.A Fede
ralGovernmentofEt
hiopi
anbudgetisatypica
l
exampleofOOEbudge ti
ng.

3.7) Budgeting Process in E thiopia: Historical Sketch and the C urrent

Scenario
Thefirs
tme nti
onofagove r
nme nta lbudgetinEthiopi
anl awwa sint he1931c onsti
tution,inAr t
icle
55.The1931c onsti
tut
ionwa ss upe r
sededin1955byr evisedc onsti
tuti
on.Thef irstgove rnme ntal
budgetappea r
eda ttheendof1944a ndcoveredthefis
calye ar1945.Abudge talsowa spubl ishedf or
1946,butthiss e
condbudge tappe aredonlyal i
ttl
emor ethanawe ekbe forethee ndoft heye a rthatit
covere
d.Af terlapseofs e
venye a
r sinwhi chnobudge tofa nyki nda ppe a
red,af ormofbudge twa s
publi
shedf or1953a snotice
sofMi nist
ryofFi nance.Itc oul dnotber egardeda spr ope rbudge t
,
however,asi tappearedaft
erthee ndoft heye arandtookt hef ormofmi nis
terialnoti
c erathertha na
st
atut
ee nactedbyapa r
li
ame nta nda pprovedbyt hee mpe r
or .Itthuswa smor ei nthena tureofa
st
atementofgove rnmentalre
ve nue sande xpendit
uresforpr eviousye ar
,pr obablypa rtlya ctua
la nd
part
lyesti
ma ted.

Thene xtbudge ttobepublis

he dwasfor1958,a ndthatyea
rcanbec onsider
edtheturningpointint
he
developme ntoftheEt hi
opia
nbudge t
.The1958budge tintheprope
rs enseofthewor disa nest
imat
e
ofantici
pa t
edr evenuesandexpendi
turestha
tc ouldbeus edasaninstr
ume ntoffis
calc ontr
ol.I
twas
enact
e dbypa r
liamentandissuedasapr ocl
ama ti
on,asrequir
edbyt her e
visedconsti
tuti
onof1953.
Ina ddit
ion,i tma rkedthebe gi
nning oft hepe r
iod ofuninter
rupteda nnuale nactmentofa
governme ntalbudget

Budget C ycle in E thiopia

Budgetisame chanismf ort r
ansf
e r
ringfundst ogove r
nme nta
lbodya ndapr oc edureforcont r
olli
ng
tha
tbody’sa ct
iviti
es.I
tr epresent
sbot hastat
e mentofresourcestobema dea va ila
bleandas t
ateme nt
ofp l
ann
e df ut
ur eoperations.Thes uc c
essi
ves tagesinbudge ti
nga r
eknowna sthebudge tcycle.
Budgetcycleinge nera
linvol vesthePr e
parat
ion( Formulat
ion);Revi
ew&Appr oval(Authorizat
ion);
andExecutionoft hea nnua lbudget.InEthiopia,budgetsareprepar
eda ccordi ngt oana uthori
tati
ve
budgetc
a l
enda r.Theca l
enda rwillschedul
et hese ve
npha sesofbudgeti
ng:( 1)Ca ll
,(2)Re quest
,( 3)
Recomme nda t
ion,(4)Appr oval,(
5)Not if
icat
ion,(6)Ope r
ationand(7)Exec ution.

Thefirst phase,Ca l
l,iswhe nthec oordinati
ngMOFEDa ske a
chpubl i
cbodyt opr epa reabudge t
reques
ta ndwoul dpr ovidethebudg etc eil
ingforthepublicbody.Thesecond phase,Re quest
,is
whe npubl i
cbodi essubmi tthei
rr e
que stforr ec
urre
nta ndc a
pitalexpendi
turetot heMi nis
tryof
Financea ndEc onomi cDe vel
opme nt
.Thethird phase,Re comme ndat
ion,isarevie
wbyt heMOFED
ofthea ge ncyrequest
sa ndthenar ecomme ndati
onforeacha ge
ncyba sedonar ecomme nde dc e
ili
ng
forthet otalcapit
alandr ecur
rentbud get.Thefourth phase,Approval,hastwos t
a ges:a pprovalby
theCounc ilofMi ni
stersanda ppr
ova lbyt heCounc i
lofPe opl
es’Re pres
entat
ives( t
hePa rli
ament).
Phase five isNotifi
cati
onwhe r
etheMOFEDnot if
ythepublicbodiesoftheirapprovede st
ima t
esof

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it
ie
s
revenuea nde xpenditurebyc la
ssofa ccountandl i
neitem.Thesixth phase ofbudgeti
ng,Ope ra
tion,
ha st
hreet asks:(I)Pr e
pa ra t
ionofa ctionplansforf i
nancia
la ndphysicalimpleme nt
at
ionwhi cha re
submi t
tedt oMOFED a ndt hePr imeMi nist
er’
sOf fic
e( PMO) ;(II
)t heelaborat
ionoft heseacti
on
plansfori nterna
lus et oi mpl e
me ntt hebudge t
;a nd(III)theesta
blishmentofa nope ra
tingbudge t
linkedtoa ccountsforfina nc i
alc ontro
l.Theseventh phase ofbudgeti
ngi sExe cut
ionwhic hhasthree
tasks:(I
)Re questanda djus tmentf ort r
ansfer
sa ndsuppleme nt
aryallocat
ions;(I
I)Prepa r
ati
onofa
mont hl
yr eportont hef ina ncialandphys ic
ala c
tionplanst otheMOFED a ndthePMO;a nd( II
I)
identi
fi
cationofTr ans f
ers 2

Overview of the F GE Budgeting, T reasury and A ccounting Processes

I
nFGE,t herearefourdi
ffe
rentproc
e s
seseachofthemhavingdist
inctact
ivi
ti
e s
.Thes
eproc
e s
sesa
re
BudgetRequestandApprovalproce
s s
;AnnualDistri
but
ionoftheAut hor
ize
dBudge t
;Monthl
yFGE
Repor
tingFlowsa ndAnnualFGEFi nanc
ialRepor
tingwhichar
epre s
entedinthedi
agra
mbelow.

Annua
lFGEBudge
tRe
que
sta
ndAppr
ova
lPr
oce
ss
1. Year
lybudgetre
que
stf
rombudget
aryins
ti
tut
iontot
heminist
ryoff
ina
ncebudge
tdepar
tment
2. Compli
edyearl
yFGEbudgetr
equesti
ssubmitt
edbytheMini
str
yofFina
nceBudgett
othePri
me
Mini
ste
r’sOffi
ce
3. The FGE budgetissubmit
ted By The Prime Mini
st
er’sTo The Counci
lOfPe opl
es’
Repr
esent
at
ives

Annua
lDi
st
ri
but
ionoft
heAut
hor
ize
dBudge
t
4. Theannua lFGEbudge tisapprovedbytheCounci
lofPe ople
s’Repr
esent
at
ivesandpubl
is
hedin
t
heNe garitGa z
eta.
5. Theapprove dbudgeti
sdist
ributedtoMOFEDAudi t,Treas
uryandBudgetDepar
tment
6. Noti
fic
ationo ftheFGE budge tdeta
ilisfor
wardedt oAc c
ount
s,Treas
urya ndBudget
ary
Ins
ti
tut
ions .Thebudgetdet
ailisrec
ordedi
nthepre
sc r
ibe
df or
m.

FGERe
por
ti
ngFl
ows
7. Mont hlyca shre questa res u
bmi t
tedbyBudge ta
ryI nsti
tuti
ontot heTr eas
ury(Cas
hDi sburs
ing
andCol l
ectionDe partme ntoft heMOFED) .Tr ea
suryve rif
iesther eques
tandc ompa resthe
request
swi ththea uthor iz
e dbudget
8. Mont hlydistri
but i
onf romTr ea s
urytoBudgetar
yI nst
it
utions.Dist
ribut
ionrepor
tedt
oAc count
s.
9. Mont hlyrece i
ptsa nde xpenditure
sreport
sforwardedbyBudge ta
ryI ns
tit
uti
onstoAcc ounts
.This
i
sve ri
fi
eda gainsti nt heNe ga r
itGazeta
,budge ttransfer
sa nd/oradditi
onsandt hemont hly
Tre a
suryRe ports.
10. Re quest
sa nda ppr ovedbudge ttra
nsfe
rsanda dditi
onsa reforwardedbyBudge tDe partmentto
Budge t
a r
yI nsti
tutions,Ac countsandTreasur
y.

2
Budge
tPol
ic
yPa
per
,Se
pte
mbe
r25,1998
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ie
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Annua
lFGEFi
nanc
ialRe
por
ti
ng
11. Annualfinanc
ialr
epor
tforward
e dbyAc count
stoAuditorGener
alandt hePri
meMi ni
ste
r’s
Off
ice
12. Thea udi
tedfi
nanci
als
tat
ementiffor
wardedbyAuditt
otheCounc
ilofPeople
s’Repr
ese
nta
ti
ves
13. Theapprovedaudi
te
dannualf
inancia
lst
ate
me nt
sar
epubli
shedi
ntheNe ga
ritGaz
eta.

Overview of the F GE Budgeting, T reasury and A ccounting Processes

Negarit 4 C ouncil of
Gazeta 13 Peoples’
R epresentatives

3
5
12 Prime Minister’ s
11 Office 5
5

A udit 11 A ccounts 6 Budget 6 T reasury

Department 10 Department 10 Department

8
9
10 1 6 8 7

Budgetary Institutions

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ie
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Preparation of R ecurrent Budget at F ederal level by MOF E D

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Step 1 Preparation of Macro F ramework

Step 2 A llocating Public E xpenditures between the F ederal and R egional Governments

Step 3 A llocating between recurrent and capital budget at F ederal level

Step 4 Budget call and ceiling notification by MOF E D

Step 5 Submission of Budget Proposal to the MOF E D

Step 6 Budget hearing with the MOF E D

Step 7 R eview and recommendation by MOF E D

Step 8 T he MOF E D shall present the compiled budget to the C ouncil of Ministers

Step 9 Submission to the C ouncil of Peoples’ R epresentatives

Step 10 Notification and Publication

Step 11 A llotment

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Preparation of C apital Budget at F ederal level by MOF E D

Step 1 Preparation of Macro F ramework

Step 2 A llocating Public E xpenditures between the F ederal and R egional Governments

Step 3 A llocating between recurrent and capital budget at F ederal level

Step 4 C apital Budget C all

Step 5
C apital Budget R eview

Step 6 C apital Budget Hearing and Defense

Step 7 Submission to the C ouncil of Ministers

Step 8
Submission of the Draft C apital Budget to the C ouncil of People’ s

Step 9 Notification and Publication of the C apital Budget

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Preparation of C apital Budget at R egional level by SNNPSG - BOF E D

Step 1 Budge
tCa
llwi
thpr
e-c
eil
ing

Step 2 W oredas Pre-ceiling budgeting

Step 3 C ompilation of the pre-ceiling budget

Step 4 Determination of the regional expenditure envelop

Step 5 A llocation of the regional envelop between capital and recurrent

expenditure

Step 6 A ssignment of budget ceiling by the region

Step 7 A pproval of the budget by the R egional C ouncil

Step 8 Publication

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3.8) L egal Basis of the F ederal Government of E thiopia (F GE ) A ccounts

Thef oll
owi nga relegalba si
sofFGEa ccount s:
1. Ar ti
cle55oft hec onst
it
uti
onoft heFe de ralDe moc r
ati
cRe publicofEthiopiar ecogniz
est hata
mode rnande ff
icientfinanci
aladmi ni st
rations ys t
emise ss
entialtoawe l
l-
functi
oninggove r
nme nt
2. Pr ocl
ama ti
onNo. 57/1996–pur suantt oAr t
icl
e55oft hec onsti
tut
ionofFe der
alDe moc rati
c
Re publi
cofEt hiopia,theCounc ilofPe opl es’Re pres
entat
ivesde termineditwa sne ces
s ar
ytos etout
theba si
cconc epts
,pr i
nc i
plesande leme ntst ha tgovernthema nageme ntoffinancialresourc
esi nthe
FGE.
3. Re gulationNo. 17/1997–t her egulationsa r
ei s
suedbyt heCounc ilofMi nist
erspur s
ua ntto
Ar t
icl
e5oft hede fi
nitionofPowe rsa ndDut iesofExe cut
iveOr gansoft heFGE,Pr oc l
ama t
ionNo.
4/1995,andAr ticl
e68ofFGEPr oclama tionNo.57/ 1997
4. Di rect
ive s–pur sua ntt
oProc lama t
ionNo. 57/1997a ndRe gul
a t
ionsNo.17/ 1997,theMi nistryof
Financeisa uthorizedtoi ss
ueDi rectives.Si xdi rect
ivesiss
ue dbyt heMi ni
stryofFi nancea r
e:
 Adi rec
tivefor“Re tentionofFi na nci
alRe c
ords
 Adi rec
tivefor“De btMa na ge me nta ndInvestme nt”
 Adi rec
tivefor“Fina ncialRe spons i
bil
it
iesofMe mbe r
sofPubl icBodi es”
 Adi rec
tivefor“Fe esa ndCha r
ge s ”
 Adi rec
tivefor“Publ icPr ope rty”
 Adi rec
tivefor“Pr oc ureme nta ndc ontr
a c
ts”

Feder
alRevenue Mone yfor
m Money Anyothermoney Aidin
(
Taxes,Fee
s& s
aleofFeder
al f
romLoans rec
eivedfr
om ki
nd
multi
la
ter
alor
Charge
s) Securi
ti
es
bi
la
ter
alagre
ements
,

PUBL IC MONE Y

WHATI STHE
I
NTENDED
PURPOSEOF
THEMONEY?
(
THEPLANNED

ForGene
ral ForSpeci
fi
c
Pur
poses purpos
es
C ONSOL IDA T E D F UND
SPE C IA L F UND
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RECURRENT CAPI
TAL
SPE C IA L PR OJ E C T
BUDGET BUDGET
E X PE NDIT UR E S
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GE NE R A L V IE W OF PUBL IC MONE Y IN E T HIOPIA A T F E DE R A L L E V E L

F L OW OF PUBL IC MONE Y INT O A ND OUT OF T HE C ONSOL IDA T E D F UND

BUDGE T A R Y NON-BUDGE T A R Y

R evenues: T ransferred Others: Unspent Other:

 Direc tt
axe s/ Acct1100/ R eceipts: E xternal Budget  Gov’tBorr
owing
I ndirectt
a xe s/Acc t1200/  Ac
count
sfr
om A ssistance: andInt
.Loans
 For e
ignTr a deTa xe s/Ac ct1300/ 4000–  Counte
rpartGrant /5001–5200/
 Cha rges&Fe es/
Ac ct1400/ 5999 /
2100/  CustomsDeposi
ts
 Salesofgo ods&Se rvices/Acct  Techni
calAssi
st
a nc
e /5300–5400/
1500/ /
2200/  OtherDepos
it
s
I nvestmen tI ncome /Ac ct1600/ /5401–6000/
C apital R eceipts:
 Mi s
c el
la
ne ous/ Ac ct1700/
 Domest
ic/
3100/
 Pens i
onRe v/ Acc t1800/
 Count
erPa
rtLoan
 Ext r
aordina ryRe v./Ac c
t1900/

C ONSOL IDA T E D F UND

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T he General (C onsolidated) F und

TheFGE ha se s
tabl
is
hedt heCons ol
idat
edFundi nor dert oc ontrolr es
tri
cte
da ndde signat
ed
re
s ourc
e sandt obothensureanddemonstr
atecompl i
ancewi t
hlegala nda dminist
rat
iver equi
rements
.
TheCons olidat
edFundi sas epara
tefis
cala nda ccounti
nge nt
ity( i
ncludi
ngc asha ndnon- c
ash
re
s ourc
e saswe llasrel
at
e dli
abil
it
ies
).TheCons ol
idat
edFundi nvolve sana ccount
ings epara
ti
on,not
necessari
lyt hephys i
cals epar
ati
onofr esour
c es
.Howe ver,resourcesa r
eof te
na lsophys i
cal
ly
segregat
e d/fore xampletheus eofs e
para
teba nka ccount
sf ortheva ri
ousc ashr e
s ource
soft he
Cons ol
idatedFund/

Proclamati
onNo.57/ 1996speci
fic
a l
lypr
escri
besthattherewil
lbeonlyoneCons ol
idatedFundinto
whi c
ha llpubl
icmone yshallbepa i
dunlesstherearespeci
ficexce
pti
onsthatareallowedbyla w.
Unde rProcl
amationNo.57/1996,theConsol
idatedFundistobema i
ntai
nedanda dminis
tere
dbyt he
Mi ni
s t
ryofFinance.Underit
sma nagementresponsi
bili
ti
esfort
heConsoli
da t
edFund,t heMini
stry
ofFi nancehasthea ut
hori
tytoope nbanka ccount
sf orthepurpos
eofde posi
ti
ngmone yint
ot he
Cons oli
dat
edFund

F lows of Public Money into the C onsolidated F und

1. FeesandCharges–FessandCha r
gesar
epaymentsmadebyus
ersofpubl
ics
ervi
cesa
nd
goodstopubl
icbodi
eswhosuppl
ythos
egoodsors
ervi
ces
.

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2. PublicDe bt–a not
hersour
cesofpubli
cmone yf ortheCons ol
idat
edFundi sthr
oughthe
abil
ityoftheFGEt orai
semoneythr
oughtheiss
uanceofpublicdebt
3. Unspe ntFunds–underFGEa c
count
ingregul
ati
ons,attheendofe a
chfisc
alyea
rtheunspe
nt
bala
nc eofa nappropr
iat
ionistobec r
edite
dtot heTr ea
suryAc countoftheMinist
ryof
Finance.

F lows of Public Money Out of the C onsolidated F und

TheFGEa c c
ount i
ngs ys t
emi sba sedona ppropr iati
ons.Appr opri
a t
ionsa retheba sisbywhi chpubl i
c
moneyisauthorizedt obepa i
doutoft heCons ol
idatedFund.Pr oc l
ama tionNo. 57/1996s tatesthatno
dis
burs
eme nt
ss hallbema def rom t heCons olidateFundwi thoutt hepr i
ora uthoriza t
ionofa n
appr
opri
ati
onbyt heCounc i
lofPe oples’Re pre sentat
ives.Theoutf l
owsi nclude:
1. Payme ntofPubl i
cDe bt–r epayme ntofpubl i
cde btobli
ga t
ionsoft heFGEi sa ne xpendit
ure
whichi spa yableoutoft heCons olida t
edFund.Ther epayme ntcha rgepa yableoutoft he
ConsolidatedFundi nc lude snotonl yt her e
payme ntofpr inc i
pal,buta lsoi ntere
sta nd
administrat
ivee xpense sre la
tedt obot hdi rectadvancesands ecur it
ie
si ssue
dbyt heFGE.
2. Commi t
me nt s–t hemi nistr
yofFi na nc e’sproceduresspe cif
iest hef ormi nwhi c hfinancia
l
commi tme ntsa gainstbudge titemsmus tber egis
teredbyt hepubl icbody.
3. Payme ntsf orGoodsa ndSe rvices–t her egulat
ionsrelatedtot hepa ymentofs uppliersand
contr
actorsc overbot hthepr ocedure sf orma kingpa ymenta ndthet ype sofpa yme ntsthatcan
bema de.
4. OtherPa yme nts

3.9) C lassification of Governmental R evenues and E xpenditure A ccounts

with Special R eference to E thiopia
Gene
ral
ly,r
eve
nuesandexpendi
tur
esofgove
rnmenta
lfun
dsaref
ir
stc
lass
ifi
edonFundbas
is.Wit
hin
ea
chfund,r
evenue
sa r
eclas
sifi
edbas
edons our
cesandwit
hinea
chsourcebas
edonsub-s
ourc
e,if

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neede
d.Wi
thi
nea
chFund,e
xpe
ndi
tur
esa
rec
las
sif
iedba
sedons
ect
or,pr
ogr
am,pr
oje
cta
nda
ccount
(obj
ect
)

T he F GE C hart of A ccount: Details of C oding for A ccounting Unit

and A ccounts
R eporting or A ccounting Unit / Sector C odes
R ecurrent E xpenditure Organization:
100 – 199 Admi nis t
rati
vea ndGe ne ralServi
ces
200 – 299 Ec onomi cSe r
vic e
s
300 – 399 Soc ialSe r
vices
400 – 499 Va r
iousAc count s
500 – 599 Budge tSuppor tRe giona lSub-CodesandOt herCodes
600 – 699 Re serve d
C apital E xpenditure Organization:
700 – 799 Ec onomi cDe velopme nt
800 – 899 Soc ialDe vel
opme nt
900 – 999 Admi nis t
rati
vea ndGe ne ralServi
ces/Bui
lding/
A C C OUNT S C ODE S:
R evenues:
1000 – 1999 Budge tar
yRe venue
2000 – 2999 Ext e rnalAs si
s t
anc e
3000 – 3199 Count erPartFund
3400 – 3999 Ext e rnalLoa ns
Non-budgetary R evenues and E xpenditures:
4000 – 5099 Ca shBa l
ance sandCa shTransfe
rs,AdvancePayme nt
sand
Interna lBorrowings
5100 – 5299 Gove rnmentBor rowi nga ndInte
rnalLoans(Treas
uryBil
ls
,
Bonds ,etc)
5300 – 5399 Cus tomDe pos i
ts
5400 – 5999 Ot he rDe pos i
ts
E xpenditures:
6000 – 6999 Re current
7000 – 7999 FGEAs s
ist
anc eont heRe curre
ntBudget

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8000 – 8999 Ca
pit
alExpendi
tur
e
9000 – 9999 Re
ser
vedforfut
ureus
e

Sample F GE C hart of A ccounts: C odes for A ccounting Unit/Sector:

Services
Sector
Head
Sub-Head
100 Admi
nis
trat
ionandGeneralServi
ces
110 Orga
nsofState
112 CouncilofPeople
s’Repr
ese
nta
ti
ves
01Off
iceoft
hePresidentandRe gi
onalcounc
ils
02Counci
lofPeopl
es ’Repre
sentat
ives
01Economi cPermanentCommi t
tee
02Soci
a lPermanentCommi t
tee
120 J
ust
ic
e
121Mini
st
ryofJust
ic
e
123Fe
deralSupr
emeCourt
124Ta
xAppe alCommis
sion
130 Nati
onalDe f
ence
150 Genera
lSe r
vice
s
200Economi
cSe rvi
ces
210Agr i
culture
220Tradea ndI ndust
ry
230Mi nesandEne r
gy
240Tour i
sm
250Transpor tandCommunica
ti
on
260Cons t
ruc ti
on
270Economi cDe ve
lopme
ntSt
udy
300Soci
alSe
r vi
ces
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ie
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310Educat
iona ndTrai
ning
320Sport
s
330Healt
h
340LaborandSoc i
alServi
ces
350Reli
efandRe habi
lit
ati
on
400Ot
herSe
rvic
es
410Pensi
onPa yments
420Publi
cDe bts
430Conti
ngencies
440Safe
tyNe t
450Subsi
diestoRegions

Sample F GE C hart of A ccounts: A ccount C odes for A ccounts

1000 R E V E NUE S
T A X R E V E NUE S
1100 Direct T ax
1101Pe rsona lIncomeTa x
1102Re nt a
lI ncomeTa x
1103Bus i
ne ssProfit/
IncomeTa x
1106Ta xonDi vi
de ndsa ndCha nceWi nni
ngs
1200 Indirect T axes
Exc iseTa xonl oca ll
yma nufac
tureGoods
1201Pe troleum
1205Suga r
1206Sa lt
1207Sof tDr inksa ndMi ne r
alWa t
er
1300 F oreign T rade T axes
Cus tomsDut yI mpor t
edGo ods
1301Mot orVe hiclesandAc ces
s or
ies
1302Ma chine s
,Ca pitalgoodsandAc ce s
sor
ies
1303Bui ldingMa teri
alsa ndMe tal
s
NON-T A X R E V E NUE S
1400 C harges and F ees
1401Pa ss por
tsa
ndVi
sas
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ie
s
1402Re gist
rati
onofFor ei
gner
s
1405Wor kPe rmits
1406Cour tFines
1407Cour tFees
1410For e
s t
ryLicenseFees
1411Hous ingLicense
1500 SalesofGoodsa ndSe r
vice
s
1600 Gove rnme ntInve st
me ntIncome
1700 Misc el
laneousRe venue s
1800 PensionCont ribution
1900 ExtraordinaryRe ve nues
2000 Exte
rnalAss
ista
nc e
3000 Capit
alRece
ipts
6000 Ordi
naryRecurr
e ntExpenditure
6100 PersonnelSe rvices
6101 Sa lariesforCivi
li
anEmpl oyees
6102 Al lowa ncesforCivil
ianEmployee
s
6103 Sa lariesforMili
taryandPoli
ce
6200Non- PersonalandCont ract
ualServic
es
6300Ma teri
alsandSuppl ies
7000Ext e
rnalAss
ista
nc e
8000Ca pit
alExpendi
ture

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s

C hapter F our
A ccounting for Governmental Operating A ctivities:
Illustrative T ransaction and F inancial Statements
T opics to Be Discussed:
 GeneralFund(GF)
 Ill
ustrat
iveCa s
e :Be ginni
ngFinancialSt
atement
sforOperat
ingFunds
 Ill
ustrat
iveJourna lEntrie
s:Recordi
ngTr ansa
cti
onsduri
ngtheFY
 Interi
mFi nancialSta t
eme nt
s
 Eve ntsSubseque nttoDa teofI
nteri
mFi nanci
alSta
tements
 Speci
alRe ve
nueFunds( SRFs )
 Int
erf
undAc ti
vityandOt herCommonTr ansact
ionsoftheGFa ndSRFs
 PermanentFunds(PFs)

L earning Objectives:
Af
terst
udyingthi scha pt
e r
,yous houldbea bleto:
 Re c
ogni zetypica loperat
ingt ra
nsacti
onsf orthegove rnme nta
la ctivit
iesandprepareappropr
iat
e
journalentr
iesa tbotht hegove r
nme nt
-widea ndf undlevels
 Prepa r
eande x plaininter
imf inanci
alstat
e mentsands c
he dules
 Distingui
shbe t
we ene xchangea ndnon- e
xc hangetransacti
ons,a ndde finet
hec l
assi
fica
ti
onsused
fornon- e
xcha nget ransac
tions
 Prepa r
eadjustinge ntri
esatye ar-
endandapr e-cl
osingtrialbal
a ncef ortheGeneralFund
 Prepa r
eclosingj ournalentrie
sa ndyear-endGe neralFundf inancials t
at
e ment
s
 Ac c
ountf orinterfunda ndi nt
ra-ac
ti
vityandi nter
-acti
vitytrans
a cti
ons
 Ac c
ountf ortrans act
ionsofape rma ne
ntf und

4.1) T he General F und

I
nCha pter3,theus eofge ner
alledgerbudge t
arycontr
olac
count
sandr
ela
tedope
rat
ings
tat
eme
nt
ac
countswe r
ee xplai
ned.
Gener
alledgerbudge t
ar yc ont
rolaccount
sinclude
 Es ti
ma tedreve nue
 Es ti
ma tedothe rfina
ncingsource
s
 Appr opr i
ati
ons
 Es ti
ma tedothe rfina
ncinguses
 Enc umbr ances
Andrel
a t
edOpe rati
ngSt a t
e mentcontr
olaccountsinc
lude:
 Re venue
 Ot herfinancings ources
 Expe nditure
s
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ingAc
ti
vit
ie
s:I
ll
ust
rat
iveTr
ans
act
iona
ndFi
nanc
ialSt
at
eme
nts
 Ot he rfinancingus esha vebe endi scus sedinde t
ail
Thene ces s
ityofs ubs idi
aryl edge rtha ts uppor tsthebudge tar yc ont rola ccounta ndt heirr el
ated
stat
eme nta cc ountisa lsodi sused.Int hisc ha pter,commont ransa ct
ionsa nde ve ntsa r
isi
ngf rom t he
operati
nga ctivit
iesa nda ppropriateacc ount inge ntri
esandf i
na ncials tateme nt
sofa nypot e
ntiallocal
governme ntaluni twi llbepr esenteda nddi s cussed.Ope ra
tingt ransa ct
ionsa nde vent
sa f
fe ctthe
governme ntalunit’sgove rnme ntwi dea c count ingr ecor
dsa ndf inancia lstateme ntsa swe l
la sthos eof
itsGene r
a lFund.Thus ,tr
ansa ct
ionsa rer ecor de d,whe r
ea ppropr i
ate,i nbot hthege ne r
aljourna lused
tocollectf i
na ncialinforma t
ionf orgove rnme nt–wi definancialre portinga ndt hege nera
ljour nalfor
theGe nera lFu nd.Subs idiar
yl edgerac count sa swe l
lasgenerall edge ra ccountswi l
lbei l
lustratedfor
theGe nera lFund.Thea c
countings tr
uc tur ei l
lus t
r a
tedinthisc hapt e
ri se ntire
lya pplic
abletos peci
al
revenuef undsofs tateandl ocalgove r
nme ntaluni taswil
la stoge ne ralfunds .

4.1.1) Illustrative C ase: Beginning F inancial Statements

Ass
umet ha
ta tt
heendofaf i
sca
lyear,2005thefol
lowinggover
nment–wideSta
tementofNet
Ass
ets(
onlyforgove
rnme
nta
lacti
vit
ie
s)andthegener
alfundbal
ances
heeti
spr
ese
ntedfort
hetown
ofJ
IMMA.
T OW N OF J IMMA
ST A T E ME NT OF NE T A SSE T S
DE C E MBE R 31, 2005
Primary Government
Gove
rnment
al Busi
ness
-Type Tot
al Compone
nt
Act
ivi
ti
es Act
ivi
ti
es uni
ts
A ssets
Ca sh Br.477,500
Inve stme nt s 1,339,040
Re ceiva bl es(net) 653,338
Ca pitala s set
s(net) 19,330,018
T otal A ssets 21,799,896
L iabilities
Vouc he rspa yable 320,
000
Ac crue dI nt
erestpayable 50,
000
Duet of e deralGove r
nme nt 90,
000
Cur rentpor ti
onofLon-t e r
mde bt 200,
000
Bondspa yable 3,
300,
000
Tot alLi a bil
iti
es 3,
960,
000
Net A ssets
Inve stedi nc apit
a la
ssets
,netofre
lat
edde
bt 15,830,018
Re stri
c tedf orDe btservi
ce 1,659,978
Unr estric ted 349,900
T otal Net A ssets Br 17,839,896
 TheGe
ner
alFundBa
lanc
esSh
eet
T OW N OF J IMMA
GE NE R A L F UND BA L A NC E SHE E T
Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 74
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s

A S OF DE C E MBE R 31, 2005

A sset
Cash 190,000
Taxesrece
ivabledeli
nquent...
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..660,
000
Less:Est
ima t
edunc ol
lec
tibl
edelinquentta
xes..
..
..
..
..
..
..
..
..
..
..
.. 50,
000 610, 000
Int
eres
tandpe nal
tie
sreceivabl
eont axes
..
...
..
..
...
..
..
..
..
..
..
..
..
.
..
..
..
..
..
..
..
..
. 13,200
LessEs t
imateduncoll
ecti
bleint
erestandpenalt
ies.
..
..
..
..
..
..
..
.. 3,300 9,900
Tota
lAs set
s..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 809, 900
L iabilities A nd F und E quity
Liabil
it
ies:
Vouc he
rsppa yabl
e...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 320,
000
Duet ofederalgovernment .
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 90,
000
Totalli
abili
ti
es .
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 410,
000
FundEqui ty:
Reserveforenc umbrance2005...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.127,000
Fundba l
a nce
....
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..272,
900
TotalFundEqui t
y..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 399,900
Totalli
abili
ti
esa ndfunde quit
y..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 809,900

Measurement F ocus and Basis of A ccounting

Asdi sc
usse
di npreviouschapter
s,theGovernment W ide Statement of Net A s
set
sr eportsfinanc
ial
posit
ionusi
ngt heeconomi cre
sourcesme asur
eme ntf
ocusandtheaccrualbas i
sofa ccounting––usi
ng
accounti
ngprincipl
ess i
mila
rt oac count
ingf orbus ine
sse nt
it
ie
s.I nc ontrast
,t heGe neralFund
BalanceSheetreport
sf i
nancia
lpositi
onus i
ngt hec ur
rentfi
nanci
alresourcesme asureme ntfoc usa
nd
themo dif
ieda ccr
ualba sisofa c
count i
ng.Alt houghbothoft heses tat
eme ntsre pr
esentf inanc
ial
posit
ionatt
hes amepoi ntint
ime,evenac ausalc omparis
onreveal
sdrama ti
cdi ff
erences.

Government W ide Statement of Net A ssets

 Report
sbothca pita
la s
set
sa ndlongt er
ml i
abil
itie
s
 I
nformati
onr eportedi nthegove rnme nt
alactivi
tie
sc ol
umnoft heStat
eme ntofNetAs s
ets
i
nclude
sf i
nancialinformati
onf orallgover
nme ntalact
ivi
ti
es,notjus
tfort
heGe nera
lFund
 GASBr ecomme ndedNe tAs se
tForma t–As set
smi nusli
abil
iti
esequal
snetasset
s
 Report
sinfor
ma t
ioninamor econde ns
edma nnerthantheGe ner
alFundbala
nc eshe
et

General F und Balance Sheet

 Repor
tsonl
ycurr
entfi
nanc
ialr
esour
cesandcur
rentli
abi
li
ti
est
obepa
idf
romc
urr
entf
ina
nci
al
r
esour
ces
 Repor
tsonl
yrec
ourse
sandobli
gati
onsoftheGe
neralFundonl
y

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 75
 Ac
count
ingf
orGove
rnme
nta
lOpe
rat
ingAc
ti
vit
ie
s:I
ll
ust
rat
iveTr
ans
act
iona
ndFi
nanc
ialSt
at
eme
nts
 Tr
adi
ti
ona
lba
lanc
eshe
etf
orma
t–As
set
sequa
lsl
ia
bil
it
ie
sandf
unde
qui
ty

Thea r
it
hme t
icdif
fer
encebet
we ent otalfinanc
ialr
esourcesa
ndt ot
all
iabi
li
ti
esofthefundist
hefund
equit
y.Inthebalanc
esheetofJ IMMATown,apor ti
onoff undequi
tyisrese
rvedbe c
ausenotal
l
purcha
seorderiss
uedintheF iscal Y ear 2005wasf i
lle
dbyt heendofthatye
ar.Apor ti
onoffund
equit
ythatisres
erve
dforthepur chas esorderout
standingi
ss howninthebal
ancesheetasReser
ve
forEncumbrance
.

Ap ort
ionoff undequi
tynotreser
vedforexpendi
tur
eisknowna sFundBa la
nce(Avai
labl
efor
Appropri
at
ion).Thi
sist
hee xc
essoffi
nanci
alr
esource
soveract
ualli
abi
li
ti
esandamount
sexpect
ed
t
obe comelia
bili
ti
eswhengoodandser
vice
sonorderatba
lanc
esheetdat
aarer
ecei
ved.

4.1.2) Illustrative J ournal E ntries: R ecording T ransactions during the F Y

1. R ecording the Budget
Abudgets
houl
dbere
corde
dintheaccountofeac
hfundforwhic
habudgetisl
ega
ll
yadopt
ed.The
t
ota
lest
imat
edr
eve
nueandappr
opr
iat
ionforFis
calYea
r(FY)2006isa
sfol
lows:

TheTownCounc i
la ppr
ovedrevenuebudgetofBr3, 986,
000anda ppropr
iat
ionbudgetofBr
4,180,
000.Est
ima t
edRe venueconsi
stsofBr2,600,000Proper
tytaxes;Br13,000I nter
est&
penalt
ie
sonde l
inquentta
xes;Br408,000sa
lest
axe
s;Br220,000li
censesandpe r
mit
s;Br308,000
Finesandfort
ie
s ;Br280,000Inter
gover
nmenta
lre
venue ;Br70,
000Cha rgesforse
rvi
ce;andBr
15,000Misc
ell
aneousrevenue

TheAppr opr
iat
ionbudgetincl
ude sBr660,000Gener
algove rnme nt;Br1,240,
000Publicsa
fet
y;Br
910,
000Publicwor ks
;Br86 0,000He at
handwe lf
are
;Br315, 000Pa rksandrec
reat
ion;Br180,
000
Cont
ribut
iontoreti
rementpla
ns ;andBr15,000Miscel
laneousa ppropria
ti
ons.Onthefir
stda
yofthe
newfisca
lyearthefol
lowingjournale
ntrywouldberecorded.

General L edger
General F und: Debits C redits
1. Es
ti
mat
edRe
venue
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 3,
986,
000
FundBal
anc
e..
..
..
..
..
..
..
..
..
..
..
..
.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 194,000
Appr
opri
ati
ons.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 4,180,000
Subsidiary L edger
Debits Debits

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 76
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s

R evenue L edger:
PropertyTa xes.
..
..
...
..
..
...
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 2,
600,
000
Intere
stsa ndPe nalti
esonDe li
nquentTaxes..
..
..
..
..
. 13, 000
SalesTa xe s..
..
..
..
..
...
..
..
...
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 480,000
Licensesa ndPe r
mi t
s..
...
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 220,000
Finesa ndFor feit
s...
..
..
...
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 308,000
InterGove rnme ntalRe venue..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 280,000
Cha rgesforSe r
ves..
..
..
...
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 70, 000
Mi scel
lane ousRe venue...
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 15, 000
A ppropriation L edger
Ge neralGove rnme nt..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 660,
000
PublicSa fety..
..
..
...
..
..
..
...
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 1,240,
000
PublicWor ks...
..
..
...
..
..
...
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 910,
000
He alt
ha ndWe l
far
e...
..
...
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 860,000
Parksa ndRe crea
tion..
...
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 315,
000
Cont r
ibutionst oRe ti
reme ntPl
ans..
..
..
..
..
..
..
..
..
..
..
..
..
. 180,
000
Mi scel
lane ousAppr opriati
on..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 15,
000

I
tispo
ssi
blet
ore
cor
dthee
sti
mat
edr
eve
nuea
nda
ppr
opr
iat
ions
epa
rat
elyasf ol l
ows:
General L edger
Debits C redits
Esti
ma tedRe ve nue s...
....
...
..
...
.....
...
..
..
..
..
...
..
....
..
...
..
..
..
.. 3,986,000
FundBa lanc e .
..
..
...
....
...
...
..
.....
...
..
..
..
..
...
...
...
..
...
..
..
..
.. 3,986,000
FundBa l
ance. ..
...
..
...
..
.....
..
...
..
.....
...
..
..
...
..
...
..
...
...
..
...
..
..
.. 4,180,000
Appr opriations .
..
...
.....
...
..
..
..
..
...
...
...
..
...
..
..
..
.. 4,180,000
Whe nt hetwoe nt
riescombi nedt oge thert heywi llprovi dethea bovejournalentr
y.
 I fe s t
ima t
edr evenuei sgr eatert ha na ppr opri
ation,the nthereisabudge t
arysurplusa ndthefund
ba lancea ccountwi l
lha veac reditba l
a nc e.
 I ft her eversesit
uati
one xist
st herei sabudge t
aryde fi
citandthefundba l
ancea c
c ountwi l
lhavea
de bitba la
nc e.
The“ Es ti
ma tedRe venue ”l edgera c counti sknowna spot enti
ala s
set
,be c
a useitr
eflectsrevenuetobe
rece
ive ddur i
ngt hef i
sc alpe r
iod.Ont heot herha nd,t he“ Appropriati
ons”l edge raccountis
consi
de reda spot e
ntiall
ia bilit
ies,be caus ei trefl
ectsthel egisla
ti
vebody’ sc ommitme nt.
Thema jorr eas
onsf orrec ordingt hebudge taryentrya re:-
1. Re c or
dingthebudge ti niti
atest hea ccountingpr ocessforeachf unds
2. Re c or
dingthebudge tf ac i
lit
iest hepr eparationoff inanc
ialstatementthatc ompareactua
l
amountofr e ve nuea nde xpe n diturewi t
ht hebudge t
.

2. T ax A nticipation Notes Payable

Thetrea
sure
rofthetownwouldli
ket
ofore
castt
heamountofcas
hne e
dedt
ocove
rit
scur
rent
l
iab
ili
tyandit
sdi
sbur
seme
ntbef
oret
hemaj
ori
temsofr
eve
nuearec
oll
ect
ed.

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 77
 Ac
count
ingf
orGove
rnme
nta
lOpe
rat
ingAc
ti
vit
ie
s:I
ll
ust
rat
iveTr
ans
act
iona
ndFi
nanc
ialSt
at
eme
nts
Cur re
ntLi a
bilit
ies(2005––Ba lanceShe et
)
Vouc herpa ya bleof .
..
..
....
..
...
..
..
..
...
...
...
..
..
....
..
..
..
...
..
..
...
..
..
..
..
..
...
..
..
..
3
.20, 000
Duet ot hef ede ralgove rnme nt..
..
....
..
..
..
.....
..
..
..
..
..
...
..
..
...
..
..
..
...
..
..
..
.90, 000
Total..
..
.....
...
....
...
..
...
..
..
....
..
...
..
..
..
...
...
...
..
..
....
..
..
..
...
..
..
...
..
..
..
..
..
...
..
..
..
4
.10, 000
 As sumet hatdisbur seme ntisonef ourthoft hebudge tedappropr i
at
ionwhi chi s4,180, 000,thusit
is4,180 ,
000@ =1, 045, 000
 Tot a lc
a s
hr equireme nt=410 ,
000+1, 045,000=1, 455,000
Expe r
ienceindicatestha tac onservativef orec
a stofc ol l
ecti
onsofde l
inquentta xesa ndi nterestand
penalt
iesthereondur ingt hef orecastpe ri
odwi llamountt o425, 000Br .
.Fur ther,thet reasurer’
s
revi
ewo ft
hei temsofEs tima tedRe ve nuebudge tindic ate
sthata tleas
t140,000Br .wi llbec oll
e ct
ed
inthef orecaste
dpe riod.The r
efore,t ot
a lcasha vai
la bletome etthe1, 455,000di sburseme ntsis
755,000Br .(190,000c a sha va il
ablea tthebe gi
nni ngoft heperiod,pulsethe425, 000and140, 000Ta x
rece
ivablede li
nque nt,i ntere standpe naltie
sa ndr eve nuesrespe ct
ivel
y)leavingt hede ficiencyt obe
me e
tbybor r
owi ngof700, 000Br .fromt heloca lbanksbypr oviding“ TaxAnt icipati
onNot e”tothe
bank.Thee ntrytor ecordbor r
owi ngwoul dbea sf oll
ows :
General L edger
General F und and Governmental A ctivities: Debits C redits
2. Ca
sh.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.7
.
.0
.
.0
.
.,
.
.0
.
.0
.
.0
.
..
Ta
xAnt
ic
ipa
ti
onNot
esPa
yabl
e..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 700,
000

3. A ccounting for E ncumbrances

Pur
cha
s eorde
rforma t
eri
alsandsuppli
eswereis
suedinthetot
a la mountof306,450,whi chc onsi s
ts
ofBr28,000Gene r
alGove r
nment;Br72,000Publi
cSafety;Br160, 000Publi
cWor ks;Br36, 000
Par
ksandRe c
reat
ion;Br10,000HeathandWe l
far
e;andBr450Mi sc
ellane
ousAppropr i
ation
General L edger Subsidiary L edger
General F und Debits C redits Debits C redits
3. Enc umbr a
nce-2006. .
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.3
.
.0
.
.6
.
.,
.
.4
.
.5
.
.0
.
..
..
..
..
..
.
Reser
vef orEncumbr ances
-2006..
..
..
..
..
..
..
..
. 306,450
E ncumbrance L edger:
Ge neralGovernme nt 28,
000
Publ i
cSa f
ety 72,
000
Publ i
cWor ks 160,
000
Pa r
ksa ndRe cr
e at
ion 36,
000
He alt
ha ndWe lfar
e 10,
000
Mi scell
aneousAppr opr
i a
ti
on 450

4. Payment of L iabilities
Checksweredr
awntopaythevouche
rpayabl
ea ndt
heamountduetot hef eder
algove
rnmenta
sof
2005.Ent
rytor
ecor
dthepa
ymentforGener
alFundandGove
rnmenta
lAc ti
vitie
swouldbe:
General L edger

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 78
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s

General F und and Governmental A ctivities: Debits C redits

4. Vouc
her
sPa
yabl
e..
..
..
..
..
..
..
..
..
.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.3
.
.2
.
.
.0
.
.,
0
.
.0
.
.0
.
..
.
Duet
oFeder
alGovernment 90,000
Ca
s h.
..
..
.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
...
..
.. 410,
000

Notethatiti
snotne ces
saryint hea boveentr
yf ortheGe ner
alFundtoknowwhi cha ppr
opr
iat
ions
werea f
fec
tedattheti
megoodsa ndse r
vice
sgivingrisetotheli
abi
li
ti
eswe rere
c ei
ved,beca
useunder
t
hemodi f
ieda c
c r
ualbasisa ppli
cabletot heGe neralFund,thea ppropr
iat
ionswe reconsi
dered
expendedinthepri
oryear,2005,whe nthegoodsa ndservi
ceswerere
c ei
ved

5. Payrolls and Payroll T axes

Thegr os
spa yofe mployeesofge nera
lfunddepar
tment
sa mount edt o252,000.De ductionsf rom
grosspayfortheperi
oda mo untto19,278forempl
oyee’
ss ha
reoft axforthef e
deralgove r
nme nt
,
25,200employee’sf
ederalwithhol
dingtaxand5,
040employees’s ta
tewithholdi
ngtaxe s
.TheEnt ry
intheGeneralFundis
:
General L edger Subsidiary L edger
General F und Debits C redits Debits C redits
5a. Exp endi
ture2006. .
..
..
..
.....
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
2.
.
5.
.
2.
.
,.
0
..
0
..
0
..
..
..
..
..
.
Vouc herPa yable..
. ..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 202,482
Duet oFe deralGove rnment..
..
..
..
..
..
..
..
..
..
..
..
..
. 44,478
Duet oSta t
eGove r nment..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 5,040
E xpenditures L edger:
Ge neralGove rnme nt 35,
040
Publ i
cSa fe
ty 156,
120
Publ i
cWor ks 29,
160
Pa r
ksa ndRe crea t
ion 19,
080
He alt
ha ndWe lfare 12,
600

Ina ddit
ion thefol
lowing ent
ry woul
d bere
quir
edtore
cor
dthepayr
oll
str
ansa
cti
on i
nthe
governme nt
alact
ivi
ti
esge ne
raljour
nalatt
hegover
nme
nt–widel
eve
l,usi
ngtheacc
rua
lbasi
s
(expens
esr a
thert
hanexpendi
tur
es):

General L edger
General A ctivities Debits C redits
5b. Expe
nse
s––Gene ralGovernme nt.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
3.
.
5
..
,
.0
..
4
..
0
..
..
..
..
..
.
Expe
nse
s––PublicSa f
ety.
..
...
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
.156,120
Expe
nse
s––PublicWor ks..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
.. 29,160
Expe
nse
s––Parksa ndRe c
reati
on...
..
..
..
..
..
..
..
..
..
..
.. 19,080
Expe
nse
s––Hea lt
ha ndWe lf
are...
..
..
..
..
..
..
..
..
..
..
..
..
. 12,600
Vouche
rPa ya bl
e..
..
..
...
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
. 202,482
DuetoFe deralGovernme nt.
..
..
..
..
..
..
..
..
..
..
..
. 44,478

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 79
 Ac
count
ingf
orGove
rnme
nta
lOpe
rat
ingAc
ti
vit
ie
s:I
ll
ust
rat
iveTr
ans
act
iona
ndFi
nanc
ialSt
at
eme
nts
Duet
oSt
at
eGove
rnme
nt.
..
..
..
..
..
..
..
..
..
..
..
..
..
. 5,
040

 Paymentoft
hevoucherforthenetpayr
esul
tsi
nthef
oll
owi
nge
ntr
yinbot ht heGe
ner
alFund
andgover
nment
alac
tivi
ti
esjourna
ls:
General L edger
General F und and Governmental A ctivities: Debits C redits
6. Vouc
her
sPa
yabl
e..
..
..
..
..
..
..
..
..
.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.2
.
.0
.
.2
.
.,
.
.4
.
.8
.
.2
.
..
Ca
sh.
..
..
.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
..
..
..
. 202,
482

I
nasmucha st
het ownisli
abl
efortheempl
oyer
’sshar
eofta
xforfedera
lgove
r nment19,
278Br.a
nd
f
orcont
ri
buti
onst oaddi
ti
onalre
ti
rementpl
ansest
abl
ishe
dbystat
el awass
ume dtobe5,400Br.for
t
hepayperiode nded.Theobli
gati
onswereprovi
dedforinthea ppr
opr
iat
ionsbudgetunde
rt he
c
apt
ion“Contr
ibuti
ontoRetir
ementPla
ns”.

General L edger Subsidiary L edger

General F und Debits C redits Debits C redits
7a. Expendit
ur e––2006. ..
..
..
..
.
...
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
2.
.
4.
.
,.
6
..
7
..
8
..
..
..
..
..
.
Duet oFe de r
alGovernme nt
..
..
...
..
..
..
..
..
..
..
..
. 19,278
Duet oSta t
eGove rnment...
..
..
..
..
..
..
..
..
..
..
..
..
. 5,400
E xpenditures L edger:
Cont ribut
iont oRetir
eme ntPlans 24,
678

E ntry 7b i
sal
sor
equi
redt
ore
cor
dthepa
yrol
lexpe
nseont
hea
ccr
ualba
sisa
tthegove
rnme
ntwi
de
level.

General L edger
Governmental A ctivities: Debits C redits
7b. Expe
nse
s––Gene ralGovernme nt.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
3
..
,
.4
..
3
..
0
..
..
..
..
..
.
Expe
nse
s––PublicSa f
ety..
..
..
.
...
...
..
..
..
..
..
..
..
..
..
..
..
..
. 15,289
Expe
nse
s––PublicWor ks..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
.. 2, 856
Expe
nse
s––Parksa ndRe cr
eati
on...
..
..
..
..
..
..
..
..
..
..
.. 1, 869
Expe
nse
s––Hea lt
ha ndWe lf
are...
..
..
..
..
..
..
..
..
..
..
..
..
. 1, 234
DuetoFe deralGovernme nt.
..
..
..
..
..
..
..
..
..
..
..
. 19,278
DuetoSta t
eGove rnment .
..
..
..
..
..
..
..
..
..
..
..
..
..
. 5,400

6. R ecording Property T ax L evy

Theesti
ma t
edr e
venuefor2006for
mpr oper
tytaxesle
viedf
romtheTownofJ IMMA Ge ne
ralfund
i
sBr .2,600,000.Ifrecord
sofpr opert
yt a
xc ol
le
cti
onpolic
ya ndchangesinloca
le conomic
condi
ti
ons,indi
catet
hatapproxi
mat
ely4% ofthegrossta
xlevywil
lneve
rbecoll
ect
ed,t
hegrosstax

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 80
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
l
evymustbel ar
geenough,sotha
tthec ol
lec
ti
blepor
tionofthel evy;96%,equa l
sthene ededr evenue
fr
om t
hiss our
ce2,
600,000.Theref
ore,thegros
slevyofpr ope rtytaxe
sforthege neralfundoft he
TownofJ IMMA mus tbe2,708,
333(2,600,
000/0.
96).
General L edger Subsidiary L edger
General F und: Debits C redits Debits C redits
8a. TaxesRe c
eivabl eCurrent.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
2
..
,
.
7.
.
0.
.
8.
.
,.
3
..
3
..
3
..
..
..
..
..
..
..
..
Estima t
edUnc ol
lec
tibl
eCur r
entTaxes.
..
..
..
..
..
. 108,
333
Re venues....
...
.
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 2,600,
000
R evenues L edger:
Prope rt
yTa xes..
..
..
..
..
..
..
..
..
..
..
.
..
..
..
..
..
..
..
..
..
..
..
..
..
. 2,
600,
000

General L edger
Governmental A ctivities: Debits C redits
8b. Ta
xesRecei
vabl
eCurre
nt..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
2.
.
,
.7
.
.0
.
.8
.
.,
.
3
..
3
..
3
..
..
..
Esti
matedUncol
le
cti
bleCurre
ntTa xes
..
..
..
..
..
.. 108,
333
Genera
lRevenue
s–Pr ope
rtyTaxes..
..
..
..
..
..
..
..
. 2,
600,
000

7. R ecognition of E xpenditure/E xpenses for E ncumbered Items

Whe ns uppl i
esa nds e r
vic esor dereddur ingt hec urr
entye arha vebe enr ecei
ve da ndf oundt obe
acceptabl
e ,thes uppliers,orc ontract
orsi nvoi cess houldbec he ckedf ora gr
eeme ntwi t
hpur chas
e
orderorc ontractpricesandt erms ,a ndforc ler
ic alaccuracy.Ife verythingisinorde r,theinvoicesar
e
approvedf orpa yme nt.If,asispr oba bl
e ,thee stima t
edliabil
ityf orpur chaseordera ndc ontract
swa s
recordedint hee nc umbr ancea c counta ndi nt hea ppropriat
es ubs idiaryaccounts,thee nc umbranc
e
entrymus tber everseda nde xpe ndit
uresmus tber ecordedi nt hec ontr
ola cc
ounta nda ppropri
at
e
subsidi
a r
ya c
counti nthea mountoft hea ctualliabili
tyforgoodsors e r
vicerecei
ve d.As sumeGoods
andSe rvicesordereddur ing2006byde partme nta ccountedforbyt heTownofJ IMMAGe nera
lFund
arere c
e i
ve d.Invoicesf ort hei temsr ec e
ivedt ota
lBr269, 450;r elatedpurchaseor derst ot
aledBr
269,775.
Invoice Price Purchase Order
Ge ne r
alGove r
nme nt..
.....
..
..
..
...
..
...
...
..
..
....
..
..
....
..
. 12, 300 12,250
Publ icSa f
ety..
...
..
...
...
..
...
...
...
..
..
..
...
..
...
..
...
....
..
...
..
..
. 72, 000 72,000
Publ icWor ks. .
..
....
..
...
..
....
...
..
..
..
..
...
...
..
..
.....
..
...
..
..
.150, 000 150, 900
Pa rksandRe creati
on. .
..
....
...
..
..
..
..
...
...
..
..
.....
..
...
..
..
. 30, 000 30,000
He a l
thandWe lfare. .
..
..
....
...
..
..
..
...
..
...
..
..
.....
..
...
..
..
. 4, 100 4,175
Mi sc e
llaneousAppr opriati
on....
..
...
...
..
..
.....
..
..
...
..
. 450 450
Tot al.
..
..
...
..
...
..
...
..
...
...
..
...
...
...
..
..
..
...
..
...
..
...
....
..
...
..
..
.269, 450 269, 775

 J
our
nale
ntr
ytor
eve
rsee
ncumbr
anc
eswoul
dbe:
General L edger Subsidiary L edger
General F und: Debits C redits Debits C redits
9. Re
ser
vef
ore
ncumbr
anc
es––2006.
..
..
..
..
..
..
..
..
..
..
2
..
6
..
9
..
,
.
7.
.
7.
.
5.
..
..
..
..
..
..
..
..
..
..

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 81
 Ac
count
ingf
orGove
rnme
nta
lOpe
rat
ingAc
ti
vit
ie
s:I
ll
ust
rat
iveTr
ans
act
iona
ndFi
nanc
ialSt
at
eme
nts
Encumbr a nc e
s––2006. .
..
...
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
. 269,775
E ncumbrances L edger:
Gene ralGove rnme nt...
..
..
..
..
..
...
..
..
..
..
..
..
..
..
.. 12,250
PublicSa fety.
..
...
..
...
..
...
..
..
..
..
..
...
..
..
..
..
..
..
..
..
.. 72,000
PublicWor ks....
..
...
..
..
..
...
..
..
..
..
..
..
..
..
...
..
..
..
.. 150,900
Parksa ndRe cr
e at
ion..
..
...
..
..
..
..
..
..
..
..
...
..
..
..
.. 30,000
Hea lt
ha ndWe lfar
e. .
...
..
..
..
..
..
...
..
..
..
..
..
..
..
..
.. 4,175
Misc ell
a ne ousAppr opriat
ion..
..
..
..
..
...
..
..
..
.. 450
10a. Expenditure ––2006. ..
...
.
..
...
...
..
..
..
..
..
..
..
..
..
..
..
..
2.
.
6.
.
9.
.
,.
4
..
5
..
0
..
..
..
..
..
....
..
..
..
.
Vouc he rPa yable––2006. .
..
...
..
..
..
..
..
..
...
..
..
..
. 269,450
E xpenditures L edger:
Gene ralGove rnme nt...
..
..
..
..
..
...
..
..
..
..
..
..
..
..
.. 12,300
PublicSa fety.
..
...
..
...
..
...
..
..
..
..
..
...
..
..
..
..
..
..
..
..
.. 72,000
PublicWor ks....
..
...
..
..
..
...
..
..
..
..
..
..
..
..
...
..
..
..
.. 150, 600
Parksa ndRe cr
e at
ion..
..
...
..
..
..
..
..
..
..
..
...
..
..
..
.. 30,000
Hea lt
ha ndWe lfar
e. .
...
..
..
..
..
..
...
..
..
..
..
..
..
..
..
.. 4,100
Misc ell
a ne ousAppr opriat
ion..
..
..
..
..
...
..
..
..
.. 450
As sumingt hatt het ownus espe r
iodicinventoryme thodsanddoe snotcapi tal
izei tsinventoryof
suppliesunlessthe ya rema teri
al,itwouldrecordpurcha s
esofs uppli
esini
ti
a ll
ya sdirectexpensesof
t
hef uncti
onsa cqui ringt hei te
msa ss howni ne ntr
y10b.( TheBr450e xpe nditurec har
gedt o
Mi scell
aneousAppr opria
tionswoul dmos ta ppropri
atel
ybec onsi
deredadi r
ecte xpenseoft he
Ge neralGove rnme ntFunc ti
ons .
)
General L edger
Governmental A ctivities: Debits C redits
10b. Expe
nse
s––Gene ra
lGovernme nt.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
1.
.
2
..
,
.7
..
5
..
0
..
..
..
..
..
.
Expe
nse
s––PublicSafe
ty.
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 72,000
Expe
nse
s––PublicWorks..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..150,600
Expe
nse
s––ParksandRe cr
eati
on...
..
..
..
..
..
..
..
..
..
..
.. 30,000
Expe
nse
s––Hea l
thandWe lf
are..
..
..
..
..
..
..
..
..
..
..
..
..
.. 4, 100
Vouche
rsPa yabl
e..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
. 269,450

8. R evenue R ecognized on C ash Basis

Revenu
ef rom t
hefoll
owi ngs ourcesnotpr eviousl
ya ccruedi sre
cogni
zedont
hec
ashba
sis
.
Coll
ect
ionsar
eass
umedt obea sfol
lows:
 Licenseea ndPermit
s..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
...100000
 Finesandf orf
eit
s..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
...151,
000
 Chargesf orSer
vices..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
... 7,000
 Mi s
ce l
laneousRevenues.
..
..
...
...
..
..
..
..
..
..
..
..
.. 1,200

 TheEnt
ryt
ore
cor
dthet
rans
act
ioni
nGe
ner
alFundJ ournali s
:
General L edger Subsidiary L edger

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 82
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s

General F und: Debits C redits Debits C redits

11a. Cash...
....
.
...
....
..
..
..
..
..
..
..
...
..
..
..
...
..
..
..
..
..
..
..
..
..
.
2.
.
5.
.
9.
.
,.
2.
.
0.
.
0.
..
..
..
..
...
..
..
..
...
..
.
Re venue s..
..
...
.
..
..
..
...
...
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 259, 200
R evenues L edger:
Lice nsea ndPe r
mi t
s....
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 100,000
Fine sandFor feit
s..
...
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
. 151,000
Cha rgesf orServices...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 7,000
Mi scella
ne ousRe venue..
...
..
..
..
..
..
..
..
..
..
..
..
..
. 1,200
Oft hea bover e
ve nues,Licensesa ndPe r
mitsandCha r
ge sforSe rvi
cesarede eme dbyt het ownof
JIMMAt obepr ogramr evenue sattheGove r
nme nt
- WideLe vel.Licens
esa ndPe rmitsarea tt
ribut
ed
totheGe neralGove rnmentf uncti
ona ndCha r
gesf orservic
e swe rerec
eivedf r
om t hecus tome r
sof
thePa rksa ndRe creati
onDe part
me nt.BothFinesa ndFor feit
sa ndMi sce
llaneousa rerec ordedas
generalrevenue satt hegove r
nme ntwidelevel.
General L edger
Governmental A ctivities: Debits C redits
11a. Ca
sh.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
2
..
5
.9,
200
Pr
ogramRe venues––Chargeforser
vices––Genera
lGove r
nme nt..
..
..
..
..
..
..
..
. 1
00,
000
Pr
ogramRe venues––Chargeforser
vices––Par
ksandRe creat
ion.
..
..
..
..
..
..
..
..
. 7,
000
Gener
alRevenues––FinesandForfeit
s..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 1
51,
000
Gener
alRevenues––Mi s
cell
aneous..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 1,
200

9. C ollection of Delinquent T axes

De l
inquenttaxesa r
es ubjecttointer
e s
tandpe nal
tie
st ha tmus tbepa ida tthetimet hetaxbil
li s
collect
ed(paid).Itispossibleforagove r
nmenttorecordt hea mountofpe nalt
iesatthetimethetaxes
becomede l
inquent.Interestma ybec omputedandr ec
or dedpe ri
odic
a ll
yt oke eptheac c
ountont he
accrualbasi
s;itmus tal s
obec omputedandrecordedfort hepe ri
odfromt heda teoflas
tr ec
ordi
ngt o
theda t
ewhe nat a xpaye rpaysitsdeli
nquentta
xe s
.As s
umet axpaye
r softhet ownofJ IMMA ha ve
paidde li
nquentt axestotaling440,000Br .
,onwhi chi nte r
estandpe nalti
esofBr8, 800ha dbe en
recordedasar eceivablea ttheendof2005;f ur
therassume600Br .additi
onali nt
eres
tswa spai
df or
thepe r
iodfromt hef i
rstdayof2006t othedateonwhi chde l
inquentt
axeswe r
epa i
d.

 Thee
ntr
ytor
ecor
dint
ere
sta
ndp
ena
lt
ie
sof2006woul
dbe:
General L edger Subsidiary L edger
General F und: Debits C redits Debits C redits
12a. I
nter
e standPe nal
tie
sRe ce
ivabl
eonTa xes..
..
..
..
..
..
..
..
..
..
..
6
..
0
..
0
..
..
..
..
Re venues....
..
..
.
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 600
R evenues L edger:
I
nt eres
ta ndPe nal
ti
esonDe li
nquentTa xes.
..
..
..
..
..
. 600

 Thec
orr
espondi
nge
ntr
yatt
hegove
rnme
nt–wi
del
eve
lis
:
General L edger

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 83
 Ac
count
ingf
orGove
rnme
nta
lOpe
rat
ingAc
ti
vit
ie
s:I
ll
ust
rat
iveTr
ans
act
iona
ndFi
nanc
ialSt
at
eme
nts

Governmental A ctivities: Debits C redits

12a. I
nte
res
tandPe nal
tiesRecei
vabl
eonTa xes
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
6
..
00
GeneralRevenues––Int
eres
tandpenal
ti
e sonDe l
inquentTaxes
..
...
..
..
..
..
..
..
.. 600
 Thec oll
ect
ionofde l
inquentt
axes,i
nte
resta
ndpe nalt
iesissumma r
izedinthefollowi nge nt
ryi
n
boththeGene r
alFunda ndGovernmenta
lActivit
ie
sjournals
.
General L edger
General F und and Governmental A ctivities: Debits C redits
13. Ca
sh 449,
400
TaxRecei
vabl
e––Deli
nquent
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 440,
000
I
nter
esta
ndPenalt
ie
sRe ce
ivabl
eonTa xes..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 9,
400

10. C orrection of E rrors

Nopr obl
ema ri
seinthecoll
ect
ionofc ur
renttaxesiftheya r
ec ol
lecteda sbill
ed,thecol
le ct
ionsare
debi
tedtoc a
sha ndcre
dite
dt oTa xe
sRe cei
vable-current.Some ti
me,e veni nawe lldesigneda nd
welloperat
edsyste
m,e rr
orsoccura ndmus tbec orr
ected.E xample: Thea s
sessedvaluati
onofa
parc
elofpropert
ywe r
elegal
lyreducedbutthetaxbillerroneousl
yi s
sueda tthehighervaluat
ion,the
fol
lowingcorr
ect
ionentr
ywoul dbema dewhe ntheerrorwa sdiscover
ed,a ss
umi ngthecorrectedbil
l
tobeBr .
364smallt
hantheori
ginalbi
ll.

General L edger Subsidiary

L edger
General F und: Debits C redits Debits C redits
14. Revenue s..
..
..
....
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
3.
.
6.
.
4.
..
..
..
..
..
.
...
..
..
..
..
..
..
.
Taxe sRe ce i
vabl
e––Current.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.364
R evenues L edger:
Pr
opertyTa xe s.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 364

As i
mi lare ntrywoul da lsobema deatt hegove r
nme nt-widele ve ltoc orr
e cttheove rst
ateme ntof
Ge ne r
alRe ve nuesa ndTa xe sRe ce i
vabl
e ––Cur rent.Pos tauditma ydi sc l
os eerrorsint her ecordingof
expe ndit
ur e
sdur ingt hec urre ntye ar
,ordur ingapr iorye ar.Ifthee rroroc curreddur i
ngt hec urrent
year,t heExpe ndituresa c
c ou nta ndthepr ope rExpe ndituressubs idiarya c
c ountc anbede bit
e dor
crediteda sne ededt oc orrectt he m.I fthee rroroc c urredi napr iorye ar,howe ver,theExpe nditur
e s
accounti na ne rr
orha sbe enc lose dtoFundBa lance ,sol ogical
lyt hec orre ct
inge ntrys houldbema de
tot heFundBa lanc ea ccou nt.The“ allinc lusivei ncomes ta
te me nt”pr acti
cet ha tisc ons i
de r
e d
appropr i
atef orpr ofitseekinge ntit
iesdoe snotha vee quala cc
e ptanc ei ngove r
nme ntalaccount i
ng
beca useoft hegre aterimpo rtanc eofle galc ons tr
aint songove rnme ntala cti
ons .Fore xampl e,ifa
gove rnme ntalunitc olle
ctsf romas uppliera na mountt ha twa serrone ous lypa i
di napr ecedingye ar,
thea ppropria t
ionfort heye aroft hec ol
le ct
ioni snoti ncreasedbyt hea mountc ollected;itrema insa s
ori
gi nall
ybudge ted.Asapr ac ti
c alma t
ter,colle c
tionf r
oms uppliers’pr i
orye ars’ove rpayme ntsma y
bebudge t
e da sMi scella
neousRe venuesa ndre corde da sc re
ditstot heRe venue sac count.

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 84
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s

11. R eceipt of Goods Ordered in Prior Y ear

Budge tar
ya ccount
ing ha
sno e ffe
cton t heGove r
nment-
Wi deFinanci
alState
ments,thusno
e ncumbranc
ei srecor
deda tthegovernmentwidel e
velwhe ngoodsors ervi
cesareorderedor
c ontr
act
edfor.Purc
haseorder
sando t
hercommit
me ntdocumentsi
ssue
di n2005andnotfulf
ill
edor
c ancel
le
dbyt heendoft hatyeartot
a lBr127,000.Thisamountisde si
gnat
eda sReservefor
Enc umbrances
––2005int heDe c
ember31,2005,Ge ne
ralFundBa l
anceShe etoftheT own of
J IMMA .

Whe nt hegoo dsonor deratt

hee n
dofFY 2005a rere
c e
ivedinFY 2006t he
irac
tualcostis
consider
edanExpe ndi
tur
eofthe2005Appropri
at
ionstotheexte
ntoftheamountencumber
edi n
2005;a nya ddit
ionalamountmustbechar
ge dtothe2006Appr opr
iat
ions.TheAppropr
iat
ions
accountfor2005,howe ver
,wascl
osedatt
hee ndofthatyeartoFundBa l
ance,a
sweretheother
budge t
aryac
c ountsf
ortha
tyear
.

TheEnc umbrancesaccountcanber ees

tabl
isheda tt
hebe ginningofane wf i
scalyea r.Whe ngoodsor
servic
esor der
edin2005a r
ereceivedin2006i tisconve nienttode bittheExpe nditures
-2005a ccount
whe ntheliabi
lit
ya c
countiscredite
de l
imina t
etheenc umbr a
nc einthei nthenor ma lma nne r
.Atye ar
end,theExpe ndit
ures-
2005a ccountisclos
e dtoFundBa la
nc e,alongwi thExpe nditure
s- 2005a ndall
otherope r
ati
ngs t
ate
me ntandbudge tar
ya c
c ount
s.Fort heTownofJ IMMA,a ssumi ngtha tthegoods
we reorderedbythePa rksandRe cr
eati
onf uncti
ons,theEnc umbr anceRe esta
blishme ntJour nalEntry
is:
General L edger Subsidiary L edger
General F und: Debits C redits Debits C redits
15.Encumbr a
nces––2005. ..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
1.
.
2.
.
7.
.
,.
0
..
0
..
0
..
..
..
..
..
..
..
..
..
..
..
..
..
.
FundBala nce..
..
...
..
..
..
..
..
..
..
..
..
.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
1.
.
27,000
E ncumbrances L edger:
Par
ksa ndRecre a
tion––2005..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 127,
000

Assumingt hatallgoodsandse
rvicesforwhiche ncumbr anceswereouts
tandinga tthee ndof2005
werer e
ceivedin2006a tatot
alinvoicecostofBr .127,2 50.Noti
cethatonlyt hee sti
ma tedamount,
Br.127,000,ischargedt
oExpendit
ur e
s––2005s i
ncethiswa stheamountofthee nc umbr anceagai
nst
t
he2005a ppr
opriat
ions
;thedi
fferencebetweent hea mounte nc
umbe r
edi n2005a ndt hea mount
approvedf orpayme ntin2006mus tbec hargeda gains tthe2006a ppropri
a t
ionsf orPa r
ksa nd
Recreat
ion.
General L edger Subsidiary L edger
General F und: Debits C redits Debits C redits
16. Reser
vef orEnc umbr ances
––2005..
..
..
..
..
.1
.
.2
.
.7
.
.,
.
0
..
0
..
0
..
..
..
..
..
..
...
..
..
..
..
..
..
.
Enc umbrances––2005..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.1
.
.2
.7,
000
E ncumbrances L edger:
ParksandRe cr
eati
on––2005. .
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 127,
000
17a. Expenditures
––2005. ..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
1
..
2
..
7
..
,
.
0.
.
0.
.
0.
..
..
..
..
..
.
Expenditures––2006...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
2.
.
5.
.
0.
..
..
..
..
..
.

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 85
 Ac
count
ingf
orGove
rnme
nta
lOpe
rat
ingAc
ti
vit
ie
s:I
ll
ust
rat
iveTr
ans
act
iona
ndFi
nanc
ialSt
at
eme
nts
Vouc he r
sPa ya
ble.
..
..
..
..
..
..
..
..
.
..
..
..
..
..
..
..
..
..
..
..
..
..
.
1.
.
2.
.
7,250
E xpenditures L edger:
Par
ksa ndRe creat
ion––2005 127,
000
Par
ksa ndRe creat
ion––2006 250
 Re cordingthet ransa ct
iona
ttheGove r
nment-wideLevel
General L edger
Governmental A ctivities: Debits C redits
17b. Ex
pense
s-Par
ksandRecrea
tion.
..
..
..
..
..
..
..
..
..
..
..
..
1
..
2
..
7
..
,
.
2.
.
5.
.
0.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
Vouche
rsPaya
ble
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
1.
.
2.
.
7.
.
,.
2
..
5
..
0
..
..
..
..
..
..
..
..
..
..
..

4.1.3) Interim F inancial Statements

Periodical
lydur ingaye aritisde sira
blet opr e paref i
nanc i
a lstat
eme nt
s ,fori nformation,t othe
admi ni
strat
orsa ndme mberoft hel egisl
ativebr a nche softhegove rnme nt
aluni t
s.Ba lances he etfor
thetownofJ IMMA,i fitwerepr eparedin2006a f tertheentrieswe rema de;theda teisassume dt obe
Ma rch31,2006.Thei nt
eri
m ba lances he etr ef
le ctstheba lanceofbot hpr opri
etarya ndbudge tary
accounts.Insteadof“ As s
ets”whi cht hosef ami li
a rwi thaccount i
ngf orprofit-s
eekinge nti
t ie
swoul d
expe ct
,theca pti
onmus tbe“ Assetsa ndRe source s”be causethee xc es
sofEs ti
ma tedRe ve nuesove r
Reve nueisnota na ss
e tasoftheba lances he etdatebutdoe sindi c
atethea mountt hatwi l
lbea ddedt o
assetswhe nl egall
ybudge tedre venue sa r
er ecogni zed.Simi larl
y,thec aptionisnot“ Equi ti
e s
,”or
“Liabili
tie
sa ndc api
tal”oranothe rtil
ec ommonl yf oundi nfinancialreport
sofpr of i
tseekinge nt
iti
es,
but“ Liabi
lit
iesa ndfunde quit
y” .Thel iabilit
iess e ct
ioninc ons i
stentwithpr ofi
tse eki
nge nt i
ties
,but
thene xtsect
ionsdi s
closethethrees ubdivisionoft hef undequi t
y.

Thef i
rstdivi
sionpr es
ent
sthea mountappropria
tedfortheye ar(Appropr
iat
ion);les
stheamountof
appropri
ati
ont hathavebeenexpended(Expenditur
es)duringtheye art
odate,andlesst
heamountof
appropri
ati
one ncumbere
dbypur cha
seor derandc ont
ra ct
sout st
andi
nga ttheba l
ancesheetdat
e
(Encumbra nc
es );thenetistheamountt hatlegal
lyma ybee xpendedore ncumbere
dduringthe
remaini
ngoft hebudgetyea r
.Thes e
conddi visi
onFu ndBa l
anceReservedf orEncumbranc
es
disc
losesthepor ti
onofnetas
s e
tandresourcethati
snota vail
ableforappr
opriat
ionbecaus
eexpect
ed
li
abili
ti
ese xi
st
.

Thelastsubdi
vis
ion,fundba l
anc
e,discl
osestheporti
onoft het
axpaye
re quit
yavai
la
blefor
appr
opri
at
ion.Accordi
ngly,i
nfina
ncia
ls t
at
ementprese
ntat
ion,t
hewor
ldUnre
servedorAvai
la
ble
forAppr
opri
ati
onissometime
susedinthepla
ceoffundbal
ance.

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 86
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
T OW N OF J IMMA
GE NE R A L F UND BA L A NC E SHE E T
A S OF MA R C H 31, 2006
A sset and R esources
A ssets:
Ca sh.....
..
...
..
..
...
..
...
..
..
..
..
..
...
..
..
...
..
..
..
...
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 513,
660
Ta xesRe ceivable––Current...
..
..
..
...
..
...
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
.
..
..
..
..
..
..
..
..
.2,707,
969
Le ss:EstimatedUnc ollec
tibleCurrentTaxes..
..
..
..
..
..
..
..
..
..
..
..
.. 108,
333 2,
599,
636
Ta xRe ceivable–De l
inquent.
....
..
..
..
..
...
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 220,
000
Les s
:Es ti
ma t
edUnc oll
ecti
bleDe li
nquentTaxes..
..
..
..
..
..
..
..
..
.. 50,000 170,
000
Interesta ndpe nalti
esreceivableont axes.
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 4,
400
LessEs t
ima te
dunc ollect
ibleinte
restandpenalt
ies.
..
..
..
..
..
..
..
.. 3,
300 1,
100
Tot alAs sets..
..
...
..
..
..
...
..
..
..
...
..
...
..
..
..
..
...
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 3,
284,
396
R esources:
Es
ti
mat
edRe
venue.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
..
..
..
..
..
..
..
..
.3,
986,
000
Le
ss:Re
venue
..
..
..
..
..
..
..
..
..
..
..
..
.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
..
..
..
..
..
..
..
..
.2,
859,
436 1,
126,
564
Tot
alAs
set
sandRe
sour
ces
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 4,410,960
L iabilities and F und E quity
L iabilities:
Vouc he rsPa yable..
..
..
...
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 581,450
Duet oFe de ralGove rnme nt..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 51,520
Duet oSt ateGove rnme nt.
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 10,800
Ta xAnt icipa ti
onNot esPa yable.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
..
..
..
..
..
..
..
..
. 700,000
Tot allia biliti
es..
...
..
..
..
...
..
..
...
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 1,343,770
F und E quity:
Appr opr iat
i on..
....
..
..
..
...
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.4,180,
000
Le ss:Expe ndit
ure––2006. .
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
1.
.
,.
1
..
9
..
1
..
,
.
7.
.
1.
.
0.
..
..
Le ss:Enc umbr anc e
––2006. .
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.3
.
.6
.
.,
.
6
..
7
..
5
..
..
.1,228,
385
AvailableAppr opriati
on....
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 2,951,
615
Re serv ef orEnc umbr ance––2006...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 36, 675
FundBa lanc e.
...
...
..
..
..
...
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 78, 000
Tot alFundEqui ty..
..
..
...
..
..
...
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 3,067,190
Tot allia biliti
esa ndfunde qui t
y..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 4,410,960
T OW N OF J IMMA
GE NE R A L F UND
ST A T E ME NT OF A C T UA L A ND E ST IMA T E D R E V E NUE S
F OR T HE T HR E E MOT HS E NDE D MA R C H 31 2006
Sour
ceofre venue Est
ima ted Ac t
ua l Est
ima tedRe ve nue
NotYe tRe alized
Ta
xes
:

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 87
 Ac
count
ingf
orGove
rnme
nta
lOpe
rat
ingAc
ti
vit
ie
s:I
ll
ust
rat
iveTr
ans
act
iona
ndFi
nanc
ialSt
at
eme
nts
Prope rt
yTa xes..
..
..
..
..
..
..
..
...
..
..
..
..
.2,
600,
000 2,
599,
636 364
Inte
r estandPe na l
ti
esTa xes..
..
..
. 13,000 600 12,
400
SalesTa xe s..
..
..
...
..
..
..
..
..
..
...
..
..
..
..
. 480,
000 - 480,
000
TotalTa xe s...
..
...
..
..
..
..
..
..
...
..
..
..
..
.3,
093,
000 2,
600,
236 492,
764
Licens ea ndPe rmit
s..
..
..
....
..
..
..
..
. 220,
000 100,000 120,
000
Finesa ndFor f
eits
..
..
..
..
..
....
..
..
..
..
. 308,
000 151,000 157,
000
Inte
r gove rnmentalRevenue. .
..
..
. 280,
000 - 280,
000
Cha ngef orSe rvic
es..
..
..
....
..
..
..
..
. 70,000 7,
000 63,
000
Mi s
c ella
ne ousRe venue....
..
..
..
..
. 15,000 1,
200 13,
800
TotalGe ne r
alFundRe ve nue.
..
..
.3,
986,
000 2,
859,
436 1,
126,
564

T OW N OF J IMMA
GE NE R A L F UND
ST A T E ME NT OF BUDGE T E D A ND A C T UA L E X PE NDIT UR E A ND E NC UMBR A NC E
F OR T HE T HR E E MOUT HS E NDE D MA R C H 31, 2006
Expe ndit
ureof Out standing Avail
able
Function Appropr iat
ion 2006 Enc umbr a
nce Appr opria
tors
Appr opr i
ati
ons
Gene ralGove rnme nt..
..
..
..
..
..
..
...
..
6
..
6
..
0
..,
.
000 129, 100 15,750 515,150
PublicSa f
ety...
..
...
..
..
..
..
..
..
..
..
..
..
1.
.
,.
2
..
4
..
0
..,
.
000 592, 400 - 647,600
PublicWor ks.
...
..
...
..
..
..
..
..
..
..
..
..
...
..
9
..
1
..
0
..,
.
000 247, 800 9,100 653,100
Hea l
thAndWe lf
are..
..
..
..
..
..
..
..
...
..
8
..
6
..
0
..,
.
000 67,700 5,825 786,475
ParksAndRe creati
on....
..
..
..
..
..
...
3
..
1
..
5
..,
.
000 72,000 6,000 237,000
Cont.toRe ti
reme ntPlan..
..
..
..
...
..
1
..
8
..
0
..,
.
000 82,260 - 97,740
Misc. Appr opriat
ion..
..
..
..
..
..
..
..
...
..
..
1
..
5
..,
.
000 450 - 14,550
TotalGe ner
alFund. ..
..
..
..
..
..
..
..
..
4
..
,.
1
..
8
..
0
..,
.
000 1,197, 710 36,675 2,
951,615

4.1.4) E vents Subsequent to Date of Interim Statements

1. R evision of Budget
Admi nistr
atorsofthet ownmus trevi
ewt heinforma ti
ont ode t
erminewhe therthebudge twa slega l
ly
approve dbeforethebe ginnin
goft heye arappe arswa sreali
sti
corwhe therc hangesshouldbema dei n
there venuebudge tint helightofc ur re
nti nforma t
iona boutl oc
ale c
onomi cconditions,possible
change sins t
a t
eorf ede r
a ll
awsr ela
tingt ogr ants,enti
tlementsors ha r
edr eve
nueorot herchange s
rela
tingt ol icens
esa ndpe rmi tfee
s,f ines,for f
e i
tsa ndc hargesf ors ervice.Simi l
a r
ly,reve nue
coll
ec t
ionpr ocedure
sa ndr e
ve nuerecognitionpol icess h
ouldber eviewe dt odeterminei fchange s
shouldbema deinther e mai
ningmont hoft heye a r
.I nthes amema nne ra dminis
trat
oroft het own
revie
wt heappropriat
iont ode t
e r
minet helega l
lya pproveda ppr
opriationbe forethebe ginni
ngoft he
yeara ppear
sr eali
st
icint heli
ghtoft hee xpendit
ur eincurredande ncumbr anc eoutstandingduringt he
pastpe r
iod.

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 88
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
Exa mple:TheTownofJ IMMA Ge nera lFundr evenuesbudge tfor2006ha sbe enr eviewe das
descri
beda ndt hebudge tisle gal
lyame nde dt oreflect
edt ha trevenuef rom chargesf ors er
vi c
esa r
e
expectedtobe5, 000mor et ha nori
gina l
lybudge t
eda ndmi s c
ellaneousr evenuea ree xpectedt obe
15,000mor etha noriginal
lybudge te
d,r evenuef romot hers ourcese ve nnotexpe c
tedtobema t
eri
al
ly
dif
ferentfrom or i
ginallybud gete
da nda ppropriat
ionsha vebe enr eviewe dandl egallya mende dto
ref
lecteda50,000Br .decr
eas einthea ppropriat
ionf orpublicwor ksa nda n80,000Br .increaseinthe
appropria
ti
onf orpubl i
cs a
fety.TheEnt ryt orecordther e
vis i
onofbudge tis
:
General L edger Subsidiary L edger
General F und: Debits C redits Debits C redits
18. Es t
imatedRe venue .
..
..
..
....
..
..
..
..
..
..
..
..
..
..
..
.1
.
.5
.
.,
.
0
..
0
..
0
..
..
..
..
..
..
..
..
..
.
..
..
..
..
..
..
..
..
..
FundBa lanc e.
..
..
....
..
..
..
..
..
..
..
..
..
..
..
.1
.
.5
.
.,
.
0
..
0
..
0
..
..
..
..
..
..
..
..
..
..
.
Appr opriation..
..
....
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
3.
.
0.
.
,.
0
..
0
..
0
..
.
R evenues L edger:
Cha rge
sfors er
vice s.
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 5,
000
Mi scel
la
ne ousRe venue....
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 10,
000
A ppropriations L edger:
PublicWor ks..
..
..
....
..
..
..
..
. .
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 50,
000
PublicSa fety..
..
..
....
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 80,
000

2. C ollection of C urrent T axes

Collec
ti
onofproper
tytaxe
sle
viedin2006forthegener
a lf
undoft
heTownofJ IMMAa mountt
oBr.
2,041,
668.Si
ncetheent
rywasrecogni
zedattheti
mel evywasrec
orde
d,thef ollowinge
ntr
yismade
inboththeGener
alFundandgovernment
alac
tivi
ti
esjournal
s.
General L edger
General F und and Governmental A ctivities: Debits C redits
19. Ca
sh.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
2.
.
,.
0
..
4
..
1
..
,
.
6.
.
6.
.
8.
..
..
..
..
..
..
..
TaxesReceivabl
e––Current
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 2, 041,
668

3. R epayment of T ax A nticipation Notes

Ast axcollect
ionbe gintoexceedc ur
rentdis
burse
me nts,i
tbe come sposs
iblef orthetownt or epaythe
localbankf orthemone ybor r
owe dont axanti
cipati
onnot es.Justasbor rowingt hemone ydidnot
involvether ecogni
tionofr evenue,therepaymentoft hepr i
ncipalisme re lythee xt
inguishme ntof
debtofthege ne r
alfunda ndisnote xpendi
ture
.Pa ymentofi nte
r es
t,howeve r,mus tber ec
ogni zedas
thee xpendit
ureofa na ppr
opriat
ion,becauseitrequiresar educ t
ionint hene tasse
tsoft hefund.
As s
umet hei nter
estt obeBr .13,500a ndthea mounti spr operl
yc ha rgeabletomi scell
aneous
appropri
a t
ion,theentryis:
General L edger Subsidiary L edger
General F und: Debits C redits Debits C redits
20a. Ta
xAntici
pa t
ionNotesPayabl
e..
..
..
..
..
..
..
..
..
7
..
0
..
0
..
,
.
0.
.
0.
.
0.
..
..
...
..
..
..
..
..
..
..
..
..
..
..
.
Ex
pendi
ture––2006.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
1
..
3
..
,
.
5.
.
0.
.
0.
..
..
..
..
..
..
..
.
Ca s
h 713,
500

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 89
 Ac
count
ingf
orGove
rnme
nta
lOpe
rat
ingAc
ti
vit
ie
s:I
ll
ust
rat
iveTr
ans
act
iona
ndFi
nanc
ialSt
at
eme
nts
E xpenditures L edger:
Mi sce
ll
a neousAppr opr i
at
ion.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 13,
500

As i
mila
rentry,isma deatthegover
nment-
widelevel
,exc
eptane
xpenser athe rexpe ndit
urei
s
re
c or
dedfortheinter
estcha
rgedonthenot
e.Theexpens
eisdee
medtobea nindi recte xpens
etha
t
benefi
tsnosi
nglefunct
ion.
General L edger
Governmental A ctivities: Debits C redits
20b. TaxAnti
ci
pati
onNotesPa
yabl
e..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
.7
.
.0
.
.0
.
.,
.
0
..
0
..
0
..
..
.
Expe
nses
––Int
ere
stonTaxAnt
ici
pati
onnot e
s..
..
..
..
..
..
..
..
..
..
.13,500
Cas
h 713,
500

4. Internal E xchange T ransactions––Interfund T ransactions

Wa t
erutil
it
ie
sor dinar
i l
ypro videfir
ehydr antsa ndwa t
ers erviceforf i
repr ot
ecti
ona taf lata nnual
char
ges.A gove rnme nta
llyowne dwa t
erut il
ityaccountedf orbya ne nter
prisef unds houl dbe
expect
edtosuppor tt
hec ostofi t
soperat
ionsbyus ercharge.Fi reprotect
ionislogicallybudge te dfor
asana c
ti
vit
yoft hefiredepa rt
me nt
,agene ralfundde pa
rtme nt.As sumingthea mountc hargedbyt he
wateruti
li
tytothege neralfundf orhydranta ndwa te
rs e
rvicei s30, 000Br.,andt hef i
rede partme nt
budgeti
sapa r
toft hepublics afe
tycate
gor yint heTOWNofJ IMMA,t hegeneralfunds houldr ecord
it
slia
bil
ityas
:
General L edger Subsidiary L edger
General F und: Debits C redits Debits C redits
21a. Expe ndi
ture––2006. ..
..
. .
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
3
..
0
..
,
.
0.
.
0.
.
0.
..
..
..
..
..
..
..
.
Duet oOt he rFunds ..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.3
.
.0
.
.,
.
0
..
00
E xpenditures L edger:
PublicSa f
ety...
....
..
..
..
..
. .
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 30,
000

Thecor
res
pondinge
ntr
ytore
cordt
heint
er-
act
ivi
ti
estr
ansa
cti
on(
bet
wee
nthegove
rnme
nta
lac
ti
vit
ie
s
andbus
ine
sstypeac
ti
vit
ie
s)a
ttheGover
nment
–Wi deLeve
lis
:

General L edger
Governmental A ctivities: Debits C redits
21b. Expe
nse––Pub
licWorks.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
3
..
0
..
,
.
0.
.
0.
.
0.
..
..
DuetoBusine
ss–TypeActivi
ti
es..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 30,
000

Governme ntut
ili
tiesproper
tyisnotas
s es
sedforpr oper
tyta x(Ge nera
ll
ywec ans aytax)pur pose ,but
anumbe rofgove rnme nt
aluti
lit
ie
sma keana nnualcontr
ibut i
ont othegener
alfundi nr ecogni t
ionof
thefac
ttha tt
heut il
it
ydoe srecei
vepolic
ea ndfir
epr ot
ectionsa ndotherse
rvices.Ifthewa t
e rutil
ity
oftheT own of J IMMA a gre
estoc ont
ribut
eBr .25,000t othege ner
alfundi nlieuoft axes ,the
requi
redjournalentri
esfortheGener
alFunda ndGove r
nme ntalac t
ivi
ti
esar
e:
General L edger Subsidiary L edger
General F und: Debits C redits Debits C redits

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 90
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s

22a. DueFor mOt herFunds .

..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
2
..
5
..
,
.
0.
.
0.
.
0.
..
..
..
..
..
..
..
.
Re venue s.
...
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
2
..
5
..
,
.
0.
.
00
R evenues L edger:
Mi scellaneousRe venue.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 25,
000

Inter
fundtra nsact
ionsoft hena tureil
lustr
ateda bovea recall
edquasi-external transactions.Tha tis
,
transa
cti
onst hata r
er ecogni zeda srevenuesa nde xpendit
ure( ore xpenses,inc a
s eofpr opr i
et
ary
funds)oft hef undi nvolve dbe caus
et heywoul dber ecognizeda sr evenuea nde xpenditure(or
expenses)ift het ra
nsactioni nvolveorganizati
onse xternaltothegove r
nme ntaluni t
.Ina ddi t
ionto
qua s
i-e
xterna ltransa
c t
ions ,i nt
erfundt r
ansacti
onst ha tconst
ituter e
imbur se
me ntsofonef undfor
expenditur
e s( orexpenses)i ni t
ia
llyrecognizedbyi t
,butthatarepr operl
ya pplicabletoa notherfund
shouldber ec ognizedase xpe ndit
ures(ore xpens e
s)byt hereimbur si
ngf unda nda sr e
duc t
ionoft he
expenditur
e( expenses)int hef undtha tisreimbur sed.Anothe rtypesofi nterfundt ransactionare
classi
fi
eda st ransfe
rs,ora si nt
erfundloansa nddonot ,inas t
rictsense,resultint herecogni t
ionof
revenue,expe ndit
ureore xpe nse.
General L edger
Governmental A ctivities: Debits C redits
22b. Duef
ormBusi
nes
s-TypeActi
vit
ie
s .
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
..
..
..
..
..
..
..
.
2.
5,000
Ge
ner
alRevenue
s––Paymentsi
nlieuofTa xes
..
..
..
..
..
..
..
..
..
.. 25,
000

5. A djusting E ntries
A ) Physical Inventories
Inagove rnme nta
luni t,itisr ecomme nde dthatt hepur cha s
ingf unctionbec entrali
zeda ndthes uppl y
acti
vitybea c
c ountedf orbya ni nt
e rna lservicef und.Foroner easonora not
he r,somegove rnme nts
ma ynotc reat
et hata ppr opriat
eInternal Service F und a nda cc ountf orthes upplya c
ti
vitya spa rtof
General F und.I ne i
the rca se
,a ccou ntantswoul df eelbe t
te rc ontroli fpe r
petualinve nt
orya ccount
we rekept.Thepur chas eofma te ri
ala nds uppliesmus tbea uthorize dbya na ppropriat
ion;the refore,
whe nma teria
la nds uppl iesa rer eceive dt hee xpe ndit
ur eac counti sde bi
ted.I twoul dbepos siblet o
creditth
ee xpe ndit
uresa ccountf ort hedol laramountofi nve ntoryt hataphys i
c alcountdis c
los edwa s
on ha nd a nd de bitt hei nvent or
ya c
countf ort hes amea mount .Thi spr oc edure,c al
le dt he
C onsumption Method of A ccounting for Inventory.Si ncet hei nve ntorywi l
lnotbec onve r
te dint o
cashi nthenor ma lope rationofag ove rnme ntalf und,i tisnotal iquida ssetwhos ec arryingc ost
shouldber e f
le c
tedi nf undba l
a nce.Ra the r
;thei nve ntorya cc ounts houldbeof f
setbyar eser vef or
inventorya ccountt hati sc l
assifie
df orba la
nc es heetpur pos esi nt hes amema nnera swedof or
encumb rance( Re ser
vef ore ncumbr anc e)-bot hr epresente leme ntsoff unde qui t
ynota vail
a blef or
appropriat
ion.

Ifagove rnmentalunitusest hec onsumpti

onme t
hodofi nventoryac c
ounting,therese
rvefor
inve
ntor
ya ccountiscr
edit
ed,a ndthefundbalanceaccountisdebitedfortheincreas
ei nt
heamount
ofthephysic
alinvent
oryatthet i
mee nt
r i
esar
ema deint heInventoryandExpe ndit
uresac
count
s.(I
f
theamountoft hephysica
li nvent
oryha sdecreas
ed,Re ser
vef orInventoryshouldbede bi
tedand
FundBa l
ancec r
edi
tedfort
hea mountoft hedecre
ase.
)

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 91
 Ac
count
ingf
orGove
rnme
nta
lOpe
rat
ingAc
ti
vit
ie
s:I
ll
ust
rat
iveTr
ans
act
iona
ndFi
nanc
ialSt
at
eme
nts

Exa mple:Assumet hatt

heBir ramou ntofthephysi c
a linventoryoft heT own of J IMMA General
F und, a
softhee ndof2006isBr .61,500andt hatthei nventoryatthee ndof2005wa ss
uc has mal
l
amountt hatitwa snotrecorded,thei nc
reaseinbot ht heinventorya ccountandt heRe se
rvefor
InventoryAcc ountisBr.61,500.( Forsimpli
c i
ty,iti sa ss
ume dt hata l
li t
emsi ni nventor
ywe re
acquiredbyexpe ndi
tur
eofthepublicwor kappropri
a t
ion.)
General L edger Subsidiary L edger
General F und: Debits C redits Debits C redits
23a. InventoryofSuppl i
es.....
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.6
.
.1
.
.,
.
5
..
0
..
0
..
..
..
..
..
..
FundBa l
ance.....
..
..
...
..
. ..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
6
..
1
..
,
.
5.
.
0.
.
0.
..
..
..
..
..
Expendit
ur e––2005. .
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
6.
.
1.
,500
Reser
vef orI nvent oryofSupplie
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
6.
.
1,500
E xpenditures L edger:
Publ
icWor ks .
..
..
..
. ..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 61, 500
 Journa lEntri
esatGove rnme ntWideLe vel
General L edger
Governmental A ctivities: Debits C redits
23b. I
nve
ntoryofSuppl
ies.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
6
..
1
..
,
.
5.
.
0.
.
0.
..
..
Expens
e––Publ
icWor ks.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.13,
500

Ana lt
ernat
iveme t
hodofa ccount
ingf ori
nvent
ori
esofgovernmenta
lfunds-equall
ya ccept
abl
eunder
pres
entGASB s tandar
d––i sknowna sthePurchase Method.Unde rthepurc ha
s eme t
hodthe
expendi
turesaccountisnotcredi
tedf ort
hedolla
ramountoft hephysi
calinvent
ory,noristhefund
bala
ncea cc
oun tdebit
ed.Theonlye ntryr
equir
edist
hede bi
ttotheass
etaccount,Inventor
y,wit
hoff
set
ti
ngc re
dittothereser
veforinventoryacc
ount.

B) W rite-Off of Uncollectible Delinquent T axes

Example
:Thet r
easur
eroftheT own of J IMMA re
cei
vesapprovaltowri
teof fde l
inquentta
xes
t
otal
ingBr.26,
300andrel
at
edint
e r
estandpe na
lt
ie
sofBr.1,
315,theentr
yinbotht heGe ne
ralFund
andGovernment
alAct
ivi
ti
eswouldbe:
General L edger
General F und and Governmental A ctivities: Debits C redits
24. Es
ti
mat
edUnc ol
lec
tibleDeli
nquentTax..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
2
..
6
..
,
.
3.
.
0.
.
0.
..
..
Es
ti
mat
edUnc ol
lec
tibleInt
eres
t&Pe nalt
ies.
..
..
..
..
..
..
..
..
..
..
..
.1,315
TaxRe ce
ivable––Del
inquent
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 26,
300
Int
ere
standPe nalt
ie
sRe ce
ivabl
eonTa xes..
..
..
..
..
..
..
. 1,
315

C ) R eclassification Of C urrent T axes

Assumingallp
roper
tytaxesle
viedbytheTOWNofJ IMMAi n2006we r
etohavebeenpai
dbefor
e
t
hee ndoftheyear
,anybalanceoftaxe
sr e
cei
vableatyearendi
sproper
lycl
ass
ifi
edas“de
li
nquent
”
r
atherthan“ c
urre
nt”.Ther ela
teda l
lowanc
ef orest
imateduncol
le
cti
bleta
xesshouldals
obe
t
ransfe
rre
dt ot
hede l
inque
ntclass
ifi
cat
ion.Ane ntr
ytoa cc
ompli
shthi
s,usi
ngamountsas
sumedto

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 92
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
e
xis
tint
hea
ccountYe
ar––e
ndi
s:
General L edger
General F und and Governmental A ctivities: Debits C redits
25. Ta
xesRecei
vableDeli
nquent.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
6
..
6
..
6
..
,
.
3.
.
0.
.
1.
..
..
Es
ti
matedUncoll
ect
ibleCurre
ntTaxes..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
1
.08,
333
TaxesRece
ivableCurr
ent.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 666,
301
Est
imate
dUnc oll
ect
ibl
eDe li
nquentTax..
..
..
..
..
..
..
..
..
. 108,
333

D) A ccrual of Interest and Penalties

Deli
nquentt
axesares ubj e
cttointe
resta
ndpenal
ti
es.I
ftheamountofint
eres
tandpena
lti
ese
arnedin
2006bytheT own of J IMMA a ndnotyetre
cogni
zedis13,
320,buti
tisexpect
edt
hatonl
y10,800of
tha
tcanbecolle
cted.Thef ol
lowingentr
yisnec
ess
ary.

General L edger Subsidiary L edger

General F und: Debits C redits Debits C redits
26a. Inter
est&Pe nal
ti
e sRe cei
vableonTa x...
..
..
..
..
..
..
..
..
.1
.
.3
..
,
.
3.
.
2.
.
0.
..
.
Estimate dUnc ol
lect
ibl
eonI nteres
tand
Penalti
e s..
..
..
..
. .
..
..
..
..
..
..
..
..
..
...
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
. 2,520
Re venue s.
..
..
.....
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
...
. 10,
800
R evenues L edger:
Interest&Pe na l
ti
esonDe linquentTaxes.
..
..
..
...
..
..
..
..
...
. 10,
800
 Thet ransacti
oni sre cordedatGo vernment-WideLe velasfoll
ows
:
General L edger
Governmental A ctivities: Debits C redits
26b. I
nte
res
t&Pe nal
ti
esRecei
vabl
eonTaxes.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..13,
320
Es
timate
dUnc ol
le
cti
bleonI
nte
restandPenal
ties.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 2,
520
Ge
neralReve
nue-Int
eres
t&Penalt
iesonDe l
inquentTaxes.
..
..
..
..
..
..
..
.. 10,
800

6. Pre-C losing T rial Balance

Assumingt hei l
lustr
atede ntri
e sfort hetransacti
onsa nde ventsper
tai
ningtot heye ar2006f orthe
TownofJ I
MMA ha vebe enma dea ndpos t
ed,a nda number of other entries––not illustrated
because they pertain to similar transactions and events––havebeenma dea ndpos ted,t het ria
l
bal
ancebe lows howst heGe ne
r alFun dgene ra
lledgeraccountsbefor
eclosi
nge ntri
es:
T OW N OF J IMMA
PR E -C L OSING T R IA L BA L A NC E
A S OF DE C E MBE R 31, 2006
Debits C redits
Cas
h...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. $145,
800
Ta
xesRecei
vable––Del
inquent.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 666,300

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 93
 Ac
count
ingf
orGove
rnme
nta
lOpe
rat
ingAc
ti
vit
ie
s:I
ll
ust
rat
iveTr
ans
act
iona
ndFi
nanc
ialSt
at
eme
nts
Estima tedUnc ol le
cti
bleDe li
nquentTa xes.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. $88,
000
InterestandPe nalt
iesRe ceivableonTa xes.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 3,
085
Estima tedUnc ol le
cti
bleInte r
est&Pe nal
tie
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 1,
985
Duef romOt he rFunds ..
..
..
....
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 25, 000
Invent oryofSuppl i
es...
..
..
...
..
...
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 61,
500
Estima tedRe ve nues.
..
...
..
..
....
..
..
...
..
..
..
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..
..
..
..
..
..
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..
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.. 4,
001,
000
Re venue s...
...
..
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.. 4,
015,
000
Vouc he rsPa ya ble..
..
..
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. 396,
800
Duet oFe de ralGove rnme nt..
...
..
..
..
..
..
...
..
..
..
..
..
..
..
..
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. 126,
520
Duet oSt ateGove rnme nt.
...
..
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..
..
..
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...
..
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..
..
..
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..
. 39,
746
Duet oOt he rFunds. ..
...
..
..
...
..
...
..
..
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..
...
..
..
..
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..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 30,
000
Expe ndi t
ur es––2005. .
...
..
..
....
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 127, 000
Appr opr i
a ti
ons ...
..
..
..
..
...
..
..
....
..
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..
..
..
..
...
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..
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..
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. 4,
210,
000
Expe ndi t
ur e––2006. .
..
...
..
..
....
..
..
...
..
..
..
..
...
..
..
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.. 4,
069,
260
Enc umbr a nce s
––2006. ..
..
..
....
..
..
...
..
..
..
..
...
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..
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..
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..
..
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.. 70, 240
Re servef orEnc umbr ances––2006...
..
...
..
..
..
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..
..
..
..
..
..
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..
..
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. 70,
240
Re servef orI nve nt
oryofSup pli
e s
..
..
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..
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..
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..
. 61,
500
FundBa l
a nce.....
..
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. 129,
400
Tot al. .
..
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.$9,169,
185 $9,
169,
185

7. C losing E ntries
Theessenc
eoft heclosi
ngpr
oce
ssforagover
nment
alfundist
hetra
nsfe
rofthebal
anc
esofthe
oper
ati
ngstatementa
c c
ounta
ndthebal
ance
softhebudgeta
ryacc
ountsfort
heyea
rtothefund
bal
anceaccount
.

General L edger
General F und: Debits C redits
27. Revenues.
..
..
..
..
..
..
..
..
..
...
..
..
..
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..
..
..
..
..
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4.
.,
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0
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1
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5
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.
0.
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0.
.
0.
Appropri
ati
ons..
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4
.,210,
000
FundBa l
ance..
..
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...
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. 45,500
Est
imatedReve nues.
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 4,
001,
000
Expendi
tures
––2006...
...
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
. 4,
069,
260
Expendi
tures
––2005...
...
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
. 127,
000
Est
imatedUnc ol
lecti
bleDelinquentTax..
..
..
..
..
..
..
..
..
. 70,
240

Thec los
inge ntr
yha stheeffe
ctofrevers
ingtheentrymadetor ecordthebudge tandtheentrymade
toame ndtheb udget.Ther
efor
e,aft
ertheclosi
ngentryispos
ted,theFundBa l
ancea cc
ountispur
elya
bala
nc esheetaccountandnotoneinwhi chhist
ori
calandexpecte
de f
fect
sa r
emi xed,asist
rueduri
ng
ayea r
.Tha tis,itagainr
epresent
stheneta mountoffina
ncia
lr e
s ource
sa vai
lableforappr
opria
ti
ons
forfundpurpos e

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 94
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s

8. Y ear-E nd F inancial Statements

A ) Ge
ner
alFundBa
lanc
eShe
et
Si
nceonl
ybalanc
es he
etaccount
sareope
n,thec
apti
ons“
Asset
s”a
nd“
Lia
bil
it
ie
sandFundEqui
ty”
ar
eusedi
nst
eadofthecapt
ionsuse
dinInt
eri
mBalanc
eSheet
.
T OW N OF J IMMA
GE NE R A L F UND BA L A NC E SHE E T
A S OF DE C E MBE R 31, 2006
A ssets:
Ca s
h..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
...
..
..
...
...
....
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
. 145,
800
TaxRe cei
vable–Deli
nquent...
..
..
...
...
....
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 666,
300
Le s
s:Es t
imatedUnc ollecti
bl eDeli
nquentTa xes.
..
..
..
..
..
..
..
..
.. 88,000 578,
300
Inte
res
tandPe nalt
iesReceivableonTa xes
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
.. 3,
085
LessEs t
imatedunc ol
lectibleinter
estandpena l
ti
es..
..
..
..
..
..
..
.. 1,
985 1,
100
Invent
oryofSuppl i
es.
..
..
..
..
....
..
..
...
...
....
..
..
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..
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..
..
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..
..
..
..
..
..
..
..
.. 61,
500
Tot
alAs
set
s.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
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..
..
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..
..
..
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..
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..
..
..
..
..
..
. 786,700
L iabilities and F und E quity
L iabilities:
Vouc he rsPa ya ble.
...
..
...
..
..
...
....
..
..
..
...
..
..
...
. .
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 396,
800
Duet oFe de ralGove rnme nt....
..
..
..
..
..
...
...
. .
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 126,
520
Duet oSt ateGove rnme nt.
...
....
..
..
..
...
..
...
..
. .
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 39,740
Duet oOt he rFunds .
..
...
..
..
...
....
..
..
..
...
..
...
..
. .
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 5,
000
Tot allia bilit
ies..
...
..
..
..
...
..
..
....
...
..
..
..
...
..
...
....
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 568,
060
F und E quity:
Re servef orEnc umbr ance––2006. ...
..
...
..
. .
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 70,240
Re servef orI nventoryofSup pli
es.
...
..
...
....
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 61,500
FundBa lance .
...
...
..
..
..
...
..
..
....
...
..
..
..
...
..
...
....
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 86,900
Tot alFundEqui ty...
..
..
...
..
..
.....
..
..
..
..
..
...
...
. .
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 218,640
Tot allia bilit
iesa ndfunde qui ty.
..
...
..
..
....
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 786,700

B) Statement of R evenues, E xpenditures and C hanges in F und Balance

T OW N OF J IMMA
GE NE R A L F UND

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 95
 Ac
count
ingf
orGove
rnme
nta
lOpe
rat
ingAc
ti
vit
ie
s:I
ll
ust
rat
iveTr
ans
act
iona
ndFi
nanc
ialSt
at
eme
nts

ST A T E ME NT OF R E V E NUE , E X PE NDIT UR E A ND C HA NGE IN F UND

BA L A NC E
F OR T HE Y E A R E NDE D DE C E MBE R 31, 2006
R evenues:
Prope rt
yTa xes.
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
..
..
..
..
..
..
..
.2,599,
636
Inte
r esta ndPe nalti
esonDe li
nquentTax...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 11,400
SalesTa xe s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 485,
000
Licens ea ndPe r
mi t
s...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 231,
200
Finesa ndFor feit
s...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 310,
800
Inte
r gove rnme ntalRevenue...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 284,
100
Cha nge sf orSe r
vices.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 82,464
Mi s
c ellane ousRe venue.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 28,400
Tot alr evenue..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 4,
015,
000
E xpenditures––2006:
Ge
ner
alGove
rnme
nt.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 649,
400
Publ
icSa
fet
y..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
..
..
..
..
..
..
..1,
305,
435
Publ
icWor
ks.
..
..
..
..
..
..
..
..
..
..
..
..
.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 778,
300
He
alt
handWe
lfa
re.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 850,
325
Pa
rksa
ndRe
cre
ati
on.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 292,
500
Cont
ri
but
iont
oRe
ti
reme
ntsPl
ans
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 179,
100
Mi
sce
ll
ane
ousa
ppr
opr
iat
ions
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 14,
200
Expe
ndi
tur
es––2006,Tot
al.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.4,
069,
260
E xpenditures––2005:
Pa
rksa
ndRe
cre
ati
on.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..127,
000
Tot
alExpe
ndi
tur
es.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 4,196,
260
Exc
essofExpe
ndi
tur
eOve
rRe
venue
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. (181,2
60)
Other F inancing Sources (Uses):
Ope
rat
ingTr
ans
ferI
n..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. –0–
Ope
rat
ingTr
ans
ferOut
..
..
..
.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. –0–
Tot
alOt
herFi
nanc
ingSour
ces
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
..
..
..
..
..
..
..
..
..
..
. –0–
Exc
essofExpe
ndi
tur
eandOFUsove
rRe
venue
sandOFSs
..
..
..
..
..
..
..
..
..
..
..
. (
181,260)
I
ncr
eas
esi
nRe
ser
vef
orI
nve
ntor
yofSuppl
ie
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. (
61,500)
De
cre
asei
nRe
ser
veForEnc
umbr
anc
esDur
ing––2006 56,760
Cha
ngei
nFun
dBa
lanc
eforYe
ar.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. (
186,000)
FundBa
lanc
e,J
anua
ry,1,2006.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 272,900
FundBa
lanc
e,De
cembe
r31,2006.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. $ 86,900

4.2) Special R evenue F unds

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 96
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
Speci
a lRe ve nueFundsa rene ededwhe nlegalorpol icyc onsiderati
onsr e quires eparat
ef undst obe
cr
eatedf orc urrentpur posesothe rthanthoseservedbypr opriet
a r
yorf iduc iaryfunds .
 Ase xa mpl eofaSpe ci
a lReve nueFundsc reatedtode mons tratelegalc ompl ianceisaSt ree tFund,
whi c hi sl argelyfinance dbyal ocalgovernme nt’ssha r
eoft hemot orf uelt a
xl e
viedbyt hes t
a t
e
tobeus edonl yforma intenan ceandc onst
ructionofs treet
s,roa ds
,a ndbr idges( State Motor F uel
T ax F und) .
 Eme rge nc y911Ac ces
sFund
 As econde xampl eofas pecialrevenuefundi saL ibrary Operating F und c re at
edtoa cc ountfor
as pe cialf undt oa cc
ountf ora na cti
vit
ytha tdiffersfrom othe rgove rnme ntala ct
iviti
es.I tisthe
de si
r eoft hegove rningboa rdt ohaveas eparatefundt oa ccountfora na c
tivit
y.
 At hirde xa mplei saf undt oa ccountforgr antsre c
e i
vedf rom ahi ghe rjurisdict
ion,s uc hasa
Fe de r
a lC ommunity Development Block Grant ( Communi tyDe ve l
opme ntFund) .
 Af inale xampl e,forgove rnme ntsthathavei mpl eme nte
dt heGASBSt at
e me ntNo.34r e port
ing
mod el,i sat rustfundi nwhi chbot hthei nve s
tme ntprinc i
pala ndt hei nve stmente arningsa re
ava ilablet os uppor tagove r
nme ntprogramort hec it
izenry.

A ccounting for Operating Grants

Gr antsre ce i
ve dbyal ocalgove rnme ntf romt hes t
ateoff e
de ralgove rnme nt–orr e cei
vedbyas tate
from t hef e de r
algove rnme nt–a r
eof te
nr estrict
edf r
os pecifi
e dope rat
ingpur pose s.Consequently,
revenue sofs uchgra ntsaref requentlya ccount e
df orbyus eofas pecialrvenuef und.Anumbe rof
grantspr ovi dethatt hegr antorwi llpa yt hegr anteeonar ei
mbur seme ntba si
s.I ns uchinstances,
GASBSt a nda r
dsr equirethatt hegr antr e venuenotber ecognizedunt ilt hee xpe ndit
ureha stake n
place.Asa ne xampl eofa ppropriat
ea ccount ingpr ocedures,a ss
umeal oc a
lgove r
nme nthasbe en
awa rde das ta t
egrantt ofinanc eaf inea rt
spr ogram,butt hes tat
ewi llprovi der eimbur se
me ntonl y
aftert hegr a nt
eeha sma dee xpendituresr e
la tedtot hefinea rt
spr ogram.I ti savol unt
arynon-
excha ng et ransacti
oni nwhi cha neli
gi bili
tyr equireme nt(i
ncurrenceofa ll
owa bl
ec os ts
)mus tbeme t
be f
oret hel oc a
lgove rnme ntc anrecogni z eana ssetandr e
ve nue.As s
umi ngt hegr a nte
egove rnment
createsas pe cia
lr e
ve nuef undt oa ccountf ort hef i
nea rtspr ogram,a ndha sinc urre
dqua lif
ying
expe nditure sore xpensea tthegove rnme nt-wide -l
evel,therequirede nt
r i
esinbot ht hes peci
alrevenue
funda ndt hegove r
nme ntala c
tiviti
eswoul dbe( assumingBr50, 000ope r
ati
nggr ant):
General L edger
Special R evenue F und and Governmental A ctivities: Debits C redits
Expendit
ure
s( Expense)
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
5.
.
0.
.
,.
000
VouchersPayabl
e( orCash).
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.50, 000
Cash 50,
000
Revenues..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 50,
000

Thes econdentryr ec
ordst hereimbursement
,whi chpres
uma bl
ywoul dbeas hortti
mea ft
erthe
expendi
ture
sa reincur
red.Ifthegrantprovi
dedi
nsteadtha
tas pec
ifi
e damountwoul dbeavail
ablefor
thecurr
entaccounti
ngpe ri
od,regardl
essofwhetherqual
if
yingexpendi t
uresar
eincurr
ed,the
rewoul d
benoe ligi
bil
it
yr equir
eme nt.Inthiscase,i
twoul dbeappropri
atef orthespeci
alrevenuefundt o
recogni
zeana sse
t(GrantsRe cei
vable)andRevenuesuponnotif
ica
tionbyt hesta
tegrant
oragency.If

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 97
 Ac
count
ingf
orGove
rnme
nta
lOpe
rat
ingAc
ti
vit
ie
s:I
ll
ust
rat
iveTr
ans
act
iona
ndFi
nanc
ialSt
at
eme
nts
t
hegra
ntshoul
dspec
ifyt
hatt
heamounti
sint
endedf
orafut
urea
ccounti
ngper
iod,ali
abi
li
tya
ccount
,
Def
err
edRevenue
s,woul
dbecre
dit
eduponnoti
fi
cat
ionoft
hegr
antrat
hert
hanRe ve
nues
.

F inancial R eporting
SpecialRe venueFunda ccou nti
ngandfinanci
alrepor t
inga r
ee ssenti
al
lythesamea sfort heGe nera
l
Fund.Al ongwi ththeGe neralFund,amountsforma jorSpe ci
alr e
venuefundswoul dbei ncludedin
theBa l
a nc eShe etandSta t
eme ntofRevenues,Expe nditur
es,andCha ngesinFundBa l
ance sprepar
ed
forthegove r
nme ntalfunds .A budge t
aryc ompa rison schedulei sals
o provideda sr equir
ed
suppleme ntaryi nformati
on( RSI)foreachmajorspe ci
a lre
venuef und.InCAFR,ac ombi ningba la
nce
sheeta ndc ombi ningope rat
ings t
ate
me nt(Combi ningSt ateme ntofRe venue
s,Expe ndi t
ures,and
Change si nFundBa l
anc
e sfornon-majorgovernme ntalfunds)shouldbepr ovi
dedf orallnon-ma j
or
governme ntalfunds ,i
ncl
udin gnon-maj
ors pe
cialrevenuef unds.

Illustration on Special R evenue F und

Assumet heVi llageofEl i
za bethma intainsaMot orFue lTa xFund,a sr equir
edbySt at
eLa w.
Revenuesi ncludeSt atemot orf uelt axr ec eiptsa ndSt ateRe imbur seme ntGr a
nts.Expe ndit
urei s
i
ncurre
df orRoa dRe pai rsandMa i
nt e
na nc e.Al ega l
lya dopte da nnua lbudge tisnotrequiredorus ed.
Assume,a tt hebe ginni ngof2005,t heMot orFue lTa xFundha sc ashofBr212, 500of fsetby
Unrese
rvedFu ndBa lanc eint hes amea mount s.
1. Mot orFue lTa xRe ve nue s
––Dur ing2005,t heSt at
enot ifiedt heVi llagethatBr650, 000i n
mot orf ue lt axe swi llbea wa rded.Re cordss how Br575, 000wa sr ecei
vedi nc a
sh;the
rema i
nde ri sd uef rom t hes t
ate.Mot orf uelt a
xe sa rede ri
ve dtaxr evenue;unde rmodi fi
e d
acc ruala c count ing,thea mountt hatc a nber ecognize di st hea mountt hatisme asurableand
ava ilable.
2. Expe ndi t
ur esforRoa dRe pairs––Dur ing2005,e xpenditur esf orr oadr epai
rsamount edt oBr
605, 000,ofwhi c hBr540, 00 0wa spa idi nc ash.Not et ha te nc umbr a
nc ea c
countingmi ghtbe
use dbuti somi ttedfrot hes akeofbr evity.
3. Pa yme ntt oGe ne ralFund––Ge ne ralFundc ha r
ge dt heMot orFue lTa xFundBr20, 000f or
Roa dRe pa i
rsa ndMa intenanc e.Thec orrespondingI nt erfundr ei
mbur semente nt r
yi st o
cha rget heMot orFue lTa xFu nda ndt or eimbur sec asht oGe ne r
alFund.
4. Gr antAc count ing––As sumet hes tatea wa rde dthevi llageofEl isabethBr450, 000f orma jor
repa irst ot hreeVi l
lageI ntersections .TheFundswi llber elea sedbyt heSt at
eonl ya sworki s
compl e t
ed,a sr e i
mbur s
e me nt.GASB St a t
eme ntNo.33c ons i
derst histobea ne li
gibil
ity
requi reme nt.Ac cordingly,Gr antRe ve nuesa nd r ec eivabl es woul d be r ecognizeda s
expe ndi ture sa rei ncur r
e d.Dur i
ng2004,e xpendi t
ure si nt hea mountofBr350, 000we re
incur red,ofwhi chBr280, 000we repa i
di nc as
h.TheSt ateha dremi t
tedBr300, 000c asha s
oft hee ndof2005

Instruction: Recor
dthefor
egoi
ngTr
ans
act
ionsa
ndPr
epa
reYe
ar-
EndFi
nanc
ialSt
at
eme
nts
assumingt ha ti
tisamaj
orfund.

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 98
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s

4.3) Interfund A ctivity

1. R eciprocal Interfund A ctivity
Interfund Services Provided and Used –I
nte
rna
lex
cha
nget
rans
act
ionswhi
chi
nvol
vet
hes
ale
s
andpur c hasesofgoodsa nds er
vic
esi
nar e
cipr
ocalexc
hangebe
twe
ent
wof
undsa
ret
er dinterfund
me
services provided and used i
nGASBSt a
tementNo.34.
Interfund L oans –a
res
ome
ti
mesma
def
romonef
undt
oanot
herwi
tht
hei
nte
ntt
hatt
hea
mountbe
r
epai
d.Ift
heloanmustbere
paiddur
ingthecur
rentyearors
oonther
eaf
ter
,thele
ndingfundshould
r
ecor
dac urr
entre
cei
vabl
eandt hebor
rowingfundshouldr
ecordacur
rentli
abi
li
ty.Example:the
Gene
ralFundmakesashor
t-t
ermloa
ni ntheamountofBr100,000tot
heCe nt
ralStor
esFund( an
I
SF)
General F und:
Debits C redits
I
nte
rfundLoa
nsRe cei
vabl
e––Current
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.1
.
.0
.
.0
.
.,
.
0
..
0
..
0
..
Ca
sh.
..
..
..
..
..
..
..
.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 100,
000
Internal Service F und:
Debits C redits
Ca
sh.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
1.
.
0.
.
0.
.
,.
0
..
0
..
0
.
Int
erfundLoansRe ce
ivabl
e––Current.
..
..
..
..
..
..
..
. 100,
000
I
fthi
sin
ter
fundloa
ndidnotre
quir
erepaymentfort
wo( ormore)ye
ars
,thesuf
fi
x“Nonc
urr
ent
”
s
houl
dbeusedr
athe
rtha
n“Cur
rent
”tos
ignif
ythenonc
urr
entnat
ureoft
heloa
n.
General F und:
Debits C redits
I
nte
rfundLoa
nsRe cei
vabl
e––Noncurrent
..
..
..
..
..
..
..
..
..
..
..
1
..
0
..
0
..
,
.
0.
.
0.
.
0.
.
Cas
h..
..
..
..
..
..
.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 100,
000

Internal Service F und:

Debits C redits
Ca
sh.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
1.
.
0.
.
0.
.
,.
0
..
0
..
0
.
Int
erfundLoansRe ce
ivabl
e––Nonc ur
rent.
..
..
..
..
. 100,
000
Sincethenoncur
rentrec
eivablei
nte
rfundloanr ec
eiva
blerepre
sent
sa ss
etsthatarenotava
ila
blefor
curr
entyearappr
opria
ti
oni ntheGeneralFund,theFundBalanceaccountshouldberese
rvedfort
his
amount,aswasdoneforencumberedamount sandendi
nginventor
iesofma t
eri
alsandsuppl
ies
.
General F und: Debits C redits
FundBal
anc
e..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
..
..
..
..
..
..
..
..
..
.
1.
.
00,
000
Re
ser
vedforNoncurrentI
nterf
undLoa ns–Recei
vabl
e..
..
..
..
.. 100,
000

2. Nonreciprocal Interfund A ctivity

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 99
 Ac
count
ingf
orGove
rnme
nta
lOpe
rat
ingAc
ti
vit
ie
s:I
ll
ust
rat
iveTr
ans
act
iona
ndFi
nanc
ialSt
at
eme
nts
Interfund T ransfers – t
her
epor
ti
ngmode
lsupe
rse
dedbyGASBSt
at
eme
ntNo.34i
dent
if
iedt
wo
typesofi nter
fundt ransfe r
s:Ope rati
ngTr a nsfe
rsandRe s
idualEqui t
yTra nsfers
,whi chwe r
er eport
e d
int wodi ffer
entwa ysingove rnme ntalfundope r
atingstateme nts.Unde rGASBSt a t
e mentNo.34,
botht ype soft ransfer
sa rede sc r
ibeds i
mpl ya si nt
erfundt r
ansfersa ndr e port
edi nthes ame
ma nner––a sothe rf i
nanc ings ource sbyt her ec
eivingf unda nda sot he rfinancingus esbyt he
transf
erri
ngf unds .Forr outinei nterfundtra ns
fers
,thet r
ansferoft axrevenuet ot heexpe ndi
ngf undi s
recordedbyt ransfe r
ora sa nI nterfundTr ans f
erOuta ndbyt het ransfer
eea sa nI nt
erfundTr ansferIn.
Thec reationofaf undbyt r
ans ferofa ssetsand/orresourcesfroma nexistingfundt oane wf und,or
transf
ersofr esidua lbalanc esofdi sconti
nue dfundst oanotherf und,resultsint here cogni
ti
onofa n
otherfinancings our c
er athert hana sr evenuebyt hene wf unda nda not herf i
nanc i
ngus erathertha n
ane xpendi t
urebyt het r
a nsferorfund.
R eimbursement – i
snotr
eve
nuet
ober
ecogni
zed. I
nsomei
nst
anc
es,onef
undma
yre
cor
das
e
xpendi
tureanit
e mtha tshoul
dha vebeenrecordeda se
xpendit
urebyanot
herfund.Iti
sus ua
ll
ya n
a
ccount
ingerr
or.Whe nt hesec
ondf undrei
mbur se
st hef
irs
tfund,t
hefi
rstf
undshouldrec
ognizethe
r
eimbur
sementasare ducti
onofitsexpendi
tur
e saccount
,notasanit
emofrevenue.Thesecondfund
s
houlddebi
texpendi
turesa ndcr
editcas
h.

Intra-activity versus Inter-activity T ransactions (Government-W ide L evel)

Intra-activity transaction
 Atr
a ns
acti
onbe t
weent
wogov er
nment
alf
unds(i
ncl
udi
nga ni
nte
rnals
ervi
cefund)orbet
ween
t
woe nt
erpri
sefunds
 Nei
thergovernment
ala
cti
vit
ie
snorbus
ine
ss-
typeac
ti
vit
ie
sisaff
ect
edatthegover
nme nt
-wi
de
l
eve
l
Inter-activity transaction
 I
n t
erf
undloansortr
ansfe
rsbetweenagove
rnme
nta
lfund(
inc
ludi
ngint
erna
lse
rvi
cef
und)a
nd
anenter
pri
sefund
 Reporttheseas“Int
ernalBalanc
es”onthegover
nment
-wi
des t
at
ementofnetas
set
sand
“Tra
nsfers
”onthesta
tementofact
ivi
ti
es
Intra-E ntity T ransactions
 Exchangeornon-exchanget
rans
actionsbet
weenthepr
imar
ygove
rnme
ntandit
sblendedor
di
screte
lypre
sent
edc ompone
ntunits
 Receivabl
esandpa yable
sfromt hesetra
nsac
ti
onsarere
port
edonas e
par
ateli
nei nthe
st
at
e mentofneta
ssets.

4.4) Permanent F unds

GASB St at
eme ntNo.34mode lrequir
estha tpubli
c-pur
poset rust
sf orwhi cht heearni
ngsa re
expendabl
eforas peci
fi
e dpurpose,buttheprinci
palamounti snote xpendable(alsore
ferr
edtoa s
endowme nt
s),mustbeac count
edf r
oinagovernmental fund c al
ledaPe r
ma nentFund.Permanent
Fundsisspecif
ica
ll
yintendedforapublicpurpose(i.
e.
,tobenefitagove r
nme ntprogramorfunc
tion,
ortheci
tize
nry,rat
hert
ha nindi
vidual
s,pri
vat
eor gani
zat
ions,orothergovernme nts
).

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 100
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
Budgetary A ccounts
Budge t
aryac c
ountsge ner
all
ys houldnotbene ededf orperma nentfundsbecausetr
a nsac
tionsoft he
fundresultinchangesi nthefundpr inci
palonl
yi nc i
dental
ly;byde fini
ti
on,theprincipalcannotbe
appropr
iatedore xpended.Publ i
c-purpos
ee xpe
nda bletrustfundsa ccount
edf orins peci
alr e
ve nue
funds,howe ver,mayber equiredbyl a
wt ous et hea ppropria
tionproceduretoe nsurea dequate
budgetar
yc ontr
olove rtheexpenditureoffundassets.Ifthea ppropr
iati
onprocedur
ei srequired,the
useofotherbudge t
arya cc
ountsisa l
sorecommende d.

Illustration f
orPe
rma
nentf
undt
rus
tpr
inc
ipa
lande
xpe
nda
blet
rus
tre
venue
AssumeonNove mber1,200 1,J
ame sSmi t
hdi ed,havingma deava lidwi l
lt hatprovidedforthegi f
t
ofva r
ioussecur i
ti
estotheCi t
yofCo lumbiat obehe ldasanone xpe ndabletrus t
;thene ti
ncomef rom
thesecur
itie
sf ordist
ri
but ionpurpos
e sittobec omput edont hef ullaccrualba si
s,butdoe snotinclude
incr
e a
sesorde cr
easesint hef ai
rvalueofi nve stments.Income ,s ome asur
e d,ist obet r
ansferr
edt o
theCi t
y’sLibr aryOpe ratingFund,as pecialr evenuefund.Ac countingf ort heLi brar
yOpe r
ating
Fundi snoti llust
rat
edhe re.Forsakeofbr e vity,corre
s pondinge ntri
esint hege neraljournalfor
gove r
nme nt
ala cti
vit
iesa tthegovernme nt-
wi del evelarea lsoomi t
ted.Thegi ftwa sacceptedbyt he
CityofCol umbi aandt heLi brar
yEndowme ntFund( aPe r
ma ne ntFund)wa se s
tabli
shedtoa ccount
forthenonexpe ndabl
et rust.Thefol
lowi ngsecur iti
eswe r
er eceive dbyt heLi braryEndowme ntFund.
I
nte
res
tRate Mat
uri
ty Fa
ceVa
lue Fai
rValueas
Bonds: PerYea
r Dat
e of11/
1/01
ABCompa
ny 10% 1/
1/06 $330,000 $340,000
C&DCompany 9% 7/
1/03 110,000 112,000
D&GCompany 9% 1/
1/25 200,000 200,000
Tot
al $640,000 $652,000
Number Fai
rValueas
Stocks: of Shares of11/
1/01
M Company,Common 2,
400 126,
000
SCompany,Common 10,
000 96,
000
KCompany,Common 3,
000 129,
000
GFCompa ny,Common 2,
000 145,
000
Tot
al 496,
000

J ournal E ntries––Permanent F und

Ther ece
iptofthes ecuriti
esbytheLi br
aryEndowme ntFundisproper
lyrecordedatthef
airvalueof
thes ec
urit
iesasoft heda teoft hegiftbecaus
et hisisthea mountforwhi cht hetr
ustee
sa re
responsi
ble
.Al thought hefaceva l
ueoft hebondswi l
lber ec
eivedatma turi
ty,GASBSt a
ndards
requir
ethatinvestment sinbondsma tur
ingmorethanoneye arfr
omr ecei
ptber epor
tedatfai
rvalue
ont hebal
ances heetda te.Thustheentr
yintheLibraryEndowme ntFundtore c
ordthere
c e
iptofthe
securi
ti
esatinit
iati
onoft hetr
ustonNove mber1,2001,is
:
Permanent F und: Debits C redits
1. I
nve
stme
nti
nBonds
..
..
..
..
..
.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
6
..
5
..
2
..
,
.
000

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 101
 Ac
count
ingf
orGove
rnme
nta
lOpe
rat
ingAc
ti
vit
ie
s:I
ll
ust
rat
iveTr
ans
act
iona
ndFi
nanc
ialSt
at
eme
nts
I
nvest
mentinStoc
ks .
..
..
..
..
.
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
4.
.
9.
.
6,000
Acc
ruedInt
ere
stRe ce
ivabl
e...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
2.
.
0,300
Revenues––Contr
ibuti
onsforEndowme nt..
..
..
..
..
..
..
..
..
..
..
. 1,
168,
300
[I
nte
res
taccr
uedi
sAB ( $330,
000@ 10% @ 4/12=$11,
000)
,C&D (
$110,
000@9%@4/
12=
$3,
300)
,andD&G($200,
000@ 9%@ 4/
12=$6,000)
]

AsofJanuar
y1,2002,inter
estisrecei
vedonallbonds––$16, 500fromABCompa ny;$4,
950from
C&D Compa ny;and$9,000f rom D&G Compa ny;howe ver
,onlyt womont hsofthi
sinte
restis
ea
rnedinve
stmentre
venuethatc a
nb et
rans
fer
redtotheL ibrary Operating F und.Theent
ryforthe
r
ecei
ptofbon dinter
estonJ anuary1,2002,andt here venuee a
rnedf ort ransf
ertotheLibrary
Oper
ati
ngFundi s
:

Permanent F und: Debits C redits

2. Ca
sh.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
6.
.
5.
.
2.
.
,.
000
AccruedInte
restRecei
vable.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 20,
300
Revenues––Contr
ibut
ionsforEndowme nt.
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 10,
150

Divi
dendsonSt oc
kdonota c
c r
ue.Theybecomearecei
vabl
eonlywhendecl
are
dbythec or
pora
ti
on
i
ssui
ngthestock.Ordi
nar
il
ytherecei
vabl
eisnotr
ecor
dedbecausei
tisf
oll
owedinar
easonabl
yshort
t
imebyi ssuan
c eofadividendwe r
ee a
rlyinJanua
ry2002i ntheamountof$9,
800,Entry8is
appr
opri
ate
:

Permanent F und: Debits C redits

3. Ca
sh.
..
..
..
..
..
..
.
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
9.
.
,.
8
..
0
..
0
Revenues––I
nvestmentEarni
ngs..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 9,
800

TheL ibrary E ndowment F und ha

ss uf
fic
ientcas
htopaytheamountowedtotheLibr
aryOper
ati
ng
Fundf orbondi nter
estdur
ingt hetwomont hssinc
ethebondint
ere
standdivi
dendswerere
cei
vedin
cas
h(10, 150+9, 800=$19, 950).Assumingc a
shintr
ans
ferr
edasofJanua
ry3,2002,Ent
ry4is
:

Permanent F und: Debits C redits

4. I
nte
rfundTrans
fersOut.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.1
.
.9
.
.,
.
9
..
50
Cash.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 19,
950
Ont headvic
eofa ni nve st
me ntma nager
,1,
000s haresofGFCompa nystockwe resol
dfor$78, 750;
thi
sa mountandc ashof$19, 000we r
einves
tedin2,000s hare
sofLHCompa nyCommonSt ock.The
GFCompa nys t
ocks oldwa shalfthenumbe rofs haresrecei
vedwhe nthet r
ustwa sestabli
shed;
there
for
e,itwa srec ordeda titsf
airva l
uehenof$72, 500;thedif
ferencebetwe e
ni t
sbookva luea nd
theprocee
dsisc ons ideredint hi
strusttobel
ongt othec or
pusanddoe stnotgiver i
setoga i
norl oss
thatwouldadjustthene tincomet obet r
ans
ferr
edt otheLibraryOpe ra
tingFund.The r
efore,thesa l
e
ofGFCompa nys toc ka ndthepur chaseofLH Compa nys t
ocks houldber ecordedintheLi brary
Endowme ntFu nda ss howni nEntries5aand5b
Permanent F und: Debits C redits

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 102
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s

5a. Ca s
h...
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
...
..
..
..
..
..
..
..
..
..
..
..
7
..
8
..
,
.
7.
.
50
Invest
me ntinStocks.
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 72,
500
Revenues––ChangeinFa i
rVa l
ueofI nves
tme nts.
..
..
..
..
..
..
..
..
..
..
..
..
. 6,
250
5b. InvestmentinStocks..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.9
.
.7
.
.,
750
Ca sh 97,
750
Assumi ngther
ewe renof urt
herpurchas
esorsalesofstocka ndthatdi
videndsrece
ivedonApri
l1,
2002,amount edto$9,920,Entry6aisnecessa
ry,aswe llasEntry6btoma ketherequir
edope
rat
ing
tr
ansfertotheLibrar
yOpe r
ati
ngFund .

Permanent F und: Debits C redits

6a. Cash..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
9.
.
,.
9
..
2
..
0
Revenues––I
nvest
me ntEarni
ngs..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 9,
920
6b. I
nte
rfundTr ans
ferOut..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
9
..
,
.9
.20
Ca s
h 9,
920

Int
eres
tacc
ruedonJune30,2002,amount
edto$30,
450,thesameamountr
ecei
vedear
lyi
nJ anua
ry
2002.Thefa
irval
ueoftheLibr
aryEndowmentFundinve
s t
mentasofJ
une30,2002,t
hel
astdayof
theCit
yofColumbia
’sf
isca
lyear,i
sgi
venbel
ow:

Fai
rValueas Fai
rValueas Changein
Bonds: of11/
1/01 of6/
30/02 Fai
rValue
ABCompa
ny $340,
000 $360,
000 $20,000
C&DCompany 112,
000 108,
000 (
4,000)
D&GCompany 200,
000 206,
000 6,000
Tot
al $652,
000 $674,
000 $22,000
No. of Fai
rValueas Fai
rValueas Changein
Stocks: Shares of11/
1/01 of6/
30/02 Fai
rValue
M Company 2,
400 $126,
000 132,
000 $6,000
SCompany 10,
000 96,
000 98,
000 2,000
KCompany 3,
000 129,
000 122,
000 (
7,000)
GFCompa ny 1,
000 72,
500 75,
500 3,000
LHCompa ny 2,
000 97,
750 96,
450 (
1,300)
Tot
al $521,
250 $523,
950 $2,700

Entry7ar e
cordsthea cc
rua
lofinte
reste
arnedfort
rans
fertotheLibra
ryOpe r
atingFund.Entry7b
recordsthea dj
ust
inge nt
rytor
ecordthechangeinfa
irvalueofinves
tmentsa ttheendoft hefis
cal
year,c omparedwiththepri
orf
airval
uerecor
dedfort
heinvest
me nt
s.Ent
ry7cr e
c or
dsthel i
abi
li
tyto
theLi brar
yOpe r
atingFund.
Permanent F und: Debits C redits
7a. Ac
crue
dInt
ere
stRecei
vabl
e..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
3.
.
0.
.
,.
4
..
5
..
0
.
Reve
nues––I
nve
stmentEar
nings.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 30,
450

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 103
 Ac
count
ingf
orGove
rnme
nta
lOpe
rat
ingAc
ti
vit
ie
s:I
ll
ust
rat
iveTr
ans
act
iona
ndFi
nanc
ialSt
at
eme
nts
7b. I
nvest
me nti
nBonds.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
2
..
2
..
,
.
0.
.
00
I
nvest
me nti
nStoc
ks..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
2
..
,
.
7.
.
0.
.
00
Cash 24,
700
7c. I
nte
rfundTrans
fer
sOut..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
3
..
0
..
,
.
4.
.
50
DuetoLibr
aryOperat
ingFund...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 30,
450

TheCl
osi
nge
ntr
yatt
hee
ndoft
hef
isc
alye
ar,J
une3
0,2002,i
sshowni
nEnt
ry8
Permanent F und: Debits C redits
8. Re
venues––Contri
but
ionstoEndowme nt.
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
1
..
,
.
1.
.
6.
8,300
Re
venues––Inves
tmentEarnings..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..60,320
Re
venues––ChangeinFa i
rVa lueofInvest
me nt.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.30,950
Int
erfundTrans
fersOut..
...
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 60,
320
FundBa la
nce––ReservedforEndowme nt..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 1,
199,
250

InEntry8,onecans eethatthetotalinter
estearnedonbondsa nddi videndsreceivedoni nve
s t
me nt
s
inst
ocksintheamountof$60, 320wa st r
ansf
erreddur ingtheye a
rtot heLibraryope r
ati
ngFund;t he
netchange(i
ncrea
se)infairvalueofinve st
me nt
s ,$30,950a ndtheoriginalcontr
ibuti
onsa readdedto
theFundBa lance
.I fthene tinc r
easei ntheva l
ueofi nvest
me ntswa spe rmitt
edunde rt
het rust
agre
eme ntt
ob eusedforLibraryope r
a t
ingpurpos e
s,thee nt
ire$91,270( s
umofe arni
ngsa ndincre
a s
e
infai
rvalue
)woul dhavebe entransf
erredout,andt hea ddit
iontoFundBa la
nc ewouldha vebe enjust
fort
he$1,168,
300or i
ginalcontri
bution.

Atyear-
e nd,f ina ncialstat
eme ntsfortheLi braryEndowme ntFundwoul dbepr esente
di nessenti
al
ly
t
hes amef orma tsa stheGe neralFundBa l
anceShe eta ndGe nera
lFundSt atementofRe venues
,
Expendi
ture s,a ndCha ngesi nFundBa lance.IftheLi braryEndowme ntFundme e
tsthec r
it
eriafora
majorfund,i tsba l
anc esheeta ndope r
a t
ings t
ateme ntinformationwoul dbeincludeda sacolumni n
t
heBa la
nc eShe et––Gove rnme nt
alFu ndsa ndSt at
eme nto fRe ve nue
s,Expendit
ures,andCha ngesin
FundBa lanc es––Gove rnme ntFunds .Ifthef undisde t
ermi ne
dt obeanon- maj
orf und,itwoul dbe
re
porte
di nt hec ombi ningba l
ances heetandope rat
ings ta
te mentfornon-majorgovernme nt
alFunds.

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 104
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s

C hapter F ive
A ccounting for General C apital A ssets and
C apital Projects F unds
T opics to Be Discussed:
 I
ntr
oduc
tiontoCa pitalAs s
e t
sa ndCa pi
ta lProj
e cts
 Acc
ount
ingf orGe ne ra lCapitalAs se t
s
 Re quiredDi sclosuresa boutCa pi
talAs set
s
 Typi calc lassif
icationofGe neralCa pita
lAs se
ts:Cost
sandDe pr
eci
at
ionofGe
ner
al
Ca pit
alAs s et
sorModi f i
edAppr oac hforInf
rast
ruct
ureAss
ets
 Ge neralCa pita
lAs se
tsa cquir e
dunde rCapit
alLeaseAgre
ement
 Cos t
si nc urreda ft
e racquisit
io n
 Re ductionofCos ts(Dis posalofCa pit
alAs s
ets
)
 I l l
ustrativeEnt r i
es
 Acc
ount
ingf orCa pita lProjects
 Le ga lRe qui reme nts
 I l l
ustrativeTr a
ns acti
onsofCa pit
alPr oj
ectFunds
 Re quiredFi nancialStateme nt s
 Al ternativet r
eatme ntofRe s
i dualEqui t
y
 Re ta
ine dPe rce
nta ge

L earning Objectives:
A fter studying this C hapter, you should be able to:
 De scri
bet hena turea ndc haract
e r
ist
ic
sofge neralc apit
alassets
 Ac countf ort hea cquisit
ion,ma i
ntenanc e
,a nddi spos i
ti
onofge neralcapi
talas
s e
ts
 Ac countf orde preciati
onofge neralc apitala s set
s,includingt hemodi fie
da pproachfor
i
nfrast
ructurea s
s et
s
 Expl ai
nt hepur pos eandc harac
teri
sti
csofac apitalproject
sf und
 Expl ai
nt het yp i
c alsource soffinanci
ngf orc apit
a lproj
e c
ts
 Pr e
pa r
ej our nale ntriesforat ypicalcapitalpr ojec t
,bothwi thinthec api
talproj
ec t
sf unda
nd
wit
hinthegove rnme ntala ct
ivit
iescat
e gorya tt hegove rnme nt-
widel evel
 Expl ai
nt hec oncept sanda c
countingpr ocedur esf orspeci
ala sses
sme ntcapit
alprojects
 Pr e
pa r
ef inanc ialstateme ntsforcapit
alpr ojec t
sf unds

5.1) W hat are General C apital A ssets?

Longl iveda s s
etsus edbya cti
vit
ie
sa c
c ount
edf orgovernmenta
lfundtypesarecal
le
dGeneral
C apital A ssets.Ge ner
alcapi
talas
set
ss houldbedisti
nguis
he dfr
omc a
pit
alass
etst
hata
respec
ifi
cal
ly
associatedwi t
ha c
tivi
ti
esr e
port
edi npr oprie
tar
ya ndfiducia
ryfunds.Capi
talas
set
sacquir
edby
proprietarya ndf iducia
ryfundsareaccountedforinthos
efunds.
Compi
le
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count
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s 105
 Ac
count
ingf
orGe
ner
alCa
pit
alAs
set
sandCa
pit
alPr
oje
ctsFunds

F inancing Sources for General C apital A ssets

Ac quisit
ionsofge ne r
ala sset
st ha trequi rema j
ora mountofmone yordi
nari
lycannotbefinancedfrom
Ge neralFundors pe ci
a lrevenuef unda ppr opriat
ion.Ma j
oracquis
it
ionsofgeneralcapi
tala ss
etsar
e
commonl yf i
nanced:
 Byi ss
uanceofl ongt er
mde btt ober epaidfromtaxrevenues
,or
 Bys peci
ala ssessme ntsa gains tpr ope r
tyde emedtobepa r
ti
cular
lybene
fite
dbyt hel ong-l
ive
d
asset
.
 Ot hersourc esoff i
na ncingt hea cqui si
ti
onofl ongli
vedasset
sincl
ude
 gr antsf romot he rgove rnme nt
alunits,
 t r
a nsfersfromot herf unds ,
 gi ftsfromi ndivi dualoror ganizat
ions,
 Orac ombi na t
ionofs e ver alofthesesourc
es
 Ca pi
tall
eas es
 t axincre
me ntfinancing

Ifmone yrec
eive
df r
omt hesesourc
esisrest
ri
c t
ed,l
egal
lyormor al
ly,t
ot hepur
cha s
eorc onst
ruct
ion
ofs peci
fi
edcapi
talasse
ts,iti
sr ec
omme ndedthatac api
talpr
oject
sfundbec reatedtoa c
countfor
res
our ce
stobeus edforsuchpr oj
ect
s.Whe r
eus ef
ul,capit
alproj
ectfundsdeeme dalsobeus e
dt o
accountfort
hea c
quisi
ti
onbyagove rnmenta
lunitofma jorgener
alcapita
lass
ets,suchas,buil
ding
unde racapi
tall
easeagreement.Leas
esinvolvi
ngequipme ntar
emor ecommonl ya cc
ountedforthe
Gene ra
lFund.

Ge ner
alc
a pi
ta lass
etsmaybea cqui
redfr
ome xpendi
tur
esofGenera
lFund,spe
cia
lrevenuefunds,or
capit
alpr
oj e
c tfunds.Thecostorothercar
ryi
ngva l
ueofgenera
lcapi
talas
set
s,andlong-t
erm debt
rel
a t
edto ge neralc api
ta
la sse
tsa c
quis
it
ion,isa cc
ounte
df orint hegener
a lledge
rf ort he
governmentala c
ti
viti
escat
egoryatt
hegovernment-
widele
vel.

General C apital A sset A cquisition: Governmental F unds and Government-wide

Governmental A ctivities
General F und and/or Government-wide
Special R evenue F unds: C apital Project F unds: Governmental A ctivities:
Ac countf orc api
taloutla
y Ac countforc onstructi
onor Ac count f or the c osta nd
expe ndituresfroma nnual ma j
orcapitalexpe ndi
turesfrom depre ci
ati
onofge ne ra
lc apita
l
budge ta ppropria
tion.Ge neral de btproceeds,capi t
algrants
, assets ( GCA) a c quir
ed by
Ca pitalassetsacquiredAr e ands pecialstat
eme nt
sa ndother expe ndit
ures of the ge neral
,
account edf orinthe sour c
esforc apit
a lassets specialr evenue Funds ,a nd
Gove rnme ntalac
tivit
iesge ner
al acquisit
ion.Ge ne ralcapit
al capital projectf unds. Al so
ledge ratthegove rnme nt
- wide ass e
tsacquireda ndr el
a t
ed account f or GCA a c quired
level. Long- t
ermde bttobeSe rvi
ced unde rc api
talLe a
s esa nd f or
fromt axreve nueorf rom GCAa cqui
redbygi ft
.Ac count
spe ci
alassessme nts,are fora l
lunma t
uredl ong t erm

Compi
le
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count
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s 106
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
re
cordedi
nthegove rnmental e
xceptde
btbeingrepai
df r
om
act
ivi
ti
esGeneral L edger a
t r
eve
nuesofEnt
erpr
iseFund
Thegover
nment-wi deLe vel.

5.2) A ccounting for General C apital A ssets

Onl yenterpri
seandi nt
ernalservicefundsr outi
nelya cc
ountf orc api
talassets(propert
y,pl anta nd
equipme nt
)us edintheirope r
ations.Ther elati
velyfew gover nme nt
altrustfundst hatus ec apita
l
assetsfortheproduct
ionofi ncomea l
soa c
c ountforpropert
y,pl antande quipme nt
.Al lotherfunds
accountonl yforfi
nancia
lr e
sourc e
s.Capitala s
set
sa cquir
edbyt hosefundsc annotbea ccountedf or
i
nt hef unds.Ra t
her,ge ne
ralc apit
ala ss
e tspurchasedorc ons t
ructe
dwi thgove rnme nta
lf und
r
e sourc
e sarea c
countedforint hegove rnme nta
la ct
ivit
ie
sge ne ra
ll e
dgera tthegove rnme nt
-wi de
l
e vel.

Inc onformit
ywi thge neral
lya c
c epteda ccount i
ngpr inci
ples,ge neralcapita
la sset
sa r
er ecordeda t
hist
or i
calcos torf airva luea ttimeofr eceipti fasset
sa rer e
c eivedbydona t
ion.Hi s
toric
alc ost
includesacquisit
ionc ostplusancillarycostsne c
essarytoputt hea sseti
nt ouse .Anc i
ll
aryc ost
sma y
includeitemss ucha sf rei
ghta ndt ransport
ationc harges,sit
epr epa r
ati
onc osts
,s et-
upc ost
s,and,f or
assetsacquir
e dthroughc onstr
uctionpr oject
s,c apita
lizedint
e r
est.Ifthec ostofc api
talass
e t
swa snot
recordedwhe nt hea ss et
swhe rea cquiredandi sunknownwhe na ccounti
ngc ont r
oloverthea sset
si s
establi
shed,itisacc eptabletorecordt hema te sti
ma t
edc ost.
Unt ili
mpleme ntationofGASBSt ateme ntNo.34,de preci
a t
ionwa snotre c
ordedonge neralasset
si n
anygove r
nme ntalf und,buta cc
umul atedde preciat
ionc ouldopt ionall
yber eportedintheGe neral
Fixe dAs se
tsAc countGr oup.Fe w gove rnme ntsoptedtor eportt hede preci
ations i
ncei twa snot
required.

Aspe rGASBSt a te
me ntNo.34,General capital are recorded in the governmental activities ledger
at the government-wide level a ndr e portedint hegovernmental activities column of the Statement of
Net Asset,ne tofa ccumul a t
edde prec i
at
ion,whe reappropr ia t
e.Eve nthought hege neralc apita
la ssets
area cqui redforthepr oduc ti
onofgov ernme ntalservicesra thertheproduc t
ionofs er
vicet hatares old,
repor t
in gde preciati
onont hege ne ralca pit
alma ypr ovides i
gnifi
cantbene f
itst ousersa ndma nage rs
alike.Re porti
ngde prec a
tione xpe ns easpa rtoft hedi r
ec te xpensesoff unctionsa ndpr ogra msint he
gove rnme ntalactiviti
esc olumnoft heGove rnme nt-
wideSt at
eme ntofAc t
ivi t
ieshelpst ode termine
thef ullcos tofpr ovidinge a c
hf unc tionorpr ogr a
m.De prec iati
one xpenseont hec a
pitalasse t
sus edi n
theope rationagove rnme ntgr ant -f
inanc edpr ogrami sof t
e na na l
lowa bl
ec os tunderthet e
r msoft he
gra nt
.I na dditi
ont he ,de preci
a tione xpe nsema ypr ovideus efulinformationt oa dmi nistrat
orsa nd
legislatorsc oncer nedt ot hea lloc ati
onofr esourc e
st opr ograms ,depart
me nts,anda ctiviti
es.Toa
limi t
ede xtent,ac ompa r
isonofa ccumul atedde preciat
ionona na sse
twi tht hec ostoft hea ssetma y
assisti nbudge ti
ngout l
aysf orr eplaceme ntofc apit
ala ssets.Forthe sere ason,Sta t
eme ntNo.34
requirest or eportde precationonge neralcapitalasset
si nt hegove rnme nt-
wi def i
nancials t
ateme ntsa s
as ignificantimpr ove me ntingove rnme nt a
lfinancialrepor ting.

R equired Disclosures about C apital A ssets

Compi
le
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count
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tor
s 107
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
GASBs t
anda rdsr e quirec erta
indi sclosur esaboutcapi
talassetsint henot estotheba s
icf i
na ncia
l
st
atement s,bot ht hege neralcapi t
a la sse tsre
portedingove rnmenta la ctivi
ti
esc olumna ndt hese
re
portedi nthebus i nesst ypea ct
ivitiesc ol umnoft hegover
nme nt
-widef inanci
alstatements.Ca pita
l
asse
tstha tarenotbe ingde pre
ciate ds houl dbes epar
ate
lydisclosedf rom t hoseass
e tsthatarebe ing
depre
ciated.Re quiredi sc l
osuresa bou te achma jorcla
sse
sofc apita
lass etsinc l
ude:
-
1) Beginning of year and end of year balances, showing accumulated depreciation separate
fromhistorical cost.
2) Capital acquisition during the year.
3) Sales or other disposition during the year.
4) Depreciation expense for the current period, with disclosure of the amount charged to each
function in the statement of activities

T ypical C lassification of General C apital A ssets

 Land–t hec os
tofla nda cquir
edbyagove r
nme nt
alunitthroughpur
cha s
eshoul
dincl
udenot
onlythec ontra
ctpricebuta l
sosuc hothe
rrel
atedcost
sa staxesandotherli
ensas
sumed,t
it
le
sear
c hc osts,le
galfee s
,surveying,fil
li
ng,gr
ading,dr
aining,andothe
rc ost
sofpr
epar
ati
onfor
theusei ntended.
 Buildingsa ndImprove me ntsOtherthanBuil
dings–
 Equipme nt,orMa c
hine r
ya ndEqui pment–
 Cons t
ruc ti
onWor k-in-Progress–
 Infr
astruc t
ureAs s
ets–

Depreciation A ccounting and R eporting

 Deprec
iati
ononge ner
alc a pit
ala s
set
s,incl
udinginfr
a s
truc
tur
ea s
s e
ts,isrequi
reda tt
he
gover
nme nt-widele
velunde rGASBS34
 Deprec
iati
on i snotr ecorde d on i
nexha
us t
ibl
ea ss
ets
,s ucha sland and non-c
apit
al
iz
ed
col
lect
ionsofa rt
 Thegove rnme ntcanelectnott odepr
eci
a t
ec e
rta
ine l
igi
bleinf
ras
truct
ureasset
s,undert
he
mo d
ifi
eda pproach(s
eene xts l
ide)
.

El
ect
iont
ous
etheModified A pproach for Infrastructure A ssets
 Thegovernme ntcanel
ectnottode preci
at
ec e
rtai
n“eli
gibl
e”i
nfr
ast
ructureass
etsif
Ana ss
etma nagementsyst
emi sinpl a
cethati
nc l
ude
s
 Anup- t
o-dat
einventoryofe l
igi
bleasse
ts
 Condi ti
onassess
me ntsofthea s
set
sands ummaryofres
ult
susingame asure
me nts
cal
e
 Es t
ima t
eseachye arofthea nnualamountneededtoma i
nta
ina ndpreser
vethea s
setsat
t
hee s
tabli
shedconditi
onlevel
 Thegovernme ntdocumentsthattheseasse
tsarebei
ngpr e
ser
vedatora boveest
abli
shedlevel
s
ofcondi
ti
on.

General C apital A ssets A cquired under C apital L ease A greements

St
at
ean
dloc
algove
rnme
nta
luni
tsge
ner
all
yar
esubj
ectt
ocons
ti
tut
iona
lors
tat
utor
yli
mit
sont
he
Compi
le
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tor
s 108
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
a
mountoflongter
mdebttheymayis
sue.Conse
quentl
y,itha
sbeencus
tomar
yforgove
rnme nt
aluni
ts
t
hathaver
eache
dthei
rle
ga ll
imi
tornea
rlydonesotoacquir
etheus
eofcapi
ta
lasse
tst
hroughalease
a
greement
.

Fore quipme ntle

aseane nt
ryisma deintheGe ner
alFundorot herappropri
ategove
rnmenta
lfundto
debitExpe ndit
ureoff
setbyac reditt
ootherFinanci
ngSo ur
ces,inthea mountofthepre
sentvalueat
theincepti
onoft helea
seofthes t
reamofl e
asepayments.Thea mount(orthefai
rval
ueofthelease
d
propert
y,ifl es
s)isal
sorecorde
di nthegovernment
alact
ivit
ie
sle dgeratthegover
nmentwidelevelas
thecostoft heleas
edpropert
y.

FASBSFASNo.13de finesa nde sta

bl i
s hesa ccountingandf inancialr e
por t
ings tanda r
dsf orope ra
ting
leasesa ndc apit
a l.GASBs tanda rdsa cc epttheSFASNo .13de fi
nitionsoft he setwof ormsofl ea se
s
andpr e s
c ribea c counti
nga ndf i
na nci
a lre porti
ngf orl ea
sea gr eeme ntsofs tatea ndloc algove rnme ntal
units.Ifapa rti
cul arleaseme etsa nyoneoft hef oll
owi ngc l
a ssif
icationc ri
teria,itisaC apital L ease.
1. The lease transfers ownership of the property to the lessee by the end of the lease term.
2. The lease contains an option to purchase the leased property at a bargain price.
3. The lease termis equal to or greater than 75 percent of the estimated economic life of the leased
property.
4. The present value of rental of other minimum lease payments equals or exceeds 90 percent of
the fair value of the fair value of the leased property less any investment tax credit retained by
the lessor.
Ifn oc ri
terioni sme t,thel eas esa reclas sif
ieda sanOperating L ease byt hel essee.Re ntalpa yme nt
s
unde ra nope ratingl eas efora ssetsu sedbygove r
nme ntalf undsa rer ecorde dbyt heus ingf unda s
expe ndit
ur e soft hepe riod.

E xample: assumet ha tac i

tyl easesat ruc kwhi c hhasat enye a rlif ea ndaf airma rketva lueofBr
50,000.He r
ea r
ef ours ampl esituationswhe ret heci
tyi srequi redt oa ccountf orthepr ope r
tya sa
capit
allease:
 The lease is for six years but the city automatically receives title to the truck at the end of that
term(Criterion one is met so it is a capital lease)
 The lease is for five years but the city can buy the truck for Br 3,000 at the end of that time,
an amount that is viewed significantly less than the expected fair value of Br 11,000
(Criterion two is met so it is a capital lease)
 The lease is for eight years after which the truck will be returned to the lessor (Criterion three
is met so it a capital lease)
 The lease is for seven years but the present value of minimum lease payments is over Br
45,000 ( 90 percent of Br 50,000) ( Criterion four is met so it is a capital lease)

R ecording C apital L ease:

Asa ne xa mpleofa ccount i
ngf ortheacquis
it
ionofg ener
alcapi
talas
setsunde rac a
pit
alleas
e
agreeme nt,a s
sumeagove rnmentaluni
tsi
gnsac apita
llea
s eagr
eementt
opay$10, 000onJ anuar
y1,
2001,thes c heduledda teofde l
iver
yofcer
tainequipmenttobeusedbyana c
tivi
tyacc ount
edforbya
specialreve nuef und.Thel e
asec a
llsf
orannualpa yment
sof$10,000atthebeginningofe achyear
Compi
le
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count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
ther
eaft
e r
;thatis,January1,2002,J anua ry1,2003,a nds oon,throughJ anuary1,2010.The reare10
payme nt
sof$1 0,
000e ach,foratot a
lof$100, 000,butGASBs t
anda rdsr equir
ee nt
ryi ntheaccount
s
ofthepr esentvalueoft hes t
ream ofa nnualpa yme nts,nottheirtot al.Sincethei nit
ialpaymentof
$10,000i spaida ttheincepti
onoft hel ease,it
spr esentva l
uei s$10, 000.Thepr esentvalueofthe
remaini
ngni nepa yme nt
smus tbec a
lculatedus i
ngt hebo r
rowingr atethel esseewoul dhaveincurr
ed
toobtainas imila
rloanove ras i
milarte rmt opurchas etheleaseda s
s et.As sumingther at
etobe10%,
thepresentva l
ueofpa yme nt
s2t hrough10i s$57, 590.Thepr e s
e ntva lueoft he10pa ymentsis,
ther
efore,$67,590.GASBs t
andardsr equireagove rnme nta
lfund( inc l
uding,ifappr opr
iate
,ac api
ta
l
proj
e c
tsfund)tor ec
ordthet ra
nsactionsa tfundlevela ndg over
nme nta lwidel evel
.

F und–Based F inancial Statements

Assumet hatthes a mel easeisbe i
ngr e
por tedi nt hef undba sedf inanc i
alstateme nt
s .Ther e cordingof
t
hissamel e
as ebyt heGe ne r
alFundma ya c t
uallya ppe artodoubl ec ounte xpenditure s
.Howe vert his
re
quireda pproachs eekstomi r
rorther e portingt ha twou l
dha ver esultedift hec i
tyha dpe rforme da
ser
iesofe vents:(1)bor r
owe dmone yonal ongt erml iabil
it
y,( 2)us edt hatmone ytoa cquirethea sset
i
nque st
i on,a nd( 3)s ubsequentlypa idofft hislongt er ml i
abili
ty.I fthats er
ie sofeve ntsha doc cur red,
t
her ec
or dingwoul dha vebe e
na sfollowsi nthef und- ba sedfina ncialstateme nts
:
1. When the money was borrowed on a long term liability, the city would have reported another
financing resource because the inflow of financial resources did not come fromrevenue.
2. When the money was spent to acquire this asset, an expenditure would be recorded in keeping
with goal of measuring the amount of current financial resources.
3. When the debt and interest were subsequently paid, an Expenditure amount would have been
recorded for both payments.
Thus,ana c
qui si
tionwoul dha vel edt oa not herf ina ncings our c
ea tthet i
memone ywa sbor r
owe d,
Expenditur ewhe nt hea ssetwa sac quired,a nda na dditi
ona ls econde xpendi t
urewhe nt hede bta nd
i
nteres
twe r
ep aid.I nf und-basedfinanc i
a lstateme nt s,identi
c altransa c
tionsa remi rroredf orac apital
l
ease.Us ingt hes a mee i
ghty earleasei nc onne ctionwi t
hthea bovet r
uc kforBr10, 000pe rye ar,a n
amountwi thapr es entva l
ueo fBr67, 590,t heGe ne ralFundr ecordst hef oll
owi ngent ry:

Ge
ner
alFund:
Expe
ndit
ure
s-Lea
sedAsse
t..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
6
..
7
..
,
.
5.
.
9.
.
0
Othe
rFinanc
ingSour
ces––Capi
talLeaseAgreement..
..
..
..
.. 67,
590

Notethatnei
thertheass
e tnorthel ongter
ml iabi
lit
iesarereport
edbe ca
us etheydonotf al
lwit
hinthe
def
ini
tionofc ur
rentfi
nanc i
alresources
.Att heendoft hefirstyear
,whe nt henextpa yme
ntismade,
Br5,759( 10percentoft heobl i
gati
ona ft
erthef i
rstpayme nt)isconsideredinter
e s
twhilet
here s
t
re
ducestheprinci
palasfollows:
Expendit
ures––Inter
es t
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
...
..
..
..
..
..
..
.
..
.5
..
,
.7
..
5.
.
9.
..
..
..
Expendit
ures––Princi
pa l
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..4,241
Cash. .
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
...
..
..
..
..
..
..
.. 10,000

Government–W ide F inancial Statements

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 110
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
Ina c
counti
ngf orac a
pitalleasewithi
nt hegove rnme ntwidefinanci
alstat
eme nt
s,thea c
counti
ngisthe
samea sthata ppropriat
ef orapr ofi
te nt
erpri
ses .Botha nassetandal iabil
it
ya rereport
edinit
ia
llyat
thepresent value ofthemi nimuml easepa yme ntsinthesamema nnerasade bt-fi
na nc
eda c
quisi
ti
on.
ThePVoft hemi nimuml easepayme ntsapplyinga10pe r
centratetoannuityduef ortenyear
sisBr
67,590.
Equipme nt.
...
..
..
..
..
..
...
..
..
..
..
..
...
...
..
..
...
..
..
..
..
..
..
...
..
..
..
..
..
..
.
6.
.
7..
,
.
5.
.
9.
.
0.
..
..
..
..
..
..
...
Ca pit
alLeaseObl i
gation...
..
...
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
. 57, 590
Ca sh.
..
..
..
..
...
..
...
..
..
..
..
..
...
...
..
..
...
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
. 10, 000

De pr
e ci
atione xpenses houldber ecognize
dove rthel e a
s et
erm.Howe ve
r,i
ftit
letothea
sse
tisto
transfer to the city or if a bargain option exists, theful
le c
onomiclif
es houl
dbeusedfor
depreciat
ionpur posesbe causethel
esseewi l
le xpec
tt oge tful
luseoftheas
set
.

Attheendoft hefirstye a
r,whe nthene xtpayme nti
sma de,partofthatBr10, 000willbea tt
ri
but
edto
i
nte
r es
twithther ema i
nde rviewe dasar educt
ioninliabili
typrinci
pa l
.Becauset heobli
ga t
ionisbei
ng
r
eportedatBr57, 590a ndt heinteres
trateis10pe rcent,theinter
estrecor
de df ort
hefirstyearwil
lbe
Br5,759.Ther e
ma iningBr4, 241( Br10,000l es
sBr5, 759)de cre
asesthede bttoBr53,349.
Int
er e
stExpe nse.
..
..
...
...
..
..
..
..
.
...
...
..
..
..
..
..
..
..
..
...
..
...
..
..
..
..
...
..
..
..
..
..
..
..
.
4.
.
,.
2
..
4.
.
1.
Capi t
alLe aseObl i
gation..
..
..
...
..
..
..
..
..
..
...
..
..
..
..
...
...
..
..
..
..
..
..
..
..
. 5, 759
Ca sh..
...
..
..
..
..
...
..
..
..
..
...
..
..
..
..
..
..
...
..
..
..
..
...
...
..
..
..
..
..
..
..
..
. 10,000

C osts Incurred after A cquisition

Anyout laythatde f
init
el
ya ddst otheut i
li
tyorf unctionofac apitala ss
etore nhancestheva lueofa n
integralpa r
tofi tma ybec apit
alizeda spartofthea sset
.Thus ,dr ainageofl and,a ddit
ionofar oomt o
abui l
ding,a ndc ha ngesine quipme ntthatincreaseitsoutputorr educeitscostofope r
a t
iona rec l
early
recogniz abl
ea sa dditi
onst oa ssets.Specialdiff
icult
ya ri
sesi nt hec aseoflar ge-s
c al
eout l
aystha tare
partlyr eplac
eme ntsa ndpa r
tl
ya dditi
onsorbe tte
rme nt
s .Ane xampl ewoul dber eplaceme ntofa
compos i
tion-t
yper oofwi t
har oofofs omemor edur a
blema teri
al.Tot hee xtenttha tthepr oject
replacest heoldr oof,outlaysshoul dn otbec a
pitali
zedunl essc ostoft heoldr oofi sre
move df r
omt he
account s;andtot hee xt
e ntthatthepr ojec
tpr ovidesabe tte
rr oof ,outlaysshoul dbec apital
ized.The
dist
r i
butionoft het otalcostins uchac a
seisla r
ge l
yama tt
erf orma nageri
alde ter
mi nati
on.Cons i
s t
ent
withpol icyinre cordingor igi
nala cquisi
ti
onc osts,someo utlaysunque st
ionablyr epres
e ntingincreases
inpe rma nentva l
ue sma ynotbec apital
ize
di fthea mounti sle sstha nsomes pe ci
f i
edmi nimumoron
theba sisofanyot hercri
te r
ionpr eviousl
yde ci
de don.

Outl
ayst ha
ta r
epa r
tl
yr e
plac
ementsandpart
lya
ddi
ti
onsorbett
erme
ntsocc
asi
onsomeaccount
ing
di
ff
icul
ty.Thedi s
tri
but
ionoftheout
layha
vingbe
endeci
dedon,t
heest
imat
edamountofa
ddit
ionor
be
tt
erme ntmightbeaddedtot
heasset
.

R eduction of C ost (Disposal and E xchanges)

Reduc
ti
onsi
nthec
ostofca
pit
ala
sset
sma yrel
at
etotheel
imina
ti
onofthetot
ala
mountexpe
ndedf
ora
gi
venit
emorit
ems
,orthe
yma ycons
istonl
yofremovi
ngthecosta
ppl
icabl
etoaspe
cif
icpa
rt.
Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 111
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s

Reducti
onsinthere
c ordedcostofcapit
alass
etsmaybebroughta boutbysale,re
ti
rementfr
om use,
des
truct
ionbyfir
eorot hercas
ualt
y,repl
acementofamajorpart
,the f
torlos
sf r
oms omeotherc
ause,
andpossibl
eotherc
ha nges.Thecostofc a
pit
alass
e t
sre
cordedint hegover
nme nt
alact
ivi
tie
sledge
r
mays ometi
mesbereduc e
dbyt het
ransfe
rofaunittoanent
erpr
isefund,orvicever
sa.

Sincede precia
tionisnowr ecor dedonge ner
alc apit
alas s
ets,theremovalofac apitalassetfrom the
gove r
nme ntalacti
vit
ie
sge neralledgerma ybeac compli
s hedbyc redit
ingthel edgera ccountrecording
itscostandde biti
ngAc cumulate dDe preci
ati
ona ndCa sh,iftheitemwa ss old.Ga insorl osse
ss hould
ber ecogniz
e difthevaluereceive ddif f
ersfr
omt hebookva lueoft heassetsremove d.Thega i
nsa nd
lossesarereportedonthegov ernme nt-widesta
teme ntofa ct
iviti
es.
Gove rnmentss ometi
me str
adeus edca pi
talas
setsfornewi tems .Inthegovernme nta lact
ivit
iesge ne
r a
l
ledger,thet ot
a lcos
toft heol di t
ems houl
dber emove da ndthet ot
alc ost( notme rel
yt hec ash
pa yment)ofthene wones etup.

Illustrative E ntries:
Ac quis
iti
onofge neralcapit
ala sse t
srequiresade bittot hea ppropria
tegove rnme nt
a lac
tiviti
esac count
andac reditt oCa shoral ia
bilitya ccount.Thus ,i fofficee quipmenti spurchas e
df ort hetreasurer
's
officefrom Ge ner
a lFundr esour ce
s,thef ol
lowi ngj ourna lentri
eswoul dbema dei nt hege neral
journal
sf ort heGe ne ra
lFund( ignoringe ncumbr anc e
s)a ndgove r
nme ntalacti
vitiesatthegove rnme nt
widel e
ve l:
General F und:
Expe nditures..
.
...
..
..
....
....
..
..
..
..
..
...
..
...
..
...
..
...
..
..
....
..
..
....
..
..
..
...
..
. 450
Vouc hersPa ya bl
e...
..
..
...
..
...
..
...
..
...
..
..
....
..
..
....
..
..
..
..
..
.. 450
Governmental A ctivities:
Equi pme nt....
..
..
..
..
.....
...
..
..
..
..
..
...
...
..
..
...
..
....
..
..
....
..
..
...
..
...
..
..
..
. 450
Vouc he r
sPa ya ble.
...
..
..
...
..
...
..
...
..
...
..
..
....
..
..
....
..
..
..
..
..
.. 450
Ge nera
lc apitala s
setsa cquir
e dbyus eofCa pit
a lProj ec
tsFundr esour
c eswoul dber ec
orde di n
essenti
allyt hes amema nnerasi fa cquir
e dfromt heGe ne ra
lFund.I fconst
ructionofage ner
alc apit
al
assetisinpr ogressa ttheendofaf iscalye ar
,Cons t
ruc ti
onExpe ndit
urestot heda teoft hefinanc i
al
reportshoul dbec apitali
zedint hegove r
nme ntalac ti
vit
ie sledger.

Acc ount
ingforana s
setdis
pos alre qui reseliminationofthecapitalasseta
nda ccumula
teddepre
ciat
ion
accountsandrecogni
tionofaga inorl oss,asa ppropria
te.Assumi ngabuildi
ngthatcost$100,
000,and
wit
h$80, 000ofa ccumulatedde pr ec iat
ion,i sre
tiredwi t
houtre venueore xpe
ndit
uretotheGe nera
l
Fund,thefoll
owinge ntr
yint hegove rnme nt
a lact
iviti
esgeneraljournalwouldberequi
red:
Governmental A ctivities:
LossonDi spos
alofBui ldi ng...
...
..
...
..
..
..
...
..
..
..
..
..
..
..
..
...
..
...
..
.. 20,000
AccumulatedDe prec i
a ti
on––Bui l
dings....
..
..
..
..
..
..
..
..
..
..
...
..
...
. 80,000
Buil
dings. ....
......
..
..
...
..
...
..
..
..
...
..
..
..
..
..
..
..
..
...
..
...
..
.. 100,000

I
nthee
ventcashisdi
sbur
sedorr
ece
ive
dinconnect
ionwit
hthedi
sposa
lofgenera
lcapi
ta
lasse
ts,t
he
Cas
hAccountwouldbedebi
te
dorcr
edi
teda
spartofthee
ntryt
oremovethebookval
ueofthecapi
ta
l
Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 112
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
a
sset
,andagainorlos
swouldber e
corde
d,asappropr
iate
.Assumingt
hati
nthepr
ecedi
ngexa
mple
t
heGe ne
ralf
undincur
red$3,
000forthedemol
iti
onoft hebui
ldi
ng,anent
ryint
hefoll
owi
ngfor
m
s
houldbemadeontheGener
alFundbooks:
General F und:
Expenditures..
...
..
..
..
..
..
....
.....
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 3,
000
Vouc he r
sPaya ble. ..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 3,
000
Governmental A ctivities:
LossonDi sposalofBui ldi ng.
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
.
. 23,
000
Accumul atedDe preci
a ti
on––Bui l
dings.
..
..
..
..
..
..
..
..
..
..
..
..80,
000
Bui l
dings..
..
..
....
.....
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 100,
000
Vouc hersPaya ble ..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 3,
000

Ifc as
hi sre ceivedf rom t hedi s
posalofage ner
alc a
pitalas s
et,someque st
ionma ya r
isea stoi t
s
disposi
ti
on.The ore ti
cal
ly,i tshouldbedirectedtothefundt ha tpr
ovidedt hea sse
t;butt hisma ynot
alwaysbepr actic
a ble.I
ft hea sse
twa sprovidedbyac a
pitalprojec
tsfund,t hecontri
butingf undma y
havebe enli quidatedbe foret hesaleoccurs.Unlessotherwisepr e
sc r
ibedbyl aw,dispositionoft he
result
sofas alewi l
lbeha ndledasde c
idedbyt helegisla
tivebodyha vi
ngj uris
dict
ionove rt heass e
t
andwi llbea ccount edfori nthema nnerre qui
redbyt hea ccountings ys
tem oft her ecipientf und.
Commonl y,pr oce edsofs a l
esofge neralcapita
la s
setsa r
ebudge teda sEs ti
ma tedOt herFi nancing
Sourcesint heGe ne r
alFund.I nsuchcases,whe nsale
sa ctuall
yocc ur
,theGe nera
lFundde bitsCa sh
(orareceivable)f orthes elli
ngpriceandc r
editsOtherFinancingSour c
e s
-ProceedsofSa lesofAs sets.

E xercises:
E xercise 1: Assumeamachi
neissol
dfor$500.Thea
sse
tha
dor
igi
nal
lybe
enpur
cha
sedf
or$8,
000
usingGFr evenues.I
twa
sful
lydepr
eci
at
ed.

E xercise 2: As
sumeabuil
dingwit
ha norigi
nalc ostof$100,
000(f
rom t
ax-
support
edbonds
)is
de molished;cos
tofde
moli
ti
onwas$5,
000.Itwasfullydepr
eci
ate
d.
Instruction: Re
cor
dthea
bovetr
ans
act
ioninGeneralFundandatGove
rnment
-wi
deLe vel

5.3) A ccounting for C apital Projects

Ther eas
onf orcreat
ingaf undt oaccountforc a
pita
lproje
ctsisthesamea sthereas
onforc r
eat
ing
specia
lrevenuefunds:toprovideaforma lme c
hanismtoenableadmini
str
ator
stoensurer
evenuesand
otherfi
nancingsourcesdedicate
dtoac ert
ainpurposear
eus e
df ortha
tpurposeandnoother,andto
enableadministr
ator
storepor tt
oc r
editorsandothergrant
orsofc a
pit
alproj
ectsfundre
sourcest
hat
thei
rrequir
eme ntsre
gardi
ngt heuseofther e
sourceswer
eme t.

Ca pit
alprojec
tsfundsdi
ff
erf
romge neralands peci
alrevenuefundsi nt ha tthelat
tercat
egor
ieshavea
yea r-t
o-yearlif
e,wherea
scapital projects funds have a project-life focus.Ins omejuri
sdi
ctions
gove r
nme ntsareall
owedtoaccountf ora llc api
talproject
swi t
hinas inglec api
talproj
ect
sfund.I n
otherjurisdi
cti
onslawsareconstrueda sr equi r
ingeac hprojecttobea ccounte
df orbyas e
parate

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 113
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
c
api
ta
lpr
oje
ctf
und.

Source of funding for C apital Project F unds

Thefinanci
alres
ourcesofc a
pita
lprojectfundscomefroms everaldif
ferentsource
s,inc
ludi
ngge ner
al
obli
gati
onbonds,grantsfr
omt hesta
tea ndfedera
lgovernment,anda ppropri
ati
onsfromthege ne
ralor
speci
alr e
venuef unds,gift
sf rom individualoror gan
izati
ons ,tra
ns f
erf rom otherfundsora
combinati
onofseveralofthes
es our
ces.Ye tama j
orsourc
eoff undingforc apit
alproj
ect
sfundsisthe
iss
uanceoflong-
termde bt
.

Budgets and C apital Project F unds

Capit
alprojec
tswhichar
ef undedenti
rel
yfrom bondedindebt
ednes
sa nd/
orfrom a
sse
tswhichhave
beenaccumulat
edinthec
a pit
alproj
ect
sfundforthatpr
ojec
tma ybebudgetedonaproj
ectbas
is.Thi
s
meansthatthebudge
tneedonlybea dopt
edoncef ort
hatproj
ect
,re
gardles
sofhowma nyfis
calyear
s
itt
akest
oc omplet
ethepr
oject.

Budge t
aryaccount ingisnotr equi re
df orc apitalpr ojectsfunds ,bute ncumbranceaccount
ingisused,
outs
tandingc ontrac t
sa ndp ur chaseor de r
sa rer eporteda sr eserva t
ionsoff undba l
ance
si nt he
governme nt
alfundba l
anc es heet.Ac compl ishme ntofac apitala c qui
siti
onprojec
tma ybebr ought
aboutinoneormor eoft hef ol l
owi ngwa ys :
1. Outright purchase fromfund cash.
2. By construction, utilizing the governmental unit's own working force.
3. By construction, utilizing the services of private contractors.
4. By capital lease agreement.

Illustrative T ransactions––C apital Projects F unds

Proceedsofde btissue sshouldber e cordeda sPr oc eedsofBondsorPr ocee dsLong- TermNot esrater
thanasRe venue s
,andt heyshouldber eportedint heOt herFinanc i
ngSour ce ssect
ionoft heSt a
teme nt
ofRe ve nues,Expe nditures,andCha ngesinFundBa l
ance.Si milar
ly,ta xr evenuesr ais
e dbyt he
Ge ner
a lFund,ors pe cialrevenuef und,a ndt r
a ns f
e rr
edt oac apitalprojectsfunda rer ecordedasa n
InterfundTr a ns
fersi na ndr eportedi nt heOt he rFinancingSour cess ecti
onoft heOperating
Statement.Ta xesra is
e dspecifi
call
yf orac api
talpr oje
c t
sfundwoul dber ecordeda sRe venuesoft hat
fund,a swoul ds peci a
la ssess
me ntstobeus e df ort hec onst
ructiona s
setsde e
me dtobeofpa rt
icular
benefittoc ertainpr ope rt
yowne rs.Gr ants,ent it
le ments,ors ha r
edr evenue sr ec
eivedbyac apital
project
sf undf roma nothergove r
nme nt alunitarec onsidere
dRe venuesoft hec apit
alprojectsfund,a s
woul dbei nteres
te arnedont empo ra r
yi nvestme ntsoft hec apitalprojectsf undi fthei nter
esti s
avail
ablef orexpe ndi t
urebyt hec apitalprojectsf und( if,bylaw,t heinterestmus tbeus edf orser
vi ce
oflong-termc a pi
talde bttheintere
sts houldbet ra ns fe
rredtothea ppropria
tede bts er
vicefund).

Inthefollowingil
lustrationofaccounti
ngforrepr
esent
at
ivetra
nsact
ionsofcapi
ta
lpr
ojec
tsfund,i
tis
ass
ume dt heCounc ilof ac ert
ai
nTowna uthori
zedanissueof$1,
200,000of6% bondsaspa r
ti
al
fi
nancingofaF ire Station e
xpectedtocos
tapproximat
ely$1,
500,
000;the$300,
000a
ddit
ionalwasto
bec ontr
ibute
dbyot hergove rnments.Theprojec
t,touti
li
zelandal
readyownedbytheTown,wa s

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 114
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
donepa rt
lybyapr i
vatecont
ractorandpa r
tl
ybytheTown'sownworkf
orce.Complet
ionoftheproj
ect
wa sexpecte
dwi t
hint hecurr
entyea r
.The$1,200,
000bondiss
ue,whi
c hhadbeenapprovedbyvoter
ref
e r
endum,wa soffic
iall
yapprovedb ytheTownCouncil
.Nof or
malentr
yisrequi
redtorecor
dvoter
andTownCou ncilapproval
.Ame morandume nt
rymaybema detoi
denti
fytheapprovedproj
ecta
nd
theme ansoffi
nancingit.

Thes um of$50,000wa sborrowedonas hor

t-t
erm basi
sfrom t
heNati
onalBankfordefra
ying
engine
eri
nga ndotherprel
imi
na r
yexpense
s.Becaus
et h
istra
nsac
ti
onaff
ect
sboththeFir
eSt at
ion
Capita
lProject
sFunda ndthegovernment
alac
ti
viti
esatthegover
nment
-widel
evel
,thefol
lowing
entr
yisma deinbot
hjourna
ls:

F ire Station C apital Projects F und and Governmental A ctivities:

1. Ca sh..
....
..
..
..
...
..
....
....
.
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
....
...
....
...
. .
.
5.
.
0.
.
,.
0
..
0
..
0
..
Shor t-
termNo tesPayable
..
..
...
..
..
..
..
..
..
..
..
....
....
....
..
. 50,
000

Therec
eiva
blef
rom t
heot
hergove
rnme
ntswa
sre
cor
dedbot
hatt
hef
unda
ndgove
rnme
nt-
wide
l
evel
s:
F ire Station C apital Projects F und:
2a. Duef romOt herGove rnme nt
alUnits
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
3
..
0
..
0
..
,
.
0.
.
0.
.
0.
.
Re venue s..
...
....
..
..
....
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 300,
000
Governmental A ctivities:
2b. Duef romOt herGove rnme nt
alUnits
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
3
..
0
..
0
..
,
.
0.
.
0.
.
0.
.
Pr ogramRe ve nues ––Capita
lGr a
ntsand
Cont ributi
ons ––Pubi cSafet
y..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 300,
000

Tota
lpurc
haseordersandotherc ommit
me ntdocumentsi
ssuedforsuppl
ie
s ,ma
teri
als
,it
emsofmi nor
equi
pment
,andl aborrequi
redf orthepar
toft heproj
ecttobepe r
formedbyt heTown'semployees
amount
edto$443,000.Thef ol
lowingbudgetar
yc ont
rolent
ryismadei ntheca
pita
lproj
ect
sfundbut
i
snotrec
orde
da tthegovernment -
widele
vel.
F ire Station C apital Projects F und:
3. Enc umbr a
nce s..
..
....
..
..
..
. .
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
4.
.
4.
.
3.
.
,.
0
..
0
..
0
..
Re servef orEnc umbr ances.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 443,
000

Acont
rac
twasletf
orc
ert
ai
nwor ktobedonebyapri
vat
econt
rac
tori
nthea
mountof$1,
005,
000.As
wi
thEnt
ry3,onl
ythec
api
talpr
ojec
tsfundi
saff
ect
ed.
F ire Station C apital Projects F und:
4. Enc umbr a nces.
..
...
....
...
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
1
..
,
.
0.
.
0.
.
5.
.
,.
0
..
0
..
0
..
Re ser vef
orEnc umbr a
nces.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 1,
005,
000

Spec
ialengi
neer
ingandmi
sce
ll
aneouscos
tst
hathadnotbe
enencumbe
redwer
epa i
dint
hea
mountof
$48,
000.Thesecos
tsar
ede
emedtob epr
oper
lycapi
ta
li
zedaspa
rtoft
hefi
res
tat
ion.
F ire Station C apital Projects F und:
Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 115
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s

5a.
Cons tructionExpe ndit
ure
s .
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.4
.
.8
.
.,
.
0
..
0
..
0
..
Ca sh...
....
..
..
..
...
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 48,
000
Governmental A ctivates:
5b. Cons tructionWor k–in–Progres
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.4
.
.8
.
.,
.
0
..
0
..
0
..
Ca sh...
....
..
..
..
...
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 48,
000

Entr
ies5a and5b highl
ightama jordiff
erencebet
we ena c
c ountingf oragove r
nme ntalfunda nd
government
alac
tivi
ti
esatthegovern
me ntwideleve
l.Ac c
ountingf oragove r
nme nt
alfundf ocuseson
theinfl
owsandoutfl
owsofc urr
entfi
nancia
lr e
sour
ces,onthemodi fie
da cc
rualbasi
s;a cc
ount i
ngfor
government
alact
ivi
ti
esfocusesontheinfl
owsa ndout
f l
owsofe conomi cre
sources
;includingc a
pita
l
asse
tsontheacc
rualbasi
susedinaccount
ingforbusi
nessorganizations.

Whe nt hepr ojectwa sa pproxi ma telyhalffini

shed,thecontr
actorsubmitt
edbill
ingrequest
ingpa
yme
nt
of$495, 000
F ire Station C apital Project F und:
6a. Re se r
vef orEnc umbr a nces.
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
4
..
9
..
5
..
,
.
0.
.0
.
.0
.
.
Enc umbr a nc es
...
...
..
...
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 495,
000
6b. Cons tr
uc t
ionExpe nditure
s...
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
.495,000
Cont ractsPa yable..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
. 495,
000
Governmental A ctivities:
6c. Cons tr
uc t
ionWor k–in– Progres
s..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.4
.
.9
.
.5
.
.,
.
0
..0
.
.0
.
.
Cont ractsPa yable..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
. 495,
000

Ent r
ies6a a nd6b r ecordc onve rsionofa ne s
tima tedlia
bilit
yt oaf i
rml iabil
it
y,e li
gibleforpa yme nt
uponpr o pera uthe nti
ca t
ion.Cont r
a ct
spa yablerec ordsthes tat
usofac laim unde rac ontra
c tbetwe en
thet i
meofpr e sentati
ona ndve ri
ficationf orvouc heri
ngorpa yme nt
.Pa yme nti nfullwa sr ecei
ve d
fromt heot hergove rnme ntalunitst hatha da gr
e edtopa ypa rtofthecostoft hene wfir
es tat
ion.
F ire Station C apital Projects F und and Governmental A ctives:
7. Ca sh. .
..
...
...
..
..
...
..
....
..
...
...
...
...
..
...
..
..
...
...
...
..
..
..
..
...
..
..
..
...
..
..
..
..
..
..
..
.
3..
0.
.
0.
.
,.
0
..
0
..
0.
Duef r
omOt herGove rnme ntalUni t
s..
....
..
..
..
..
..
..
..
..
..
... 300,000
Thena t
iona lBa nkl oanwa srepa idwi thinterestmount i
ngt o$1,000
F ire Station C apital Projects F und:
8a. Cons t
ruc t
ionExpe nditures...
..
...
..
..
...
...
...
..
..
..
...
..
..
..
..
...
..
..
..
..
..
..
..
....
1
..
,
.0
..
0
..
0
..
Shor t–termNo tesPa yable....
..
...
..
...
..
....
..
..
..
..
....
..
..
..
..
..
..
..
..
..
..
. 50, 000
Ca s
h....
.
....
...
...
..
....
..
...
..
..
..
...
...
...
..
..
..
..
....
..
..
..
..
..
..
..
..
..
... 51,000
Government A ctivities:
8b. Cons t
ruc t
ionWor k-in-Progr ess.
..
...
..
....
..
..
..
..
....
..
..
..
..
..
..
..
..
..
..
..
....
..
1
..
,
.0
..
0
..
0
..
Shor t–termNo tesPa yable....
..
...
..
...
..
....
..
..
..
..
....
..
..
..
..
..
..
..
..
..
..
. 50, 000
Ca s
h....
.
....
...
...
..
....
..
...
..
..
..
...
...
...
..
..
..
..
....
..
..
..
..
..
..
..
..
..
... 51,000
Ca pi
talizati
onofi nt er
e s
tinc urr
e ddur ingc ons t
ruction,int hema nnerrequiredbyFASBs tanda r
dsf or
bus i
nessor ganiz a
tions ,isnowr equi r
edbyGASBSt at
eme ntNo.34.Thebondi ssuewa ssolda tparon
June15,2005,whi c hisa lsot heda t
eoft hebondst heda tefrom whi chi nt
e r
e s
tbe gi
nst oa ccrue.

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 116
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
Ent ries9aa nd9bbe low s how t hes harpc ont ra
stina ccount ingf ort histransacti
oni nt hec apita
l
pr ojectsf unda ndi nt hegove rnme nta lacti
vitiesledgeratthegove rnme ntalwidel evel.Aga i
n,int he
ca pitalpr ojectsfund,t hef ocusi sont hei nflowofc urr
entf i
na nc i
alresourc e
st hatincreasest hef und
ba lance,whe r
e asa tthegove rnme ntwi del evel,thefocusi sont hec hangei ne conomi cres ources.In
thisc ase ,thei nflowofc ashpr oduc esonc ha ngeinne tassetssinc ethec ashinflowi sof f
s e
tbyal ong
terml i
abi li
ty.
F ire Station C apital Projects F und:
9a. Ca sh. .
..
...
...
...
..
.....
..
...
..
..
...
..
.....
..
...
...
..
..
....
...
..
..
..
..
..
..
..
...
..
...
...
...
..
...
..
..
....
..
..
..
1
..
,200,000
Othe rFina nc i
ngSour ces––Pr oce edsofBonds ..
...
.....
..
...
..
..
...
...
..
..
.. 1,200,000
Governmental A ctivities:
9a. Ca sh. ..
..
..
....
....
..
..
..
....
..
..
....
....
..
..
...
..
...
...
..
..
..
...
..
..
..
..
...
...
...
...
..
...
..
..
..1
.
.,
.
2
..0
.
.0
.
.,
.
0
..0
.
.0
.
BondsPa yable..
...
....
...
..
..
...
....
..
...
..
..
..
..
..
..
..
..
...
...
....
...
...
..
..
...
..
...
..
..
...
.. 1, 200,000
Thec ont ractor'siniti
alc laimwa sful lyve r
ifi
e da ndpa i
d(seeEa t
e ri
es6ba nd6c ).
F ire Station C apital Projects F und and Governmental A ctivities:
10. Cont r act
sPa yable...
..
..
....
....
..
..
...
...
..
...
..
..
..
...
..
..
..
..
...
...
...
...
..
...
..
..
..4
.
.9
.
.5
..
,
.
0.
.
0.
.0
..
..
..
Ca sh. .
..
...
..
..
...
..
.....
..
...
...
..
..
....
...
..
..
..
..
..
..
..
...
..
...
...
...
..
...
..
..
....
..
...
..
..
...
..
..495, 000
Tot ald isbur seme ntsf ora llcos t
se nc umbe r
e di nTransacti
on3a mount e dto$440, 000.Al thought he
enc umb rance ’
se nt r
yonl yaffectst hec apitalpr oj
ectsfund,t hedi sburseme nta ff
ectsbot ht hec apita
l
pr ojectsf unda ndgove rnme ntalactivitiesatthegove rnme ntwi del evel.
F ire Station C apital Projects F und:
11a. Re s er
vef orEnc umbr a nc e
s .
..
..
....
..
...
..
..
..
..
..
..
..
..
...
...
....
..
...
..
..
...
...
4
..
4
..
3
..
,
.0
..
0
..
0.
.
Enc umbr ances....
...
..
...
..
..
....
...
..
..
..
..
..
..
..
...
..
....
..
....
..
...
..
..
.. 443,000
11b. Cons tr
uc tionExpe ndi tures..
...
....
..
...
..
..
..
..
..
..
..
..
...
...
....
..
...
..
..
...440, 000
Cont ract
sPa ya ble...
...
..
..
....
...
..
..
..
..
..
..
..
...
..
...
...
...
..
...
..
..
... 440,000

Governmental A ctivities:
11c. Cons truc tionWor k–in–Progres
s .
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
4
..
4
..
0
..
,
.
0.
.
0.
.0
.
.
Cont ractsPa
yable..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
. 440,
000
Bi
ll
ingf orthebalanc eowe dontheconstruc
tioncontr
actwa srece
ivedfromthec ont
rac
tor
:

F ire Station C apital Projects F und:

12a. Re se r
vef orEnc umbr anc e
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.5
.
.1
.
.0
.
.,
.
0
..
0
..
0
..
Enc umbr anc e s
...
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 510,
000
12b. Cons tr
uc t
ionExpe ndit
u r
es..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..510,000
Cont ractsPa ya bl
e...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 510,
000

Governmental A ctivities:
12c. Cons truc tionWork–in–Progress
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
5
..
1
..
0
..
,
.
0.
.0
.
.0
.
.
Cont ract
sPayabl
e..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 510,
000
I
nspect
ionr eveal
e donl ymi norimperf
e ct
ionsinthec ont
ract
or'
spe rf
ormance,andoncorr
ect
ionof
t
hese,t
hel i
abil
it
yt ot hec ont
rac
torwaspa i
d.

F ire Station C apital Projects F und and Governmental A ctivities:

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 117
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
13. Cont
rac
tsPayable.
..
..
..
..
..
..
..
..
..
....
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
5
..
1
..
0
..
,
.
0.
.0
.
.0
.
.
Cash.
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 510,
000
Allrequi
rement
sandobligat
ionsrelat
edtot heprojecthavi
ngbe enfulf
il
led,theoper
ati
ngsta
teme
nt
ac
c ount
swe r
eclos
edinthecapit
alproje
ctsfunda ndgovernmentalact
ivi
ti
esgenerall
edger
s.

F ire Station C apital Projects F und:

14a. Re venue s..
..
...
..
...
...
....
..
..
...
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
..
.
3.
.
0.
.
0.
.
,.
0
..
0
..
0
.
Othe rFi nancingSour ces––ProceedsofBonds .
..
..
..
..
..
..
..
..
..
..
1
..
,
.
2.
.
0.
.
0.
.
,.
0
..
0
..
0
..
Cons tr
uc t
ionExpe nditure
s..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 1,
494,
000
FundBa lance. .
..
..
..
. .
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 6,
000

Governmental A ctivities:
14b. Progr amRe ve nues–Capit
alGrantsand
Contribut i
ons –Publ i
cSafety.
..
..
..
..
..
..
..
..
...
..
..
...
..
..
..
..
..
..
..
..
...
..
..
..
.
3.
.
0.
.
0.
.
,.
0
..
0
..
0
.
Ne tAs s
ets-
Investe
dinCa pit
alAss e
ts,Ne tof
Re latedDe bt..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
...
..
..
..
..
..
..
..
..
. 300,
000
(Not
e:I ft
he$300, 000ha dnotye tbeenexpendedf orthepr oje
ct,theaccountcredit
edwouldhave
beenNe tAs set
s-Re stricte dforCa pit
alProject
s.Ifonlypa rtofther es
ourceshadbe e
nexpende
d,
appr
opriat
ea mount swoul dh a
vebe encredi
tedtobotha c
c ounts.
)

Si ncet hepr oj ec
tha sbe enc ompl eted,iti sappropriatetoc losetheCa pit
alPr ojec tsFund.Theonl y
as setoft hef undr e ma ini
nga ftert he14t ransact
ionsi l
lust
ratedisCa shi nthea mountof$6, 000.St at
e
lawsof tenr equiret hata s
setsnol onge rne ededinac apit
alproject
sf undbet rans f
e rredtothef undt hat
wi llserv i
c ethede btinc urr
e dfort hisproj ec
t,ade bts ervi
cef und.Tr ansfer
soft hi snatur
ea r
ec alle
d
interfun dtrans fe
r sa nda rerepor t
e da sot herfinancingus esbyt hetransferorfunda ndotherf i
nancing
sour cesbyt het r ansfereefundi nt heirStatementofRe venues,Expe nditur
e s,andCha ngesi nFund
Ba l
anc ethee ntriest ore c
ordt het ransfera ndthec l
os i
ngoft heCa pit
a lProjectsFunda cc
ounta re:
F ire Station C apital Projects F und:
15a. Ot herFi nanc i
ngUs es––I nte r
fundTr ansfersOut ..
..
..
..
...
..
..
..
..
...
..
....
..
..
.. 6,000
Ca sh...
..
....
..
..
..
..
...
....
.....
..
..
..
...
...
..
..
..
..
..
....
..
...
..
..
..
..
...
..
..
..
..
...
..
....
..
..
..
... 6,000
15b. FundBa lanc e
....
..
..
..
..
...
....
.....
..
..
..
...
...
..
..
..
..
..
....
..
...
..
..
..
..
...
..
..
..
..
...
..
....
..
..
..
... 6, 000
Othe rFi nancingUs es–I nte
rfundTr ansfersOut .
...
..
..
..
..
...
..
...
..
...
..
... 6,000
Si milare ntri
e swoul dber equiredt or ecordtheI nterfundTr ansfer
sI nbyt hede bts er
vicef und.No
ent r
yi sr equireda tthegov e r
nme nt-widel evels incet hetr a
nsferoc curswi thint hegove rnme ntal
ac ti
vitiesc at
e gory.

TheCos tofthefires tationc onstruct

edbyt heTowni srecordedi nthegove r
nme ntalact
ivit
iesgener
al
j
ournalatthegove rnme nt- widelevel
.Becausea l
lc api
tal
izablec ost
sha vepreviouslybeenr e
cordedas
Const
ructi
onWor ki nPr ogr e
ssdur i
ngt hepe riodofc onstruct
ion,t heonlye ntr
yr equi
redi sto
re
clas
sifytheamounti nt ha ta c
counttotheBuildingsa c
count ,asshowni nt
hefollowinge ntr
y.
Governmental A ctivities:
16. Bui l
di ngs ...
...
. .
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
....
..
..
..
..
..
..
..
....
..
..
..
..
...
..
..
1
..
,.
4
..
9
..
4
..
,
.
0.
.
0.
.
0.
Cons truc ti
onWor k–in–Progr
ess. .
..
..
..
..
..
...
..
...
...
..
..
..
..
..
. 1,
494,000
Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 118
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s

Illustrative F inancial Statements for a C apital Project F und

I
na smuc hasallba l
ancesheeta
c c
ountsoft heFi r
eSt ati
onCa pit
alProject
sFunda recl
osedinthecase
i
llustra
tedint hepr ece
dingsecti
ono ft hi
sc hapte
r ,therea r
enoa s
set
s,li
abili
ti
es,orfundequityto
r
e portinaba lances he
et.Theope ra
tionsoft heye ar,howe ver,shouldbereporte
di naStat
eme ntof
Re venues,Expenditure
s,andCha ngesinFundBa lanc e
.Si ncei tisass
ume dtheTowni snotr
e qui
red
t
oa doptal e
ga lbudge tfori
tsc a
pitalproject
sf unds,the r
ei snone edtopr epar
eabudge t
ary
compa ri
sons c
he dul
eors ta
tementforthecapitalprojectsfundtype .

Att hegove rnme nt-widel evel,thec ompl et

edf i
res t
ationi sr eport
eda sac apit
alasset
,ne tof
accumul at
edde preci
ation( ifanyde preciati
one xpenseisre cor dedint hefi
rstye arinwhichtheasseti
s
placedi nt
os ervice)
,i nt hegove rnme ntala ct
ivi
tie
sc ol
umnoft heSt a
teme ntofNe tAs s
ets
.The
$1,200,000oft ax-supporte dbondsi ssuedf orthepr ojecti sr eportedasal ong-ter
ml ia
bil
it
yi nthe
governme ntalac t
ivit
iescol umnoft heSt ate
me ntofNe tAs se t
s .Ifanyde pre
c i
a ti
onexpenseisrec
orded
forthepor t
ionofaye arthef iresta
tionha sbe eninservice,i twoul dber eporteda sadirec
texpenseof
thePub li
cSa fetyfunc t
ioni nt heStateme ntofAc ti
viti
es.
 TheCPFi si ncl
ude da sas eparatec olumnoft hegove rnme ntalfundsf inanci
alstat
ements,i
fit
mee t
sthec rit
e r
iafora“ ma jorfund” ;other
wi s
eint he“ Ot herGove r
nme ntalFunds”column
 I fnon-ma jor,financiali nforma t
ionf ortheCPFi sr epor tedont hecombi ningba l
ancesheetand
combinings t
atementofr evenue s
,expe ndit
ures,andc ha ng esinf undbalanc e
s
T OW N OF J IMMA
F IR E ST A T ION C A PIT A L PR OJ E C T S F UND
ST A T E ME NT OF R E V E NUE S, E X PE NDIT UR E S, A ND C HA NGE S IN F UND BA L A NC E
F OR T HE Y E A R E NDE D DE C E MBE R 31, 2005
R evenues:
Fromot herGove rnme nta
lUni t
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 300,000
E xpenditures:
Cons t
ructi
on..
...
..
...
...
..
..
..
..
..
. .
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 1,494,000
Exc essofRe ve nuesover( under)Expe ndi
tures.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. (
1,194,000)
Other F inancing Sources (Uses):
Pr oceedsofbonds .
..
..
..
..
..
. .
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
$1,
200,000
I nt
erfundtransferout..
..
..
. .
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. (6,000) 1,194,000
Cha ngei nFundBa lanceforYe ar. .
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. –0–
FundBa lance,J a
nuary,1,2005. .
....
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. –0–
FundBa lance,De cembe r31,2005. ..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. $ –0–

A lternative T reatment of R esidual E quity or Deficits

I
falong-te
rmde bthadbeenincur
redfort
hepurpos
esoftheCa pi
talProj
ect
sFund;t heresi
dualequi
ty
i
sordi
na r
ytransf
err
e dt
othefundthatist
oservi
cet
hede bt
.Iftheresi
dualequitywasdeeme dtohave
comefrom grant
sors ha
redrevenuesres
tri
ct
edforcapi
talacquis
iti
onsorc onstr
ucti
on,legaladvi
ce
mayindicat
et ha
ta nyres
idualequi
tymus tberet
urnedtothes ource(
s)oft herest
ric
tedgr a
ntsor

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 119
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
r
est
ri
ct
eds
har
edr
eve
nue
s.

Ins omes it
uations,i
ns piteofc are
fulpl a
nninga ndc ostc o
ntrol,expenditur e
sa ndotherf i
nanci
nguses
ofCa pi
talProjectFundma ye xce
edi tsrevenuesandot herfinancings our c
e s
,result
inginanegative
F und balance, or deficit.Ift hedef ici
tisar ela
tive lys ma llamount ,t hel egis
lat
ivebodyoft he
gove rnmentalunitma ybea bletoauthorizetra
nsfersf romoneormor eot herfundstoc overthedef
ici
t
int heCa pit
a lProjectsFund.I fthede fi
c i
tisr el
ative lyl a
rge ,and/ori fi nt
endedt ransf
ersarenot
feasible
,thegove rnme nta lunitswouldne edt ofinanc ethede ficitbyi s
s uingde btinwha te
verfor
mi s
legallypossi
blea ndsa lableu ndermar ketcondit
ionst he ne xi
sting.

R etained Percentage
I
tiscommont or equi
rec ont
ractor
sonl argescal
ec ontr
act
stogiveperf
ormanc
ebonds ,providingfor
i
ndemnit
ytot hegove rnmentalunitforanyfail
ur eonthecont
ract
or'
spartt
oc omplywi t
ht ermsa nd
s
peci
fic
ati
onsoft hea greement.Beforefi
nalinspecti
onofaprojectca
nbec omplet
ed,thec ontract
or
f
ir
mma yhavemove ditsworkingforceande quipmenttoanot
herloc
ati
on,t
husma kingitdiffi
c ul
tto
r
emedypossibleobjecti
onstothefirm'sperf
ormanc e.

Topr ovi
demo repr ompta dj
ustmentons hortcomingsnotlargeorc onvinc i
nge noughtoj ust
ifylega
l
act
ion,andnotr e
c over
ableundercontra
ctor'
sbonda swellasthusthecont ra
ctorma yadmi tbutnotbe
inapos it
iont orec t
if
y,itiscommonpr acti
c etowi t
hhel
dapor t
ionoft hec ontract
or’
sr emune r
ati
on
unti
lf i
nalinspe c
tionanda cce
ptancehavec omea bout
.Thewi thheldportionisnorma l
lyac ontr
actual
percent
ageoft hea mountdu eone a
chs egme ntofthec ont
ract.As s
umi ngt hea mountbi l
ledbyBr
495,000andt hec ontr
actprovi
de dforre
tentionof5pe rc
ent,currentset
tl
eme ntont hebill
ingwoul dbe
rec
or de
da sfollows :
14a. Cont
rac
tPayabl
e..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
4
..
9
..
5
..
,
.0
.
.0
.
.0
.
.
Cas
h..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 470,
250
Contra
ctPayable
–Re t
ainedPercenta
ge..
..
..
..
..
..
..
..
. 24,
750

Thissa
mee ntrywoul da l
sobema deint hegovernme ntalact
ivit
iesgener
alj
ournalatthegove rnme nt
widelevel.Al t
ernat
ively,theint
entionoft hegovernme nttor et
aintheper
c e
ntagestipulat
edi nthe
cont
ractcouldber ec
or deda tt
hetimethepr ogres
sbillingreceivespre
limi
nar
ya pproval
.I nthatevent,
t
hec r
edittoc ontr
act
spa yableinthef i
rstentryi
nt hi
ss ecti
onwoul dbe$470,750isma dea tthatt
ime .
Theseconde ntrythe
refore,wouldbeade bittoContr
a ctspayableandac r
edi
ttocashfor$470, 250

Onf inala ccep

tanceoft hepr oje
c t
,theret
ainedpe r
ce nt
a gei sli
quidate
dbyapa yme ntofcashinthe
eventthegove rnment alunitt
hatma detherete
ntionfindsi tne c
essarytospendmone yonc orr
ect
ionof
defi
cienc i
esint hec ontr
ac t
or'
spe r
for
ma nce,thepayme nti schargedto c ontra
ctspayable-
Retai
ned
percentage.Ifthecos tofcorrect
ingdefi
cie
nc i
ese xc
ee dst heba l
anceinthec ont
ract
spayableRetai
ned
percentageAc count,thee xces
sa mountisdebite
dt oc onstructi
onExpe ndit
ur e
sintheCa pi
talPr
oject
s
Funda ndt oBui l
dings( orot herappropr
iatec api
tala ss e
ta ccount)inthegove rnmentalact
ivi
ti
es
generaljournal.

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 120
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s

C hapter Six
A ccounting for General L ong-T erm L iabilities
and Debt Service F unds
T opics to Be Discussed:
 Ge
neralLong-TermLi abil
itie
s
 Ge
neralLong-TermLi abil
itie
saris
ingf
ormCapi
ta
lLe
aseAgr
eeme
nts
 De
bitLimitandDe btMa r
gin
 Di
rectDebtandOve rl
appingDe bt
 Ac
countingf
orDe btSe rvi
c eFunds
 Ac count
ingforSe r
ialBonds
 De btSer
viceAc countingforTermBonds
 Ac
countingf
orDe btRe funding

L earning Objectives:
A fter studying this chapter, you should be able to:
 Explai
nwha tki ndsofl i
abili
tiesarec l
assif
ieda sgene rall
ong-termliabil
iti
es
 Ma kejournalent ri
esint heg eneraljournalofgove rnme nt
ala ct
ivi
tiestor ec
or dtheissua
nc e
andrepayme ntofge nerallong-ter
ml i
abil
iti
e s
 Ma kejour
na lentriesinthegove rnme nta
la ctiviti
esge ne r
aljournalt
or ecordge ner
allong-t
erm
l
iabil
it
iesari
s i
ngf romc apitallea
sea greeme nts
 Prepar
eas chedul esumma ri
zingc hangesinge nerallong-ter
ml iabil
it
ies
 Descri
bether ea sonsfora ndna t
ur eofstatutor yde btlimitsande xplai
nst heme aningofde bt
marginandove rlappingde bt
 Ma keappropriatejournalentrie
stoa ccountf orde bts ervi
cetransact
ions
 Descri
bether equi r
edfairvaluere port
ingofi nve st
me ntsheldbyde btservi
c efunds
 Descri
bet hea ccountingpr oc e
dur esandma ke sappr opri
atejournale ntr
iesf orspecia
lde bt
ser
vicetra
nsa ct
ions

6.1) General L ong-T erm L iabilities

Theus eofl ong-t e
rm de bti sat radit
ionalpartoft hef i
scalpol i
cyofs tatea ndlocalgovernment s
,
part
ic
ular l
yf orfi nanci
ngt hea cquisi
ti
onofge nera
lc apit
ala ss
ets.Althoughs omegove rnmentsha ve
is
suedta xablede bt,thei nterestearnedonmos tdebtissuedbys t
ateandl ocalgovernmentsisexempt
fr
om f edera ltaxa t
iona nd,i ns omes ta
tes,from s ta
tet axati
on.Thet ax-
exemptf eatur
ee nables
governme ntstor aiselargea mountsofc apit
ala tr
elati
velylowc ost
.Be causeofther e
lat
iveeasewi th
whichgove rnme ntsc a
ni ssuede bt,mosts t
ateshavea ctedi nthepubl i
ci nte
resttoimpos esta
tutory
li
mitsont hede btt hatc a
nbei ncur
redbys t
atea ndloca lgove r
nme nts.Cons e
quently,eff
ective
manageme ntofs tat
ea nd l ocalgove r
nme ntalde btrequi r
esgood l egala dviceand a s ound
underst
andi ngofpubl i
cf inance.
Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 121
 Ac
count
ingf
orGe
ner
alLong-
Ter
mLi
abi
li
ti
esa
ndDe
btSe
rvi
ceFunds

Thisc ha pte rdescribe stheki ndsofde bta ndot he rlong- terml iabil
iti
e stha taret er
me d“ gene r
a llong-
terml iabilities.
”General long-term liabilities a ret hoset hata r
isefrom a ct
iviti
esofgovernmental
funds and that are not accounted for as fund liabilities of a proprietary or fiduciary fund.
Ge nerall ong- ter
ml iabil
it
ie sarer eporteda slia bilit
iesint hegovernmental activities column oft he
gove r
nme nt -wideSt a te
me ntofNe tAs sets,buta renotr eporte daslia bi
litiesofgove r
nme nt alfunds.
Thisc hapt era ls
odi sc usse
st hec onc eptsof:
 Di r
e c
ta n
dOve rl
a ppi ngde bt;
 St atutoryDe btLimi t
;a nd
 De btMa rgin
Ita ls
opr ovidesi l
lus trat
ivej ourna le ntri
esa tt hegove rnme nt-
widel eve ltor ecordi ncre a
s esa nd
decreasesi nge ne r
a llong- te
rml iabi l
it
ies.Fina lly,thec haptere xplainst hena t
urea ndtype sofDebt
Service F unds and Debt Services A ccounting f orva riouski ndsofge ne rallong-terml i
a bil
ities,as
we llasa ccount i
ngf orr efundingofde bt.Ins tudyi ngt hisc ha pte
r,ther eade rshouldr ecalltha tthe
gove r
nme nt alfundt ypes( Ge neral,Spe cialRe ve nue ,Ca pitalPr ojec
ts,De btSe rvice,andPe rma nent
Funds )a cc ountf oronl ys hort-ter
ml iabili
ti
est obepa idf rom f unda ssets.Al though,thepr oce e
dsof
long-ter
mde btma ybepl ac edinoneoft hesef undt ype s(us uallyaC apital Projects F und) ,thel ong-
term debtma ybepl a cedi t
selfmus tber ecorde di nt hegove rnme ntala c
tivitiesaccountingr ec ordsat
thegove rnme nt-
widel evel.Ent er
pr isefundsa ndpe rhapsc ert
a i
npr i
va te-purpos etrustfundsa ccount
forbothl ong- te
mde bts ervicedbyt hefunda nds hor t
-termde bttober epaidf romf unda s
s et
s.

Thel iab i
lit
yofE nterprise F unds shouldbedi spla
yedont hefaceofthes t
at
e mentoft heissui
ngf und
ifthatf undma yr eal
ist
icallybee xpec te
dt of i
nancethede btservi
ce;howe ver,ifthel i
abil
ityalsois
seconda ril
yba ckedbyt hef ullfaitha ndc reditoft hegove rnmentalunit,thec ontingentge nera
l
obligationl i
abi
lit
yoft hegove r
nme nts houldbedi scl
os e
di nanot etot hef i
nancialstat
eme nt
s.The
continge ntobligati
on toa ssumed e bts er
viceofl ong-ter
m de btba cke d pri
ma ril
y by s pecia
l
assessme ntsisa c
knowl edge dbyr epor t
ingsuc hdebti nthegove r
nme nt-widefinancialst
a t
eme ntas
“speciala ssess
me ntdebtwi t
hgove rnme nta
lc ommi t
me nt.”Anypor tionofs uc hde btthatwi llbe
repaiddi rect
lybyt hegove rn ment(fore xa mple,t
of i
nancet heport
ionofas pecia
la ss
e s
sme ntprojec
t
deeme dt ohavepubl i
cbe ne fit
),shouldber eport
edlikea nyothergener a
llong-ter
ml ia
bil
itie
soft he
gove rnme nt

Bondsa ndot herde btofe nterpri

sef undsi ssuedwi t
hc ovenantstha tgivet hede btthes tat
us ,eve n
continge ntly,oftax-supported debt ma ya ff
ec tthegove r
nme ntalunit’sabi l
ityt
oi s
suea ddit
iona ltax-
suppor t
e dde bt.Ther easonf orthisisdisc uss
e dunde rt hehe ading“ De btLi mitandDe btMa rgin”i n
thischa pte r
.Ifthec ontingencyc lausebe come se f
fectivebe caus eresource softheE nterprise F und
areins uff ic
ientforDebt Service,t heunpa i
dpor t
ionoft hede btisr e
c ordeda sal i
a bil
it
yoft he
gover nme nta
la ct
iviti
esa tthegove rnme nt-
wi del evel.Thee nter
prisef undt hatisr e
lievedoft he
lia
b i
lityt henr emove stheunpa i
dde btfrom itsl ia
bili
tya cc
ount sandr ecognizesanOt he rFinanc i
ng
Sourc es,whi chisreporteda ft
e rt
hen on-ope r
atingr e
ve nue s(expenses)s ecti
onoft hepropr i
etar
yf unds
Stateme ntofRe venue s
,Expe nses,andCha nge sinFundNe tAs set
s,int heGASBSt ateme ntNo. 34
reportingmode l.

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 122
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
Ge ne r
all ong- t
erml i
abili
tie
st hatrequirejour nalentriesi nthegove rnme ntala ct
iviti
esge neraljournal
atthegove r
nme nt-wi deleveltor efle
c tincre as
esorde creasesingeneral long-term liabilities als
o
requi r
ee ntri
esi nthea ccountsofoneormor egove rnme ntalfunds.Mos tincreasesinge nerallong-
term l iabilit
iesa r
ising from de bti ssuanc esa r
er ecorde da sa n Ot he rFi nancing Sour cei na
gove rnme ntalfunda nda sage nerallong- terml iabilit
ya tthegove rnme nt-widel evel
.I ncreasesin
long- t
erml i
abilit
iest hata r
isef r
om ope rati
nga cti
vi t
ies,s ucha se sti
ma tedl ossesf r
om l ong-term
claimsa ndj udgme nts,fore xample,a r
er ecorde datt hegove rnment-widel evelbyde biti
nga ne xpens e
andc reditingal i
abilit
y.Exc eptforc ertai
nde feas
anc es,mos tgenerallong- t
erml iabil
it
iesa res et
tle
d
byt hepa yme ntofc as hfr
omagove rnme ntalfund.Asonewoul de xpect,thee ntryinthegove rnme ntal
activiti
esj ourna latthegove rnme nt
-wi deleve ltorec ordt hede creas
einge nerallong-ter
ml i
abil
itie
si s
str
a ightforwa rd:de bittheliabil
ityac c
ounta ndc reditCa sh.Att hesamet imet hegove rnme ntalfund
payi ngt hel iabil
itywoul dde bitExpe ndituresa ndc reditCa sh.Re t
irementofma turedde btprincipal
usingade btse r
vicefundi si l
lus
trat
e dlaterint hischa pter.

Ina nygi venye ar,i

tiscommonf orn ewdebtiss
uest obea uthori
ze d,forpreviousl
ya uthori
zedde btto
bei ssued,a ndf orolderissuestober et
ir
ed.Whe nac ombi nat
ionofl i
a bi
li
tye ventstakespl a
c e
,a
schedul edeta i
li
ngc hangesinl ong-ter
m debtisne ededtoi nfor
mr eportus e
rsoft hede tai
lsofhow
long-terml i
a bil
it
ieschanged.Thege ne
rall
ong-te
rml i
abil
it
ydi scl
os ur
e srequi
r e
dbyGASBSt ate
me nt
No.34e ff
ec t
ivelyme etthesenee dsbyprovidi
ngde t
ailofbe gi
nni ngofpe r
iodlong-terml i
abili
ti
es,
additionstoa ndr educt
ionsoft hos eli
abil
it
ies
,e ndingliabili
ti
es,a ndt hepor ti
onoft heliabi
lit
ies
paya blewithinoneye a
r.Ill
ustr
ation6-1present
sthisdiscl
osures cheduleforthehypot hetic
alTownof
JIMMA.
Illustration 6-1: Disclosures about L ong-T erm L iabilities, T own of J IMMA September 30, 2002
NOTE4–Long- TermDe btLi a
bil
ities
Amounts
Bal
ance Ba l
ance Duewithi
n
10/
1/2001 Addi
ti
ons Re
duc
ti
ons 9/30/2002 Oneyear
Governmental A ctivities:
Ge ner
a lobligati
onbonds $510,
000 $–– $140,
000 $370,
000 $35,
000
OtherLo ng-ter
mBonds 11,120,
000 15, 830,
000 1,315,
000 25,635,
000 2,
152,
185
Promiss orynot e 213,
016 –– 17,
917 195,
099 16,
410
Capitalle as
es 155,
084 41,
702 76,
047 120,
739 73,
740
Compe ns a
teda bsence s 1,296,
122 77,
864 –– 1,373,
986 0
TotalGe neralLTl iabiliti
e s $13, 294,
222 15, 949,
566 1,548,
964 27,694,
824 2,
227,
335
Business-T ype A ctivities:
Utili
tyr evenueb onds 356,053,692 134,
920,
000 67,
017,
331 423,
956,
361 66,
900,
000
Utili
tyNot es 71,361,
000 –– 1,
700,
000 69,661,
000 1,
680,
000
TotalBus i
nes s
-typeLTLi abi
li
ti
es 427, 414,
692 134,920,
000 68,
717,
331 493,
617,
361 68,
580,
000

6.2) General L ong-T erm L iabilities arising form C apital L ease A greements
Acqui
sit
ion ofGe ne
ralCapit
alAs s
etsunderLeaseAgr e
ementsresult
edin gene
rallong-
ter
m
l
ia
b i
li
ti
es.Abr i
efexamplei
sgivenofthecomput
ati
onofthepres
entvalueofr
enta
lunderac a
pita
l
l
easeagr
e e
me nt
.Theentr
yneces
saryi
nagove r
nmenta
lfu
nda tt
heince
ptionoft
heleas
eisil
lust
rat
ed
Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 123
 Ac
count
ingf
orGe
ner
alLong-
Ter
mLi
abi
li
ti
esa
ndDe
btSe
rvi
ceFunds
in Cha pte r5.Thec orrespondi ng e ntryi nt hegove rnme nta la ctiviti
esge neralj our nala tt he
gove rnme nt-wi del eve lisa l
s ogi ve ninCha pter5t os howt hec apita l
izationoft hea sseta cquiredunde r
thelea s
e.Thee ntryi sr eproduc edhe r
ea lsoi nor dert oillus t
ratehowt hel ia
bili
tyi srecor ded.
Governmental A ctivities:
Equi pme nt .
...
..
...
...
......
..
..
...
.....
..
..
..
...
...
...
....
..
...
...
....
..
.......
..
..
.....
..
..
6
..
7
..
,.
5.
.
9..
0.
Ca pi talLe aseObl iga t
ionsPa yable. .
..
...
...
....
..
.......
..
..
.....
..
..
..
....
.... 67,590
Ass howni nt hepr ec edinge ntry,a tt hei nceptionoft hel e asea nobl igat
ioni sre cognizeda tthe
gove rnme nt-wi del eve li na na mounte qua ltot hepr e
s entva l
ueoft hes tream ofa nnua lpa yme nts.
Althoug h,t hel easea gr eeme ntc a llsfora$10, 000i nit
iall easepa yme ntonJ a nua ry1,2001,t hef ull
presentva lues houl dber ec orde da st hel i
abi l
ityunt ilt hei ni t
ialpa yme ntha sbe enr ecorde d.
Ac countingf ort hei nitialpa yme ntisr e cordedi nt hed ebts e rvi c
ef undi si llus t
ratedl a t
eri nt his
chapte r
.Whe nt hei nitialpa yme nti sre cor dedint hede bts ervicef und,i twillbea ccompa niedbyt he
fol
lo winge nt rya tthegove r
nme nt -widel e veltor ecor dther educ tionoft hecapi talleaseobl igation.
Governmental A ctivities:
Ca pitalLe as eObl iga ti
onPa yabl e..
..
..
....
..
....
..
...
....
...
...
...
.....
..
....
1.
.0
..
,
.0
.
.0
.
.0
.
..
Cash. ...
...
...
..
.....
..
.....
..
...
...
.....
..
..
..
....
..
....
..
...
....
...
...
...
.....
..
....
....
..
..
..
.. 10, 000
OnJ anuary1,2002,t hes econdl easer ent alpayme ntof$ 10, 000i sma de .Ast het ablegi venl ateri n
thi
sc hapters hows ,onl y$4, 241oft ha tpa yme nta ppliest or e duc ti
onoft hepr i
ncipa loft hel ea se
obligati
on( ther ema ining$1 0,000-$4, 241,or$5, 759,r eprese ntsi nte re
stont hel ea se
).Thus ,the
fol
lo winge ntryi sr equi reda tthego vernme nt-widel e
ve lt of ur therr e ducet heba lanc eoft hel ea se
pri
nc ipalandt or ecogni zether e
la tedinte restexpe nse .
Government A ctivities:
Ca pitalLe a seObl i
ga tionsPa ya ble.
..
...
...
...
....
..
...
...
....
..
.......
..
..
....4
.
.,
.
2
..
4
..
1
....
InterestExpe nseonCa pita
lLe as e
..
...
...
...
...
...
..
....
..
....
..
.......
..
..
....5
.
.,
.
7
..
5
..
9
....
Ca sh.....
...
..
...
....
...
....
..
...
...
.....
..
..
...
...
..
....
..
....
...
...
...
.....
...
..
......
..
..
..
...
. 10, 000

Schedule of F uture Debt Service R equirements

I
na ddit
iontothediscl
osuresaboutlong-ter
ml i
abilit
ie
spresente
di nIl
lustr
ation6-1,inf
orma t
ionabout
t
hea mountofde btprinci
palandi nte
restfal
li
ngduei nfut
ureye ar
sisus ef
uli nf
orma t
iontof i
nanci
al
ma nagers,bondsa nal
ys t
s,andot herstabl
esha vinga ninter
estina sses
singagove rnmentalunit
’s
r
e quirementsforfutur
ede btserviceexpendit
ures.Ther ea
dershouldnot ethattheinteres
tporti
onof
t
hes chedul
edf ut
urede btser
vicepa yme nt
sisnotapr ese
ntliabil
it
ya ndshoul dnotbepr esente
da s
such.Todos owoul dnotbeinc onformit
ywi t
hge neral
lyaccept
e daccounti
ngpr i
nciple
s .
Illustration 6-2
T OW N OF J IMMA
NOT E S T O F INA NC IA L ST A T E ME NT S
SE PT E MBE R 30, 2002
Aggregatea
nnualdebts
ervicer e quir
eme nts(e xcl
udi ngt heComme rc
ialpa
perNot
es)
i
ncludingmat
uri
ti
esofpr
incipa landpa yme ntofc urrenti nte
restarea
sfoll
ows.
Debt Service R equirement

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 124
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s

Internal
F iscal Y ear(s) General E nterprise Service T otal
2003 $2,815,299 $30, 499,025 $22,273 $33,336,598
2004 2,838,305 34,499,804 22,273 37,360,382
2005 2,751,053 36,805,138 14,849 39,571,040
2006 2,693,201 39,340,417 –– 42,033,618
2007 2,698,904 39,344,076 –– 42,042,980
2008-
2012 12,294,623 195, 959,406 –– 208,254,029
2013-
2017 11,306,314 203, 342,022 –– 214,648,336
2018-
2022 11,308,384 244, 763,213 –– 256,071,597
2023-
2027 4,115,205 109, 164,138 –– 113,279,343
2028-
2032 –– 28,912,475 –– 28,912,475
52,821,288 962, 629,715 59,395 1,015,510,398
Les
s:Int
ere
s t 26,500,450 538, 673,354 5,285 565,179,089
Tot
alPri
ncipal $26,320,838 $423,956,361 $54,110 $450,331,309

6.3) Debit L imit and Debt Margin

Thede bts chedulesa lre a
dyi l
lustrate
di nt hi sc haptera repr i
ma ri
lyusef ulfort hei nforma ti
onof
admi nistrators
,l egis
lativebodi es,a ndother sc onc ernedwi t
ht heimpa ctofl ong-ter
m de btont he
financialc ondi t
ionanda c
tiviti
esoft hegove r nme ntalunit,pa r
ti
cularl
ywi t
hr ef
e re
nc etot heresulti
ng
taxr atesa ndt axes.Anot herma tt
e rofi mpor tanc ei sthel egallimitont hea mountofl ong- t
erm
indebtedne s sthatma ybeout st
andinga tagi ve nt ime,i npr oport
iontothea s
s e
s s
edva lueofpr opert
y
wi t
hint hej urisdic
tionr epresented.Thi stypeofr e s
tri
c t
ioni sofi mpor tancea sapr otecti
onof
taxpaye rsa gainstpossiblec onfiscatorytaxra tes.Eve nthought a
x-rat
elimitationlawsma ybei ne f
fect
foragove rnme ntaluni t
,t hel imitati
ononbonde di nde bte
dne s
si sus uallyne ededbe ca
us ethe
prevailingpr a
c ti
ceist oe xemptt hec lai
msofbondhol dersfrom theba r
rieroft axr atesr est
rict
ions.
Thisi st os ayt hat
,e ve nt houghal a
we st
a blishingma ximaf ort axrat
esi sint hes ta
tut es
,i twill
proba blye xc l
udede bts e r
vic erequirementsf romt her est
ricti
onsoft helaw.Thi sexclusionwoul dbe
reit
era t
ed,i ne ffec
t,int hebondi nde nt
ures.Be f
or econtinuingadi scussi
onofde btlimitat
i on,itseems
we l
lt oc la
r if
yt heme ani ngoft hete rmsdebt limit and debt margin.

Debt limit me
anst
het
ota
lamountofi
nde
bte
dne
ssofs
pec
ifi
edki
ndst
hati
sal
lowe
dbyl
awt
obe
outstandinga ta nyonet ime.Thel imit
ationisli
kel
yt ob eint er
msofas t
ipulat
edpe rc
entageoft he
assessedva luationofpr opert
ywi thinthegove r
nment’sjur i
sdic
tion.Itma yr el
atetoe i
theragr oss
valuationorane tval
ua t
ion.Thel atte
ri slogi
cal
,butproba blynotpr eva l
ent,becaus
ede btlimitat
ion
existsa sade viceforpr otec
tingpr opertyowne r
sfrom c onfisc
atory( veryhi gh)taxati
on.Fort hat
reason,t ax-
pa yingpr opertyonlys houldbeus edinr egul at
ingma ximum i ndebtedness.Inma ny
gove r
nme nt
alj uri
sdict
ions,certa
inpr opertyisle
gall
ye xcludede venf rom a ss
essment.Thisinc l
udes
propertyowne dbygove rnme nts
,c hurches,char
it
abl
eor ganizati
ons ,ands omeot hers,dependingon
st
a t
el aws .Exe mpt i
ons,whi cha pplytopr oper
tysubjecttoa ssessment ,areba se
donhome st
eador

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 125
 Ac
count
ingf
orGe
ner
alLong-
Ter
mLi
abi
li
ti
esa
ndDe
btSe
rvi
ceFunds
mort
gageexempt
ion l
aws,mili
ta
ryser
vic
e,economicsta
tus
,a nd pos
sibl
ysomeot
her
s.Bot
h
exc
lus
ionsa
ndexe
mptionsr
educ
ethea
mountoft
ax-pa
yingpr
oper
ty.
Ne
tVa
lua
ti
on=Al
lPr
ope
rtyVa
lue–Exc
lude
dPr
ope
rtyVa
lue–Exe
mpt
edPr
ope
rtyVa
lue

Debt margin, s
ome
ti
mesr
efe
rre
dtoa
sbor
rowi
ngpowe
r,i
sthedi
ff
ere
ncebe
twe
ent
hea
mountof
debtl i
mi tc a
lculate
da sprescri
be dbyl awa ndt hene ta mountofout s
tandi
ngi nde bte
dne s
ss ubje ctto
limit
a t
ion.Thene ta mountofout sta
n dingi nde btednesssubj ectt ol i
mi t
ati
ondi ffer
sf r
omt otalge ne ra
l
long-termi ndebtedne ssbecausec e
rtainde bti ssuesma ybee xe mpt edbyl awf romt helimitati
on,a nd
theamounta va i
lableinde btservicef undsf orde btr e
pa yme nti sde ductedfromt heout s
tandingde btin
ordert ode ter
mi net hea mounts ubjectt othel egaldebtl i
mi t
.Tot algenerallong- t
ermi ndebte dness
mus t
,i ns omej urisdicti
ons,includes peciala ssessmentde bta ndde bts er
vicedbye nterpri
sef undsi f
suchde btwa si ss
ue dwi t
hc ove nant st hatgi vet hede btt a x-supporteds tatusint hee ve ntt hat
colle
c ti
onsofs pe ci
a lassess
me ntsore nterpri
s efundr evenue sa rei nsuff
ici
entt ome etrequir
e dint eres
t
orprinc i
pa lpayme nts.De btauthorizedbutnoti ssueda soft hee ndofaf i
scalye arshouldbea dde dto
outst
a ndingde btbec auseitma ybes olda tanyt i
me .Althoughi twoul dbeinke e pi
ngwi ththepur pose
ofe stabl
ishingal e
ga ldebtlimi ttoi ncludet hepr es
entva lueofc a
pitalle
a seobl i
gati
onsa longwi th
bonde dde btinthec omput at
ionofl e galde btma rgi
n,s ta
tess tatutesa tpres
e tgene r
all
ydonots pe ci
fy
thattheliabili
tyforc apita
lleaseobl iga t
ionsi ssubj e
cttot hele ga ldebtlimit
.

I
ll
ust
rat
ion:
TownofAnywhe r
ehasthefoll
owi ngda t
aonSe ptember30,2006:
Asses
sedval
ueofRe alProperty..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
164,
147,
340
I Asses
sedval
ueofPersonalPr opert
y..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.53,
012,
260
n DebtLimita
sapercentofa s
se ss
edva l
ue..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 20%
st Out s
tandi
ngDebt.
..
..
...
..
..
..
..
..
....
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
126,
438,
619
r NetAsset
sinDebtservi
ceFundst opaytheoutst
andingdebt.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.45,
836,
524
uction: De
ter
minet
heLe
galDebtma rgin
T own of A nywhere
C omputation of L egal Debt Margin
September 30, 2006
Assess
edvalueofRealPrope r
ty..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
...
..
..
..
..
..
..
..
..
..
.164,
147,
340
Assess
edvalueofPersonalProper
ty..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
...
..
..
..
..
..
..
..
..
..
.53,012,
260
Tota
lAs s
essedValueofRe alandPe r
sonalProper
ty..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..747,
159,
600
LegalDebtLimit
,20%ofa sses
sedva l
ue..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..149,
431,
920
Outst
andi
ngDe bt.
..
..
..
...
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..121,695,
000
NetAsset
sinDSFst opa ytheoutsta
ndingdebt..
..
..
..
..
..
..
..
..
..
..(45,
836,524)
Outst
andi
ngDe btappli
cabletoDe btLimit
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
.80,602,
095
LegalDebtMa r
gin..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..68,829,
825

E xercise:
ATownhadge
ne r
alobl
iga
ti
onde
btout
sta
ndi
ngofBr30,
000,000andha
da va
ila
bler
esour
cesi
nthe
a
mountofBr8,000,
000topaytha
tdebt
.Theass
ess
edvaluati
onofproper
tyintheTownisBr
Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 126
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
600,
000,
000.Thesta
teappli
esan8per
centdebtli
mit
,ba
sedonass
esse
dva
lua
ti
on.Thede
btma
rgi
n
tobere
port
edintheTown’sst
at
ist
ic
als
ect
ionoftheCAFRwouldbe:

6.4) Direct Debt and Overlapping Debt

De btlimit
ationl awsor di
na r
ilye stabl
ishl i
mi t
sha tma y notbe e xceeded by e a
chs epara
te
governmentalunitaff
ect
edbyt hel aws.Thisme ansthecount
rygove r
nmentma yincurindebtednessto
thelegalli
mitat ownshipwithint hatcount
yma ydol i
kewise,andaTownwi thi
nt hetownshipma y
becomei ndebtedt othel e
ga lli
mi t,withnor est
ric
ti
onbe causeofde btalr
e a
dyowe dbyl ar
ger
terr
it
ori
alunitsinwhi chitislocated.Asar e s
ult,agivenpa rce
lofrea
le st
at
eorobj ectofpe rs
onal
propert
yma ybet heba s
isofde btbe yondtheso-call
edlegallimita
ndalsoma ybes ubjectatagi ven
timetoassessmentsfort
hepa yme ntoftaxestoretir
ebondsissuedbytwoormor egove rnmentalunits
.
Whe nthissi
tuat
ione xi
st
s,itisdesc r
ibedasoverl
a ppi
ngde bt
.

Thee xt entt owhi chde btma yoverlapde pe ndsont henumbe rofuni tsre prese
ntedwi thinana reathat
area uthor izedtoi ncurl ong-te
rmi ndebte dness.The sema yi nc ludet heSt at
e,Count y,Towns hip,
Town,Sc hoolBoa rd,LibraryBoa rd,Hos pitalBoa r
d,a ndPr oba bl yOt he rs
.Tos howt het ota
la mount
offixedde btaga instprope r
tylocatedwi thinagi ve njuris
diction,as tateme ntofdirecta ndove rla
pping
debts houl dbepr epared.Tot his,dire
c tde btsarea ddeda mount sowi ngbyot heruni tsa ndauthori
ties
thatlevyt axesa ga i
nstthes amepr ope r
tyonwhi cht hedirectde bti sba sed.As ta t
eme ntofDi r
ector
Ne tandove rl
appi ngDe bts houldbepr epa redtodi sclos
et her ela t
ionofdi rectde bta ndove rla
pping
debtt oa ssessedva luat
ionofr ealpr ope rtywi thint hes tatea ndl oc algove rnme nt s. Villa
geof
Anywhe rei sloc atede nt
irelywi t
hinthebounda r
iesofTo wnofAnywhe r
ea ndTownofAnywhe r
ei s
locat
e de ntirel
ywi t
hinthebounda r
iesofDi str
ictofAnywhe re.TheVi lla
geha dde btofBr370, 000
andt axabl eprope rtyofBr1, 591,052,836;t heTownha dd ebtof16, 930, 000a ndta xablepr oper
tyofBr
3,478,806, 917;a ndBr69, 723,480a ndtaxa bleprope rtyofBr3, 478, 806,917.De t
ermi net heDirectand
Ove rl
a ppingDe bt
V IL L A GE OF A NY W HE R E
F Y 2002 C OMPR E HE NSIV E A NNUA L F INA NC IA L R E POR T
ST A T IST IC A L SE C T ION
SC HE DUL E OF DIRTaxEab
Cl
eT DE BT AGeND
neraOV
l E R L%o
A PPING
fDebt DE BT
Vill
age
’s
Ta
xing Pr
ope
rtyVa
lue Obli
gat
ion Appl
ic
ablet
o Sha
reofDe
bt
Aut
hori
ty BondedDebt t
hevil
la
ge
Direct Debt:
Vi
ll
ageofAnywhe
re 1,
591
,052,
836 370,
000 100.
00% $370,
000
Overlapping Debt:
TownofAnywhe
re 3,
478
,806,
917 16,
930,
000 45.74 7, 743,782
Di
st
ri
ctofAnywhe
re 3,
478
,806,
917 69,
723,
480 45.74 31,891,520
Direct and Overlapping $87,
023,
480 45.97% $40,005,302

Debt per C apita

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 127
 Ac
count
ingf
orGe
ner
alLong-
Ter
mLi
abi
li
ti
esa
ndDe
btSe
rvi
ceFunds
De btperCa pi
taisame asur
eoft hea bil
it
yoft heci
ti
z e
nst opaygener
algover
nmentdebt;ahigh
fi
gur eindic
ate
sthatc i
ti
zensofagove rnmentbearana boveaver
ageburden.I
tisde t
ermine
dby
dividi
ngt henetdebttothepopulat
ionnumbe r.Accordi
ngt oSt
andardandPoor’
s,anyt
hingbelow
$1,000woul dindica
telow fis
calstre
s s.Dete
rminetheDe btperCa pi
taforvi
ll
ageofAnywhe r
e
assumingapopulati
onof10,614
Vi
ll
age
’s Vill
ageof De
btper
Shar
eofDebt Popul
ati
on Capi
ta
Direct Debt:
Vill
ageofAnywhe re $370,
000 10,
614 34.
86
Overlapping Debt:
TownofAnywhe r
e 7,
743,
782 10,
614 729.
58
Distr
ictofAn ywhere 31,
891,
520 10,
614 3,
004.
67
Direct and Overlapping $40,
005,
302 10,
614 3,
769.
11

E xample 2: Thegove rnme ntwi deSta t

ementofNe tAsset
sofVi l
la
geofEl izabet
hindicat
es
$1,090,800i ngenera
lobligationbondsout s
tandi
ng.TheVi l
la
geofEl izabe
thgovernment
alfunds
ba l
ances heeti
ndic
atest
hat$36, 500isonha ndforpaymentofdebt
;thusthenetdebtis$1,
054,
300.
Thene tde btperc
apit
aassumi ngpopula
tionof10,000the
nis:
Ne tdebtpe rca
pit
a=Br1, 054,300/10,000=$105. 43

E xercise 1:
ATowngove rnmenti
sl ocat
ede nti
rel
ywi t
hint
heboundari
esofthecount
y.TheTownha ddebtof
$3,
000,000,as
sess
edpropert
yva lueof$100,
000,
000,andapopul
at
ionof10,000.Thecount
yhaddebt
of$2,
000,000,ass
esse
dpr opert
yva lueof$200,
000,
000,andapopula
ti
onof15, 000.TheDir
ectand
Overl
appingdebtperca
pitafortheTo wnwouldbe:

6.5) A ccounting for Debt Service F unds

Long- termde btinc urredtopr ovidemone ytopayf ort hec onstr
uctionorpur chaseofc api t
a lassets
,or
fora nyot herpur pos es,canber epai
donl yfr
omr evenuer aisedins ubsequentye arstose rvi
c ethede bt
.
Re portingLong- Te rm Li abil
it
iesPrinciplepr
ovidest hatthel ong-ter
ml iabil
itiestobes ervicedf r
om
there venuesofapr opri
e t
aryf undshouldbea cc
ounte df orbyt hatpropriet
a r
yf unda ndt hes erviceof
suchde btisa l
soa ccounte dforbyt hepr opr
iet
aryf und.Debt service include sbotht hepa yme ntof
inter
e standt her epa yme ntofpr inci
palwhe ndue.Long- t
ermde bts er
vicedbyt a
xl evie
s ,orbys pecia
l
assessme nts
,h owe ve r,i
sa ccountedforinthegovernme nt
ala c
tivit
iesc a
tegorya tthegove r
nme nt-wide
level.Re venuer aise dfrom taxe sorfrom speci
ala s
s essme nt
sf orde btservice,ande xpe ndituresfor
debts ervice
,a recommonl ya ccount
edf orbyuseofa debt service fund,t hes ubjectoft hissectionof
thec hapter.

6.5.1) A ccounting for Serial Bonds

Se
ver
alde
cade
sago,gove
rnme
nta
lis
sue
sofl
ong-
ter
m de
btc
ommonl
yma
tur
edi
ntot
alonagi
ven
Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 128
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
dat
e.Intha
tera,bondi ndenturesof t
enr e
qui
redtheest
abl
is
hme nt
sofa“ sinki
ngf und,”some t
imes
oper
ate
dona nact
uarialba si
s.Somes i
nkingf
undt e
rmbondiss
ue sar
estil
louts
tanding,buttheyar
e
dwarf
edinnumbera nda mountbys eri
albondiss
ues,i
nwhichtheprinc
ipalmaturesininsta
llment
s.
Fourt
ypesofse
ria
lbondi ss
uesa refoundinpr
acti
ce:
 Re gul arSeria
lBond,
 De ferr
edSe ri
a lBond,
 Annui tySerialBond,a nd
 I rr
e gul
a rSeri
alBond

R egular serial bond issue i

sabo
ndi
ssue
dwhos
epr
inc
ipa
lisr
epa
yabl
einas
pec
ifi
ednumbe
rof
equa
la nnua
lins
tall
mentsove
rt hel
if
eoftheissue.I
fthefi
rsti
nst
all
mentisde
laye
df orape
riodof
morethanoneyearaft
ert
hedateoft
heis
sue,butther
eaf
teri
nst
al
lment
sfal
ldueonaregula
rba
sis,t
he
bondsa reknownasdeferred serial bonds.Iftheamountofa nnua
lprinci
palre
payment
si s
schedul
edtoincr
eas
eeachye a
rbya ppr oxi
matel
ythesameamountthati
nte
restpayme
ntsdecr
ease
(i
nteres
tdecr
ease
s,ofc
ourse,beca
us ethea mountofout
st
andi
ngbondsdecre
a s
es)sot
hatthetot
al
de
bts
ervi
cer
ema
insr
eas
ona
blyl
eve
love
rthet
ermoft
hei
ssue
,thebondsa
rec
all
edannuity serial
bonds.Irregular serial bonds ma
yha
vea
nypa
tt
erno
fre
payme
ntt
hatdoe
snotf
itt
heot
hert
hre
e
c
ate
gor
ies
.

Budgeting for Debt Service

Whe therornota dditionst ode bts e r
vicef undsa rer equi redbyt hebondi nde nt uret obea ppr oxima tely
equa lye arbyye a r
,goodpol i
ti
c sa ndgoodf ina nc i
alma nage me nts ugge stt hatt hebur de nont he
taxpa yersbes pre adr easona blye venlyr a the rtha nl ump e di nt heye a rst ha tiss ue sori ns tallments
happe nt oma t
ure.I ftaxe sf orpa yme ntofi nte resta ndp rinc ipalonl ong- term de bta r
et ober aised
directlybyt hede btse r
vicef und,t heya rer e cogni z eda sRe ve nue soft hede bts ervi cef und.I ft het axes
aret ober a
isedbya nothe rf unda ndt r
a nsfe rredt ot hede bts e rvicef und,t he ymus tbei nclude dint he
Re ve nuesbudge toft hef undt hatwi l
lra iset her e ve nue( of te
nt heGe nera lFund)a nda l
sobudge tedy
thatf unda sint
erfundt rans ferst othede bts e r
vi cef und,a ndr e por t
e da sa nOt he rFi na nc i
ngUs ebyt he
Ge ne ralFund.Thet ransfe rsa rer eporteda sOt he rFi na ncingSour c esbyt hede bts e rvicef und.Si nc e
thede bts ervic
ef undi sabudge tinga nda c count inge ntity,i ts houl dpr epa reaRe ve nuesa ndOt her
Fina ncingSour cesbudge tt ha tinc ludesi nter fundt r ansfe r
sf romot he rfundsa swe lla sr evenue sitwi l
l
raisedi rec t
lyore arnoni tsi nve stme nts.Al thought hei te msma ybedi ff
ic ulttobudge ta ccura t
e l
y,de bt
servic efundsc anof tenc oun tonr e
ceivingpr emi umsonde bti ssue ss olda nda cc rue di ni ntereston
debti ssue ssold.Ac cruedi nterestonde bts oldi sc ommonl yc ons ide redRe ve nue soft her ecipientde bt
servic ef und;pre mium onde bts oldisa nOt he rFi na ncingSour ce.Si mi larlyi fc a pitalpr ojec t
sa re
compl etedwi t
he xpe nditur esl esst hanr eve nue sa ndot herf ina nc ings ourc es,t her e si
dua le qui t
yi s
ordina ril
yt ransf
e rre
dt ot hea ppr opriat
ede bts ervic ef und .Pe rsonsbudge tinga nda c countingf orde bt
servic efundss houl ds eekc ompe te ntlega la dviceont hepe rmi ss i
bleus eofbot hpr emi umonde btsold
andr esidua lequityi nter
f undt rans f
ers.I ns omec a ses,oneorbot hoft hes ei temsmus tbehe l
df or
eve ntualde btrepa yme nta ndma ynotbeus edf ori nt erestpa yme nts :inot he rc ase s,bot hpremi umsa nd
residua le quit
ytrans f
e r
s-inma nybeu s
e df ori ntere stpa yme nts.

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 129
 Ac
count
ingf
orGe
ner
alLong-
Ter
mLi
abi
li
ti
esa
ndDe
btSe
rvi
ceFunds
TheAppr opri
a ti
onsbudge tofade b tservicefundmus tpr ovidef ort hepa yme ntofa llintereston
generallong-term de btt ha twi llbe comel egallyduedur ingt hebudge tyear,andf ort hepa yme ntof
anypr i
ncipala mount st ha twi l
lbe c
omel egall
yduedur i
ngt hebudge tye a
r.CASBs tanda r
dsc urrently
requir
ede bts ervicef unda cc ount i
ngt obeont hes ameba sisa sisr equiredforge ne ra
la nds pecial
revenuefunds .Onepe culia rityoft hemodi fi
eda ccrualbasisus edbygove rnme nta
lf undt ypesi sthat
inte
restonl ong- t
erm de bti snota ccruedi nthede bts e
rvicef und,buti sa ccr
ue datt hegove rnme nt-
widel evel
.Fore xampl e,i ft hef iscalye a
rofagove rnme ntalunitendsonDe cember31,2001,a ndt he
inte
restoni t
sbondsi spa ya bleonJ anua r
y1a ndJ ul
y1ofe ac hyear,t hea mountpa yabl eonJ anua r
y1,
2002,woul dn otbec ons ide re dal i
abili
tyi ntheba l
a nceshe etofthede bts er
vicefundpr epareda sof
De cemb e
r31,2001.Ther a tiona leforthisr ecomme ndati
o nist hatthei nt
erestisnotl egall
ydueunt i
l
January1,2002.Thes amer e asoninga ppliestopr i
nc i
pala mount st hatma t
ureont hef i
rstda yofa
fis
calye ar
;the ya r
enotl i
a bilitiestober e
c ognizedins t
ateme ntspre pa r
e dasoft heda ybe fore.Int he
event2001 a ppropria ti
ons i nc l
ude J anua r
y 1,2002,i ntere
sta nd/orpr inci
pa lpa yme nt,t he
appropriat
iona nde xpe ndi ture s(a ndre s
ult
ingl ia
bili
ties
)shoul dber ec ogni z
edi n2001.

Number of Debt Service F unds

Ina ddi t
iont ot ermbondsa nds eri
albonds,de bts er
vicefundsma yber equiredtos er
vicede btar i
sing
frot heus eofnot esorwa r
rantsha vi
ngama t
ur it
ymor ethatoneye arafterdateofi s
sue .Ina ddi t
ion,
debts ervicef undsma ybes uedt oma kepe riodi
cpa yme ntsr equi redbyc a
pitalleasea gr e
e me nts
.
Al t
houg he achi s s
ueofl ong-term orinterme diate[
term de bti sas eparat
eobl igati
ona ndma yha ve
legalr estrict
ionsa nds e r
vicingr equir
eme ntst hatdi f
ferfrom ot he rissues,GASBs t
a nda r
dspr ovide
that,ifle gall
ype rmissible,as ingledebtservicef undbeus edt oa c countfort hes e
rvic
eofa llissuesof
tax-supp orteda nds pec i
ala ssessmentde bt.Subs idia
ryr e cordsoft ha tfundc anpr ovidene eded
assur ancet hatres t
ricti
onsa ndr equirementsrela ti
ngt oeachi ssuea reprope rl
ybudge teda nda ccount ed
for.I flega lr
e stric
tionsdonota llowthes erviceofa l
lissuesoft a x-supporteda ndspec i
a lassessme nt
debtt obea cc ountedf orbyas i
ngl
ede bts ervicef und,a sf ewa dditi
ona ldebts er
vicef undsa si s
cons iste
ntwi tha pplicablelawss houl
dbec re at
e d.Inthischa pter,as eparat
ede bts e
rvicef undf ore ach
bondi ssuei si ll
us t
rateds impl ya same ansf orhe l
pingt her ea de rfocusont hedi f
ferenta cc
ount ing
proc edure scons idereda ppropr i
ateforeachki ndofbondi ssuee nc ounteredi npracti
ce.

Use of General F und of A ccount for Debt Service

Ins omej uris
dicti
ons,lawsdonotr equi
rethedebts e
rvicefunc t
iontobea ccountedforbyade bt
ser
vi c
ef und.Unl es
st hedebtservicefuncti
onisverysimpl e
,i tmaybea rguedtha tgoodf i
nancia
l
ma nageme ntwoulddi ct
at
ethees t
ablis
hme ntofadebtservic
ef undeventhoughnotr equiredbylaw.
Ifne i
therlawnors oundf i
nanci
a ladminist
rat
ionr
equirestheus eofdebtservi
cef unds,thefunct
ion
ma ybepe rfor
me dwi t
hintheaccounti
nga ndbudget
ingframewor koftheGene r
alFund.Ins uchcas
e s
,
thea ccounti
nga ndfinanci
alre
por t
ings t
andar
dsdis
c us
sedi nthischapt
ershouldbef oll
owe dforthe
debtse r
viceacti
viti
esoftheGene ra
lFund.

A ) Debt Service A ccounting for R egular Serial Bonds

Acc
ountsre
comme ndedforus
ebyde btser
vic
efundscre
atedtoac
countf
orr
eve
nue
st obeusedfor
t
hepaymentofi
nte
r e
standpri
nci
palofse
ria
lbondiss
uesaresi
mil
artot
hos
ere
commendedforus
eby

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 130
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
gene r
a la nds pecialr evenuef unds ,butnote xactl
yt hes ame .Se rialbondde bts ervicef undss hould
recordt hebudge tinEs t
imatedRe venuesa ndAppr opriationsc ont rola cc ountsa nds ubs i
dia r
ya c counts
(andEs tima t
edOt herFi nancingSou rcesa ndEs timatedOt he rFi nanc ingUs esc ontrola ccount sa nd
subsidia rya ccounts,ifne eded)j usta sGe neralands pe c i
alr e ve nuef undss houl d.Howe ve r
,be cause
theirope rat
ionsdonoti nvolvet heus eofpur chaseor de rsa ndc ontra ctsf orgoodsa nds e
rvic es,the
Enc umbr ancesa ccounti snotne eded.Propr i
etarya ccount sofas erialbondde btservicef undi nclude
Re venu esa ndExpe nditurescont rolands ubs i
diarya ccount s( a ndOt he rFi na ncingSour cesa ndOt her
Financ ingUs esc ontrola nds ubs i
diaryac counts,ifne e ded) ;a ndl iqui da s
s et
s ,currentl ia
bility,a nd
FundBa lancea ccount s.Liquida ss
etsofas erialbondde bts e rvic efunda rehe l
df ort hepur poseof
payingi nterestonout st
andingbondsa ndr etir
ingt hepr i
nc ipa li nstallme ntsa st heyf al
ldue ;f ort he
conve nie nceofbondhol de r
s,t hepa yme ntofi nteresta ndt her ede mpt ionofma turedbondsi s
ordinarilyha ndledt hrought heba nkingsys tem.Us ua
llyt hegove rnme ntde si
gna tesaba nka sPa ying
Age ntorFi scalAge nt,toha ndl einteres
ta ndpr i
nc i
palpa yme ntsf ore achi ssuewhe the rthei ssuei sin
regist
e redorbe ar
e rform.Thea sser
tsofade btservicefundma y,t he refor e,include“ Ca shwi thPa ying
Age nt,”a ndt hea ppropr i
ati
o ns,e xpenditures,andl iabi li
tiesma yi nc ludea mount sfort hes e r
vice
cha r
ge sofpa yinga gents.Inve stmentma na geme ntma ybepe rf orme dbygove rnme ntale mploye esor
byb anks ,brokers,orot herswhoc hargefort hes ervi
c e;inve stme ntma nage me ntf eesa r
eal egitima t
e
cha r
gea ga i
nstinvestme ntreve nues.

Ac countingf orde btse rviceofr egul arseri

albondsfurnis
hest hes i
mpl estil
lustr
ationofr ecomme nde d
debts ervicef unda c c
ount ing.As sumeabondi siss
uedb ytheTownofJ IMMA a spa rti
alme ansof
fi
na ncingf orthef irestationc onstructionproje
c t
.TheBondi sar egula rserialbondsma turingine qual
annua lamount sove r20ye arsanda rer e
gist
eredastointer
esta ndpr inc i
pal.Thet ota
lf aceva l
ueoft he
is
s uewa s$1,200, 000;a llbondsi nt heissuebearinte
restof6pe rcentpe rye ar,paya bles emiannually
onJ une15a ndDe cembe r15.Thebondswe redatedJune15,2002,a nds oldont ha tda t
ea tpa r
.
Dur ing2002t heonl ye xpe ndituret heDe btServiceFundwi llber equi redtoma kewi l
lbet heint
e r
e s
t
payme ntdueDe ce mbe r15,2002,i nt heamountof$36, 000($1, 200,000@ 0. 06@ ½ye ar)
.As suming
revenue stopa ythef i
rsti nst
allme nto fbondsdueonJ une15,2003,a ndbot hinterestpa yme ntsduei n
2003,wi llber a
isedi n2003;t hebudge tfor2002ne edonlypr ovi
der e
ve nuesint hea mountoft he
2002i n t
ereste xpenditure.Th ee ntrytor ecordthebudgetfortheye are ndedDe cembe r31,2002i s
:

R egular Serial Bond Debt Service F und:

1. Es t
imatedRe venues....
..
...
..
..
...
...
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
...
..
..
..
..
..
..
..
.
3.
.
6..
,.
0
..
0
..
0
.
Appr opri
a t
ions...
...
..
..
..
. .
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
...
..
..
..
..
..
..
..
..
....
..
..
. 36,000
Ifrevenue si nthea mountof$30, 000we rec oll
ecte
di ncashf r
om va ri
ouss ourcesavail
ablefordebt
servi
c e,thee nt
r yis
:
R egular Serial Bond Debt Service F und:
2a. Ca s
h....
...
..
..
...
..
..
..
...
..
....
..
..
...
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
3.
.
0.
.
,.
0
..0
.
.0
.
..
...
.
Re venues..
..
....
..
...
..
..
...
...
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
...
..
..
..
..
..
..
..
..
....
..
..
..
..
.30,000
Thec orre spondingentryint hegove rnme ntalacti
vit
iesgeneralledgeratthegove rnment-widele
velis
(Note:Ent ry1ha dnoEf fectatt hegove rnment-
widel evelsincebudge te nt
riesarema deonlyi n
governme ntalfunds)
:

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 131
 Ac
count
ingf
orGe
ner
alLong-
Ter
mLi
abi
li
ti
esa
ndDe
btSe
rvi
ceFunds

Governmental A ctivities:
2b. Ca sh. .
....
....
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
.
3.
.
0.
.
,.
0
..
0
..
0
..
..
..
.
Ge ne r
alRevenues––Miscel
laneous-
Re s
tri
ctedfor
De btSe r
vice.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.30,
000

Asi llustrat
edi nCha ptert ,the$6, 000r esiduale quit
yoft heFi r
eSt ati
onCa pit
alProject
sFundwa s
transferredtot heDe btSe r
viceFund.Thee ntryrequire dint hel atterfundi s:
R egular Serial Bond Debt Service F und:
3. Ca sh......
...
...
...
..
...
..
...
...
...
...
..
...
..
..
...
..
...
..
....
..
...
....
...
..
....
...
...
..
.....
..
...
6.
.
,.
0
..
0
..
0
..
Ot he rFina ncingSour ces-I
nterfundTr ans fer
si n....
...
....
..
....
..
..
..
.. 6, 000
(Note :gove rnme ntala cti
vitiesa tthegove r
nme nt-wi del eve la reuna ffecteds i
ncet hetransf
e r
sa re
betwe ent wof undswi thi nthegove rnme ntala c
tivi
t i
esc ategor y.)
OnDe cembe r15,2002,whe nt hef ir
stinte r
estpa yme nti sle gallydue ,t heDe btServiceFundr ecords
thee xpe nditur eoft hea ppropr iati
ona ndt hec orrespondi nge ntryi sma det or ecor
di nt
e r
estatt he
gove rnme nt-wi del eve l:
R egular Serial Bond Debt Service F und:
4a. Expe ndi tures––BondI nt
e rest.
..
..
...
...
..
..
....
...
...
....
..
...
....
..
...
..
....
...
.3
..
6
..
,
.0
.
.0
.
.0
.
.
In terestPa yable...
...
..
...
..
..
..
...
...
..
..
....
...
....
...
..
....
...
...
..
.....
..
...
..
..
..
..
..
. 36,000
Governmental A ctivities:
4b. I nteres tExpe nse sonLong- TermDe bt...
..
...
....
...
..
....
...
...
..
.....
..
...
3.
.
6.
.
,.
0
..
0
..
0
..
In terestPa yable...
...
..
...
..
..
..
...
...
..
..
....
...
....
...
..
....
...
...
..
.....
..
...
..
..
..
..
..
. 36,000
Che ckst otaling$36, 000a rewr it
tentot her egisteredowne rsoft he sebonds .Thee ntr
iestor e
cordt he
payme ntint hede bts e rvicef unda ndgove rnme ntalactivitiesge ne raljour nalsa r
e:
R egular Serial Bond Debt Service F und and Governmental A ctivities:
5. I nteres tPa yable...
...
...
..
..
....
...
..
..
..
...
...
..
..
....
..
....
....
..
...
....
..
...
..
....
...
.3
..
6
..
,
.0
.
.0
.
.0
.
.
Ca sh...
...
...
..
...
...
..
..
....
..
...
..
..
...
...
..
..
....
..
....
....
..
...
....
..
...
..
....
...
...
..
..
..
..
. 36,000
Aso fDe ce mbe r31,2003,a na djusti
nge ntrywoul dbema det oa c cr
ueone -hal
fofamont h’sint
e res
t
expe nseont hea c cr
ua lba sisa tthegove rnme nt-widel eve l,a swoul dbet hec aseina cc
ountingf or
bus i
ne ssorga ni zations .Aswa sdi scussede arli
er,intereste xpe nditurei sre cognizedinthepe ri
odwhe n
duei nt hede bts ervicef unda ndi snota c crueda tthee ndoft hea cc ountingpe ri
od.
Governmental A ctivities:
6. I n terestExpe ns esonLong- t
e r
mDe bt...
...
..
....
...
....
..
...
...
...
...
....
..
...
3.
.
,.
0
..
0
..
0
..
Int erestPa yable..
...
...
...
...
..
..
...
..
..
...
....
..
...
...
....
...
..
...
...
...
....
...
...
..
..
..
.. 3, 000
TheDe btSe rvi ceFundha snoa ssetsa ndnol iabil
ities,the reforeha snone edtopr epar
eaba lance
she e
ta tye ar-e nd;howe ver,thebudge t
arya ndope rat
ings ta t
e me nta ccount sha veba l
ances,whicha re
closedbyt hef ollowi nge ntry:

R egular Serial Bond Debt Service F und:

7. Re venue s.
..
..
..
..
..
..
..
..
...
..
..
...
..
...
....
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.3
.
.0
.
.,
.
0
..
0
..
0
..
OtherFi nancingSources––Int erf
undTr a
nsfer
sIn..
..
..
..
..
..
..
..
..
..
..
.6
.
.,
.
0
..
0
..
0
..
Appr opriat
ions.
..
..
..
...
..
..
..
...
..
.....
..
..
..
. .
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
3
..
6
..
,
.
0.
.
0.
.
0.
.

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 132
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
Est
imate
dRe venue
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 36,
000
Expendi
tur
es–BondInt
eres
t..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 36,
000

Inaddit
ion,al
ltempora
rya ccount
soft
hegove
rnme
ntalac
ti
vit
ie
sgene
rall
edgerwoul
dbec los
edat
yea
r-end.Becaus
ethatledgerhasmanyte
mpor
arya
ccount
sbesi
dest
hoser
elat
edtodebts
ervic
e,i
ts
cl
osingentr
yisnoti
llus
trat
edhe r
e.

Ba l
anc
es hee ta ndoperat
ingst
a t
ementinforma t
ionforeachde btser
vic
efundwoul dbepre
sent
edasa
ma orfund column i
j ntheBalanceShe e
t–Gove rnmentalFunds,ifthe
yme etthemajorf
undc r
it
eri
a.
Eachde btser vicefundthatdoesnotme e tt
hema j
orfundc r
iteri
awouldbei ncl
udedinanon-ma j
or
fundscombi ningBa l
anceSheetandc ombiningStatementofRe venues
,Expendit
ures
,andChangesin
FundBa lances ,al
ongwi t
ha l
lothergovernme nt
alnon-majorfunds.

B) Debt Service A ccounting for Deferred Serial Bonds

Ifagove r
nme nti ss
ue sbondsot he rt hanr egulars erialbonds,de bts ervicefunda ccount ingi s
s omewhatmor ec ompl ext hant hati llustrat
eda bove .Int heentri
esbe low,i tisa ss
ume dt heTownof
J IMMA i ssuedat otalofBr2, 000,000f ac
eva l
ueofde ferr
eds er
ialbondsonJ anua ry1,1992.Ea ch
instal
lmentisi nt hea mountofBr20 0,000.Thef irstinstal
lmentma turesa fter10ye a r
sonJ a
nua r
y1,
2002;thef i
na linstall
me nta fter20ye a rsonJ anua r
y1,2011.I nt
e r
estispa ya bl
eonJ anua ry1a ndJ uly
1ofe ac
hye a ratt henomi na la nnua lr ateof5pe rcent.De btservi
cei sfina ncedf r
omt axe slevi edby
theDe btSe rvic
eFunda ndf romne te arningsonDe btSe rvi
ceFundI nvestme nts.Ta xesf orthi sDe bt
Se rvi
ceFunda rel evie
di na na moun te qualtoi nter
e sttobepa idduringt hebudge tye ar,plusal evel
a mountof$100, 000t obei nvestedbyt heDe btSe rvic eFunda ndus edf orpr inc
ipalr epayme ntwhe n
thepr i
ncipalinstallmentsf alldue .Th et r i
albalanceoft heTownofJ IMMA ’ sDe ferredSe rialBonds
De btServiceFunda tthee ndoft he10 ye
th
a
r( yeare ndingDe cembe r31,2001)f ollowi ngt heda t
eof
thede f
erreds er
ialbondi s s
ue ds howe d:
Debits C redits
Ca s
h Br250, 000
Investme nt..
..
.....
....
..
..
..
..
...
..1, 298,656
Inte
r estRe ceiva ble..
..
..
..
...
.. 33, 438
FundBa lance. ...
....
..
..
..
..
...
.. –– Br1, 582,094
Totals...
...
..
..
......
....
..
..
..
..
...
.B
.r1,582,094 Br1, 582,094
Noticethetri
albalanceshowsCa s
hi nt hee xacta mountofi nt
erestont hi
sbondi ssuedueonJ anuary
1,2002( Br2,000,000@ 5% @ ½ ye ar=Br50, 000),pl us$200, 000f orthebondst hatma tureon
January1,2002.Toe ns
uret imelyp ayme ntofi nteres
ta ndpr incipalreti
rement,c he
c kstotali
ngBr
250,000,datedJ anuary1,2002,we rewr it
teni nl a
teDe cembe ra ndma i
ledt ot her ere
gi st
ered
bondholders
;sincetheche cksar
eda tedt heda ya ft
erba lanc esheetda t
e,theywi l
lnottobec redite
dt o
Ca s
hun ti
lthatda t
e.[Note :Ana lt
erna t
ivea ppr oachwoul dbet ode bitana ccounts ucha sPr epaid
Inte
restandc redi
tc a
shwhe nthec hecksa reissue .The n,onJ anuary1,2002,I nter
e s
tExpe nditure
woul dbedebitedinthede btservi
cefunda ndPr epaidI nterestwoul dbec redi
ted.Thisa pproachma y
bene ces
saryifthegovernme nt’
spro c
e duresr equireaj our nalentrybe f
oreapa yme ntc anbevouc he r
.
Be c
ausethe$2 50,000liabili
tydoesnotl egall
ye xistuntilJ anuary1,2002,i ti snotr epor
tedi nt he

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 133
 Ac
count
ingf
orGe
ner
alLong-
Ter
mLi
abi
li
ti
esa
ndDe
btSe
rvi
ceFunds
Decembe
r31,2001,bal
ancesheetf
orthedebts
ervi
c efund.Buttheaccr
uedli
abi
li
tyisre
porte
dinthe
gove
rnment
alacti
vit
iescolumnoft hegove r
nme nt-
wideSt at
eme ntofNe tAsse
tspr e
sente
da d
Decembe
r31,2001,as“c
urrentpor
ti
onofbondspayable,”$200,
000,and“i
nte
res
tpayabl
e,”$50,
000.

Thebudge tfort hisf undf orf iscal2002i nc l

udesthea ppropr iationsf orpa yme ntoftheintere s
tofBr
50,000onJ anua ry1,t hepa yme ntofma t
ur edbondsofBr200, 000onJ a nua ry1,a ndthepa yme ntof
inter
estofBr45, 000onbondsout st
andi ngonJ uly1,2002( $1,800,000@ 5% @ ½ ye a r
).I tis
assume d,forthes akeofs impl i
city,thatt heTownwi llnoti nc ura nyf e esf orpa yi
nga gentsorf or
investmentma na geme nt;the refore,thet ot aloftheAppr opriationsbudge tf or2002i s$295, 000.As
notedi nthede sc ri
pt i
onoft hisde fe
rreds eri
albondi s
sue ,t axe sa rele viede ac
hye artoa ll
ow f or
collect
ionofc as hi nt hea mountofi nterestc heckstobewr it
te nt hatye ar,pl usa namountof$100, 000
tobei nvestedf orus ef orbondpr incipalpa yment;earni
n gsont hei nves tme ntsarea l
soa c
c umul ated
forbondpr incipa lre payme nt.The refore,theRe venuebudge tfor2002f ort hisfundf orre
ve nue sfrom
taxestotals$190, 000( $45, 000f ort hei nt ere
stpa ymentdueJ uly1,2002;$45, 000f orthei nt e
rest
payme ntdueJ a nua ry1,2003;a ndt he$100, 000levelamo untt obei nveste d);revenuesfrome arni
ngs
oni nvest
me ntsdur i
ng2002a rebudg e t
eda t$103,900.Tot alEs timatedRe ve nuesfor2002,t he r
e f
ore,
amount sto$293, 900.Thee ntryt or ecordt he2002budge tis:
Deferred Serial Bond Debt Service F und:
1. Es tima tedRe ve nues....
..
..
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3
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FundBa lance .
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tions .
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000
Subs i
diaryrecor ds,ifne eded,woul dbeke pti nthema nne rillustrated.Sinc et her e
cords,andt heiruse,
arethes ame,the ya reomi ttedf romt hisc ha pter
.

Also,a sofJ a
nuary1,2002,thebondpa yme ntandi nt
e r
estpa yme ntdueont ha tdat
eshouldbe
recogni
ze dasexpendi
tur
esof2002appropri
ations(Ent
ry2 a),andthef actt
hatchecksdatedJ
anuar
y1,
2002,ha vebeenis
suedinpaymentoftheinte
re sta
ndbon dpr i
ncipalshouldberecorded(Ent
ry2b).I
n
additi
on,Entry2cwoul dbema deatthegove rnment-
widel eveltoreduc et
hea ccruedli
abi
li
ti
esthat
hadbe enrecor
dedonDe cember31,2001,inthegovernme nt
a lact
ivit
iesgenera
ljournal:

Deferred Serial Bond Debt Service F und:

2a. Expe nditure–BondPr i
ncipal.
..
...
..
..
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..
..
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2.
.
0.
.
0,000
Expe nditure–BondI nterest
..
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5
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BondsPa yabl e.
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. 200,
000
In t
e re
stPaya ble
..
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. 50,
000
2b. BondPa ya ble.
..
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Intere st
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. 250,
000
Governmental A ctivities:
2c. Cur re ntPor ti
onofBondsPa yabl
e..
..
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000
Ac c ruedI nteres
tPa yable..
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.,
000
Ca sh..
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. 250,
000

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 134
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
Inana ct
ua lcaseitwould,ofcours
e,simpli
fytheacc
ountingt omakeonee nt
ryf orthenetef
fectof
Entri
es2aa nd2b:ade btt
oExpenditur
esandac r
edi
ttoCa sh.Thee xpendi
turesforbondinte
restand
t
hee xpenditure
sf ortherede
mptionofma t
uredbondsshouldbes eparat
elyreportedintheoperat
ing
sta
tements.Thus ,theuseofsepara
teExpendit
uresac
countsf orpr
incipalrepayme ntandint
ere
s t
,as
showninEnt r
y2a ,shoul
dbeused.

Taxe
slevi
edf
orde
btser
vic
eonthede
fer
redser
ialbondi
ssuea
rel
evi
edi
nthea
mountof$195,
000;
$5,
000oft
hel
evyi
sexpe
ctedt
obeunc
oll
ect
ibl
e:

Deferred Serial Bond Debt Service F und:

3a. Ta xesRe c
eivable
–Cur rent.
.....
..
..
..
..
..
..
..
..
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..
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..
..
..
..
..
..195,
000
Est
ima t
edUnc ollectibleCurrentTaxes.
..
..
..
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..
..
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..
..
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.. 5,
000
Reve nues
..
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..
..
.
..
.. 190,
000

Government A ctivities:
3b. Ta xe sRe c ei
va ble–Curre
nt .
..
.
...
..
..
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..
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1
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9
..
5
..
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000
Es ti
ma t
edUnc oll
e c
tibl
eCur r
entTa xes.
..
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.. 5,
000
Ge ne r
alRe venues–Propert
ytaxes–Restr
ict
edfor
De btSe rvic
e..
..
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..
.. 190,
000

Entry4as umma r
ize
st hecollect
ionoft axesdur i
ngthef ir
sthalf
-year(assume dtoa mountt o
$100,000),thec oll
ect
ionofi nter
estrec
eivablea sofDe cember31,2001( $33,438,
perthe tri
al
balance)
,andt hecoll
ecti
onof$51,100inte
re s
tearneddur
ingthefir
sthal
f-yearoni nves
tmentsoft
his
fund.Entry4br e c
ordsthegove r
nment-
widee ffe
c toft
hes a
met r
ansact
ions.Ca shinthea mountof
$139,500wa spr omptlyinve
sted,asshownbyEnt r
y4c;theentr
ybe i
ngt hes amei nboththedebt
servic
efunda ndthegove r
nmentalact
ivi
ti
esc at
egory.

Deferred Serial Bond Debt Service F und:

4a. Ca
sh.
..
..
...
..
..
..
..
..
..
..
..
..
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..
..
..
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..
184,
538
TaxesRe c
eivabl
e–Cur rent
..
..
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. 100,
000
Int
erestRecei
vable
..
..
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.. 33,
438
Re venues.
..
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.. 51,
100

Government A ctivities:
4b. Ca sh 184,538
Ta xesRe ce
ivabl
e–Cur rent.
.
...
..
..
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000
Inte r
estRecei
vable.
..
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438
Ge ne r
alRevenues–InvestmentEarni
ngs–
Re s t
ri
cte
dforDe btSer
vice..
..
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..
..
.. 51,
100

Deferred Serial Bond Debt Service F und and Governmental A ctivities:

4c. I n vestments
..
..
..
...
..
...
..
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. .
..
.
1.
.
3.
.
9.
.
,500
Cash..
...
..
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..
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....
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. .
..
..
..
..
. 139,
500

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 135
 Ac
count
ingf
orGe
ner
alLong-
Ter
mLi
abi
li
ti
esa
ndDe
btSe
rvi
ceFunds
I
nte
res
tpayabl
eonJuly1,2002,i
sre
cor
deda
sexpe
ndi
tur
e,a
ndc
hec
ksa
rewr
it
te
nandma
il
edi
nthe
a
mountofint
ere
stpa
yabl
eJuly1:

Deferred Serial Bond Debt Service F und:

5a. Expe nditure
s–BondI nteres t
..
..
...
..
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..
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..
..
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..
5
..
,
.0
.
.0
.0
Inte
restPayable...
...
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.. 45,
000
5b. I nterestPayabl
e...
..
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4.
.
5.
.
,.
0
..
00
Cash..
..
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..
..
. 45,
000
Government A ctivities:
5c. I n t
er es
tExpe nseonLong- termDe bt
..
..
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.
.5
.
.,000
Cash.
...
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000

Taxcol
lect
ionsdur
ingthese
condhal
fof2002tot
ale
d$85,000;int
ere
stea
rni
ngsrece
ive
dinc
ash
dur
ingt
hatperi
odamounte
dto$32,
500.
Cas
hintheamountof$117,
500wasi
nvest
ed:

Deferred Serial Bond Debt Service F und:

6a. Ca sh 117,
500
TaxesRec ei
vable–Cur rent
..
..
..
..
..
..
..
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..
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..
. 85,
000
Revenues..
..
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..
..
..
..
.
..
. 32,
500

Governmental A ctivities:
6b. Cash 117,
500
Taxe sRe c
eivabl
e–Cur rent
..
..
..
..
..
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...
. 85,
000
Ge ne ralRevenues
–Invest
me ntEarnings
–Re s
tri
ctedfor
De btSe r
vice.
..
..
..
..
..
..
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..
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..
..
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..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
... 32,
500

Deferred Serial Bond Debt Service F und and Governmental A ctivities:

6c. I n vestment s
....
..
..
..
..
..
..
...
..
..
...
..
...
..
..
..
..
..
..
..
..
..
..
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..
...
..
..
..
..
...
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..
. .
..
.1
.
.1
..
7
..
,
500
Cas h.
..
..
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..
..
..
..
..
..
..
..
..
...
..
..
..
...
...
.....
..
. .
..
..
...
.. 117,500
Ta xe
snotc ollecteddur ing2002mus tbec l
assif
iedasde l
inquent,asr e qui r
edbyt helawsoft hestat
e
inwhi c
ht heTownofJ IMMAi slocated.Admi nis
tra
torsesti
ma t
et ha t$5, 000oft axesle
viedi n2002
willbec oll
ectedbe foreMa rch1,2003,a ndtherema i
nderoft hatlevy,$5, 000,wi l
lbeunc oll
ecti
ble
.
Sincetheor iginalestima teofunc oll
ec t
ibletaxeswa s$5,000,nof urthe ra djust
me nttoRe venuesis
requir
ed.Ent ry7a cc ompl i
shesthene cessar
yr ecl
assi
ficat
ionsf orbot ht hede btservi
cef unda nd
governme nt
ala ctivi
ti
e s:

Deferred Serial Bond Debt Service F und and Governmental A ctivities:

7. Ta xe sReceiva
ble–De linque nt.
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
...
....
...
....
....
..
..
..
1
.0,
000
Esti
ma t
edUnc ol
lecti
bleCur rentTaxes..
..
..
..
..
..
..
..
..
..
..
..
....
...
...
....
....
..
..
..
.5,
000
TaxesRec ei
vable–Cur r
ent.
...
..
..
..
..
..
..
..
..
..
..
..
..
..
...
....
...
....
....
..
..
..
. 10,
000
Est
imatedUnc ollectibleDe l
inquentTaxes.
..
..
...
....
...
....
...
. .
.
..
..
.. 5,
000

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 136
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
Bondsi nthea mountof$200,000wi llma t
ureonJ anuar
y1,2003,a ndi nt
eres
tintheamountof
$45,000willbepayabl
eont ha
tdate.Invest
me ntsintheamountof$245, 000a rec
onver
tedt
ocashas
ofDe cember31,2002,sothatche
cksda t
edJa nuar
y1,2003,ma ybema i
led.Inaddi
ti
on,t
hebonds
dueonJ anuar
y1,2003,areaccr
ueda tthegovernme nt
-widele
vel,i
nc onformitywit
hsta
ndar
daccrua
l
account
ingpract
ice
s.Therequi
redentri
e sonDe cember31,2002,aregivena s:

Deferred Serial Bond Debt Service F und and Governmental A ctivities:

8a. I n vestments
..
..
..
...
..
...
..
...
..
.....
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
...
....
...
....
...
. .
..
.
2.
.
4.
.
5.
.
,000
Cash..
...
..
...
..
...
..
....
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
...
...
....
....
...
. .
..
..
..
..
. 245,
000

Governmental A ctivities:
8b. BondsPa ya ble. ..
..
..
..
..
...
..
..
..
..
.
....
....
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
2
..
0
..
0
..
,
000
In t
e res
tExpe ns eonLong- ter
mDe bt.
...
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
4
..
5
..
,
000
Cur re ntPortionofLong- te
rmDe bt.
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 200,000
Ac c r
ue dInt
er e
stPaya ble...
..
..
..
..
...
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
.. 45,000
I
nterestrecei
va bleoni nve stmentsaccrueda tyear-e
nd,De cembe r31,2002,amountt
o$20,500.Thi
s
ac
crua li
sr e
cor dedbothi nt hedebts er
vicef unda ndgovernme nta
la c
ti
viti
es:
Deferred Serial Bond Debt Service F und:
9a. I nt
e r
e stReceiva bl eonInve s
tme nts..
..
..
...
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
. 20,
500
Reve nue s.
..
..
..
...
..
..
..
..
..
...
....
..
..
..
..
..
..
...
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
. 20,500
Governmental A ctivities:
9b. I n t
e res
tRe ceiva bleonI nvest
me nts.
..
...
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
2
..
0
..
,
500
Ge ne r
a lRevenues–Inve st
me ntEa r
nings–Restr
ict
ed
forDe btService.
..
..
..
....
...
..
..
...
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 20,500

Budge t
arya ndope r
ati
ngstateme ntac count soft hedebtservi
cef undf or2002a recl
osed(Entr
y10a)
onDe cembe r31,2002.Asnot edpr evi ously,therearema nyaddi t
ionaloperati
ngstat
ementaccount
s
ofthegove rnme nt
alacti
vit
iesbe sidesde bts ervic
e–r elat
editemst ha twouldne e
dtobec losed.A
par
tialcl
os i
nge nt r
yispresentedhe r
ef ori llust
rati
vepurposesonly:
Deferred Serial Bond Debt Service F und:
10a. Re ve nues.
..
..
..
..
...
..
..
..
...
...
....
....
..
...
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
...
..
..
..
.2
.
.9
.
.4
.
.,
100
Appr opri
at
ions.
...
..
...
...
..
..
.....
...
...
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
...
...
..
..
...
..
..
..
2
..
9
..
5
..
,
000
Esti
ma tedRe venue s.
....
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
...
..
..
..
..
..
..
. 293,
900
Expenditures–BondPr inci
pa l 200,
000
Expenditures–BondI nter
est 95,
000
FundBa l
anc e. .
....
...
...
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
...
...
..
...
..
..
..
..
..
..
.. 200

Governmental A ctivities:
10b. GeneralRe venue s–Proper
tyTaxes–Rest
ric
tedforDe btServi
ce..
..
..
...
..
..
..
..190,
000
Ge
neralRe venue s–Inves
tmentEarni
ngs–Res t
ri
ctedforDebtService.
..
..
..
...
.
1.
94,
100
In terestExpe ns
e..
..
..
..
..
..
..
..
..
..
..
..
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..
..
..
..
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...
..
..
..
..
..
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..
..
..
..
..
..
..
..
..
..
..
. 95,
000
Ne tAs sets–Rest
ri
ct
edforDe btServic
e 199,
100
10c. NetAs sets–Re stricte
dforDebtSe r
vice . ..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
.
2.
00,
000
Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 137
 Ac
count
ingf
orGe
ner
alLong-
Ter
mLi
abi
li
ti
esa
ndDe
btSe
rvi
ceFunds
Ne
tAs
set
s–I
nve
ste
dinCa
pit
alAs
set
s,Ne
tofRe
lat
edDe
bt.
..
..
..
..
..
..
..
.. 200,
000

Entry10crefle
ctsthefactthatnetasset
srest
rict
edfordebtservi
c ewe rec onsume donJ a
nua r
y1,2002,
whe nthecurrentpos i
ti
onofl ong-t
erm debtwa spai
di nt hea mountof$200, 000.Presumablythe
$2,000,
000ofde ferr
eds er
ialbondswe reissuedforacapit
alprojecttha twa slonga gocompletedand
forwhichge neralcapi
talasseswe rerecor
de datthegovernme nt-
wi del evel.Thus,thecredittoNet
Ass e
ts–InvestedinCa pi
talAs set
s,NetofRe la
tedDebtwoul dbea ppr opria
tetot heexte
nttherela
ted
debtha sbeenr eti
red.Re cal
la ls
ot hatNe tAs s
ets–Re stric
tedf orDe btSe r
vicewoul dhavea n
accumulat
edb alancefortheye ar1992through2001whe nt axeswe rel evieda ndinvest
eddur i
ngthe
deferr
alper
iodoft hedebt.

Afterrecordingthee ntrie
sf or2002,t heTownofJ IMMADe fer
redSe ri
alBondsDe btSe rvi
ceFund
BalanceShe e twoul dbea spr ese
ntedi nIll
ust
rati
on6- 8,t hec ombini ngba lanc esheetf ora l
ldebt
servicefundsoft heTownofJ I
MMA.( Reca
lltha ttheRe gularSe rialBondDe btSe rviceFund
discusse
di nthepr ecedings ecti
onwoul dnotbei ncludedint hec ombi ningba l
a nceshe e
ta titha dno
assetsorl i
abilit
iesatye a r
-end.)Ina dditi
ontobeba l
ances heet
,ther evenue s,expendi t
ures,and
changesi nfundba la
nc edur ingthef i
s calperi
ods houldber eporte
df ore a
c hde bts er
vic efund,as
shown pr eviouslyi nI l
lustrat
ion 6-6 whi ch presentst he Combi ning St atementofRe venues
,
Expe ndi
tures,andCha ngesi nFundBa lancesf
ortheTownofJ I
MMADe f
e r
re dSe r
ialBondsDe bt
ServiceFundf ortheye are ndedDe ce mbe r31,2007,a swe l
la stheot herde bts er
vicef undsoft he
Town.Si ncet hefundsa reas sumedtoope rat
eunderl egal
lyr equir
edbudge ts
,aCombi ni
ngSt at
ement
ofRe venues,Expe ndit
ures,a ndCha n
ge sinFundBa lances–Budge tandAc tualf ort
heye ars houldbe
preparedforinternalma nageme ntpurpos es.

T OW N OF J IMMA
C OMBINING BA L A NC E SHE E T
A S OF DE C E MBE R 31, 2002
Defer
red Term Tot
alDebt
Se
ria
lbonds Bonds Se
rvi
ceFunds
A ssets:
Ca s
h..
...
..
..
..
.....
..
....
...
...
....
..
...
.. .
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
. $245,
038 $613 $245,
651
Invest
me nts..
...
..
.....
..
....
...
...
...
. .
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
. 1,310,
656 83,
316 1,393,
972
Taxesreceiva bl
e ,ne t..
....
..
...
....
..
..
..
..
..
..
..
....
..
..
..
..
..
..
..
..
..
. 5,
000 1,
600 6,
600
Inte
restreceivable ..
..
....
...
...
...
. .
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
. 20,
500 0 20,
500
TotalAssets....
..
....
...
...
....
..
...
.. .
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
. $1,581,
194 $85,
529 $1,666,
723
L iabilities and F und E quity:
FundBa lance–Unr eserve d..
. .
..
..
..
..
..
..
..
..
. .
..
..
..
..
..
..
..
..
..
.. $1,
581,
194 $85,
529 $1,
666,
723
TotalFundEqui ty. .
..
....
...
...
...
. .
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
. $1,
581,
194 $85,
529 $1,
666,
723

6.5.2) Debt Service A ccounting for T erm Bonds

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 138
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
Te rmbo ndi s
s ue sma turei nt he i
rent i
ret
yonagi ve nda t
e ,inc ont r
a sttos eria
lbonds ,whi chma tur ein
instal
lme nts.Re qui redr evenu e soft er
mbondde bts ervic ef undsma ybede ter
mi ne dona n“ actua ri
al”
ba si
soronl esss ophi st
ica t
e dba sesde s
ignedt opr oduc ea ppr oxima tel
yl evelc ont ri
but iondur ingt he
lifeoft heis s
ue .I fa na ctua rialba si
si snotus e
d,a c c
ount ingpr oc edur esands t
ateme nt si llustratedf or
thede fe rr
eds eria lbondi s
s ueoft heTownofJ IMMA a rea ppropr iatef orus ebyt e rm bondde bt
servicef unds .I nor de rtoi llustr
atet hedif ferenc est ha te xistwhe na na ct
ua rialba sisi sus e d,t he
followinge xa mpl ei sba s edont hea ssumpt iont ha tt heTownofJ I
MMA ha sat erm bondi ssue
amount in gto$1, 500, 000wi tha20- yearli
fe.Thet ermbondsbe ars e miannua linterestc ouponswi t
ha
nomi nal( ors tate d)a nnua lr a teof5pe rcent,pa ya bleonJ anua ry1a ndJ uly1.Re ve nue sa ndot her
financi
ngs our cesoft hispa rticularde btservi c
ef unda r
ea s sume dt obet axesle vieddi re ctl
yf ort his
de btservicef unda nde arningsoni nvestment soft hede bts ervic efund.Thea mountoft het axl evyi s
comput e dina ccor dwi t
ha nnui tytablesont hea s sumpt iont hatr eve nuesf orpr i
nc ipalr e pa yme ntwi l
l
bei nve steda ndwi lle arn6pe rcentpe rye ar,c omput eds e mi annua ll
y.( Ac tuariesa reus ua l
lyve ry
cons er
va ti
vei nt he ira ssumpt ionsbe causethe ya rec onc e r
ne dwi t
hal ongt imes pan.)Us inge i
the rthe
annuityt ablesf oundi nmos tint e
rme diateacc ount i
ngt axe sorac alculator,onewi llfindt ha tthef uture
amountof$1i nve steda tthee ndofe achpe riodwi lla mountt o$75. 4012597a tthee ndof40pe riods,
ifthepe r
iodicc onf oundi nte restis3pe r
c e
nt( ass pe cifiedi nt heTownofJ IMMAe xa mpl e).Sinc et he
amountne ededf orbondr epa yme nta tthee ndof40s ix- mont hpe riodsi s$1,500, 000,t het axle vyf or
bondpr inci
pa lr epa yme ntmus tyield$1,500, 000di vide dby75. 4012597,or$19, 893. 57a tthee ndof
ea chsix-mont hpe riodt hr oughoutt hel i
feoft hebonds .Re ve nuef ore achbondi ntere stpa yme ntmus t
be$37, 500( $1, 500, 000,t hef a c
eoft hebonds ,@ 5pe rce nt,t hea nnua lnomi na linter es trate,@ ½
ye ar
).

Assumingthebondswe r
ei s
sue
donJ a
nuar
y1,2001,andact
uala
ddit
ionsandactua
lea
rningswer
e
bot
he xact
lyasbudget
ed,theTermBondsDebtSe
rvi
ceFundwouldhavethefol
lowi
ngtr
ialbal
anc
e
asofDe c
ember31,2001.

Debits C redits
Ca s
h $37,
500. 00 ––
Invest
ments 40,
383. 95 ––
FundBa l
ance –– $77,883. 95
Tot
al
s $77,
883. 95 $77,883. 95

Foreveryye arofthel i
feoft hei ssue,thebudge tfortheTe r
mBondsDe btSe r
viceFundoft heTown,
ref
lect
ingt heconditi
onsde scr
ibe da bove,wi l
lincludetwor equiredaddit
ionsof$19, 893.57e achf or
i
nve s
tme ntfore ve
ntualpr inci
pa lrepayme nt,andt woa mountsof$37, 500e achfori nterestpayme nt,
foratota lof$114,787. 14.Thebudg etwi l
la ls
oi ncl
udee arningsonde bts e
rvicef undi nvestme nts
computedi na ccor
dwi tha ct
uarialrequi r
eme nts
.For200 2,thes econdyea roftheTe rm BondsDe bt
Servi
ceFund’ sope r
ation,t hea ctuarialassumptioni sthatt hefundwi llearn6pe rcentpe rye a r
,
compounde ds e mi
annua lly;ther equirede arni
ngsf ort heye ara mountt o$3, 056. 19.The refore,
Esti
ma t
edRe venuesisde bite
df or$117, 843.33($114,787.14+$3, 056.
19).TheAppr opr i
ationsbudge t
wouldi nc l
udeonl yt hea mount sb e comingduedur i
ngt hebudge tyea r
,$75, 000( t
woi nterest

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 139
 Ac
count
ingf
orGe
ner
alLong-
Ter
mLi
abi
li
ti
esa
ndDe
btSe
rvi
ceFunds
paymen t
s,eachamount
ingto$37,
500)
.The ne
ntrytorec
ordthebudge
tforfi
sca
lyear2002isshown
below.(Note:Entr
iesa
tthegover
nment-
widelevelar
eomitte
dhereastheywouldbeessent
ia
ll
ythe
sa
mea sil
lus
trat
edfort
hedefe
rre
dseri
albondexamplepr
ovidedi
ntheprec
edi
ngc ha
pte
r.)

1. Es tima te dRe ve nue s–DSF. ..

..
...
..
..
...
..
..
...
....
....
..
...
...
...
..
..
..
...
..
..
...
..
..
..
...
..
..
1.
.1
..
7
..
,.
843.33
FundBa l
a nce––DSF. .
...
..
..
...
....
....
..
...
...
...
...
..
..
..
..
..
...
...
..
..
..
..
...
...
....
.. 42,843. 33
Appr opria t
ions ––DSF. ..
...
..
..
....
....
..
...
...
...
...
..
..
..
..
..
...
...
..
..
..
..
...
...
....
.. 75,000. 00
Ifthede bts e rvicef undi stoa ccumul atethea mountne e
de dtor et
irethet ermbondi ssuea tma turi
ty,
botha dd itionsa nde arningsmus tber eceived,a ndi nves t
,ina ccordwi tht hea c
tuariala ssumpt ions.
The re
f ore,t het axl evyf ort hisfundmus tyiel
dc ol l
ectionsi nthefirstsixmont hstotali
ng$57, 393.57,
atleast.Sot ha t$19, 893. 57c anbei nvesteda nd$37, 500i nte
restpaidt obondhol ders,bot ha soft he
endoft hef irsts ix-mont hpe riod.Col lecti
onsdur ingt hes econds i
xmont hsmus talsotota l$57, 393.57,
forthes amer e ason.I nt her ealwor lditisunlike lytha tcollecti
onswoul deve rtotal$57, 393. 57,tot he
penny,i ne ithe rs i
x-mont hpe r
iod.I fcollect
ionsa relesst hanthatamounti ne it
he rperiod,i ts houldbe
obvioust ha tthi sf undwoul dha vet obor r
owe nought oma kether equiredi nve s
tme nts–t he reisno
ques t
iont hatt hei nte r
e stwoul dha vet obepa idwhe ndue ,asdi scussedina ne arlys ec t
ionoft his
chapter .As sumi ngc olle ct
ione xpe rie
nc eoft heTownofJ I
MMA i ndicatest hatat a xl evyi nt he
amountof$12 0,000i sne ede di nor dertober e asona blyc ertai
ntha tcoll
e c
tionsdur inge a chs ix-mont h
periodwi lle qua lt hene ede da mount ,thee nt ryt or ecordt hel evya ndt hee xpe c
tedunc ollect
ible
amount i
n gt o$3, 000i s:
2. Ta xe sRe ce i
va bl e––Cur re nt.
..
...
..
..
...
..
.....
...
..
..
....
..
...
...
..
..
..
..
..
...
...
..
...
..
..
....
.1
..
2
..
0
.,000
Es ti
ma t
e dUnc olle
c t
ibleCur r
e ntTa xes...
..
..
..
..
...
..
...
..
...
..
...
...
...
..
..
.. 3, 000
Re ve nue s..
..
....
..
...
..
..
...
..
..
...
....
....
..
...
...
..
..
...
..
..
..
...
...
..
..
..
...
..
...
...
...
..
...
. 117, 000

I
fac
tua
lcoll
ect
ionsduri
ngt h
efirs
tsixmont hsof2002we re$57,400,Entr
y3r ecor
dsthatfac
t.
3. Cash...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 57,400
Ta xesRecei
vable––Current
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
..
..
5
..
7
.,400

Ent
ry4recor
dstheinvest
mentoftherequir
ed$19,893.57andthepa ymentofintere
stof$37,500.
4. Expendi
tur
es––BondInter
est.
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
3.
.
7.
.
,.
5
..
0
..
0.
00
Inve
stment
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
.
1.
.
9.
.
,.
8
..
9
..
3
..
.
5.
7
Cash.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
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...
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..
..
..
..
..
..
..
..
..
..
..
. 57, 393.57

Entry5r e
cordsthea ddi
ti
onofintere
stonJ une30intheamountof$1,261.
99t otheinvest
mentsof
$40,383.
95investedfortheent
irefi
rstsixmonthsof2002.Not
ethea c
tuali
nteres
tforthisper
iodis
$50.47great
ertha ntherequi
rede a
rningsof$1,211.
52fortheper
iod,becausethea ct
ualrat
ewa s
sl
ightlygr
eat
erthantherateuse
di nact
ua r
ialc
omputat
ions
.
5. Invest
me nts 1,261.99

I
nte
restEarni
ngs 1,
261.
99
.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
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..
..
..
..
..
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..
..
..

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 140
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s

Dur i
ngthese
conds i
xmonths,ta
xc ol
lec
ti
onsfortheTer
mBondsDe
btServi
ceFundtot
al
ed$58,
000
(Entry6a)
.Therequir
edaddit
iontotheInves
tmentsac
countwa
smade
,andint
ere
stof$37,
500was
paid,bot
hact
ionsasofDe
c ember31,2002(Ent
ry6b).

6a. Ca
sh 58,000
Ta
xesReceiva
ble––Curr
ent.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 5
8,000
I
nter
estExpense.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 9
5,000
NetAsset
s–Restr
ict
edforDebtService..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 19
9,100

6b. Expendi
tur
es––BondInter
est.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
3.
.
7.
.
,.
5
..
00.
00
Inve
stment
s.
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
..
..
..
..
..
..
..
..
..
.
1.
.
9.
.
,.
8
..
93.
57
Cash..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 57,
393.
57

Int
erestear
ningsduri
ngt hel as
tsixmont hsont he$61,539.51investe
ds i
nceJ ul
y1,2003,t
ota
led
$1,
883.10;thi
samountwa sa ddedtotheInves
tmentsaccount:
7. I nvest
ments.
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
1
..
,
.
8.
.
8.
.
3.
..
.
10
Int
ere
stEarnings..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
.
..
..
..
..
..
..
..
...
..
.. 1,
883.
10

Taxesl
eviedfor2003butno tcollect
eddur i
ngtheye ararerecordedasde l
inquent;theamounti
nthe
re
lat
edEs t
imat
edUnc oll
e c
tibleaccountsisrevi
ewe dandd et
erminedtober easonable.
8. TaxesReceivable––De l
inquent.
...
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
4
..
,
.6
..
0
..
0
..
.0
.
.0
.
...
..
.
Est
imate
dUnc ollect
ibleCurrentTaxes . ..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
3
..
,
.0
..
0
..
0
..
.0
.
.0
.
...
..
.
Ta xesRe cei
va ble
––Cur r
ent.
...
..
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..
..
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..
..
..
..
..
..
...
..
..
..
..
..
..
..
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..
...
..
..
..
..
...
..
4
.,
600.
00
EstimatedUnc oll
ect
ibleDe l
inquentTaxes.
...
...
..
..
..
..
..
..
..
..
..
..
..
..
...
..
...
..
3
.,
000.
00

AsofDe ce mber31,2002,t hebudge t

aryaccountsandope rat
ingstat
eme nta c
countswe r
ecl osed.
9. Appr opriat
ions .
..
..
...
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
...
..
..
..
..
..
..
..
...
..
..
..
..
.
7.
.
5.
.,
.
0
..0
.
.0
.
..
0
..
0
..
..
..
..
..
..
Re venues..
...
...
..
..
..
...
..
..
..
..
..
..
..
...
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
...
..
..
..
.
1.
.
1.
.
7.
.,
.
0
..0
.
.0
.
..
0
..
0
..
...
..
..
..
.
Inter
e s
tEa rnings....
..
..
..
..
..
..
..
...
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
.
3..
,
.
1.
.4
.
.5
.
..
0
..
9
..
...
..
..
..
.
Esti
ma t
edRe venues.
..
...
..
..
..
...
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
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...
..
...
..
..
..
..
..
..
1
..
1
..
7
..
,
.8
.
.4
.3.33
Expe ndit
ures––BondI nte
rest. .
..
...
..
..
..
..
..
..
..
..
..
..
..
..
...
..
...
..
..
..
..
..
..
..
7
..
5
..
,
.0
.
.0
.0.00
FundBa l
anc e..
..
..
..
..
..
...
..
..
..
...
..
..
..
..
..
..
...
..
..
..
..
..
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..
..
..
...
..
...
..
..
..
..
..
..
..
..
3
..
,
.3
.
.0
.1.76
Assets
,liabil
it
ies,andFundBa lanceoftheTe rmBondsDe btServic
eFunda sofDe cembe r31,2002
(a
llroundedt othene ares
tdol l
ar),areshowni nonec olumnoft hecombi ningbalancesheetofa lldebt
ser
vicefundso ftheTownofJ I
MMA.Si milar
ly,revenues,expendit
uresandc hangesinfundba lance
oftheTe rm BondsDe btSe rviceFunda res howni ntheCombi ningSt atementofRe venues,
Expendit
ur es
,andCha ngesi nFundBa lances.

Disclosures in Notes to the F inancial Statements

Anyinformati
oni naddi
tiontothefi
nanci
alsta
tementsshowna sIll
ust
rati
ons6-6,6-7,and6-8t hat
wouldbehelpfultoadminis
tr
ator
s,membersofthelegi
sl
a t
ivebody,int
eres
tedr
esidents
,credi
tors
,or
anyotherca
tegoryofper
s onwhousesthefi
nancia
lrepor
tsofagove r
nme nt
alre
porti
nge nti
tyshould,
Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 141
 Ac
count
ingf
orGe
ner
alLong-
Ter
mLi
abi
li
ti
esa
ndDe
btSe
rvi
ceFunds
ofcours
e ,bepr ovi
ded.GASBs t
andardsrequir
ediscl
osur
einthenotestothefi
nancia
lstat
ements(t
he
note
sa r
ea nintegr
alpartoft
hebasicfi
nancialsta
tement
sandarecoveredbyt heaudit
or’
sreport
)of
spec
ifi
cda t
aa boutdeposi
tswit
hf i
nanci
alinsti
tuti
onsandinve
stments.Disc
losur
esa r
erequir
edfor
theenti
tya sawhol e,notju
stfordebtservicefunds
.Howe ver
,sincetheTownofJ IMMA’ sdebt
ser
vicefundsh oldover$1.6mil
li
oninc a
sha ndinvest
ments
,iti
sappropri
atet
ome nti
onr e
quir
ednote
dis
closu
re satthispoi
nt.

GASBs tandardsrequir
edisclos
ureinthenot e
soft hetype sofdepositsandinve s
tme nt
saut
hor izedby
legalandc ontra
c t
ualprovis
ions.Anys ignificantvi ol
a t
ionsduringt heperiodofl egalorcont r
a ct
ual
provisi
onss hould,ofc ours
e,bedi scl
os ed.Ifba nkba l
ancesa sofba l
ances heetda t
earee nti
rely
insure
dorc oll
ater
aliz
edwi thsecuri
ti
eshe l
dbyt hee nti
tyori tagenti nthee nti
ty’sname,tha tf a
ct
shouldb eme nti
oned.Ifnot,theamountoft het otalbankba lanceshouldbec l
assif
iedandrepor te
di n
thethreecategori
esofc re
ditris
ks pe
cif
ie dint hes tandards.Simila
rly,thefairvalueofinve
stme ntsas
ofba l
ances heetdareshouldbedi sc
losedi ntot alandf ore achtypeofi nvestment.Thedisclosureof
carryi
nga mount sbyt ypeofi nvest
me nts houldbec lassi
fie
di nthet hreec ate
goriesofcre ditr i
sk
specif
iedinthes t
andards.

GASBs tandar
dsa pplyt oallsta
teandloc a
lgovernme nta
lreport
ingentit
ies
’financi
alreport
sthatare
inte
ndedt oc onform wi th gener
allya cce
pteda ccounti
ng princ
ipl
e s
.A n umbero fs tat
esh ave
establ
is
h e
db yl awr epo r
ti
ngr equi
rementsforthestat
egove rnmentit
s el
fandf orlocalgovernments
withinthes t
ate.Itisc ommo nforfinanc
ialrep
o r
tsprepar
edinc ompli
ancewi t
hs t
at
el a
wst oincl
udea
lis
to ft
h eamo unt
so nd epo
sitinn a
me db an
ks,al i
sto fsec
urit
ie
sh el
d,a n
dt hei
rfairvalueasoft he
balancesheetda t
e .Suppleme nt
arys c
hedulespresentedinordertoc onfor
m wi t
hlaws ,orpres
ented
becauseadministr
a t
orsfeelt
h edis
closur
esshouldbema de
,arenotcoveredbytheindependentaudi
tor'
s
reportunles
st hea uditengageme n
ts pec
ifi
cal
lye xt
end sthescopeoft heaudittothes uppl
eme n
tary
schedul
es.

Debt Service F und Investments

Ass howni nt h eDe ferr
edSe ri
alBo ndDe btSe rv
iceFu nda ndth eTe r
m Bo n dDe b
tSe rviceFund
examplesi nthisc hapter,fi
na ncialresourcestypicall
ya rea ccumula t
edinth e
set ypesofd ebtservic
e
fundsforeve n
tu alrepayme nto fprincipal
.Su c
hr esourcess houldbei nvest
edpr udentlyuntiltheya r
e
neededf orpr incipalrepayme nt.I nt
eres
te arni
ngsoni nvest
me nt
si nbondsa ndot hers ecuri
tie
s
purchasedatap r
emi umo rdiscou n
tg ener
all
ywo ul
dn otb ea dj
uste
df oramo r
ti
zationofa nypremi umso r
disc
o unt
s.Asn o t
edi nFo ot
no t
e6 ,c urr
entGASBs tandardsr equi
refairvalueacc ounti
nga ndr eporti
ng
formos tinvestme nts,exceptf orc ert
ainmone yma rketi nvest
me ntswithma turit
iesoflessthanone
year.Thelatte
rma ybea c c
ount edf oratamor t
izedc ost(intere
stearningsadjustedfora mortizat
ionof
premiumo rd i
s count)
.'Of t
en,h owe v
er,p r
emi umsa ndd i
scount
sa ren otamo r
ti
zedf ors hort-t
erm
invest
me nts.Al llong-termi nve s
tme ntsinde btande qui t
ys ec
ur i
ti
esh el
df orr e
payme nto fgeneral
long-t
ermd ebtp ri
ncipalarerep ort
eda tfai
rv al
ueint hed eb ts
ervic
ef undb al
ances heet
.Al lchangesin
thefai
rva l
ueo finv e
stmen t
sdur ingt heperiod,bothr eali
z edandunr eali
z e
d,a rereporteda srevenue
intheStatemen tofRe venues,Ex pen di
ture
s,andCh an gesinFu ndBa lance
s.

Debt Service A ccounting for Special A ssessment Debt

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 142
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
Sp eciala ss
e s
sme n tproje
c t
styp i
cal
lyfo l
lowt hesa mep atte
rna st ransact
ionso fotherc ap
italp r
ojects.
Sp ecifi
ca l
ly,c onstruct
iona cti
viti
esa r
eu s
uall
yc omp l
etedi nt hef i
r s
ty earors o
,u singe i
theri nt
erim
financing fromt hegove rnme ntalunitorpr oc e
edsofs peciala ssessme ntdebti s
s uances(bondsor
n ot
e s)top ayc on st
ruct
ionc o st
st oc ontr
actors
.Ei t
h era tt heb egi
nn i
ngo ft hep r
ojecto r,mo r
e
c ommo nly,wh enc onstr
uctionisc omp l
e t
ed,assessme ntsf ord ebts erv
icei slevie
da gai
n s
tp r
op ert
y
o wn ersi nt hed e fi
neds p ec
ialb enef
itd is
tr
ict.Annua la s
s essme nti nstal
lmentsr ece
iva ble,a nd
inte res
ton de ferredi ns t
all
me nts,us uallya ppr oxima t
et hea mountofde btpr incipa la nd
inte restpa ya bledur ingt hes a
mey e
a r
.Iftheg overnme n t
alu nitiso bl
igat
edins omema nnert oma ke
thed ebts e r
vi c
epa yme ntsint hee ve ntamount sc ollect
edf rom be nefit
edpr ope r
tyowne r
sa r
e
insuf f
icient,thede btshoul dber ecor
de dinthegove rnme nta
la ctiviti
esledgeratthegove rnme nt-wide
leve landade bts ervic
ef unds houldbeus edtoa ccountf orde bts ervic
ea cti
vit
ies.I
ft hegove rnme nta
l
uniti sno tobligatedina nyma nnerforspecialassessme ntde bt,thede btshouldnotber e
corde dina ny
a ccountingr e cordsoft hegove rnme nt.Int hel att
erc ase,whi chi sr el
at
ivelyr are,debts er
vice
trans a
ctionss houldbea ccountedforina nagency fund.

As sumet ha tspec ialass e

s sme ntbonds ,s econda rilyba ckedbyt hege nera
ltaxinga uthor i
tyoft heTown
ofX,we rei ssue dt oc ompl et eas t
reet-wide ningpr oject
.Uponc ompl et
ionoft hepr ojectt heTown
levieda sses sme ntsa mount i
ngt o$48 0,000,pa ya blein10e qua linsta l
lmentswith5pe r c
e ntintere s
ton
def err
edi ns tall
me nts,onown ersofpr ope rtiesf rontingont hei mpr oveds t
reets.Ass howni nEnt r
y,1
allr ecei
va bl esa rer ecor de da tthet imeoft hel evy,butRe venue si scredit
edonl yf ort hea mount
expe ctedt obec ollectedwi thi noney earf romt heda t
eoft hel evy;De ferr
edRe venue sisc reditedf or
thea mountofde ferredi nsta l
lme nts
.Be causet hee ntri
esa tthegove r
nme nt-widel evelwoul dbe
simi la
r,e xc eptt ha tintere stExpe nsewoul dber eportedr athert ha nExpe nditures,thos ee nt r
iesa re
omi ttedfort hes akeofbr e vity.Re quire dbudge tarye ntri
es,a ss howne arl
ierint hi
sc hapterf ors er
ial
bonda ndt er mbondde bts ervi cefunds ,areomi tted.
1. As ses sme ntsRe ceiva ble ––Cur r
ent ..
...
...
...
....
..
...
..
...
..
..
...
...
...
...
...
...
..
..
..
..
..
..
...
. 48, 000
As ses sme ntsRe ceiva ble ––De fer
r ed...
...
...
....
..
...
..
...
..
..
...
...
...
...
...
...
..
..
..
..
..
..
...
. 432, 000
Re ve nue s..
..
......
....
..
..
...
..
..
....
...
...
...
...
....
..
...
..
..
..
..
...
....
...
..
.....
..
..
..
..
..
..
...
..
... 48, 000
De fe rr
e dRe ve nue s. ..
..
..
....
...
...
...
...
....
..
...
..
..
..
..
...
....
...
..
.....
..
..
..
..
..
..
...
..
... 432, 000
Al lcurrenta ssessme ntsr e ceiva ble
,duea tye ar -
e nd,we r
ecolle cteda longwi t
hi nter
e s
tof$24, 000( see
Ent ry2).Anya mount snotc ollect
e dbyt hedueda tes houl
dber ecla s
sif
iedbyade bittoAs sessme nts
Re ceivable–De linque nta ndac r
edittoAs sess me ntsRe cei
va ble––Cur re
nt.
2. Ca s h 72,000
As s essme ntsRe cei
vable ––cu rr
e nt...
..
...
..
..
..
..
...
....
...
..
.....
..
..
..
..
..
..
...
..
. 48 ,000
Re ve nue s.
......
....
..
..
...
..
..
....
...
...
...
...
....
..
...
..
..
..
..
...
....
...
..
.....
..
..
..
..
..
..
...
..
...
. 24 ,000
Ma t
ureds pe ciala ssessme ntbondpr inc i
pa lint hea mountof$48, 000a ndma turedbondi nt e
re s
tof
$24, 000pa ya bl
ewe r
er ec orde da ndpa idons chedul e.
3a. Expe nditures––BondPr i
nc i
pal .
..
...
...
....
....
..
..
...
...
..
..
..
..
....
...
..
.....
..
..
4
..
8
..
,
.0
.
.0
.
.0
..
...
..
Expe nditure–– BondI nterest.
..
....
...
...
..
....
....
..
...
..
..
..
..
...
....
...
..
.....
..
..
.
2.
.
4.
.
,.
0
..
0
..
0.
..
...
..
..
BondsPa ya ble..
..
..
...
....
...
...
..
....
....
..
...
..
..
..
..
...
....
..
...
...
...
..
..
..
...
..
..
..
...
..4
.
.8
.,
000
Intere s
tPa ya ble.
...
..
.....
..
...
...
...
....
..
...
..
...
..
..
...
...
...
...
...
...
..
..
..
..
...
..
..
...
...
2
..
4,
000

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 143
 Ac
count
ingf
orGe
ner
alLong-
Ter
mLi
abi
li
ti
esa
ndDe
btSe
rvi
ceFunds
3b. BondsPa yable
...
....
..
..
..
..
...
..
...
..
..
..
..
..
...
..
..
..
...
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
4
..
8.
.
,.
0
..
0
..
0
..
..
..
..
..
Int
erestPayabl
e .
....
..
..
..
..
...
..
...
..
..
..
..
..
..
...
..
..
..
..
..
...
..
..
..
..
..
..
..
..
...
..
..
..
..
2
..
4
..
,.
0
..
0
..
0
..
..
..
..
..
Ca s
h..
...
..
..
....
..
..
...
..
..
..
...
..
..
..
..
..
...
..
..
..
...
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
...
..
..
..
..
..
..
.
7.
.
2.
,000
Theseco ndinstal
lmentofa ssess
me ntsrecei
va bl
ewa srecl
assif
iedfrom theDe fe
rredc a
tegorytot
he
Curr
entc ate
gory.Ac orrespondinga mountofDe ferr
edRe venueswa sreclas
sif
iedasRe venues.
4a. As sessmentsRe c
eivable––Current..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
...
.
..
...
..
..
..
..
.
4.
.
8.
.
,.
0
..
0
..
0
.
Assessme ntsRe ce
ivabl
e ––De f
erre
d...
..
..
..
..
..
..
..
...
..
..
..
...
..
..
..
..
..
..
..
..
..
..
.48, 000
4b. Defer
redRe ve nues.
...
..
...
..
..
..
..
..
..
...
..
..
..
..
..
...
..
..
..
..
..
..
..
..
...
..
..
..
..
..
...
..
..
..
.
4.
.
8.
.
,.
0
..
0
..
0
..
..
.
Revenue s.
..
...
..
...
..
..
..
..
..
..
...
..
..
..
..
..
...
..
..
..
..
..
..
..
..
...
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
.48, 000
Thi
spa t
te r
nofj our
nalentrieswi l
lber epeate
ddur inge a
choft herema i
ningnineyearsuntilalls
pec
ial
as
sess
me ntbondsarereti
re d.

Use of Debt Service F unds to R ecord C apital L ease Payment

InCha pter5,underthehe ading“ Gener
alCapitalAs s
etsAc quire
dunde rCa pit
alLe as
eAgr eeme nts ,
”
ane xampl eisgi
venoft hec omput at
ionofthea mountt ober e
corde dinagove rnmenta lfunda tt he
incepti
onofac api
talle
as e
.Thee xampleill
ustr
a t
esthee ntryrequireda tthegove rnme nt-widel e vel
whe na nasseti
sa c
quire
dbyac apita
lleas
ea gr
ee ment.Thee xampl epresentedinCha pte r5s pec ified
thatthefirs
tpaymentof$10, 000wa sdueonJ anuary1,2001,t heince pt
ionoft helease
.Gove rnme ntal
unitsc ommon l
yus eaDe btSe rviceFundt or ecordc apita
ll e
a sepa yme ntsbec a
us et hea nnua l
payme n t
saremerelyinst
allme ntpaymentsofgene r
allong-termde bt.Thef i
rstpayme nt,s i
ncei tison
thefirstdayofthelease,ise nti
relyapayme ntont heprincipalofthel easeobligati
on.Ac cordingl y,
thepa ymentwouldber ecordeda s:

Expe
ndi
tur
es––Pr
inci
palofCa pi
talLeas
eObl i
gati
on..
..
..
..
..
..
..
..
..
..
..
.1
.
.0
.
.,
.
0
..
0
..
0
..
Cash.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..10,
000

TheExpe ndi
turede t
a i
lrecordwoul ds howt hatthee nti
rea mountoft hef i
rstpayme ntwa sapa yme nt
ont hepr i
ncipal.Thepa yme ntdueo nJ anua r
y1,2002,a ndthepa yme ntduee achye arthe reaft
er,
howe ver,mus tbeconsideredapa rt
ialpayme ntont hel e
a s
eobligationa ndapa ymentofi nter
e s
tont he
unpa i
dba la
nc eoftheleaseobligati
on.GASBs ta
nda r
dsa reconsis
te ntwiththeFASB’ sSFASNo.13;
boths peci
fytha taconstantperiodi
cr ateofi nt
e r
estmus tbeus e.Int hee xampl estart
edi nCha pte
r5,
thepr es
entvalueoft heobligat
ionisc omput edus i
ngt herateof10pe rcentpe ryear.Itisreasona bl
et o
usethes amei nter
estrat
etode t
e rminewha tpa rtofthea nnual$10,000pa yme ntispayme ntofi nter
es t
,
andwha tpartispayme ntofprinc i
pal.Thef ollowingt ableshowst hedi stri
butionoft hea nnua llea
s e
rent
a lpayment s
:

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 144
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s

Payment A mount of Interest on Unpaid Payment on Unpaid L ease

Date Payment Balance at 10% Principal Obligation
$67,590
1/
1/01 $10,
000 $–0– $10,
000 57,590
1/
1/02 10,
000 5,759 4,
241 53,349
1/
1/03 10,
000 5,335 4,
665 48,684
1/
1/04 10,
000 4,868 5,
132 43,552
1/
1/05 10,
000 4,355 5,
645 43,552
1/
1/06 10,
000 3,791 6,
209 37,907
1/
1/07 10,
000 3,170 6,
830 31,698
1/
1/08 10,
000 2,487 7,
513 24,868
1/
1/09 10,
000 1,736 8,
264 17,355
1/
1/10 10,
000 909 9,
091 –0–
Ass hownbyt het a
bleabov e,althought hetotalexpendit
urerec
ordedeachyear
,Janua
ry1,2001,
t
hroughJ anua
ry1,2010,i s$10, 000,t hedetai
lrecordsforeachyearshoulds
howhowmuc hofthe
e
xpe ndit
urewasf orinte
restont hel easeobli
gati
ona ndhow muc hwa spaymentontheobli
gat
ion
i
ts
e l
f.Asnot e
de a
rli
erinthisc hapter,theunpaidbalanceofthecapit
allea
seobl
igat
ioni
scarr
iedin
t
hegove rnment
a lact
ivi
ti
esge neralledge ra
tthegovernme nt
-widel
evel
.

6.6) A ccounting for Debt R efunding

Ifdebtservi
c efundasse
tsacc
umul a
tedforde
btrepa
yme ntarenotsuf
fic
ienttorepa
ycredi
torswhen
thedebtma ture
s ,ori
ftheint
erestr
ateonthedebti
sa pprec
iabl
yhigherthanthegove
rnme nt
aluni
t
wouldha vet opa yonane w bondissue
,orifthecovenantsoftheexis
tingbondsar
ee xcess
ivel
y
burdens
ome ,thegovernment
alunitmayiss
ueref
undi
ngbo nds.

Theproceedsofref
undi
ngbo ndsiss
ueda tt
hema t
uri
tyofthedebttober
efundedareacc
ounte
dforas
OtherFinanc
ingSource
soft hedebtser
vicefundtha
tistorepa
yt heexi
st
ingdebt.Theappr
opri
at
ion
fordebtre
paymentisaccounte
dfora si
llus
trat
edintheTownofJ IMMADe fe
rre
dSe ri
alBondDebt
Servi
ceFunde xa
mple(seeEntri
es1,2aand2b)

Ifagove r
nmentalunitha sa ccumula t
ednoa ss
etsa tallfordebtrepayme nt,ifispr oba blethatnode bt
servi
cef undexi
st s
.Ins uc hac as
e,ade btservi
cef unds houl
dbec r
e a
tedtoa ccountf orthepr oceedsof
theref
undi ngbondi ssuea ndthere payme ntoftheol ddebt.Whe nt hede btisc ompl etelyr epa
id,the
debtservicefundr el
a t
ingt otheliquida t
edi s
sues houldbec losed,andade bts ervicef undf orthe
ref
undingi ss
ues houl
dbec reat
eda nda ccountedfora sde sc
ribe
di nthischa pt
e r.Ifther efundingbond
iss
uei snots ol
dbuti sme r
elygive nt otheholde rsoft hema turedissuei na ne vene xc hange,the
tra
nsactionwouldnotr e quireentr
iesinade btservicefundora tthegove rnme nt-widel eve lbutshould
bedisclosedadequatel
yi ntheNotet oFi nancia
lSt ateme nt
s.

A dvance R efunding of Debt

Adva
ncer
efundi
ngoft
ax-
exe
mpt
edde
bta
rec
ommondu
ringpe
riodswhe
nint
ere
str
ate
sar
efa
ll
ing
Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 145
 Ac
count
ingf
orGe
ner
alLong-
Ter
mLi
abi
li
ti
esa
ndDe
btSe
rvi
ceFunds
sharpl y.Compl exa cc ount i
nga ndr e portingi s
sue sha ves urfacedr elatingt ol e galques t
ionss ucha s
,
“Arebot hi ssuess t
illt hede btoft hei ssue r?”“ Ift hepr oce edsoft hene wi ss uea r
et obehe l
dfort he
event ualr eti
reme ntoft heoldi ssue ,how c ant hepr oce edsbei nve stedt oa voidc onf li
c twitht he
Inte
r na lRe venueSe rvi ceove rt het axa bilityofi nte restont hede bti ssue ?”( complianc ewi tht he
arbi
tr ager ulesunde rt heI nterna lRe venueCodeSe c.148a ndr elatedr e gul ationsi snec essaryfort he
inte
re stt obee xemptf ormf ede rali ncomet a
xa nd,pos si
bly,f r om s tatea ndl oca lt axes.
)Ful l
conside rati
onoft hec ompl exi
tie sofa ccount ingf ora dva nc erefundi ngr e sultingi nde feasanc eofde bt
ispre sentedi ntheGASBCodi ficationSe ctionD20.De fea sa
nc eofde btc anbee i
ther“ legal”or“ in
substa nce.”L egal defeasance oc curswhe nde bti sl ega llys at
isfi
edba se donc e rt
ainprovi sionsint he
debti nstrume nte vent hought hede btisnota ctuallypa id.In-substance defeasance oc cur swhe nde bt
iscons i
dere ddefe a
sanc efora cc ount i
nga ndf i
nanc ialr epor ti
ngpur pos ee ve nt houghl egalde feasa
nc e
hasnotoc curred.GASBCodi ficati
onSe ctionD20. 103s e t
sf ort
hi nde tailt hec i
rcums t
a ncesfori n-
substa ncede feasance .Br i
efl
y,t hede btormus tirre voc ablypl acec a shorot he ra sset
sint rus twitha n
escrowa ge nttobeus e ds olel
yf ors ati
sfyi ngs che dul edpa yme ntsofbot hi nte r
e standpr incipaloft he
defea sancede bt.Thea mountpl acedi ne sc rowmus tbes uffici
entlyl arges ot ha tthereisonl yar emot e
possibi l
itytha tt
hede bt orwi l
lber e quiredt oma kef utur epa yme ntsont hede f
e aseddebt .Thet rustis
rest
ric tedtoowni ngonl ymone tarya s
setst ha taree sse ntiall
yr is
k- freea st ot hea mount,t iming,and
coll
e ctionofi nteresta ndpr incipa l.

Toi l
lus t
ratea c count i
ngf ora dva nc ere f
undi ngr esult
ingi nde fea sanceofde btr e portedi nt he
gove r
nme ntala cti
viti
e sledge ratthegove rnme nt-widele vel,ass
umet hepr oceedsfromt hes al
eoft he
refundingi ssuea mountof$2, 000,000,a nda ss ume dde bttobede f
e aseda mountt o$2, 500,000.The
proceedsa rere cordedi nt hef undr ec e
ivingt hepr oceeds( normally,a debt service fund)bya ne nt
ry
sucha s:
Ca s
h. .
...
..
....
..
..
....
..
...
...
..
...
..
..
..
....
...
..
..
...
....
..
....
...
..
..
...
..
...
...
..
..
..
..
....
...
...
...
2.
.
,.
0
..
0
..
0
..,
000
Othe rFina ncingSour ce––Pr oce edsofRe f
undi ngBonds ...
.....
..
...
..
..
..
...
.. 2, 000, 000
Payme nt stot hee scrowa gentf r
omr esource spr ovidedbyt henewde bts houldber ecorde dint hedebt
servicef unda sa nOt he rFi nancingUs e;pa yme ntst ot hee scrow a gentf r
om ot herr e
sour cesare
recordeda sde bts ervicee xpendi t
ure s.The r
e f
or e,as s
umi ng$500, 000ha spr eviousl
ybe ena c
c umula t
ed
inthede btse r
vi cefundf orpa yme ntoft he$2, 500,000bondi s
sue ,thee ntrytor ecordthepa yme ntto
thee sc
r owa ge ntwoul dbe :
Othe rFina ncingUs es––Pa yme ntt oRe funde dBondEs c r
owAge nt.....
..
...
..2,000,
000
Expe nditure––Pa yme nttoRe f
unde dBondEs c r
owAge nt .
...
..
..
..
..
...
.....
..
...
.. 500,000
Ca sh...
..
...
...
..
....
..
...
...
..
...
..
..
..
....
...
..
..
...
...
..
.....
..
...
..
...
..
...
...
..
..
..
..
....
..
....
...
..
...
.. 2,500,000

T he Disclosure about A dvance R efunding

Thediscl
osur
eguidanc
eonde btr
efundinginGASBCodifi
cat
ionSect
ionD20isapplica
bletost
ate
andlocalgovernment
s,publ
icben e
fitcorpor
ati
onsandaut
hori
ti
es,publi
cemployeer et
ir
ement
sys
tems,andg over
nment
alut
ili
ti
es,hospit
als
,coll
ege
sandunive
rsi
ti
es,andtoal
lf undsofthose
ent
it
ies
.

De
tai
le
ddi
scl
osur
egui
danc
eiss
etf
ort
hinSe
cti
onD20.
111–114.Br
ief
ly,a
lle
nti
ti
ess
ubj
ectt
o

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 146
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
GASBj uris
dict
iona rerequir
edage neralde scr
ipt
ionofan ya dvancerefundingr e
sulti
ngindefeasance
ofdebt.Atami ni
mumt hedisclosur
esmus tincl
ude(1)thedi ff
erencebe tweenthec as
hflowsr e
quired
toser
vic ethen ewde bta ndcompl e
tether efundi
nga nd( 2)thee conomi cga i
norl ossres
ult
ingfrom
thetr
ans act
ion.Ec onomi cgainorl ossist hediffe
rencebe twee nthepresent value oftheoldde bt
ser
vicer equir
eme ntsandt hepresent vale ofthene w de btservicerequi r
ements,disc
ounteda tthe
eff
ect
ivei nter
estrateanda dj
us t
edfora dditi
onalcashpaid.Se ct
ionD20. 901-915pr ovidese
xa mples
ofeff
ec t
iveintere
strateande conomicga i
nc a l
cul
ati
onsan dofnot edisclosures
.

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 147
 Ac
coun
tingf
ort
heBus
ine
ss–TypeAc
ti
vit
ie
s

C hapter 7
A ccounting F or the Business–T ype A ctivities of
State and L ocal Governments
T opics to Be Discussed:
 Proprie
tar
yFunds
 Inte
rnalServi
ceFunds
 Ill
ust
rati
veCa s
e:Suppl
iesFund(
ISF)
 Enterpr
iseFunds
 Ill
ust
rati
veCa s
e:Wa t
erUti
lit
yFund(
EF)

L earning Objectives:
Af
ters
tudyingt hischapte r
,y oushouldbea bl
eto:
 Di stinguishbe twe enthepur pos
esofi nte
rnalser
vicefundsa ndenter
pri
s efunds.
 De scri
bet hec haracteri
sti
csofpr oprie
tar
yfunds,incl
udingt hoseuni
quet ointer
nalser
vic
ea nd
enterprisefund s
.
 Expl ai
nt hef i
na ncialrepor
tingre quir
ement
s ,i
ncludi
ngt hedi f
fer
encesinr epor
ti
ngofinter
nal
servicea ndent e
r pri
sefundsi nt
hegove r
nme nt
-wideandf undf i
nanc
ialstatements
.
 De scri
bea ccount i
ngpr oceduresa ndpreparejourna
le ntri
esa ndfinanci
a lsta
tement
sfora n
int
e r
na lservi
c efund.
 De scri
bea ccount i
ngpr oceduresa ndpreparejourna
le ntri
esa ndfinanci
a lsta
tement
sfora n
enterprisefund .

7.1) Proprietary F unds

Thef undsdi scussedinpr e viousc hapt er(gene ral,s pec ia
lre venue ,capitalproj ec
ts,de btse r
vicef unds,
andpe rma nentfunds )owet he irexistenc etol ega lc ons t
raintspl acedont her ais
ingofr eve nuea nd/or
theus eofr esourcesf ort hepr ovisionofs ervice st ot hepubl icors egme ntsthe r
e of,a ndf ort he
acquisi
tionoff acili
tatestoa i
di nt hepr ovisionofs ervices.Asgove rnme ntalunitsbe camemor e
compl ex,i tb ecamea ppa r
e ntt hate ff
icie
nc ys houl d bei mpr ovedi ss ervi
c esus e
d by s eve ra
l
depa r
tme ntsorf unds,ore ve ns evera lgove rnme ntaluni t,we r ec ombi ne dinas inglea dmi nist
ra ti
ve
unit.Purcha singi sac ommone xampl e ,asisamot orpool .Al ogicalna mef oraf isca
la nda cc
ount ing
entit
yc rea tedta ccountf orr e s
our c
e sus edf orpr ovi di ngc entralizedse rvicesisinternal service fund.
Traditi
ona lly,ther easonf ort hec reationoff undsi nt hisca t
egor ywa st oi mpr ovet hema nageme ntof
resources.I nr e
c entye ars,l argenumbe r
sofgove rnme ntaluni tsha vee xpe ri
enc edas hortf
al lof
revenues wi tha ni ncreasei nt he de ma nd f orgov ernme nt als e r
vices.Cons e quent l
y,ma ny
gove r
nme ntaluni t
sha vet urne dtous erc harge sasame ansoff inancingope rati
onsf orme rlyfina nced
byt axr eve nu esa ndi ntergove rnme nt alreve nue s.I nor de rtode t
ermi newhe therus e
rc hargesa re
comme nsur at
ewi t
hope r
atingc osts
,a ndt oimpr ovet hea bilit
yofa dmi nistra
torsa ndgove rningbodi es

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 148
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
tode ter
mi net hatc ostsa rere asonablei nr e lat
iont obe ne fi
ts,itisde sir
ablef ort hea c
ti
vit
iestobe
operateda nda ccount edf oronabus i
ne ssba sis.Thusma nya ctivit
iesforme r
lyope r
atedonapur ely
noncomme rcialba sisanda c countedf orbygove rnme ntalf undsa renowa ccount e
df orbypropriet
ary
funds:enterprise funds and internal service funds.Ac ti
vitiestha tproducegoodsors er
vicest
obes old
totheg eneralpubl icarea ccount edfo rbye nt erpri
sefunds .Ac tiviti
esthatproduc egoodsors ervi
cesto
bepr ovidedt ode pa rt
me ntsora genc i
esoragove rnme nt
a luni t
,ort oothergove rnmentalunits
,ona
cost-
reimbur seme ntba sisa rea ccountedf orbyi nternals er
vicef unds.(Internals ervi
cefundsa re
some ti
me sca l
ledi ntergove r
nme ntalse r
vicef unds,wor kingc api t
alfunds,revol vingfunds,andother
simil
a rname s.
)

Ac tivi
tiesa ccountedf orine nte
rprisef undsa rereferredt oasbusiness-type activities forpurpos eof
financialr eport
inga tt hegove r
nme nt-wi delevel.Al thoughi nternalservicef undsa rea ccounte
df or
internally asbusinesstypeac t
ivit
ies,theirtransac
tionpr e dominantlyinvolves alesofgoodsors er
vices
to,ori nte r
fundt ransacti
onswi t
h,theGe neralFunda ndot he
rf undstha tcompr iset hegove rnme nt
al
ac t
ivit
iesofagove rnme nt
.Fort hisr ea s
on,GASB St a t
ementNo.34r equire st ha tthef inanci
al
ba l
anc esofi nternals e
rvi
cef undsber eporte
di nt hegove rnmentala c t
ivitiesc ategorya tt he
gove rnme nt-widel evel.Ne vert
heless,i nter
na lservicef undsa reprope rl
yc l
as si
f ieda spr opri
e t
ary
fundsa nda rereporte
di nas epara
tec olumnoft hepr oprietaryfundf i
nanc i
alstateme nts.

F inancial R eporting R equirement

Propr i
e t
aryf undsa rea ccount edf orinama nne rs i
mi l
artoi nve s
tor-owne dbus ines se nte rpris
esoft he
samet ype .Ane nterprisef unde stabli
she dt oa c countforagove rnme nt-owne de lectricut i
lit
y,f or
exampl e,shoul df ollow a ccountingpr inc i
pl e
ss imilartot hoseofi nvest
or -
owne de lectricut i
liti
e s
.
Ac cordingly,pr opr iet
a ryf undsf oc usont hef low ofe conomi cr esourcesr ecogni zedont hea ccrual
ba s
is,bot hwi thint hef unda nda tthegove rnme nt-widel e
ve l.Thus,t hesefundsa ccountf ora llca pit
al
assetsus edi nt he irope rationsa ndf ora lllong- te
rml i
abil
iti
e stobepa i
df r
omt her e venue sge nerated
frothierope rations ,a swe llasf ora llcur re
nta s s
e t
sa ndc urrentliabilit
ies
.Be causepr opr ietar
yf unds
foll
o w bus iness -typea cc ountingpr inc
ipl e
s ,ones houldnotbes urprisedt hatt he sef undspr epare
essentiall
yt hes a mef inanc ia
ls tat
e me nt
st hatbus inessesdo:aBa lanc eShe e
t( call
e de ithe raSt ateme nt
ofNe tAs set
soraBa lanceShe et);aSt at
e me ntofRe venue s,Expe ns e
s,a ndCha nge si nFundNe t
As sets( equivale ntt oa ni ncomes tateme nt);a ndaSt ateme ntofCa shFlows .The s es ta t
eme ntsa re
prepar eda ccordi ngt oGASBs t
anda rds,howe ver,whi chdi fferins omer e
s pectsf r
om t hee quiva l
ent
stat
e me ntspr escribe dbyFASBs ta
nda rdsf orbus inessorgani zat
ions .Thesedi fferenc esa redis c
us sed
atva riouspoi nt si nt hisc hapter.Illust
ra t
ivef inanc i
als t
ateme ntsfort heTownofJ I
MMA Suppl ies
Fund( atinterna ls ervicef und)a redi spl
a yedi nI l
lustrat
ions7- 2,7-3,a nd7-4,l at
e rint hi sc hapter.The
correspondi ngf ina nc i
a lstateme ntsf ortheTownofJ I
MMAWa terUt i
li
tyFund( ande nte r
prisefund)
arepr ovidedi nI llus t
ration7- 6t hrough7- 8.

UnliketheGe ne
ralfundandotherma j
orgover
nme ntalfundsforwhi c
habudge tislegall
yadopt
ed,
propri
et
a r
yfundsarenotrequi
redbyGASBs ta
ndardst orecordbudgetsinthe
iraccount
ingsyst
ems.
Somegove rnmenta
lunitsdo,however
,requi
reallfundstoope ra
teunde rl
egal
lyadoptedbudget
s.In
suchcases,GASBs tandar
dspermit,butdonotrequire,theint
egrat
ionofbudgeta
rya ccount
sinthe

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 149
 Ac
coun
tingf
ort
heBus
ine
ss–TypeAc
ti
vit
ie
s
ma
nne
rde
scr
ibe
dinCha
pte
r3a
nd4ge
ner
ala
nds
pec
ialr
eve
nuef
unds
.

7.2) Internal Service F unds

Althoug ht her easonf ort hee st
abl i
shme ntofa ni nter nals ervicef undi st oi mpr ovef i
na nc ia
l
ma na geme ntofs carcer esou rces,its houl dbes t
ressedt hataf undi saf iscale nti
tywe lla sa n
account i
nge ntit
y;c onseque ntly,establis hme ntofaf undi sor dina ri
lys ubjecttol egislat
ivea ppr ova l
.
Theor di
na nce ,orothe rlegi sla
t i
vea ction,t hata uthori
z esthee stablishme ntofa ni nternalse rvicef und
shoul dalsos pe ci
fyt hes our ce,ors o urc es ,off inancialre sourc est obeus edf orf undope ra tions .The
originalalloc ati
onofr esour cestot hef undma ybede rive dfr om t ransferofa sset
sofa not herf und,
sucha stheGe nera
lFundora nEnt e rpris eFund,i ntende da sacontribution nott ober e pa i
d,ora
tra
ns ferint hena tureofal ong- t
ermi nt erf undl oa ntober e pai
dbyi nter
na lservi c
ef undove rape riod
ofye a r
s.Al ternati
vely,ora dditionally,t her esourcesini t
iallya lloca t
edtoa ninternals er
vicef undma y
bea cquiredf romt hepr oc ee dsofat ax-s uppor t
edbondi s
s ueort ransferfor mot hergove rnme ntaluni t
s
thata nti
cipa t
eut il
izingt hes ervicetober ende redbyt hei nterna ls e
rvicef und.Si ncei nterna ls ervice
fundsa r
ee st
a bli
shedt oi mpr ovet hema na geme ntofr esour ces ,itisge ne r
allyc ons i
deredt ha tt hey
shoul dbeope rat
ed,a nda ccount e
df or,onabus i
nessba s i
s.Appl icat
ionoft hisge neralt rutht oa
spec i
ficca sec anleadt oc onflic
tbe twe e nma na ger
swh owi sht hef r
ee dom t oope r
atet hef undi n
accor dwi tht heirprof essiona ljudgme nt ,a ndl e gis
latorswhowi sht oe xerci
s ec onsiderable ,c ont r
ol
ove rthede c i
sionsoft hei nte r
na lser
v icef undma nagers.

Fore xa mple,a s
sumet hata dmi nistr
a t
or sr eque s
tt hee stablishme ntofaf undf ort hepur chasing,
wa rehous ing,a ndi s
s uingofs uppl i
esus e dbyanumbe roff undsa ndde pa r
tme nt s.Att het i
meoft he
reque st
,s inceoni nte r
na lser
vi cef unde xists,e a
chf undo rde pa r
tme ntmus tinc ludei ni tsbudge ti t
s
reque st
e da ppropriationf ors uppl ies
,i tsre que s
teda ppr opriationf ors alari
esa ndwa gesofpe rs
onne l
enga gedi npur chasinga ndha ndlingt hes uppl ies
,a ndi tsre que st
eda ppr opriationf ora nyope rating
expe nseorf acili
tyc ostsa ss
oc iatedwi tht hes upplyfunc t
ion.Ac cor di
ngly,l egislatorst endt of ellthat
throught heirc ontrolove rbudge tsthe ya rec ontroll
ingt hei nvestme nti ns uppl iesa ndt heus eof
suppl i
esbye ac hf unda ndde pa rt
me nt.Le gi slat
orma yf eelt ha tiftheya pprove dt hee s t
ablishme ntof
ani nternals ervicef undt hatha da ut
h orityt oge nerateope ratingr evenuess uf f
icie ntt ope rpetuatet he
fundwi t
houta nnua la ppropria ti
ons,t hes uppl yfunc tionwoul dnol onge rbes ubj ectedt oa nnua l
legislat
ivebudge tr eview,a ndt hel egislaturewoul d“ losec ontrol”a ftert hei nitiala l
loc at
ionof
resourc est othef und.Admi nis tr
a t
orsa remor eli
ke l
yt of eelt hati fani nterna ls ervicef unddi dnot
havea uthorityt oge nerateope ra
tingr eve nue ssuffici
e ntt ope rpetuatethef und,a ndt os pendt hos e
revenue sa tthedi scr et
ionoff undma na ge me ntr a
thert ha na tt hedi sc
retionofpe rsonspos siblymor e
conc erned wi thr ee le
c ti
on t ha n withf ina ncialma na geme nt,t here woul d be l i
ttle ga i
ned by
establishme nto fthei nternalse rvicefund.

Thetwooppos i
ngvi e
wss houldbesomewhatbalancedbyt hefac
tthat
,asshowninIll
ust
rat
ion7-1,
thecust
ome r
sofa nint
ernalservi
cefundare,byde fini
tion,ot
herfundsanddepart
mentsoft he
gove
rnme nt
alenti
ty,orofot hergove
rnmenta
le nti
ti
es;theref
ore
,e a
chus i
ngfundanddepa r
tment
mustinc
ludeinit
sAppr opri
ati
onsbudgetr
equestjus
ti
fica
tionfortheamounttobes
pent(i
.e
.,paidto

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 150
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
theint
erna
lservi
cefund)fors
uppli
es,s
othelegi
sla
tivebranchc
ont
inue
stoe
xer
cis
ebudge
tar
yre
vie
w
overtheamounteac
hf undanddepar
tmentbudge
tsforsuppli
es

I
ll
ust
rat
ion7-
1
Le
gisl
at
ive
Body

Appr
opr
iat
ions

Ge
nera
landOthe
r
Budge
tar
yFunds

De
par
tme
nts
/pr
ogr
ams
Ext
erna
lExpe
ndi
tur
es
I
nte
rna
lExpe
ndi
tur
es*

Pr
opr
iet
aryFunds
Employees
Int
erna
l Enter
pri
se
Exte
rnalsuppl
ie
rs
Servi
ce Funds
Contr
actors
Funds
Etc
.
I
nte
rna
lExpendit
ure
sAr eMo r
eFor
mal
lyRe
fer
redToAsI
nte
rfundSe
rvi
cesPr
ovi
deda
ndUs
ed,or
I
nte
rna
lExchangeTrans
act
ions
Ass howni nI l
lus t
rat
ion7- 1,de partmentsandpr ogr amst hatrequirelegi
slat
ivea ppropri
ationst o
expendr es
our cesf orgoodsa nds ervic
ess houlda cc ountforpur chasesofgoodsors ervi
cesf rom
int
ernalsuppliers( i
.e.
,internals ervi
c efundsore nte
r pris
ef unds)ine sse
nti
a l
lythes amema nnera s
goodsa nds ervi
c espur chasedf rom e xt
ernalsuppl i
ers .Ifthel egi
sla
tivebranchwe retos etpricing
poli
ciesforthei nternalservicefund,a ndpolici
e sgove r
ningt heuseofc urr
entea r
nings,andretention
ofearnings,andr equi
ret hes ubmi ssi
onofpe r
iodicf inancials t
ate
me ntstoevidencethati t
spol i
cies
weref oll
owe d,t hel egisl
aturewoul dbea blet oma intai
nc onsi
derablecontrolove rthef unction
perf
orme dbyt hei nt
ernals ervi
c efund,ye tlea vet hef undma nagersfreedom toope r
atea tthe i
r
dis
creti
onwi thint hepoliciessetbyt helegisl
ati
vebr anc h.

Oneoft hemor edif

ficultproblemst ores
olvetot hes ati
sf a
c t
ionofpe rsonswi t
hoppos ingvi e
wsi sthe
establishme ntofpricingpol icy.“ Cost
”i sobvi ous
lya ni nc ompl et
ea nswer:Hi stori
c a
lc ostoft he
suppl iest hems el
ves,whe therde finedasFI FO,LI FO,a vera ge,ors pe ci
fici dentif
icat
ion,wi l
lnot
provi des uf fi
cie
ntreve nuetor e placesupplie
si ssuedi fr eplace mentpr ic
e sha ver i
sens incethela s
t
pur chase,ort oincr
eas ethei nve ntor
yqua nti
tiesifthes caleofgove rnme ntalope rat
ionsi sgrowing.
Pa yrolla ndot hercas
hope rati
nge xpense
soft hei nt
erna lservic efundmus tbeme t;andi ftheint
e r
nal
servi cefundha sre
ceive dalo anf roma nt
herfundora not hergove r
nme ntalunit,pricesmus tbes etata
leve lthatwi llgener
atec ashne ede dfordebtreti
reme nt.Ifthei nternalse r
vicefundi stobeope rat
edon
at ruebus inessbasi
s,itmus talsobea bl
et ofinancef rom i t
sope rat
ionsr epl
ac eme nt
,mode rni
zati
on,
Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 151
 Ac
coun
tingf
ort
heBus
ine
ss–TypeAc
ti
vit
ie
s
a
nde xpans
ionofplantandequipmentus
edi
nfundoperat
ions.Pric
eschar
gedbytheint
ernals
ervic
e
f
und,however,s
houldbeles
stha nt
heusi
ngf
undsanddepartmentswoul
dhavetopayout
sidevendor
s
f
orequ i
val
entproduct
sandservice
s,ift
hee
xis
tenceandc ont
inuedoper
ati
onoftheint
ernals
ervic
e
f
undistobejust
ifi
ed.

Be causeoft hec onsidera t

ionsme ntionedi npr ec
e dingpa r agr a
phs ,ma nydi ffe re nta ppr oac hest o
inter
na ls ervicef undope rati
onsma ybef oundi npr actice.Si ncea cc
ount ings ys temss houl dgi ve
appropria tere cogni t
iont oope ra t
ingpol i
cies,a swe lla st ol e galre quir
e me nts,pr ac t
icesva ryf rom
thoseofpr ofit-se
e kingbus iness esa tonee xtreme ,tot hosedi sc
us sedi nt hist e xti nt hec hapte r
s
relat
ingt oge nerala nds pe cialr evenuef undsa tt heo there xtr
eme .I nt hei ll us tra
tionsgi ve ni n
foll
owi ngs ecti
onsoft hisc hapt er,iti
sa s s
ume dt hefina ncialobj ect
iveofa ni nt
e rna ls ervicef undi st o
recoverf r
om ope ra t
ingr e venue st hef ullc ostofope rations ,wi the noughne ti nc omet oa llow f or
replaceme ntofi nve ntoriesinpe riodsofr i
singpr i
ces ,ande noughi ncreaseini nve nt oryqua ntiti
est o
me etthene edsofus ingf undsa ndde pa rtment swhos es caleofope rati
onsi sinc r
e as ing.Si mi larly,itis
assume dne tincomes houldb es uf fi
cienttoa llowf orr epla ceme ntofc apit
a las s
etsus edbyt hei nternal
servi
c ef und,bute xpa ns
ionoft hef a
c il
iti
esmus tbef inanc edt hroughc ont ri
butionsf rom ot he rfunds
authorizedi nt he i
rAppr opr i
ationsbudge ts.Ma nagersofi nterna ls e
rvicef undsmus tpr epareope r
ating
plans–budge t–a sama nage me nttool .Int hei ll
ustrationsi tisa ssume dbudge t sofi nterna ls ervice
fundsa res ubmi tt
e dt othel e gislati
vebody,orbodi e s,a ndt ot hepubl icf orinfor ma t
ionbutnotf or
legala ction,a ndt here f
oret hebudge ti snotf orma l
lyr ecor de dini nternals er vic ef unda ccount s
.
Similarly,ma na gersofbus i
n essmus tbeke pti nforme do ft hes t
atusofout standi ngpur cha seor de r
s
andc ontr acts
,bute ncumbr anc esne ednotber ecordedi nt hea c countsi norde rtoa c c ompl isht his.

Account
ingf
oraninte
rnalse
rvi
cef
undc once
rnedwitht
hef
unc
ti
onsofpur
cha
sing,wa
rehous
ing,a
nd
i
ssui
ngsuppl
iesi
sil
lust
rat
edint
hefol
lowingsec
tion.

7.3 Illustrative C ase: Supplies F und

Assumet hatt
hea dmi nistr
atorsoft heTownofJ IMMA obt ai
na pprovalfrom theTownCounc i
lto
centr
aliz
et hepur c
hasing,s t
or i
ng,a ndi ssui
ngf unctionsa sofJ a
nua ry1,2003,a ndtoa dmini
ste
ra nd
accountforthesefunctionsinaSuppl iesFund.Thet own’ sGe neralFundist otr
ansfertothenewf und
i
tsDe cembe r31,2002,i nventoryofs upplie
s( $61,500)a nd$30, 000inc ashtobeus edf orworking
capit
al;thesetr
a nsfe
rsa reint endeda sc ontri
butionst ot heSuppl i
esFunda nda r
enott ober epaid.
Transfer
soft hi
sna t
urea rei ni
tiall
ya c c
ountedf orbyt her e c
ipie
ntf unda sint
erfundtransf
ersin,a s
showni nEnt r
y1.TheI nter
fundTr ansfersIna ccountisc losedatt heendoft hef i
sca
lpe ri
odtoNe t
Assets–Unr es
trict
ed.Thei nterfundt ransfe
risr e
por t
edbe low thenon- opera
ti
ngr evenues/
expens e
sect
ionoft heStatementofRe ve nues,Expe nses
,a ndCha nge sinNe tAssets.

De
bit
s Cr
edi
ts
1. Ca
sh.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
..
..
..
..
..
..
..
..
.30,
000
I
nve
ntor
yofSuppl
ie
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.61,
500
I
nte
rfundTr
ans
fer
s–I
n..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 91,
500

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le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 152
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s

Ino r
de rtopr ovi
decashtob euse
df oracquisi
ti
onofab uil
dingande quipme ntneededtoha ndl
et he
supplyf uncti
one f
fi
cie
ntly,t
hetown’sWa terUtil
it
yFundi stoprovi
deal ong-ter
mi nt
erfundloanof
$130,000t ot heSuppli
esFund.Thel oani stober epa
idbyt heSuppl i
esFundi n20e qua lannual
inst
allme nts
.Entry2i l
lustr
ate
sthee nt
ryt obema debytheSuppl i
e sFundf orthereceiptoft he
int
erfundl oan;Wa t
erUti
lit
yFunde nt
rie
soft hi
stra
nsact
ionareil
lus
tra
tedl at
erinthischapter
.
De
bit
s Cr
edi
ts
2. Ca
sh.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
..
..
..
..
..
..
..
..
.
130,
000
I
nte
rfundLoa
nfr
omWa
terUt
il
it
yFund––Cur
rent
..
..
..
..
..
..
..
..
..
.. 6,
500
I
nte
rfundLoa
nfr
omWa
terUt
il
it
yFund––Non-
cur
rent
..
..
..
..
..
..
. 123,
500

Assumet hatas a
ti
sfactorywarehousebui
ldi
ngispurc
hasedfor$95,
000;$25,000ofthepur
cha
sepri
ce
isconsider
edac ostoft heland.Ne ces
sar
ywa re
housema chi
neryande quipmentispur
chas
e df
or
$25,000.De l
iverye quipmenti spurcha
sedfor$10,000
.I fthepurchas
e sa r
ema deforcash,t
he
acquisi
ti
onoft heas
s et
swoul dber e
cordedi
nthebooksoftheSuppl
iesFunda s:
De
bit
s Cr
edi
ts
3. La
nd.
..
.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
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..
..
..
..
..
..
..
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..
. 25,
000
Bui
ldi
ng.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 70,
000
Ma
chi
ner
yandEqui
pme
nt––
War
ehous
e..
..
..
..
..
..
..
..
..
..
..
..
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..
.
..
..
..
..
..
..
..
..
..
.. 25,
000
Eq
uipme
nt––De
li
ver
y..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 10,
000
Ca
sh.
..
..
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..
..
..
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..
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..
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..
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..
..
..
..
..
..
..
..
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..
..
..
..
..
..
..
..
..
..
..
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..
..
..
..
..
..
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..
..
. 13
0,000

Additi
ona lsuppl
ieswouldne edtobeor der
edtoma i
nta
ininventori
esa taleve lc
ommensuratewi
th
expect
edus a
ge.Enc umbra
ncesne ednotber e
cordedforpurchaseordersis
sue d,ands
oinformati
on
aboutthedol l
arvalueofpurchaseorder
sisomitt
e dfor
mt hi
si l
lust
rat
ion.During2003,i
tisa s
sumed
suppl
iesa rerece
iveda ndrel
atedinvoic
esareapprovedforpayme ntintheamountof$192, 600;t
he
entr
yne ededtorecordtheass
e ta
ndt hel
iabi
li
tyis
:
De
bit
s Cr
edi
ts
4. I
nve
ntor
yofSuppl
ie
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
1.
.
9.
.
2.
.
,.
6
..
0
..
0
.
Vouc
her
sPa
yabl
e..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 192,
600

TheGe neralFundoft heTownofJ I

MMA ( SeeCha pter4)a ccountedf orsuppliesontheperiodic
inventoryba s
is.TheSuppl ie sFund,howe ver,shoulda ccountfori tsinventori
esont hepe r
petual
inventoryba s
iss i
ncet hei nformati
oni sne ededf orpr operpe rformanceofi t
spr i
ma r
yfunction.
Ac cordi
ngly,whe ns uppli
esa r
eissued,t heinve ntorya ccountmus tbec r
edi
tedf orthecostoft he
suppliesiss
ued.Sinc etheus ingfundwi llbec hargeda na mounti nexcessoft heinvent
orycarr
yi ng
value,ther ece
ivablea ndre venuea c
c ountsmus tr ef
lectt hesellingprice.Thema rkupabovec ost
shouldbede t
erminedont heba s
isofbudge tede xpe nsesa ndot heritemst obef i
nanc
edfrom ne t
income ,inrel
ationtoee xpectedrequi
sitionsbyus ingf unds.Ifthebudge tfortheTownofJ IMMA’ s
Suppl i
esFundi ndic
atesama rkupof35pe r
centonc os
ti sne e
ded,i ss
uestoGe ne r
alFunddepart
me nts
ofs uppli
escost
ing$185, 000woul dber ec ordedbyt hef oll
owi ngent r
ies
.

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 153
 Ac
coun
tingf
ort
heBus
ine
ss–TypeAc
ti
vit
ie
s

De
bit
s Cr
edi
ts
5a. Cos
tofSuppl
ie
sIs
sue
d..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
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..
..
..
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..
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..
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..
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.
1.
.
8.
.
5.
.
,.
0
..
00
I
nve
ntor
ySup
pli
ed.
..
..
..
..
..
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..
..
..
..
..
..
..
..
..
..
..
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..
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..
..
..
..
..
..
..
..
..
..
..
.
. 185,
000
5b. Duef
romGe
ner
alFund.
..
..
..
..
..
..
..
..
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..
..
..
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..
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..
..
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..
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..
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2.
.
4.
.
9.
.
,.
7
.50
Bi
ll
ingt
oDe
par
tme
nts
..
..
..
..
..
..
..
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..
..
..
..
..
..
..
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..
.
.. 249,
750

I
fcol
le
cti
onsf
romt
heGe
ner
alFundd
uri
ng2003t
ota
led$231,
000,t
hee
ntr
yshoul
dbe
:
De
bit
s Cr
edi
ts
6. Ca
sh.
..
..
..
..
..
..
..
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..
..
..
..
..
..
..
..
..
..
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..
..
..
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..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
2.
.
3.
1,000
Duef
romGe
ner
alFund.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
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..
..
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..
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..
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..
..
..
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..
..
.. 231,
000

Ass
umingt
ha tpa
yrol
lsandfr
ingebene
fit
sdur
ingtheye
arwer
ea l
lpa
idincashandwer
edi
st
ri
but
ed
t
othef
unct
ionalexpe
nseacc
ountsi
ntheamountss
hownbel
ow,Ent
ry7isappr
opr
iat
e.

De
bit
s Cr
edi
ts
7. Admi
nis
tra
ti
veExpe
nse
s..
..
..
..
..
..
..
..
..
..
..
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..
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..
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..
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..
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..
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000
Pur
cha
singExpe
nse
s..
..
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000
Wa
rehous
ingExpe
nse
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000
De
li
ver
yExpe
nse
s..
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..
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..
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000
Ca
sh.
..
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..
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..
. 5
5,000

I
fpa
yme
ntonvouc
her
sdur
ingt
heye
art
ota
led$164,
000,t
hee
ntr
yis
:
De
bit
s Cr
edi
ts
8. Vouc
her
sPa
yabl
e..
..
..
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..
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000
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sh.
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..
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..
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..
..
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..
..
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000

Theinte
rfundl
oanfr
om theWate
rUti
li
tyFundi
stoberepa
idin20e qua
lannua
linst
al
lment
s;
re
paymentofoneins
tal
lmenta
tthee
ndof2002andre
cla
ssi
fi
cat
ionofthenexti
nst
al
lmentare
re
corde
da s:
De
bit
s Cr
edi
ts
9a. I
nte
rfundLoa
nfr
omWa
terUt
il
it
yFund––Cur
rent
..
..
..
..
..
..
.
..
..
..
..
..
..
..
..
..
.. 6,
500
Ca
sh.
..
..
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..
..
..
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..
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..
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..
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..
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..
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..
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..
..
..
..
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..
..
..
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500
9b. I
nte
rfundLoa
nfr
omWa
terUt
il
it
yFund––Nonc
urr
ent
..
..
..
.
..
..
..
..
..
..
..
..
..
.. 6,
500
I
nte
rfundLoa
nfr
omWa
terUt
il
it
yFund––Cur
rent
..
..
..
..
..
..
.
..
..
..
. 6,
500

Itisa s
sumedt hebuil
dingus eda sawa rehousewa se s
timat
eda tthetimeofpur chasetoha vea
remaini
ngus e
fullif
eof20y ears
;thewa re
housema c hineryandequipmentwa sestima t
edt ohavea
usef
ullif
eof10ye ars
,andt hedeli
veryequi
pme nttoha veaus ef
ulli
feof5ye ar
s.Ifthea dminist
rat
ive
andc ler
ica
loff i
cespaceoc cupies10pe rcentoft hea reaofthewa r
ehouse,10pe rcentoft he
depreci
ati
onoft hewa rehouse,$350,ma ybec ons
ide re
da dminis
trat
iveexpense;s imil
arly,ifthe
purchasi
ngoffi
c eoccupies1 0percentofthes pacei nt hewa r
ehousebuildi
ng,10pe r
centoft he

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 154
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
buil
dingdepr
eci
ation,$350,ma ybecons
idere
dpur c
hasinge xpe
ns e.There
ma inderoft
hebuil
dingis
devotedtowarehousing;ther
efor
e,80pe r
centofthet otalbuil
di ngdepr
eciati
on,$2,
800,istobe
chargedtowa r
ehous i
nge xpense
.Thel at
tera c
counti salsoc ha r
ged$2,500f ormachi
nerya nd
equipmentde
preci
a t
ione xpe
nse.Del
iver
ye xpenseischarged$2, 000fordepreci
ati
onofequipment
duri
ngtheyear
.

De
bit
s Cr
edi
ts
10. Admi
nis
tra
ti
veExpe
nse
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 350
Pur
cha
singExpe
nse
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
..
..
..
..
..
..
..
..
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Wa
rehous
ingExpe
nse
s..
..
..
..
..
..
..
..
..
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..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..5,
300
De
li
ver
yExpe
nse
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.2,
000
Al
lowa
ncef
orDe
pre
cia
ti
on––Bui
ldi
ng.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 3,
500
Al
lowa
ncef
orDe
p–Ma
chi
ner
y&Equi
pme
nt–Wa
rehous
e..
..
..
.. 2,
500
Al
lowa
ncef
orDe
pre
cia
ti
on––Equi
pme
ntDe
li
ver
y..
..
..
..
..
..
.
..
..
..
. 2,
000

Or ganiz
a t
ionsthatkeeppe r
p e
tualinvent
oryr e
cordsmus ta dj
us ttherecor
dspe r
iodi
c a
ll
yt or efl
ect
shortages,overages
,orout -of-
condit
ionstockdi sc
losedbyphys i
calinve
ntori
es.Adjustme ntst he
I
nve ntorya cc
ountareals
oc onsidere
da dj
ustmentstothewa rehous i
ngexpensesoftheperiod.Int his
i
llustrat
ivec as
e,itisa s
sume dnoa djus
tme nt
swe ref oundne ce s
sar
ya rtyear-
end.As sumi nga l
l
r
e venuesa ndexpensesa
pplicableto2003havebe enproperl
yr ec
or dedbytheentr
iesil
lust
rateda bove,
t
heope r
a t
ingstat
ementaccountsshouldbeclose
da sofDe cembe r31,2003:
De
bit
s Cr
edi
ts
11. Bi
ll
ingst
oDe
par
tme
nts
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
249,
750
Cos
tofSuppl
ie
sIs
sue
d..
..
..
..
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..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 185,
000
Admi
nis
tra
ti
veExpe
nse
s..
..
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350
Pur
cha
singExpe
nse
s..
..
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..
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. 19,
350
Wa
rehous
ingExpe
nse
s..
..
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..
..
..
..
..
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. 17,
300
De
li
ver
yExpe
nse
s..
..
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..
..
..
..
..
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..
..
..
..
..
..
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..
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..
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..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 15,
000
Exc
essofNe
tBi
ll
ing
stoDe
par
tme
ntsove
rCos
t..
..
..
..
..
..
..
..
..
..
..
.. 1,
750

ExcessofNe tBi l
lingst oDe par
tmentsove rCosts(orExc e
ssofCos tsoverNe tBi l
li
ngst o
Depart
me nts,i
fope r
a ti
onsresul
tedinaloss)ist
heaccountt
it
legeneral
lyconsi
der
edmor edesc
riptive
ofthefund’sresul
tstha nIncomeSumma r
yorCur r
entEarni
ngs–thet i
tl
escommonlyf oundinpr ofit
-
see
kingbus i
nesses.Wha t
everti
tl
eisusedfortheac
countsummarizi
ngtheresul
tsofope r
ati
onsfort he
per
iod,theac c
ounts houldbec l
osedatyear-e
nd.Hetitl
eoftheaccounttha
trecor
dse a
rningsret
a ined
inaninter
nals er
vicef und,aswe l
lascontr
ibuti
ontoequit
y,ar
erecordedintheaccountNe tAsse ts–
Unrest
rict
ed.
De
bit
s Cr
edi
ts
12. Exc
essofNe
tBi
ll
ingst
oDe
par
tme
ntsove
rCos
ts.
..
..
..
..
..
..
.
..
..
..
..
..
..
..
..
..
.
1.
,750
Ne
tAs
set
s––Unr
est
ri
ct
ed.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 1,
750

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 155
 Ac
coun
tingf
ort
heBus
ine
ss–TypeAc
ti
vit
ie
s

TheInt
erf
undTrans
fer
sInacc
ountr
epr
ese
ntsot
herf
ina
nci
ngs
our
cea
ndi
scl
ose
dtoNe
tAs
set
s–
Unre
str
ict
edass
howninEnt
ry13:
De
bit
s Cr
edi
ts
13. I
nte
rna
lTr
ans
fer
s–I
n..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
9.
.
1,500
Ne
tAs
set
s––Unr
est
ri
ct
ed.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 91,
500

R equired F inancial Statements: Internal Service F unds

1. Statement of Net A ssets
Asonewoulde xpectoffundsaccount
edf ori nama nne rsi
milartoprofit
-see
kingbusines
ses,the
st
at
ementofnetasset
s(or,al
te
rnat
ivel
y,at radit
ionalcl
ass i
fi
edbalancesheet
)ofpr opr
iet
aryfundsis
cl
ass
ifi
ed;t
hatis,curre
nta s
set
sa resegregatedf r
om c apita
lassetsandot herasset
s,andc urr
ent
l
iabi
li
ti
esar
esegregat
edfromlong-
termde bt.Thes t
a t
eme ntofnetasse
tsfortheSuppli
esFundoft he
TownofJIMMAa sofDecember31,2003,iss howni nIl
lustr
ati
on7-2.

GASBSt a t
eme ntNo.34r equi
resthatnetas
set
sber eport
edinthr
e ec
ompone nt
s,i
nvest
edinc a
pita
l
ass
ets
,ne tofre l
at
eddebt;rest
rict
ed;andunres
tri
ct
ed.AsofDe cember31,2003,t
heSupplie
sFund
i
nvest
me ntinc apit
alasse
tsof$122, 000isles
sthant hebal
anceoftheinter
fundloanof$123,500
(
$117,000l ong-t
ermliabil
ityplus$6,500curre
ntpor t
ionduewi t
hinoneye ar
).Thus,the
reisno
i
nvest
me ntinc apit
alasse
tstober eport
ed.Therealsoa r
enoa s
setsr
estr
ict
eda st
ous ebye xt
erna
l
r
e s
ource
spr ovider
sorlegi
slati
veacti
on.Asar e
sult
,theSuppl
iesFundhasonlyunre
str
ict
ednetasset
s
asofDece mber31,2003.

I
ll
ust
rat
ion7-
2
T OW N OF J IMMA
SUPPL IE S F UND
ST A T E ME NT OF NE T A SSE T S
A S OF DE C E MBE R 31, 2003
A SSE T S :
Cur
rentAs s
ets
Cas
h...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. $35,
500
DuefromGe nera
lFund. .
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 18,
750
I
nventoryofSuppli
es,ataver
agec ost
..
..
..
..
..
..
..
..
..
..
..
..
..
. 69,
100
Totalcurr
entass
ets.
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 123,
350
Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 156
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
C apital assets:
La nd. ...
...
..
....
...
.....
..
..
....
..
..
..
..
..
..
..
..
....
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. $25,
000
Bui lding...
...
....
..
. ..
..
...
..
...
..
..
..
..
..
..
..
...
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
$70,
000
Le ss:Al lowa ncef ordeprecia
tion...
..
..
..
..
..
..
..
..
..
..
..
..
. 3,
500 66,
500
Ma chine r
ya nde quipme nt–wa rehouse...
..
..
..
..
..
..
..
..
..
..25,
000
Le ss:Al lowa ncef ordepre
c i
ation...
..
..
..
..
..
..
..
..
..
..
..
. 2,
500 22,
500
Equi pme nt–d elivery....
..
..
..
..
..
..
..
...
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.10,
000
Le ss:Al lowa ncef ordeprecia
tion...
..
..
..
..
..
..
..
..
..
..
..
..
. 2,
000 8,
000
Tot alc apit
a la s
se ts..
..
....
..
..
..
..
..
..
..
..
....
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 122,
000
Tot alAs s e
ts....
..
. ..
..
...
..
...
..
..
..
..
..
..
..
...
...
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 245,
350
L IA BIL IT IE S :
Cur rentLi abi l
iti
e s:
Vouc he r
sPa yabl es..
..
....
..
..
..
..
..
..
..
...
...
..
..
..
..
..
..
..
..
..
..
..
..
..
.. $28,
600
Cur rentpor tionofl ong- ter
ml i
abili
ties.
..
..
..
..
..
..
..
..
..
..
..
.. 6,
500
Tot alc urrentl i
abi li
ties..
..
..
..
..
..
..
..
...
...
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 35,
100
Long- t
e rml iabilitie
s :
Interfundl oa nf romwa teruti
li
ty.
...
...
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 117,
000
Tot alliabi li
tie
s ..
..
..
..
..
..
..
..
..
....
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 152,
100
NE T A SSE T S :
Unr estri
c t
e d..
. ..
..
..
..
....
..
..
..
..
..
..
..
...
...
..
..
..
..
..
..
..
..
..
..
..
..
..
.. $93,250
2. Operating Statements
Ther esult
sofope rat
ionsofa nInte
r n
alSe rvic
eFundforape riods houldber eport
e dinaSt ate
me ntof
Re venues,Expe nses,andCha ngesinNe tAssets
,whichisthee quival
entofa ni nc
omes t
a t
eme ntfora
prof i
t-
seekinge ntit
y.Inther eport
ingmode lbei
ngsupersededbySt at
e mentNo.34,t hestateme nti
s
calledaSt ateme ntorRe venues,Expe nses,andChangesinRe ta
inedEa r
nings,sincethef unde quit
y
(r
a therth
a nne ta s
set
s)unde rthepreviousmode lwasreporte
di ntwoc ompone nts
,c ontr
ibutedc api
tal
andr etai
nede arni
ngs.Ill
ustrati
on7- 3pr e
sentsaStat
eme ntofRe venues,Expe nses,andCha ngesin
Ne tAs s
etsf ortheyearendedDe ce
mb e r31,2003,f
ortheTownofJ I
MMASuppl i
esFund.

I
ll
ust
rat
ion7-
3
T OW N OF J IMMA
SUPPL IE S F UND

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 157
 Ac
coun
tingf
ort
heBus
ine
ss–TypeAc
ti
vit
ie
s

ST A T E ME NT OF R E V E NUE S, E X PE NSE S, A ND
C HA NGE IN NE T A SSE T S
F OR T HE Y E A R E NDE D DE C E MBE R 31, 2003
Operating revenues:
Bil
lingtode pa rt
me nts..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. $249,
750
Less:Cos tofs upplie sissued..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 185,
000
GrossMa rgin..
....
....
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 64,
750
Operating E xpenses:
Purchasinge xpe ns es....
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..$19,
350
Admi nistr
a t
ivee xpe nses...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 11,
350
Wa rehousinge xpe nse s.
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 17,300
Deliverye xpe nse s
....
....
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 15,
000
TotalOpe ratingExpe nses .
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 63,
000
Ope r
a t
ingI ncome. .
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 1,
750
Int
erfundt rans ferin.....
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 91,
500
Changei nne ta ssets...
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 93,
250
Neta sse
ts–J a nuary1,2003. ..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. -
0-
Neta sse
ts–De cembe r31,2003...
..
..
..
..
..
..
..
..
..
..
..
.. $93,
250

3. Statement of C ash F lows

GASBf inancialreporti
ngst
anda r
dsr equi
ret hepr eparat
ionofastat
ementofCa s
hFl owsa sapartof
fullsetoff inancialstat
ementsforallproprieta
ryf unds .Cat
egori
esofcashflowsprovidedbyFASB
Stateme ntNo.95we redeemedi nsuffi
cienttome ettheneedsofus e
rsofgove r
nme nt
alfi
nanci
al
reports.Cons equently,GASBs t
a ndardsprovidef ourc ate
gor
iesofcashfl
ows:Ope r
ating,Non-c
apit
al
Financ i
ng,Ca pi
talandRe l
ate
dFi nanc i
ng,andI nve st
ing.Ineac
hc at
egor
y,theter
mc as hal
soincl
udes
C ash E quivalents (
defi
nedasshort-
term,hi ghl
yl iquidinves
tments
).

Ca s
hf l
owsf rom ope r
ati
nga cti
vit
iesincl
uderecei
ptsfoundc ust
ome r
s ,receipt
sf r
om sal
e stoot her
funds,payme nt
stos uppl
iersofgoodsors er
vices
,payme nt
stoe mployee sforservi
ces,payme nt
sf or
purchase
sfromot herfunds(incl
udingpaymentsinli
euoft a
xes),andotherope ra
ti
ngc ashr
e ce
iptsa nd
payme nt
s.Thetransacti
onsoftheTownofJ I
MMA’ sSuppli
esFundr ecordedinEnt ri
es6,7,and8a re
class
ifi
edasope rat
inga cti
vit
ie
sa ndarereport
edinthefirsts
e ct
ionoft heSt at
ementofCa shFl ows
(seeIl
lust
rat
ion7-4).Asr equir
edbyGASBs t
andar
dstheState
me ntofCa s hFlowsisaccompa nie
dby
areconcil
iat
ionofope rat
ingincomewiththenetcashfl
owf romope ra
tinga ct
ivit
ies.

Ca s
hflowsf rom non-capital financing acti
vit
iesincludeproce
edsf romde btnotclear
lya tt
ri
butabl
eto
acquis
iti
on,c ons
truction,ori mpr oveme ntofc apit
ala s
sets
;receiptsfrom grants
,subsidies
,ort axe
s
otherthanthoses pecific
a ll
yr e s
trict
edf orc a
pitalpurposesorthos eforspeci
ficoperatingac t
ivi
ti
es;
payme ntofinter
eston,a ndr epa yme ntofpr i
ncipalof,non-c
apit
a lfinanc
ingde bt
;grantsors ubsi
die
s
paidtoothergove r
nme nt
s ,funds ,ororga ni
zati
ons,exc e
ptpayme ntsforspeci
fi
cope ra
tinga ct
ivit
ie
sof
thegrantorgovernme nt.Thec ont r
ibuti
onf romt heGe nera
lFundt ot heSuppli
e sFundoft heTownof

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 158
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
JI
MMA( seeEnt
ry1)isr
epor
tedi
nt hecas
hfl
owsf
romnon-
capi
ta
lfi
nanc
inga
cti
vit
ie
sse
cti
onoft
he
St
ate
mentofCas
hFlows(I
ll
ust
rat
ion7-4)
.

Cas hflowsfr om capital and related financing activit

iesincludeprocee
dsofde btandr e
ce i
ptsf r
om
specialass
essme nt
sa ndt axesspe cifi
ca ll
ya tt
ributa
bl et oacquisi
ti
on,const
ruct
ionorimprove me ntof
capita
la sset
s;r e c
e i
ptsf r
om c a pit
a lgr ant
s;r eceiptsf rom thes al
eofc a
pit
ala s
sets
;pr oceedsof
insuranceonc apit
a lasset
st hata res t
ol enorde st
roye d;payme nt
stoa cqui
re,const
ruct
,ori mpr ove
capita
la ss
ets;pa yme ntofi ntereston,a ndr epayme ntorr ef
undingof,capit
alandr el
at
edf inancing
debt.Th etransac t
ionsoft heTownofJ IMMA’ sSuppl iesFundr ecor
dedinEnt r
ies2,3,a nd4a re
classi
fiedasc apita
la ndrelat
e dfina ncinga ct
iviti
esa nda rereporte
dinthatsect
ionoftheStateme ntof
Cas hFlows(I ll
us t
rati
on7- 4)
.

Ca s
hf l
owsfrom i
nvest
ingacti
viti
esincluderecei
ptsfrom col
lect
ionofl oa
ns;inte
restanddividends
recei
vedonl oa
ns,debtinst
rume nt
sofot herent
it
ies,equi
tys ec
ur it
ies,andc as
hma nagementa nd
invest
mentpool
s;rece
iptsfr
omt hesalesofde btorequit
yinstr
ume nt
s;wi t
hdrawalsfr
omi nvestment
poolsnotuseda sdemanda ccount
s;dis burs
ementsforloans;pa yme ntstoa c
quiredebtore qui
ty
inst
rument
s;anddeposi
tsint
oinvest
me ntpoolsnotusedasde manda c
counts.Noneofthet r
ansacti
ons
oftheTownofJ I
MMA’ sSuppl
iesFunddur i
ng2003areinthenatureofi nvest
ingacti
viti
es.

I
ll
ust
rat
ion7-
4
T OW N OF J IMMA
SUPPL IE S F UND
ST A T E ME NT OF C A SH F L OW S
F OR T HE Y E A R E NDE D DE C E MBE R 31, 2003
C ash flows from operating activities:
Ca
shrec
eivedfromc ust
ome r
s...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.$231,000
Ca
shpai
dt oemployeesforser
vices.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. (55,
000)
Ca
shpai
dt osuppli
ers.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
..
..
..
..
..
..
..
..(164,
000)
Netcashprovi
dedbyope rat
ingacti
vit
ies.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. $12,
000
C ash flows from non-capital financing activities:
I
nte
rfundtr
ansf
erfromGener
alFund.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 30,
000
Netc
ashprovide
dbynon-
capit
alf
inanci
ngacti
viti
es..
..
..
..
..
..
..
.. 30,
000
C ash flows from capital and related financing activities:
Adva ncefromWa te
rUt il
ityFund. ..
..
..
..
..
..
..
..
....
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 130,000
Pa r
ti
a lr
epa yme ntofa dva ncef romWa terUtilit
yFund. .
..
..
..
..
..
..
..
..
..
..
.. ( 6,
500)
Ac quisi
ti
onofc api t
alasse t
s..
....
...
...
..
..
..
..
..
..
..
....
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..(130,
000)
Netc ashus edf orca pi
ta landr el
atedactivit
ies.
..
..
..
..
..
..
..
..
..
..
..
..
.. (
6,500)
Net Increase in C ash and C ash E quivalents .
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 35,500
C ash and C ash E quivalents, 1/1/2003..
..
..
..
....
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. -
0-
C ash and C ash E quivalents, 12/31/2003..
..
....
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. $35,500

R econciliation of Operating Income to Net C ash

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 159
 Ac
coun
tingf
ort
heBus
ine
ss–TypeAc
ti
vit
ie
s

Provided by Operating A ctivities

Operat
ingI ncome. ..
..
...
..
...
..
..
..
...
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. $1,
750
Adjust
me nts:
Depreci
a t
ione xpens e
...
..
....
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 8,000
Inc
reaseinr eceivablesfromo therfunds..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. (
18,750)
Inc
reaseini nventory...
..
...
..
..
..
..
..
..
..
...
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. $69,
100
Less:c
o nt
r i
bute dinventory..
..
...
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 61,
500 (
7,600)
Inc
reaseinvou cherspaya bl
e..
...
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 28,600
NetCashPr ovidedbyOpe r
ati
ngAc t
ivit
ies.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. $12,000

E xternal F inancing R eporting of Internal Service F unds

Thef inancialstateme nt
spr esentedinI l
lus t
rations7- 2,7- 3,a nd7- 4s houldbepr eparedf ori nt
e rnal
ma na geme ntpur poses.Forexternal f inancia lr eporting pur pose s,t he Suppl iesf und f inancial
infor ma ti
onr eportedi ne ac
hoft hos es t
a t
eme ntswoul dber epor teda sas e
pa ratec olumnoft he
Sta teme ntofNe tAs s
e t
s–Pr opr i
eta
ryFunds ;St a te
me ntofRe ve nues,Expe nses,a ndCha nge sinNe t
As se ts–Pr opr i
e t
aryFunds ;a ndSt ateme ntofCa shFl ows–Pr oprietaryFunds ,e achofwhi c hi s
pre pa redfora llproprieta
ryfunds( seeI l
lus t
rat
ion2- 6,2- 7,a nd2- 8f ore xa mples).Int hegove rnme nt-
wi deSt ateme ntofNe tAssetsa ndStateme ntofAc ti
vities,i nte r
na lservic efundf i
nanc iali nforma ti
on
is“ c olla
ps ed”i ntothegove rnme nta
la cti
vi t
iesa ndr epor tedi nt hatc olumnofbot hgove rnme nt-
wi de
fina nc i
als t
ateme nts.Va r
iousre cl
assi
fications,e liminations ,a nda l
loc a
tionsma yber equi re dtoa voi d
wha tSt ateme ntNo.34r e
ferstoa s“ doubl i
ngup”–t ha tis ,r eportingi nternals er
vi c
ef undf inancial
infor ma ti
ononc ea spa r
tofthegove rnme nt a
la ctivit
iesa ndt he na gaina spa rtofinte r
nals e rvicefunds .
Asr ecomme nde dbyGASBSt at
ementNo.34,t hedisc ussi ont ha tfollowsa ssume st ha ta llint
e rnal
servi cef und t ransacti
ons oc curr
ed wi th gove rnme ntalf unds .I nternals ervicef und f inancial
infor ma ti
ons houl dber eport
e di nt hebus ine ss-t
ypea c tivitiesc olumnoft hegove rnme nt-
wi de
fina nc i
als t
a t
eme ntsonl yifa ne nt
erprisef undi sthepr edomi na ntpa rti
c i
pa ntint hei nter nals e
r vice
fund.

Tope r
mitrepor
ti
ngoft heTownofJ I
MMA’ sSuppl
yFunda c
ti
viti
esinthegove r
nmenta
lact
ivi
ti
es
cat
egoryofthegovernment-
wi definanci
als
tat
ement
sc er
tai
njournalent
rie
ss houl
dbema deinthe
gover
nmentalact
ivit
iesgeneraljournal
,onethatrecor
dstheba lanc
es heeteffe
ctsandonethat
el
iminat
esanynetincomerecognize
dbyt hei
nter
nals
ervi
cefund.

Thee ntrytorecordtheba l
anc
es heeteff
ectsinthegovernment
alactivi
ti
esgeneraljournalshoul
d
recordthechange dur
ingtheyea
rine achint
ernalse
rvi
cefundbalanc
es heeta
c c
ount.Beca us
ethisi
s
thef i
rstye
arofope r
ati
onoftheTownofJ I
MMA’ sSuppli
esFund,thejournalentr
yt or e
cordit
s
balancesheeti
nformati
on(SeeIl
lust
rat
ion7-2)si
mplyrecordst
heyear-
enda mounts
.

De
bit
s Cr
edi
ts
1. Ca
sh.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
..
..
..
..
..
..
..
..
.35,
500
I
ntr
a-a
cti
vit
ie
sBa
lanc
e..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..18,
750

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 160
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
I
nve
ntor
yofSuppl
ie
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.69,
100
La
nd.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..25,
000
Bui
ldi
ngs
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
..
..
..
..
..
..
..
..
..
70,
000
Ma
chi
ner
yandEqui
pme
nt.
..
.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.35,
000
Al
lowa
ncef
orDe
pre
cia
ti
on–
–Bui
ldi
ng.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
..
.. 3,
500
Al
lowa
ncef
orDe
p–Ma
chi
ner
y&Equi
pme
nt.
..
..
..
..
..
..
..
..
..
..
.
..
..
.. 4,
500
Vouc
her
sPa
yabl
e..
..
..
..
..
..
..
..
..
.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 28,
600
I
ntr
a-a
cti
vit
ie
sBa
lanc
e..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
..
..
. 18,
750
Cur
rentPor
ti
onofLong-
ter
mLi
abi
li
ti
es.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 6,
500
I
nte
rfundLoa
nfr
omBus
ine
ssAc
ti
vit
ie
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 117,
000

I
nc ompari
ngEntr y1toTownJ I
MMASuppl iesFundBa l
anceShe et(I
ll
ustr
ati
on7-2),onewi llnot e
t
hattheamounts howna sDuef r
om Ge ner
alFundi nthebalancesheetisdebit
edtoIntra-activities
Bala
nceinEntry1,a namountthatwillbeoff
setbyc r
edi
tinthes ametotala
mountt oInt
ra-activities
Bala
nceatthegovernment-
widelevelwhenexpenseswererec
or dedforpr
iorbil
li
ngsfromthei nter nal
ser
vicefund.Thisi nt
erf
undreceivable
/l
ia
bil
ityha snone te ff
ectont hegovernme nt
ala ctivities
col
umna sbotht heGe nera
lFunda ndtheSuppliesFunda repa rtofthegove r
nme nt
ala ctivities
cat
egory.

Althoughi tma ynota ppa r ent,unl e

s sa ddi
tionala dj
us t
me ntsarema det heba l
anceofCa sha nd
InventoryofSuppl i
eswi l
lbeove rsta t
eda tthegove rnme nt-
wi delevel
.Whyi st
hisc as
e ?Ther eas onis
thatthei nt
erfundt ransferf rom t heGe neralFundt ot heSuppl iesFund( seeillust
rati
vet ransac t
ion
Entry1e a
rli
e rint hisc ha pter)ha snoe f
fecta tthegove r
nme nt-
wi del evelsincebot hfundsa r
e
consideredtobegove r
nme ntala ctivit
ie s
.Thus ,theinterfundt r
ansfe
rdi dnotr esultinane tr
e duc t
ion
ofCa sha ndI nventoryofSuppl iesa tt hegove rnment-widel evel
.Ac cordingly,cashint hea mountof
$30,000a nds uppliesinthea mounto f$61, 500mus tbee li
mi nat
edore l
set heywi l
lbec ounte dt wice
atthegove rnme nt-widele ve l
.Si mi larly,alt
hought hei nte
rfundtransferinc r
ease
dt heunr estr
ictedne t
asset
soft heSuppl iesFundb y$91, 50 0,ithadnoe f
fe c
tont hene tassetsofgovernmental activities a
t
thegove r
nme nt-widel eve l
.Ass howni ntheTownofJ IMMA ope r
atings t
ateme ntpr es
e ntedi n
Ill
ustra
tion7- 3,theI nt
erfundTr ans fe
rsI nf r
om theGe neralFundi salsor eport
eda sac ompone ntof
“netincome ”or ,mor eforma lly,change in net assets.Asj ustdiscusse
d,t hiscompone ntofc ha ngei n
netas s
etsha snoe ffectatt hegove rnme nt-widelevel.Ther equire
dj ournale nt
ryi nthegove rnme nta
l
acti
viti
esge neraljournaltoe l
imi natet hee ff
ectsofthei nte
rfundtransferis:
De
bit
s Cr
edi
ts
2. Ne
tAs
set
s–Unr
est
ri
ct
ed.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 91,
500
I
nve
ntor
yofSuppl
ie
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 61,
500
Ca
sh.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 30,
000

Anothercomponentofthechangei
nne ta
sset
sthatmustbee l
imi
nate
distheope ra
ti
nginc
ome,shown
as$1,750inIl
lust
rat
ion7-3.Elimi
nat
ionofthesecompone nt
spre
ventsdoublecount
ingofnetas
set
s
att
hegove r
nme nt
-widelevel
.Asgovernment
alfundspurchases
uppli
esthroughoutt
heyearf
ormthe

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 161
 Ac
coun
tingf
ort
heBus
ine
ss–TypeAc
ti
vit
ie
s
int
e r
na ls ervic
ef und,t hepur chasesa r
er e
cordeda se xpendituresoft hegove r
nme ntalf unda nda s
directe xpensesoft hea ppropr i
atefunc t
ionsatthegove rnme nt-widel eve l.Be causeope ratingi ncome
result
sf r
om bi l
li
ngst hatexce e
dt hei nte
rnalservic
ef und’sope r
atingc os ts,thec ostoff unc t
ions( or
progra ms)a tthegove rnme nt-widel evelwoul dbeove r
statedi ft heope rati
ngi ncomewe renot
eli
mi na t
edf r
om thea mountsbi ll
ed.I fsubsta
nce ,t
hee liminationofc ha ngei nneta s
se t
sa djuststhe
int
e r
na ls ervicef undi nforma t
iona st hegove rnme ntalfundspur c
ha sedt heirowns uppl i
e sfrom
externals our c
eswi t
houtus inga ni nter
nalse r
vicef und.Or ,vi ewe da lternati
vely,thee limina t
ion
presentst heinternals er
vicef undf i
na nci
alinfor
ma ti
ona sift hef undope rate donabr e ak-eve nba sis
,
justcove ringi t
sa ccrualba s
isope ratingcosts.Entry3gi vest hej ourna le ntryne ededtor emovet he
ope r
atingi ncomee ff
ec t
soft heTownofJ IMMA’ sSuppl i
esFund,a s
sumi ngapa rti
culara ll
oc ati
onof
functionsa tthegove rnme nt-
wi del e
ve l:
De
bit
s Cr
edi
ts
3. Ne
tAs
set
s––Unr
est
ri
ct
ed.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
1
..
,
.
7.
.
5.
.
0.
..
.
Expe
nse
s––Ge
ner
alGove
rnme
nt.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 175
Expe
nse
s––Publ
icSa
fet
y..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 525
Expe
nse
s––Publ
icWor
ks.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 700
Expe
nse
s––Pa
rksa
ndRe
cre
ati
on.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 263
Expe
nse
s––He
alt
handWe
lfa
re.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
..
..
. 87

NotethatEntr
y3a ff
ect
sonl ythegove r
nme nt
-widefinanc
ialsta
tements;expendi
tureswouldbe
r
eport
edi nthegovernmentalfundsState
me ntofRe venues
,Expe ndit
ure
s,a ndCha ngesinFund
Bal
ancesfort
hefullamountbil
ledbytheSupplie
sFund.Ther eade
rshouldalsonotet
ha tanyint
erna
l
se
rvi
cefundope r
ati
nglosswoul dhavetheoppos i
teef
fect
;itwouldi nc
reasethedir
ecte xpe
nsesof
f
uncti
onsandnetasse
tsatthegovernment
-widelevel
.

Af t
erthee l
imina
ti
onsi nentr
ies2a nd3a r
er ecor
de d,onlyc as
hi nthene tamountof$5, 500and
suppli
esinthea mountof$7,600r el
at
edtot r
ansac
tionsoft heinter
nalservi
c efundarereport
edas
addit
ionstothosea c
countsatthegovernment-
widel evel
.Interes
ti
ngly,duringthecost2003f i
scal
yeartheope r
ati
onsoft heSuppli
esFundhavenoe ffe c
tonne ta s
set
sa tthegove r
nment-
wi dele
vel.
Thisisa ppar
entfrom thefactthatt
he$93,250c r
edittoNe tAsset
s–Unr e s
tri
ct
edinEnt ry1( a
s
report
edintheSuppliesFundBa la
nceSheet
)iscompl etel
yof f
setbythede bi
tsof$91,
500i nEntry2
and$1,750inEntry3.

Ifaport
ionofa ninte
rna lservi
cefund’sope
rat
ingi ncomer es
ult
sf r
om bil
lingstoe nt
erpr
isesfunds
,
Stat
ementNo.34’ sr equirementtor epor
tinternals er
vicef und fi
nanc i
alinformati
on int he
gover
nme nt
alacti
vit
iesc at
egorytendstounderst
a teunrestr
ict
edne tassetsintha tcate
gorya nd
over
sta
teunrest
ric
tedne tasset
sint hebusine
ss-t
ypec a
tegory.Usuall
yt hiseffe
c tshouldnotbe
mater
ial
,part
ic
ularifthei nt
ernals
ervic
efundpric
ingi ssettocoverappr
oxima te
lythefullcostofit
s
oper
ati
ons.

Beca
useinte
rna
lse
rvic
efundfina
nci
alinf
ormati
onisrepor
tedinmostc
ase
si nthegover
nment
al
ac
ti
vit
ie
sc ol
umnofthegove
rnment
-wi
definanc
ials
tat
ement
s,thef
ina
nci
ali
nformat
ionre
port
edi
n

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 162
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
thebus i
nes s
-typea cti
viti
esc olumnwi llusuallybet hatfore nt
e rpr
isefundsonly.I fthisistheca se
,
ther
ei snone edtoma i
ntainas epar
atesetofa ccountingre cor
dsf orthebusiness
-typea ct
ivit
iesatthe
gove rnme nt-wi delevel.Ra t
he r
,thef i
nancialrecordsoft hee nter
pris
ef undsc ans implybea dde d
togethe rforf inanci
a lreport
ingpur posesatt hegove r
nme nt-
wi delevel.Anyi nterfundtransac
tions
betwe ene nt
e rpri
sef undswoul dbee liminateda st heywoul dha venone te f
fectont heove ral
l
busine ss-
typea ct
ivi
ties.Enterpri
sefunda c
c ounti
nga ndfinanci
a lreport
inga r
ediscus se
dl at
erinthis
chapte r.

A ssets A cquired under L ease A greements

Theacquis
it
ionofgeneralcapit
alas
set
sunderleas
ea gr
eement
sisdi
scusse
dinCha pt
er5.Asset
sfor
usebypropri
etar
yfundsma ya l
sobeacqui
redunderlea
seagre
ement
s.Thec r
it
eri
asetfor
thinFASB
SFASNo.13( t
hesecri
te
riaa r
eite
mizedinChapter5)areuse
dtodeter
minewhe t
herthele
asei
sa n
oper
ati
ngleaseoracapi
tall
ea s
e.

As set
sa cquiredunde ra nope r
atingl easebe l
ongt ot hele ss
ora ndnott obei nter
na ls er
vicef und;
accordingly,thea nnua lleas
epa yme ntisre cordeda sar entalexpe nseoft hei nternalse rvicefund,a nd
thereisnode pre ci
a ti
one xpenseont hea ssetsa cqui re
dunde ra nope r
atingl ea seagr eeme nt.As sets
acquiredunde rac apit
alleaseagre ementsbya ni nternalservicef und,ora ne nterpris
ef und,s houldbe
capital
izedbyt hatf und.Thea mountt ober ec
or de dbyapr opr ietar
yf unda st hec os toft hea ssets
acquiredunde rac apitallea
se,anda sther elat
edl i
a bil
it
y,ist hel esserof( a)thepr esentva lueoft he
rentalandot hermi nimum l eas
epa yme nt
sor( b)t hef ai
rva lueoft hele asedpr operty.Thea mount
recordeda sthec ostoft hea s
seti samor t
iz edinama nnerc onsistentwi tht hegove rnme nt’snor ma l
depreciat
ionpol icyf orowne da ssetsofpr opr i
et
a ryf unds.Thea mor tizat
ionpe riodisr estr
ictedt othe
leasete r
m,unl esst hel ease(a)pr ovidesf ortra nsfero ft i
tleor( b)i nclude saba rgainpur c
ha se
operati
on,i nwhi chc asethee c
onomi clif
eoft hea ssetbec ome st hea mor t
izationpe riod.Dur ingthe
leaseterm,e a c
hmi ni
mum l easepa y mentbya ni nt er
nals er
vicef undi stobea l
loca t
edbe t
we ena
reducti
onoft heobl i
ga t
ionundert heleasea nda si nterestexpensei nama nne rtha tproduc esac onst
a nt
periodi
cr a t
eofi nterestont her emainingba lanc eoft heobl igati
on.Thi sa ll
oca t
iona ndot he r
compl exit
iestha tariseinc ert
aine ventsar ede scribe dandi ll
ustratedi nva riouspa r
agr aphsofSFAS
No.13a ndi nma nyi ntermediatea ccountingt exts.The sec ompl e xit
iesa r
ebe yondt hes copeoft his
text.

Internal Service F unds with Manufacturing A ctivities

TheSuppl iesFundoft heTownofJ IMMA,f orwhi chjournalentri
esa ndst
atementsa r
eill
ust
rat
edina
prec edingse ct
ionoft hischapte
r,isres
ponsibleforpurchasi
ng,s t
oring,andissuingsuppli
esusedby
othe rfundsa nddepa r
tme nt
soft hetown.Ma nystat
esandl ocalgovernmentalunitshavefundssi
mila
r
tot hatoft heTownofJ IMMA.I tisa l
soc ommont of i
ndpr int
ings hops,asphaltplant
s,orother
serviceuni tsthatproduc eaphys i
calproduc
tt obeusedbyf undsa nddepartments,orthatfa
cil
it
ate
s
theope ra
ti
onsoft heot herfundsanduni t
sbype r
formingma intenanceorrepairjobs,orevenperf
orm
atempor aryfinanci
ngf uncti
on.

I
fanint
ernalservi
cefundper
for
msac ont
inuouspr
oce
ssmanuf
actur
ingoper
ati
on,i
tsac
count
ing
s
yst
em should provi
de pr
oce
ssc os
taccounts
.Ifa ser
vic
ef und per
for
msa ma nuf
act
uri
ng,
Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 163
 Ac
coun
tingf
ort
heBus
ine
ss–TypeAc
ti
vit
ie
s
ma intenance,orre pai
rope r
ati
ononaj ob-or
derbasi
s,t
hef und’sacc
ounti
ngs yst
ems houldprovide
appr opri
atejob-ordercostaccount
s.Tot heexte
nttha
toperati
ons,pr
oces
s e
s,oracti
viti
esarecapable
ofbe i
ngs t
anda r
dized,costst
andardsf orma t
eri
als
,di
rectla
bor ,a
ndoverheadshouldbee s
tabl
ish;in
suchc ases
,t hea ccount
ings yst
ems houldprovideforther out
inemea s
urementa ndreport
ingof
significa
ntva ri
ancesfromthes t
andards.

Internal Service F unds as F inancing Devices

Gove r
nme ntaluni t
sma yutili
zei n ternals ervic
ef undsa sde vice st of ina ncer iskma nage ment,
equi pme ntpur chasesandope ra
ti
ons( includingc entral
iz edcomput e rope rations),andot he rfuncti
ons
tha ta refac i
lit
atedbyge nerat
ingr e
ve nue sfromus ercha rgestocove rc ostsa nde xpe nsesc omput edon
af ul lac cr
ua lbasis.Inthec aseoff un dstof inancee quipme ntpur cha sesa ndope r
a t
ions ,includingthe
ope ra t
ionsofc omput ersowne dbyt hegove rnme ntaluni t,ani nter nals e r
vicef undc a ni ncl
ude
de pre ciat
iona nd,pe rhaps,expectedi ncrease si
nt hec ostofr epla
c i
nga ssets,int hec harget ot heus i
ng
funds–t husi ncorporatingthesec os tsinc ur
r e
nta ppr opri
ationofgove rnme ntalfunds ,r atherthan
budge tingt heestima t
edc ostofequip me nte xpectedtober epl
a ce
d.I fi nterna lse r
vicef undsa r
eus edto
fina ncee quipme ntpur chasesa nd ope rat
ions,t herefore,thea ppr opr iat
ionsa nd e xpe ndituresof
gove rnme ntalf undsmor ene arl
ya ppr oxima t
ec os t
st ha twouldber eporte dbye nti
tiesus i
ngf ull
ac crua laccount i
ngt hani st
rueunde rt hepr oceduresdi s
c ussedinCha pt er3a nd4.

GASBha sissueda c
c ountinga ndf i
na nc i
alreporti
ngs tanda r
dsforriskf i
nanc inga ndr el
atedi nsurance
acti
vit
ies.Gove r
nme nte ntit
iest ha tus einternals e
rvicef undstoa ccountf orr i s
kf i
nanc i
nga ct
iviti
es
arerequiredt orecognizer eve nue sa ndc lai
mse xpensesa ndl i
abil
it
iesi nesse ntiallythes amema nner
aspublice nt
ityriskpool s( coope rati
vegr oupsofgove rnme nt
alentitiesjoint edt oge t
he rtof inance
ris
ksofl osst o property,wor kers ’c ompe nsati
on,e mployeehe al
thc ar
e ,a nd s imilarr isksor
exposures).Br i
efl
y,t hei nternals er vic
ef unds houl dr ecognizecla
imse xpe ns ea ndl iabili
tywhe na
clai
mi sa ssert
ed,itisproba blet hata na ssethasbe eni mpa ir
edoral iabil
ityha sbe eninc urre
d,a ndt he
amountoft helossisr ea
s onabl ye stima ble
;ori fane sti
ma bl
elosshasbe e
ni nc urre dandi tispr obable
thatac laim wi l
lbea sserted.Re as onablypos sible(butnotpr obable)los sc ontingenc i
es,pr obable
loss
estha ta r
enotr easona blyme as urable,andl ossexpos ureine xcessoft hea ccrue dliabil
itys hould
bedisclosedi ntheNot est ot heFi na ncialSta t
eme nts
.Thedi scl
osures houlde xpla i
nt hena tureoft he
conti
nge ncya ndane s t
ima teoft hepos siblelossorr angeoft heloss,oras tate me nttha tthea mounti s
notesti
ma bl e
.

Inter
nalservicefundc ha rgestootherfundsf orr i
skfina ncinga cti
viti
ess houldbes uffi
c ientt orecove r
thetotalamountofc l
a i
me xpensesrecogni zedfort hepe r i
odor ,al
ter
na ti
ve l
y,ma ybeba sedona n
actuari
alme t
hods ot hati nt
ernals e
rvicef undr evenue sa nde xpensesove rt i
mea rea pproxima tel
y
equal.Charge stoot herf undsma ya ls
oinc ludear easona blepr ovisi
onf orexpe ct
edf utur ec at
a s
trophe
losse
s.Inte
r nalservicef undc hargestoot herf undsar er ec
ogni zeda srevenue sbyt hei nternals e
r vic
e
funda ndase xpe ndituresbygove rnmentalf undsore xpens esbypr oprietar
ya ndnone xpe nda bl
et rust
funds.Int
erna lservicef undc hargesine xc e
s softhef ullc osta mountde termineda sa boves houldbe
report
eda sa not herf inanc i
alsourcebyt hei nt
ernals ervicef unda nda not herfi
na nc ingus ebyt he
otherfunds.Ifthei nterna lser
vicefundfa i
lst orecovert hef ullcostofcla i
msove rar ea sona blepe ri
od

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 164
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
oft
ime
,theaccumula
tedfunddef
ici
tshoul
dbec
har
gedt
otheot
herf
undsa
ndr
epor
tedbyot
herf
unds
asa
nexpendi
tureore
xpense,a
sappropr
iat
e.

Dissolution of an Internal Service F und

Whe na ni nternalservic ef un dha sc ompl et
edt hemi ss i
onf orwhi chi twa se stablishe d,orwhe nit
s
activityi st ermi nat
edf ora nyot herr ea
son,di ssolutionmus tbea cc ompl ished.Li qui da tionma ybe
accompl ishe dina nyoneoft hreewa ysorinc ombi na tionst hereof.Thet hreewa ysa r e
:( 1)t ransferof
thef und’ sa ssetstoa nothe rf undt hatwillcont inuet heop era t
iona sas ubs i
diarya ctivity,f ore xampl e,
as uppl yf undbe comingade part
me ntoft heGe ne r
a lFund;( 2)di st
ribut i
onoft hef und’ sa ss e
tsi nkind
toa not herf undort oa nothe rgove r
nme ntaluni t;(3)c onve rsionofa llitsnon- casha ssetst oc a s
ha nd
distributionoft hec a
s ht oa notherf undorot he rf unds .Di s
s olutionofa ni nternalse r
vi cef und,a sfora
priva tee nterprise,woul dpr o c
e e
dbypr iorpa yme nt stoo utsidec reditors,fol l
owe dbyr epa yme ntof
long- termi nte
rfundl oa nsnotpr eviousl
ya mor ti
z ed,a ndf ina ll
y,liqui dationofr ema i
ni ngne ta sse
ts.
Thee nt i
repr oc essofdi ssolut i
ons houldbec onduc teda ccor dingtope rti
ne ntlawa ndt hedi scre t
ionof
thea ppr opr iat
el egi
slativebody.Ne ta ss
etsc ont ri
but edbya notherfundorgove rnme ntaluni t,butl aw
orot he rre gulati
onsma ydi c tateothe r
wise.Ifne tas setsha vebe enbui ltupoutofc ha rge sine xcessof
costs,t henl iquidati
onwi llf oll
owwha te
ve rregul ationsma ygove rnt hec a se
;a ndi fnote xist
,t henthe
appr opr i
ategove rni
ngbodymus tde ci
dedont her ec i
pie ntorr e c
ipients.

7.4) E nterprise F unds

Enterprisef unda ndi nte rnals e rvic ef undsa r
ebot hc l
a s
s if
iedbyt heGASB a spr opri
e tar
yf unds,
alt
hougha sdi s
cus sedpr e vious ly,i nterna ls ervicef undf ina nc i
alinforma t
ioni sr eportedaspa r
toft he
gove rnme ntalac t
iviti
e sc ategor ya tt hegove rnme nt-
wi del evel.Whe reasi nt e
rnals ervicef unds,
discussede arl
ierint hisc ha pter,a reus e dpr i
ma ri
lyt oa ccountf ors ervicespr ovi dedbyonede par
tme nt
orage ncyofagove r
nme nt aluni ttoo the rde partme ntsora ge ncie
soft hes a megove r
nme nt ,ente
rpr i
se
fundsa reus edbygove rnme ntaluni tstoa ccountf ors ervice sprovide dt ot hegeneral public onaus er
charge sba si
s.Unde rt heGASBSt ate me ntNo.34mode l
,agove rnme ntaluni tmus treportce rt
ain
acti
vitiesina nent erpr
is ef undi ft hef ol lowi ngc rite
r i
aa reme t.
1. Thea cti
vi tyisf ina ncedwi thde bttha tiss ecur dsolely byapl
e edgeoft her e
ve nuesf romf ees
andc harge sofa na cti
vi ty.[ Empha sisadde dbya uthor s.]
2. La wso rr egulationsr equi ret ha tt hea cti
vity’sc ost sofp rovi dings er
vi ces
,i ncl
udi ngc apit
al
costs(suc ha sde pre c
iationo rde bts ervice),ber ecove re
dwi thf e
e sa ndc harges,r at
hert han
wi t
htaxe sors imi larre ve nue s.
Thes ec r
iteri
aa r
equi t
es pe cif
icr ega r
di ngwhe na ne nt e
rpris efundmus tbeus ed.Fore xampl e,i
fde bt
isissuedt hatisa l
soba cke dbyt hef ul lf ai
tha ndc reditoft hegove rnme nt aluni t
,e vent houghi tis
int
ende dt ober e pa i
df rom r eve nue sofapa rt
iculara cti
vi t
y,t hata ctivityne ednotber epor t
edi na n
enterpris
ef und.Si mil
a rly,i fa na ctivityi ss ubs i
dize dbyagove rnme ntaluni t’sGe neralFun,r ather
thanf ullyc overingi tsc ostsofpr ovidi ngs erviceswi t
hf ee sorc ha rge s
,t ha tacti
vi t
yne ednotbe

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 165
 Ac
coun
tingf
ort
heBus
ine
ss–TypeAc
ti
vit
ie
s
r
eport
edinanent
erpri
sef
und.Inei
the
rofthe
see
xampl
es,howe
ver
,thegove
rnme
nta
luni
tcoul
dopt
t
oreportt
heac
ti
vit
iesi
nanente
rpr
isef
und.

From thisde s
cript
ion,andfrom t
hef actthatthewordenterprise i
softenus
edasas ynonym for
“business
-typeac t
ivi
ty,
”itisappa
rentthate nte
rpr
isef
undss houldus eful
lacc
rua
la c
counti
nga nd
accountfora l
la ss
e t
susedintheproducti
onofgoodsors ervicesoffere
dbythefund.Simil
arl
y,if
l
ong- te
rmde btistobeservi
cedbythefund,itisacc
ount
edforbyt hefund.

Themos tcommone xampl esofgove rnmenta

le nter
prisesa republ
icuti
li
ti
e s
,notablywa te
ra nds ewer
uti
lit
ies.Ele ct
rica ndga sut i
lit
ie
s,t ra
nsport
ations ystems ,air
port
s,ports,hospital
s,tollbr i
dge s
,
producema rket
s,pa rkinglot s
,pa r
kingga r
ages,l i
quors tore,andpubli
chous i
ngpr oj
ectsa r
eot her
examplesfre quentl
yf ound.Se rvic
esoft hekindsme ntioneda regener
all
ya ccounte
df orbye nterpri
se
fundsbe ca
us ethe ya r
ei nte
nde dtobel argel
ys elf-
supporting.However,theya r
epr oper
lya ccounted
forbyage ne ralors pecialrevenuefundbyt hosegove rnme ntsthats
upporttheacti
vitie
slargelyf r
om
generalors pecialrevenues ourcesotherthanus erchargesa nda r
enotconce r
nedwi thme asur
ingt he
costsofthea cti
viti
es.

Almos te ver yk indofe nter

pr i
seope r
ate
dbyagove rnme nthasitsc ounterpartint hepr ivat
es ect
or.I n
ordert ot akea dva nta
geoft hewor kdonebyr egul at
orya genciesa ndt radea ssoc i
a t
ionstode velop
usefula c c
ount ingi nf
or mati
ons yst
emsf ort hei nve s
tor-ownede nterpri
ses,it is recommended that
governmentally owned enterprises use the accounting structures developed for investor-owned
enterprises of the same nature. Budge tarya c c
ount sshouldbeus edonl yi fr equiredbyl aw.De bt
servicea ndc onstructi
ona ctivatesofagover nme ntalenterpri
searea c
c ountedforwi thi
nt heenterprise
fund,ra thert hanbys epa r
atede btser
viceandc apit
a lproject
sfunds .Thus ,thef inanc i
als t
at
eme ntsof
enterprisef unda res elf-
contained;andc reditors
,l egisl
ators
,ort hege neralpubl icc ane valuat
et he
performa nceofagove rnme ntalenter
pri
seont hes ameba se
sa sthe yc anthepe rforma nc eofinvestor-
owne de nt
e rprisesi nthes amei ndustr
y.Byf arthemos tnume r
ousa ndi mportante nte r
pris
es er
vic es
renderedbyl oca lgove r
nme ntsa republ
icut il
iti
es.Int hischapter,the re
fore,thee xa mpl eusedistha t
ofawa terut ili
tyf und.

7.5) Illustrative C ase: W ater Utility F und

TheBa l
a nc
eShee ta
sofDece
mbe r31,2001,fort
heTownofJ I
MMAWa te
rUtil
it
yFundi sshownin
Il
lust
rat
ion7-5.Whilet
heBalanc
eShe etappe
a r
sfai
rlyconvent
ional
,te
rminol
ogypecul
iartoutil
it
ie
s
wa r
rant
sdiscus
sionpri
ort
oproceedi
ngt otheill
ust
rat
ivetr
ansact
ionsfort
heyearendi
ngDe ce
mbe r
31,2002.
C urrent and A ccrued A ssets
CashandMa te
rial
sandSupplie
ss howni nIll
ust
rat
ion7-5intheCur r
e ntandAc cruedAs set
ss ec
tion
ar
enotpeculi
artouti
li
ti
esandnee dnotbedi s
cuss
edhe r
e.Theothertwoa ssetaccountsinthi
ss ec
tion
–CustomerAccountsRecei
vabl
ea ndAc cruedUti
liti
esRevenue
s–a r
er el
ated.Thef ormerrepres
ents
bi
ll
ingstocust
ome r
sthatareoutsta
ndinga tyea
r-end(andarereduced,asonewoul dexpect,bya n
Accumulat
edPr ovi
si
onf orUncollect
ibl
e).Thel att
erres
ultsfr
om t hef actthatut i
li
ti
esge nera
lly
pr
eparebil
li
ngstocust
ome r
sont heb a
sisofme t
erreadi
ngs,anditisnotpr a
c t
ica
lf oruti
li
tie
st oread
Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 166
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
a
llme t
erss
imul
ta
neousl
yatyea
r-endandbillal
lcust
omersasoftha
ttime.Ut
il
it
ie
stha
tme t
ert
hei
r
s
ervic
ema keext
ensi
veuseofc ycl
ebill
ing,which,i
ns ubs
tanc
e,consi
stofbil
li
ngpar
tofthei
r
c
ustomerse
achdayi
nste
adofbi
ll
ingbycalenda
rmonths.

Underthispl an,me t
errea di
ngi sacont i
nuousda y- by-
da yope r
ation,wit
hbilli
ngsf oll
owings hortl
y
aft
erthefil
ingoft heme t
e rreaders
’reports
.Individua lme t
ersarereadona ppr
oximate l
ytheda meda y
eachmo nth,ore veryothe rmonth,inor derthate achbillc over
sa pproxi
ma t
el
yt hes amenumbe rof
daysofusa ge.Cyc l
ebil
linge l
iminate
st hehea vype akloa dofa c
countingandcler
icalwor kthatresult
fr
om uni f
or m billingonac ale
ndarmont hba si
s.I tdoe s,howe ver,res
ultinas iz a
blea mountof
unbil
ledr ecei
va blesona nygivenda te,thusr e quiri
nga ccr
ualofunbi ll
edr ece
iva bl
es( Accrued
Util
it
iesRe venue s,inre
gul at
oryt e
rminology)a soft hefinancia
lstatementdat
einor dertostat
ea sset
s
andsalesprope r
ly.

R estricted A ssets
Thes ec
tionbelowCur r
enta ndAc cr
uedAs s
etsinIllus
trat
ion7- 5i
sc apt
ionedRe st
ric
tedAs se
ts,the
capti
onmos tcommonl yus edwhe ntheuseofassetsisrestr
ict
edbyc ontrac
tualagreement
sorl egal
requi
reme nt
s.Somegove rnme nt
sthatuseregul
atoryterminologyreportres
tri
cte
da sset
sofut i
lit
ies
underthebr oadercapt
ion,Ot herProper
tyandI nvest
me nts.Othe
rPr opert
ya ndI nvest
me nt
sma y
incl
ude,ina ddit
iontor estr
ict
eda s
sets
,thec a
rryi
ngva l
ueofpr opertynotbe i
ngus e
df orutil
ity
purpose
sorbe inghel
dforf utur
euti
li
tyuse.

Casha ndI nvestme nt

sa retheonl ytwoi t
emsr eport
edunde rt heRe strictedAs set
sc aptionoft he
balancesheetshowni nI ll
ustra
tion7- 5.Thos ei temsa rerestr
ict
edf orreturnofc us
tome rdepos itsand
forreti
rementofr evenuebo ndspur sua nttot hebondc ovenants.Thea mountofa ssetsse grega t
ed,
$562,600,isof f
setbyl iabi
li
tiesc urr
e ntl
ypa ya blef r
om restri
cteda ss
ets( inthec aseoft heTownof
JIMMA,Cus t
o merDe posi
tsof$23, 700)a ndr estri
cti
onsofne ta ss
ets( i
nt hiscase,re s
trict
e df or
payme ntofde btservi
c e,$538,900).Thi sfundwi thinaf unda pproachpe rmit
ss egregat
ionofa ssets
,
rel
atedl i
abil
it
ies,a ndr est
ri
c t
edne ta sset
swi thinas i
ngl eenterpri
sef und.Ne ta sset
ss houldbe
rest
rict
edint hea mountoft hene tas s
e t
sofe achr estr
icted“ f
und”wi thintheEnt e r
priseFund,a s
showni nIll
ustrat
ion7- 5.Otheri t
emsc ommonl yr eport
edi nRe s
trict
edAs set
si ncl
udea sset
ss eta side
tof undde precia
tionf orc apit
ali mpr oveme ntsorgr a
ntsa ndc ont
ribut i
onsr est
rict
edf orc a pi
tal
acquisi
ti
onori mpr ove

Utility Plant
Utili
tyPl a
nti nSe r
vicei sac ontrola c
count,suppor te
di nwhateve rdetai
lisr equire
dbyr e gul
atory
agenc i
esandbyma na geme ntneeds.Fore xample,wa teruti
li
ti
esc ommonl yha ves i
xs ubcategorie
sof
planta sset
s:i nt
angible pl a
nt,s ource ofs upply pl ant
,pumpi ng pl a
nt,wa tertrea t
me ntpla nt
,
tr
ansmi ssi
ona nddistribut
ionpl a
nt ,andge nera
lpl ante ac
hoft hes ixsubcategoriesiss upportedby
appropriat
es ubsi
diar
ya ccounts
.Fore xample,intangiblepla
ntc onsis
tsoft hec ostsofor ganizat
ion,
fr
anc his
esa ndc onsents,anda nyot herintangiblec ost
s“ ne
cessarya ndva luableint hec onductof
uti
lit
y ope rat
ions.
” Sour ce sofs upply pla
ntc onsist
sofl and a nd land r ight
s;s truct
ur esa nd
improve ments;col
lectinga ndimpoun dingreservoir
s;lake,ri
ver,a ndotherintakes;we llands pri
ngs;

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 167
 Ac
coun
tingf
ort
heBus
ine
ss–TypeAc
ti
vit
ie
s
infi
lt
rat
iongaller
iesandt unnels;supplyma ins;andotherwa t
ersourceplant
.Ea c
hoft hea ccount
s
withi
ne a
chs ubcat
egoryi ss upportedbyne ce
ssar
ys ubsi
dia
ryre c
ordsfore a
c hi ndi
vidualasset
detai
li
ngi tsdescri
pti
on,l ocati
on,c ost
,da teofa c
quisi
ti
on,est
ima t
edus ef
ullife
,s al
va gevalue,
deprec
iati
onc harges,anda nyothe rinforma ti
onne e
dedf orma nagementplanninga ndc ontr
ol,
regul
atoryage
nc yrepor
ts,financi
alstat
eme nt
s ,orspe
cialr
eport
stocredi
tor
s.
Illustration 7-5
T OW N OF J IMMA
W A T E R UT IL IT IE S F UND
ST A T E ME NT OF NE T A SSE T S
A S OF DE C E MBE R 31, 2001
A SSE T S :
Curr
enta ndAc cruedAs s
e ts
:
Ca sh...
..
..
...
....
..
....
..
...
....
..
...
...
..
..
...
....
...
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. $126,
000
Cus tome ra ccou ntsre ceivable.
...
....
...
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
$69,
000
Le s
s :Acc umul a te
dpr ovisionforunc ol
lect
ibl
e..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 2,
900 66,
100
Ac cruedut ilit
iesre venue s...
..
..
...
....
...
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 14,
800
Ma terial
sa nds upplies .
..
...
...
..
..
...
....
...
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 28,
700
Tota
lCur renta ndAc c
rue dAs set
s..
...
....
...
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. $235,
600
Rest
rict
edAs sets:
Ca sh...
..
..
...
....
..
....
..
...
....
..
...
...
..
..
...
....
...
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 6,
600
Inve st
me nts. ..
...
..
....
...
..
....
..
..
..
....
...
...
....
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 556,
000 562,
600
Uti
li
tyPl ant:
Ut i
lityplanti ns ervice..
....
...
..
..
...
....
...
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 3,
291,
825
Le s
s :Acc umul a te
dde pre c
iati
on. ...
..
....
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 440,
325
Ut i
lityPlant–Ne t...
...
..
....
..
..
..
....
....
..
....
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 2,
851,
500
Cons tructi
onwo rki npr ogress...
....
..
....
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 125,
000
NetUt il
ityPl a
nt .
....
...
..
....
..
..
..
....
...
...
....
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 2,976,500
TotalAs sets. .
...
..
....
...
..
....
..
..
..
....
....
..
....
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 3,774,700
L IA BIL IT IE S
Curr
entLi abili
ties:
Ac countspa yab l
e....
...
..
....
...
..
..
...
....
..
....
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 33,
200
Cus tome ra dvan cesf orc onstr
uc ti
on. ...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 21,
000
Tota lCur r
e ntLi abili
ties .
..
...
..
..
...
....
...
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 54,
200
Lia
bili
ti
e sPaya bl efromRe stri
ctedAs sets:
Cus tome rde pos it
s...
....
..
...
...
..
..
...
....
...
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 23,
700
Long-TermLi abilit
ie s
:
Re
venuebondspa
yabl
e(ne
tofuna
mor
ti
zedDi
scountof$5,
300)
..
..
..
.. 1,744,700
TotalLiabi
lit
ies.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
...
....
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 1,822,600
NE T A SSE T S
Invest
edinc api
talas
ses,netofrelat
edde bt.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 1,231,800
Re s
tri
ct
edf orpaymentofde btser
vice..
.....
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 538,900
Unrestr
icte
d...
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
...
....
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 181,400
TotalNe tAsset
s $1,952,100

C onstruction W ork in Progress

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 168
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
Theothe rUtili
tyPlanti
temshownont heBa l
anceSheet
,Ill
ust
rat
ion7- 5,i
sCons truct
ionWor kin
Progre
ss.Thisa cc
ountrepr
ese
ntstheaccumulate
dc os
tsofworkordersf
orpr oject
sthatwillr
esul
tin
it
emsr eport
ableasUt i
li
tyPla
ntwhe nc ompl
etedandis,ofcour
se,supporte
dyt hewor korder
sfor
proj
ectsinpr ogr
ess.Eachworkor de
r,i nt
urn,issuppor
tedbydoc umentss uppor
tingpaymentsto
contr
actorsandtosuppli
ers
,orsupport
ingchargesf
orma t
eri
al
s.Labor,andove rhea
da ll
ocabl
etothe
proj
ect.

TheUni formSys te
mofAc countsf
orwa t
er,sewer,gas,ande lect
ri
cutil
it
iespubli
shedbyNARUCa l
l
contai
nas ect
iononUt i
li
tyPlantIns
truct
ionsthat,amongot herit
ems,spe c
ifi
esthecomponentsof
constr
uctionc os
t.Gene
rall
y,thecomponentsa r
ei nagreeme ntwiththosel i
st
edina nyi
nter
me dia
te
account
ingt ext.Oneit
eml ongr e
cognize
di nuti
lit
ya c
c ountinganda cc
e pte
dbyt heFASBi sthe
Allowancef orFundsUsedDuringConstr
uction(AFUDC) .

AFUDCi nclude sthene tc ostfort hepe ri

odofc onst
ructi
onofbor r
owe df undsus e
df orc onst
ructi
on
purpos esand a reasonable rate on other funds so use.This,int
erestpa id,a ccr
ued,orimput eddur i
ng
thepe riodofc ons tructi
onoaut ilit
ypl antas s
eti sincl
udeda sac ostoft hea sse
t.Interestpaidof
constructi
onofaut ilityplanta ssetisincludeda sac ostofthea s
set.Intere stpai
dora ccrued,knowna s
thede btcompone ntofAFUDC,i sde ductedfromI ntere
stonLog- TermDe btintheOthe rIncomea nd
De ducti
ons s ection oft he ut i
lity’s operati
ng s tat
ements( seeI ll
us trat
ion 7-7).Thi s pr a
cti
ce
accompl is
hest wot hi ngs;(1)i tdi
s closestofinanc i
alsta
teme ntreadersthea mountofint e
restthatwas
capital
izeddur i
ngt heye a r,and( 2)i treducesther eport
edi nte
reste xpe nse,thusincreasi
ngr eport
ed
neti ncomef ort hepe riod( pre
s uma blys howingdownut i
li
ty’s’r eque stsforr at
ei nc r
eases)
.If
constructi
oni sfinanc ed,inp art
,byus eofr esourcesgeneratedbyope rationsoftheutilit
y,regulat
ory
authorit
iesallowi nte re
sttobei mput edont hese“ equit
y”fundsa ndc apita li
zed.Sinceimput edint
erest
isnotvi ewedbya c
c ountant sasa ne xpens e
,itisof fs
etbyr eport
ingt heequity component ofAFUDC
asnon- opera
tingi nc ome .

C urrent L iabilities
Itemsc ommonl yf oundi ntheCur rentLiabilitiesse c
tionofaUt i
li
tyBa l
anc eShe etareshownunde r
thatcaptioni nIllustr
ati
on7- 5.Ac countsPa ya blene edsnoc omme nthe re.Theot heritem,C ustomer
A dvances for C onstruction,resultsfromt hepr act
iceofu ti
lit
iesofrequiringc us t
ome rstoadvanceto
theutil
ityas izablepor t
ionoft hee sti
ma tedc ostofc ons tr
uctionproje
c t
st obeunde r
takenbyt heuti
li
ty
atther equesto fthec ustomer.I fthea dvance sa retober efunded,ei
the rwhol lyori npa r
t,orappli
ed
againstbill
ingsf ors ervicerende r
e da ft
erc ompl e t
ionoft hepr oj
ect
,t heya rec la
ssifi
eda sshowni n
Ill
ustra
tion7- 5.Whe nac ustome ri sr efunde dt hee nt
irea mountt owhi chheors heise nti
tl
ed
accordingtot hea greeme ntorrul e
,unde rwhi chthea dva ncewa smade,theba lance,ifany,isreport
ed
asc ontri
butionsf romCus t
ome rsint heSt ateme ntofRe venue s
,Expe nses,a ndCha ngesinNe tAs s
ets
.
Othe ritemsc ommonl yr eport
e dunde rCur r
e ntLi abili
tie
si ncludeaccruede xpe nses,amount sdueto
otherf unds,a ndc urr
entpor tionso fl eg-terml i
abilit
ies.Somegove rnme nt
sa l
sor eportc ust
omer
depos i
tsunde rtheCur rentLiabi l
it
iesc apt
ion.

L iabilities Payable from R estricted A ssets

Li
abi
li
ti
espa
yabl
efr
om r
est
ri
ct
eda
sse
tss
houl
dbedi
spl
aye
dse
par
ate
lyf
rom c
urr
entl
ia
bil
it
ie
sas
Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 169
 Ac
coun
tingf
ort
heBus
ine
ss–TypeAc
ti
vit
ie
s
showni nI llus
trat
ion7- 5.I na dditi
ont ocustome rde posits
,thec urrentpor t
ionofr evenuebonds
paya ble,ifany,woul dber eport
e dheresincerest
rict
eda ssetshavebe ense tas
ideforthatpur pos e
.The
TownofJ I
MMA f ol
lowst hec ommonpr acti
ceofmos tut i
li
ti
esa ndr equir
esa llnewc ustome r
st o
depos itas um ofmone ywi t
ht heut i
li
tya ssecurit
yf ort hepa yme ntofbi l
ls.Inma ny,butnota ll
,
jur
isdi ct
ionsutili
tiesa r
er equir
edt opa yinter
estonc ustome rdepos i
tatanomi nalrate.Re gul
atory
author i
tiesorloca lpolic
yma yr equir
eut i
li
tie
st orefundt hedeposits,andinterest
,afteras peci
fied
periodoft i
mei fthec ust
ome rha spaida l
lbil
lsont i
me .Theut i
lit
yma yber e
quired,aswa stheTown
ofJ IMMA Wa te
rFund,t os egregatec as
hori nvest
me nt sina na mounte qua ltothel i
abi l
it
yf or
Cus tome rDe posi
ts.Cus tome rAdva ncesforCons tr
uctiona r
ec ontr
a c
tuallydiff
erentfrom Cus t
ome r
De pos i
tsa nda rel esslikelytober eport
eds eparat
e l
ya sr e
s t
ri
cteda sset
sa ndl iabili
tie
s ,unless
agree me nt
swi t
hde velopersma kei tnec
e s
sarytorestr
ictas set
sforthispurpose.

L ong-T erm L iabilities

Bondsa ret hec us t
oma r
yf ormofl ong- ter
ml i
a bi
liti
es.Bondsi ss
ue dbyaut il
it
ya reusuallys ecure
dby
thepl edgeofc e rt
ainpor ti
onsoft heut ili
ty’sr evenue ,thee xactt ermsoft hepl edgeva ryingwith
individualc a ses
;bondsoft hi
sma turea r
ec alledrevenue bonds.Someut il
it
ybondsa res ecurednot
onlybyapl edgeofac e r
tainportionoft heut ili
ty’sr evenuesbuta ls obya na gre
e mentont hepartof
thet own’ sorTown’ sge neralgove rnme nttos ubsidizetheut il
ityi na nyye arinwhi chi tsnormal
revenuei si nade quateforc omplianc ewi t
hthet e
rmsoft hea ndinde nture.Otherutil
it
ybondsc ar
rythe
pledgeo ft heg ove rnme nt
a lunit
’sf ullf
a i
tha ndc redit,alt
hought hei ntentistoservicethemf oruti
li
ty
revenue sr athert hange ne r
altaxes .Thel a
ttera re,the re
fore,technic a
llygeneral obligation bonds.
GASBs tanda rdspr ovi
det hatgene ralobligati
onbondsi nte
nde dtobes ervi
cedf r
omut il
ityre venuesbe
reporteda sal i
abi l
ityofthee nter
pr isefund.Si mi l
arl
y,s pecialassessme ntdebtma ybea ss
ume dbya n
enterpris
ef undi ftheas s
e t
sc onstructe
dbys peciala ssessmentfina ncingareus edine nterprisefund
opera t
ions.

Gove rnmental
lyownedut i
li
tiesma yhaver eceivedlong-ter
mi nter
f undloansf ormt hegovernment ’
s
Ge neralFundorotherfunds .Al so,enter
pr i
sesma ya cquir
ea ss
e t
sunde rac apit
alleasearr
angeme nt.
Thepor ti
onofinter
fundl oans,requiredlea s
epa yments,orbondorot herdebti ss
uestobepa idwithin
oneye arform bal
anceshe etda teshouldber eport
eda sac urrentliabil
it
y;t herema inde
risproper l
y
reportedintheLong-te
rm Li a bil
iti
ess e
ctionoft heUtilit
ySt a
teme ntofNe tAs set
s.(Alte
rnat
ivel
y,a
Ba l
anc eSheetmaybepr esent e
d.)Long- ter
m bondspa yableshouldber epor t
edne tofunamorti
z ed
discountorpremium,a ss howni nIllust
rati
on7- 5,ore ls
euna mor t
i z
eddis countorpr emium canbe
reportedasanoff
setagainstb ondspa yableatpa rontheStatementofNe tAs sets.

Net A ssets
Asdiscussedine a
rli
erchapter
sfort hegovernment-
wi deStateme ntofNe tAssets
,GASBSt a te
me nt
No.34r e
qui r
esthatnetasse
tsber epor
tedinthreecate
gories:i
nve stedincapi
talass
e t
s,netofr el
ated
debt
;rest
ricte
d;andunr es
tri
cte
d.Thes a methre
ec a
tegori
esa pplyt othenetass
e t
s(tot
alassetsmi nus
tot
alli
abi
liti
es)ofane nt
erpri
sefund,a sshowninIllust
rat
ion7- 5.Re st
ri
cti
onsma yb eplacedbyl aw
orregul
ation,orcontrac
tuall
ybya greementwithcredit
orsorot he routs
idepa r
ti
es.Ill
ustr
ation7- 5
showsat ypicalre
stri
cti
on–as inkingfundc r
eate
dpur suanttoabondi nde
ntureforrepayme ntof

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 170
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
r
eve
nuebondprinc
ipal
.Unre
str
ict
ednetas
set
srepre
senttheres
iduala
mountofne
tas
set
saf
ter
s
egr
ega
ti
nginve
stmenti
nca
pit
alass
ets
,ne
tofre
lat
eddebt
,andre
str
ict
edneta
sse
ts.

Illustrative A ccounting for a W ater Utility F und

Thedi s
cussioninpr ece
dingpa gesofthebalancesheetaccount
sofawa t
erutil
it
yi ncl
udesby
impli
cat
iont hee ssenti
alc ha
racte
ris
ti
csofa c
counti
ngne ce
ssaryforbothgovernment
a l
lyowned
uti
li
ti
esa ndi n
vestor-ownedut i
li
ti
es.Inthi
ssecti
on,acc
ounti
ngf orcha
rac
ter
ist
ictra
nsact
ionsofa
uti
li
tyfundi sil
lustr
ateding ener
aljour
nalent
ryformatfort
heye arf
oll
owingtheStat
ementofNet
Asset
spre s
entedinIllust
rat
ion7-5.

Iti
sa ssumedt heTownofJ I
MMAi sloc at
edinas ta
tethatpermitsente
rpri
sefundstooperatewi thout
for
ma ll e
gala pprovaloft heirbudgets.Ut i
li
tyorot herenterpri
sefunds,ma nagementmus tpr epare
operat
ingbudg e
tsa ndcapitalexpenditurebudgetsasma nageme ntt
ools.Fortheill
ustr
ati
vec ase,itis
assumedt hebudge tsa r
es ubmitt
e dtot heTowna dminis
trat
ors,totheTownl e
gisl
ati
vebody,a ndt o
thepubl i
c,forinforma t
ion,notf orlega lac
ti
on.Ac cordi
n gl
y,thebudge tisnotformall
yr e
c ordedi n
enter
prisefunda ccounts.Similar
ly,utili
tyma nagementmus tbei nf
ormedpe r
iodica
llyofthes t
a t
usof
outst
andingc onst
ruc t
ioncontractsandpur chaseorder
s,butenc umbrancesneednotber ec
orde dint he
accountsinordertoa ccomplishthis.

Thena tur
eoft heAc cruedUt i
li
tiesRevenuesaccountwa se xpla
inedprevious
lyinthes e
ctionon
CurrentandAc crue dAs se
ts.Intheyearfoll
owingt heo neforwhi chthestat
ementofnetass e
tsis
shown,itisnotfeas i
blewhe ncustomers
’bill
sarepreparedtode t
erminewhe t
heraport
ionofthebill
hasbe e
na ccrue
da nd,ifso,howmuc h.Thes i
mplestprocedure,ther
efor
e,istorever
sethea ccr
ual
entr
ya softhestartofthene wfiscalyea
r.Assumingt heenti
reDe cember31,2001,TownofJ IMMA
Wa t
e rUtil
it
yFundr evenuesaccrualhasbe e
nc redite
dt os al
esofWa te
r,thefoll
owinge ntryis
appropri
at
ea sofJanua ry1,2002:
De
bit
s Cr
edi
ts
1. Sa
lesofWa
ter
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
1.
.
4.
.
,.
8
..
0
..
0
..
..
Ac
crue
dUt
il
it
yRe
venue
s..
..
.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 14,
800

Whenutil
itycust
omer
sa rebill
edduringt heyear
,a ppr
opr
iat
er e
venueac c
ount
sarec r
edit
ed.
Ass
umingduri
ng2002thetot
albil
lstonon-gove
rnment
alcust
omersamount
edto$696,
000,bi
llsto
t
heTownofJ I
MMAGe ne
ralFundamountedto$30,
000,andal
lre
venuewasfromsal
esofwate
r,the
f
oll
owi
nge nt
rysummar
ize
stheevents
:

De
bit
s Cr
edi
ts
2. Cus
tome
rAc
count
sRe
cei
vab
le.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
6
..
9
..
6
..
,
.
0.
.
0.
.
0.
..
Duef
romGe
ner
alFund.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
..
..
.
3.
.
0.
.
,.
0
..
0
..
0
..
.
Sa
lesofWa
ter 726,
000

I
fcol
le
cti
onf
romnon-
gove
rnme
nta
lcus
tome
rst
ota
led$680,
000f
orwa
terbi
ll
ings
,Ent
ry3i
sne
ede
d;

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 171
 Ac
coun
tingf
ort
heBus
ine
ss–TypeAc
ti
vit
ie
s

De
bit
s Cr
edi
ts
3. Ca
sh.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
6.
.
8.
0,000
Cus
tome
rAc
count
sRe
cei
vab
le.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 680,
000

Ma t
eri
alandsuppl
ie
sintheamountof$138,
000we
repur
cha
seddur
ingt
heye
arbyt
heWa
terUt
il
it
y
Fund.Theli
abil
it
yisre
corde
das:
De
bit
s Cr
edi
ts
4. Ma
ter
ial
sandSuppl
ie
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
1
..
3
.8,
000
Ac
countPa
yabl
e..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
..
..
. 138,
000

Mate
ria
landSuppl
ie
scha
rge
abl
etot
hea
ccount
sit
emi
zedi
nthee
ntr
ybe
lowwe
rei
ssue
ddur
ingt
he
ye
ar.
De
bit
s Cr
edi
ts
5. Sour
ceofSuppl
yExpe
nse
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
..
..
.
1.
.
8.
.
,.
0
..
0
..
0
..
..
Pumpi
ngExpe
nse
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
2
..
1
..
,
.
0.
.
0.
.
0.
..
.
Wa
terTr
eat
mentExpe
nse
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
2.
.
4.
.
,.
0
..
0
..
0
..
..
Tr
ans
mis
siona
ndDi
st
ri
but
ionExpe
nse
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
1.
.
3.
.
,.
0
..
0
..
0
..
..
Cons
truc
ti
onWor
kinPr
ogr
ess
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
6.
.
6.
.
,.
0
..
0
..
0
..
..
Ma
ter
iala
ndSuppl
ie
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..142,
000

Payrol l
sf ort heye arwe rec ha r
ge abletot hea ccountss howni nthee ntr
ybe l
ow.Ta xCol lec
tions
Payabl eist hea ccountprovi de di nt heNARUCa ndFERCs ys
temstor eport“thea mountoft axe s
colle
c tedbyt heutilit
ythroughpa yrolldeduc t
ionsorot he
rwi sependi
ngtransmi t
ta
lofs uchtaxest
ot he
prope rtaxinga ut
hor i
ty.
”Ta xe sAc crue disthea cc
ountpr ovidedintheNARUCa ndFERCs yst
emst o
reportthel iabil
it
yf ortaxest ha taret heexpens eoftheutilit
y,suchasreporttheliabil
it
yfort a
xest hat
arethee xpe nseoft heutil
ity,s ucha st heempl oyer’sshareofs oc
ialsec
urit
yt axes.Intheentrybelow,
itisas s
ume dthatt
hee mploye r’ss hareofs oci
a lse
c uri
tytaxesischarge
dt othes amea cc
ountsthatt he
empl oyee s
’gr osse arni
ngsa re;i tisa lsoa s
sume dt hatche c
ksha vebeeni ssuedfore mployees
’ne t
earni
ngs .

De
bit
s Cr
edi
ts
6. Sour
ceofSuppl
yExpe
nse
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
..
..
..
..
..
..
..
..
.. 8,
200
Pumpi
ngExpe
nse
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
..
..
..
..
..
..
..
..
.. 15,
700
Wa
terTr
eat
mentExpe
nse
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 17,
500
Tr
ans
mis
siona
ndDi
st
ri
but
ionExpe
nse
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 76,
250
Cus
tome
rAc
count
sExpe
nse
s..
.
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
..
..
..
..
..
..
..
..
.. 96,
550
Sa
lesExpe
nse
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
..
..
..
..
..
..
..
..
.. 17,
250
Admi
nis
tra
ti
vea
ndGe
ner
alExpe
nse
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
..
..
..
..
..
..
..
..
.. 83,
150
Cons
tru
cti
onWor
kinPr
ogr
ess
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 30,
400
Ta
xAc
crue
d..
.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 13,
800

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 172
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
Ta
xCol
le
cti
onsPa
yabl
e..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 51,
750
Ca
sh.
..
..
..
..
..
..
..
.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 279,
450

Bondint
eres
tint
heamountof$105,
000waspa i
d;thebondswer
eiss
uedtofi
nancet
hea
cqui
si
ti
onof
ut
il
it
yplantas
set
s.Amor
ti
zat
ionofdebtdi
scountandexpens
eamount
edto$530.
De
bit
s Cr
edi
ts
7. I
nte
res
tLong-
Ter
mDe
bt.
..
..
..
.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 105,
000
Amor
ti
zat
ionofDe
btDi
scounta
ndExpe
nse.
..
..
..
..
..
..
..
..
..
..
.
..
..
..
..
..
..
..
..
..
.. 530
Ca
sh.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
. 1
05,
000
Una
mor
ti
zedDe
btDi
scounta
ndExpe
nse.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 530

Bondi nt
eres
tintheamountof$12,
900waspr
ope
rlyca
pit
al
ize
da spar
tofcons
truct
ionworkin
progr
essduri
ngtheye
ar.(
TheTownofJIMMAdoesnoti
mputei
nte
res
tonit
sownre s
ource
sdur
ing
const
ruct
ion.
)
De
bit
s Cr
edi
ts
8. Cons
tru
cti
onWor
kinPr
ogr
ess
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
1.
2,900
Al
lowa
ncef
orFundsUs
edDur
ingCons
truc
ti
on.
..
..
..
..
..
..
..
..
..
..
..
. 12,
900

Cons
truc
ti
onpr
oje
ctsonwhi
chc
ost
stot
al
ed$220,
000we
rec
ompl
et
eda
ndt
hea
sse
tspl
ace
din
se
rvi
ce:
De
bit
s Cr
edi
ts
9. Ut
il
it
yPl
anti
nSe
rvi
ce.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
..
2
..
2
..
0
..
,
.
0.
.
0.
.
0.
..
..
Cons
truc
ti
onWor
kinPr
ogr
ess
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.220,
000

Colle
c t
ionef
for
tsweredi
sconti
nue donbill
stotal
ing$3,
410.Thec ust
ome r
sowi ngthebil
lsha
dpa i
d
deposit
stothewaterut
il
it
yt ota
li
ng$2, 140;thedeposi
tswerea ppl
iedtot hebill
s,andtheunpai
d
re
ma inderwasc
hargedt
oAc cumul at
edProvi
sionforUncol
lect
ibl
eAc count
s( Entr
y10a).Ares
tri
ct
ed
asse
t( c
ash)i
sre
ducedby$2,140,theamountofthedecre
aseinCus t
ome rDeposit
s(Ent
ry10b).
De
bit
s Cr
edi
ts
10a. Cus
tomerDepos i
ts.
..
..
..
..
...
..
..
..
..
..
..
..
...
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
2
.,
140
Acc
umulate
dPr ovisi
onf orUncoll
ec t
ibl
eAc c
ounts.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.1
.,
270
CustomerAc countsReceivable.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 3,
410
10b. Cas
h..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.2
.,
140
Cash–Custome rDeposit
s..
..
...
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
.. 2,
140

Cust
omer
s’deposi
tsamount
ingto$1,320wer
eref
undedbyche
cktocus
tomersdi
scont
inui
ngs
ervi
ce
(
seeEnt
ry11a
) .Depos
it
stot
ali
ng$2,525wer
erec
eive
dfromnewcust
omers(
seeEnt
ry11b).

De
bit
s Cr
edi
ts
11a. Cus
tome
rDe
pos
it
s.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
1,
320

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 173
 Ac
coun
tingf
ort
heBus
ine
ss–TypeAc
ti
vit
ie
s

Cash––Cus
tomerDe posi
ts.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
..
..
..
. 1,
320
11b. Ca
sh––Cust
omerDeposit
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
..
..
..
..
..
..
..
..
.2,
525
Custome
rDe posi
ts.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
. 2,
525

Customers
’adva
ncesforcons
truct
ioni
nthea mountof$
14,000we r
ea ppl
iedtothe
irwat
erbil
ls
;in
accordwit
htheagr
eementwit
ht hecus
tomersandNARUCr ec
omme ndati
ons,t
heremai
nder
softhe
advance
swe r
etr
ans
fer
redtoCapita
lContr
ibut
ionfr
omCu s
tomers.
De
bit
s Cr
edi
ts
12. Cus
tomerAdva nc
esforConst
ruct
ion.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
2.
.
1,000
Cust
ome rAccountsRe
cei
va bl
e.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 14,
000
Capi
talContr
ibut
ionsf
romCus t
omers.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 7,
000

PaymentsofAccount
sPayableformat
eri
alsandsuppl
iesus e
di noper
ati
onstota
led$67,200,and
pa
yme ntofAccount
sPayabl
eformater
ial
susedi
nc ons
truct
iontot
ale
d$66,000.PaymentsofTaxes
Accrue
da mount
edto$13,
500,andpa
ymentsofTaxColl
ecti
onsPayabl
eamountedto$50,000.

De
bit
s Cr
edi
ts
13. AccountsPayabl
e..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 133,
200
TaxesAc c
rued 13,
500
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.

TaxCollect
ionPayable 50,
000
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.

Ca
sh.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 196,
700

TheWa t
erUti
li
tyFundagr
eedtopay$25,
000totheTownGe ner
alFundasacont
ri
buti
oninli
euof
pr
oper
tytaxe
s.Theentr
yintheGener
alFundisill
ust
rat
edinChapter4(
SeeChapte
r4,ill
ust
rat
ive
Ent
ry22a)
.Thefol
lowi
ngentr
yrec
ordst
heeventi
ntheaccount
softheWat
erUt
ili
tyFund:
De
bit
s Cr
edi
ts
14. Cont
ri
buti
oninLie
uofTa xe
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
2
.5,
000
DuetoGener
alFund.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 25,
000

Duri
ngtheyeari
nte
res
tinthea
mountof$44,500wasre
ceivedi
nCa shonres
tri
ct
edinve
stme
nts
.The
amountof$1,
375isal
loc
ablet
oinve
stment
sofc us
tomerdepos
itass
etsandi
sunres
tri
ct
edastous
e;
t
heremaini
ng$43,
125addstot
heamountre
stri
ct
edforr
evenuebondrepa
yment.
De
bit
s Cr
edi
ts
15a. Ca
sh..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.1,
375
Ca
sh–BondRe payme nt.
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.4
.
.3,
125
Interes
tandDi vi
dendI ncome..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 44,
500
15b. Ne
tAssets––Unrest
ri
c t
ed..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.4
.
.3,
125
Ne tAssets
––Re st
ri
ctedforBondRe payme nt.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 43,
125
Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 174
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s

Atye ar
-end,entr
iestor ec
orddepreci
at
ione xpe nse,theprovisi
onforunc
oll
ect
ibl
ea c
count
s,and
unbil
ledcust
ome rsaccount
sr e
cei
vableshoul
dbema dea sill
ust
rat
edbyEntr
y16.I naccor
dwith
regul
at
oryterminol
ogy,Cus t
omerAccountsExpe nse,inste
adofBa dDebt
sExpe
nse,i
sdebit
edfort
he
amountaddedtoAc cumulat
edProvi
sionforUnc olle
ctibleAccount
s.Amount
sar
eassumed.
De
bit
s Cr
edi
ts
16. Depr
ecia
ti
onExpe nse...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
102,
750
Cust
omerAc countsExpenses.
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 3,980
Accr
uedUt i
li
tyRe venues.
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..15,
920
Accumulate
dPr ovis
ionforDe pre
ciat
ionofUt i
li
tyPlant.
..
..
..
..
..
.. 102,
750
AccumulatedProvisi
onforUnc oll
ecti
bleAccounts.
..
..
..
..
..
..
..
..
..
. 3,
980
Sal
esofWa te
r..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 15,
920

I
na ccor
d wi t
ht her e
ve nuebond i ndent
ure
,$100, 000 unres
tri
ct
edc as
h wasi nvest
edi n U.
S.
Governme ntSec
urit
iesforeve nt
ualr
etir
ementofrevenuebonds.Netass
etsar
eres
tri
ctedinanamount
equaltot heincr
e a
seinr est
ric
tedassets
.Ina ddit
ion,inves
tmentsfr
om rest
ri
cte
dc a
shf orbond
r
e pa
yme ntamountedto$40, 000.
De
bit
s Cr
edi
ts
17a. I
nve
stme
nt–BondRe payment.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 140,
000
Cas
h...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 100,
000
Cash––BondRe payment..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 40,
000
17b. Ne
tAs
set
s––Unrest
ri
ct
e d..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
..
..
..
..
..
..
..
..
. 100,
000
NetAs s
ets
––Restri
ctedforBondRe payment.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 100,
000

Nominal accounts for the year were closed:

Ina ddit
ion,Ne tAs set
s-I nvestedinCa pitalAs se
ts,NetofRela
ted Debt,woul
dbei ncrea
sedfor
deprecia
tionanda mor tiza
tionofde btdi scounta ndincre
asedordec
rea
sed,asappr
opri
ate,f
orthenet
changeinut il
it
ypla ntdur i
ngt heye ar.De cre as
esandrecor
dedasadebitt
oNe tAsset
s–I nvest
edin
CapitalAs s
ets,NetofRe la t
edDe bt,a nda sac re
dittoNetAsset
s–Unr es
tri
ct
ed.Therevers
ee nt
ry
woul dber e
quiredforinc r
e asesincapitalasse tbal
ances
.
De
bit
s Cr
edi
ts
18. Sa
lesofWa
ter
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
7
..
2
..
7
..
,
120
Ca
pit
alCont
ri
but
ionf
romCus
tome
rs.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
..
..
..
..
..
..
..
..
7
.,
000
Al
lowa
ncef
orFundsUs
edDu
ringCons
truc
ti
on.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
1
..
2
.,
900
I
nte
res
tandDi
vide
ndRe
venue
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
4
..
4
..
,
500
Sour
ceofSuppl
yExpe
nse
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
..
.. 26,
200
Pumpi
ngExpe
nse
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
..
..
. 36,
700
Wa
terTr
eat
mentExpe
nse
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 41,
500
Tr
ans
mis
siona
ndDi
st
ri
but
ionExpe
nse
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 89,
250
Cus
tome
rAc
countExpe
nse
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 100,
530

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 175
 Ac
coun
tingf
ort
heBus
ine
ss–TypeAc
ti
vit
ie
s
Sa
lesExpe
nse.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 17,
250
Admi
nis
tra
ti
vea
ndGe
ner
alExpe
nse
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 83,
150
I
nte
res
tonLong-
Ter
mDe
bt.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 105,
000
Amor
ti
zat
ionofDe
btDi
scou
nta
ndExpe
nse.
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 530
Cont
ri
but
ioni
nLi
euofTa
xes
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
..
.. 25,
000
De
pre
cia
ti
onExpe
nse.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 102,
750
Ne
tAs
set
s–Unr
est
ri
ct
ed.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 163,
660

R equired F inancial Statement: Illustration

Statement of Net A ssets
TheStatementofNe tAsset
sforawa t
erutil
it
y,andde f
init
ionsofcer
tai
nbalancesheetcate
goriesand
i
temspe cul
iart
ore gul
at
edutil
it
ies
,areexplai
neda tl
engthinthese
cti
onsofthischapt
e rpre
cedingthe
i
llust
rat
iveentr
ies.TheSt a
tementofNe tAssetsoftheTownofJ IMMA Wa terUtilit
yFunda sof
De c
emb er31,2002,isshowna sIl
lus
tra
tion7-6.Notet heamountduetotheGe neralFundi soffse
t
agai
nsttheamountduef romthatf
und,andonlyt henetamountoftherece
ivable
,$5,000,isshowna s
anasset
.

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 176
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s

Illustration 7––6
T OW N OF J IMMA
W A T E R UT IL IT IE S F UND
ST A T E ME NT OF NE T A SSE T S
A S OF DE C E MBE R 31, 2002
A SSE T S :
C urrent and A ccrued A ssets:
Cash..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. $128,3675
Customera c
countsrecei
vable.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.$67,
590
Les
s :Accumulate
dpr ovis
ionforuncoll
ecti
ble.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 5,610 61,980
Accruedutil
it
ie
sre venues
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 15,920
DueFr omGe nera
lFund. .
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 5,000
Materi
a l
sandsupplies.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 24,700
Tot
alCurrentandAc c
ruedAs set
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. $235,
965
R estricted A ssets:
Cas
h..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 8,
790
I
nvest
ments..
..
..
..
..
..
..
..
..
..
..
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..
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..
..
..
..
. 696,
000 704,
790
Utility Plant:
Utilityplanti ns er
vice..
...
...
..
..
....
....
...
...
..
..
..
..
..
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.. 3,
511,
825
Less :Ac cumul a teddepr eciati
on. ...
..
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..
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.. 543,
075
UtilityPl ant–Ne t.
..
..
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...
...
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.. 2,
968,
750
Cons tructionwo rkinpr ogress...
....
..
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.. 14,
300
NetUt il
it
yPl a nt...
..
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.. 2,
983,
050
TotalAs s
e ts. .
.....
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.. 3,
923,
805
L IA BIL IT IE S
C urrent L iabilities:
Ac count spa yab le..
..
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.. 38,
000
Ta
xAc
crue
d..
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. 300
Cus
tome
radva
nce
sforc
ons
truc
ti
on.
..
..
..
..
..
..
..
..
..
..
..
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.. 1,
750
Tot alCur rentLi abi
l i
ti
es..
..
....
..
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....
..
...
.. .
..
..
..
..
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..
..
..
..
..
.. 40,
050
L iabilities Payable from R estricted A ssets:
Cus t
ome rde posits.
. .
..
..
..
..
..
...
...
..
...
....
..
...
....
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. 22,
765
L ong-T erm L iabilities:
Re
venuebondspa
yabl
e(ne
tofuna
mor
ti
zeddi
scountof$4,
770)
..
..
..
..
. 1,
745,
230
TotalLiabi
lit
ies.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
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...
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..
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..
. 1,
808,
045
NE T A SSE T S
Invest
edinc api
talas
ses,netofrelat
edde bt.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 1,
237,
820
Re s
tri
ct
edf orpaymentofde btser
vice..
.....
..
..
..
..
..
..
..
..
..
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..
..
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..
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..
. 682,
025
Unrestr
icte
d...
..
..
..
..
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. 195,
915
TotalNe tAsset
s..
..
..
..
..
..
..
..
..
..
...
..
..
...
....
..
..
..
..
..
..
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..
. $2,
115,
760

Operating Statement
Ther
esul
tsoft
heope
rat
ionsoft
het
ownofJ
IMMA’
sWa
terUt
il
it
yFundf
ort
heye
are
nde
dDe
cembe
r

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 177
 Ac
coun
tingf
ort
heBus
ine
ss–TypeAc
ti
vit
ie
s
31,2002,ar
eshowni nIllus
tra
ti
on7-
7,thes
tat
eme
ntofRe
venues
,Expe
nses
,andCha
ngedinNet
Asset
s.The clas
sif
icat
ions usedinthe s
tat
eme
ntareconsi
st
entwit
h NARUC a nd FERC
rec
omme nda
ti
ons.

Illustration 7-7
T OW N OF J IMMA
W A T E R UT IL IT IE S F UND
ST A T E ME NT OF R E V E NUE S, E X PE NSE S
A ND C HA NGE S IN NE T A SSE T S
F OR T HE Y E A R E NDE D DE C E MBE R 31, 2002
Utility Operating R evenue:
Sa lesofWa t
er...
...
....
..
..
..
...
...
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. $727,
120
Operating E xpenses:
Sour cesofSuppl yExpe ns es..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.$26,200
Pumpi ngExpe ns es...
..
..
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...
...
..
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..
...
..
..
..
..
..
..
..
..
..
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..
.36, 700
Wa terTr ea t
me ntExpe nses...
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
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..
..
.41, 500
Tr ansmi ssiona ndDi s
tri
but i
onExpe nses..
..
..
..
..
..
..
..
..
..
..
.89, 250
Cus t
ome rAc countsExpe nses..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.100,530
Sa lesexpe nses ..
..
..
....
..
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..
...
...
..
..
..
...
..
..
..
..
..
..
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..
.17, 250
Admi nistra t
ivea ndGe neralExpe nses..
..
..
..
..
..
..
..
..
..
..
..
..
.83, 150
De preci
a ti
onExpe ns e.
..
..
...
...
..
..
..
...
..
..
..
..
..
..
..
..
..
..
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..
.102,750
Cont r
ibutioni nLi euofTa xes..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.25, 000
TotalOpe ra t
ingExpe nses..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 522,
330
UtilityOpe ra t
ingI ncome. ..
..
...
...
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 204,
790
Other Income and Deductions:
Int er
esta ndDi vide ndRe ve nue..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
(44,500)
Int er
estonLong- termDe bt..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.105,000
Amor tizationofDe btDi scounta ndExpense..
..
..
..
..
..
..
..
. 530
Al lowa nc ef orFundsUs edDur ingCons t
ruct
ion..
..
..
..
..
.
(12,900)
TotalOt herI ncomea ndDe duc t
ions.
..
..
..
..
..
..
..
..
..
..
..
. 48,
130
I
nc omeBe foreCont ributions..
...
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 156,
660
Capi talcontrib uti
onsf r omc ustome rs.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 7,
000
Cha ngei nNe tAs sets.
....
..
..
..
...
...
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..
..
...
..
..
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..
..
..
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..
..
..
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..
..
. 163,
660

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 178
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
Tot
alNe
tAs
set
s,Ja
nuary1,2002..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 1,
952,
100
Tot
alNe
tAs
set
s,Dece
mbe r31,2002.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. $2,
115,
760

Statement of C ash F lows

GASBs tanda r
dsr e quiret ha tas t
a teme ntofCa shFl owsbepr e pa redf ora llpr opr ietaryfundsa sapa rt
ofaf ulls etofa nnua lf ina ncials tateme nts.Asdi s
c usse da tl e ngt he arli
e ri nt hisc ha pter,GASB
standa rdsf orp repa rationofac ashf lows t
ateme ntdi fferf rom FASBs t
a nda rds;t hema indi ffe r
ence
beingt hatGASB s tanda rdss pe ci
fyf ourma jorc atego riesofc ashf lowsr athe rtha nt hr ee.The
stateme ntofCa shFl owsf ort heTownofJ IMMAf ort heye are nde dDe ce mbe r31,2002( Illustrati
on
7-8),ut ili
z esonlyt hr eeoft hef ourc ategor i
esofc ashf lo wss inc et het ownha dnoc ashf lowsf orm
non- capi t
alf i
nanc inga c tivities.Ca shf lowsf rom ope ratinga ctivi ties( Ill
us tration7- 8)we repr ovided
byr ece ipt
sf ormc us tome rs( Ent r
y3)a ndt hene tinc rea sei nr efunda blec us tome rde posits(Ent riesI1a
andI 1b) .Not etha tt hea ppl ic at
ionofc us t
ome rde pos itstopa yove rduebi lls(Ent r i
es10aa nd10b)ha s
noe f
fe ctont otalc asha ndc ashe quiva lents.Cha sf romope rat
inga ctiva teswa sus edtopa ye mpl oye e
s
(Ent r
ie s6a nd13) .Ass ugge stedi nt heGASBi mpl eme ntationGui deonr epor ti
ngc ashf lows ,
9a ll
empl oye e-relate
di tems( int hisc a seTa xesAc crue da ndTa xCol le ctionsPa yabl e)ha vebe e na dde dto
thea mounta ct
ua llypa idt oe mpl oy ee s.Pa yrol lt axe sa ndf ringebe nefitsma ybei nclude di na s
sepa r
a teline“ cashpa yme ntsf ort axe s ,dutie s,f ines,a ndot he rf ee sorpe na l
ties,”i fs i
gni ficantin
amount .“Ca s hpai dt oe mpl oye esf ors ervic e
s”i nt hea mo untof$312, 550i sc alc ulateda sthene tc a
sh
paiddi rectl
yt oe mpl oye e s,$ 63,500pa idf orTa xe sAc crue da ndAxCol lec t
ionsPa yable( Ent ry13) .
Althoug hs upplierswe repa id$133, 200i nt ota l
,onl y$67, 200oft hisa mounta ppl i
edt oope rati
ng
activates .
Ca shf lowsf ormc api t
a la ndr ela t
eda ctivatesi nI ll
us tr
a tion7- 8s how t wous e dofThef irsti t
em,
acquis it
iona ndc ons tructi onofc a pit
ala ssets
,i sc alcul ateda sthes umof$30, 400( Ent ry)a nd$66, 000
(Ent r
y13)Theot he ri tem,i ntere s
tpa idonl ong- t
ermb onds ,r e flec t
sbondi nt erestint hea mount
$105, 00pa idi nc a sh( Ent ry7).Ca shf lowsi nve stinga ctivitiess how c ashpr ovi dedbyi ntere stand
dividendi nc ome( Ent ry15a )a ndc as hus edbypur cha seofi nve s tme nt( ent ry17a ).Ass howni n
Ill
us t
ra t
ion7- 8,twor e conc ilia
tionsa rer equired.Thef irs trec onc ol l
ationi sne cessarybe caus ethe
TownofJ IMMA’ sSt ate me ntofCa shFl owsr e por tsCha nge si nt otalc a sha ndc ashe qui va l
ents,
whe rea stheBa l
a nc eShe e ts howst woc ompone ntsofc a sha ndc a she qui va lents:tha tinc lude din
Cur renta ndAc crue dAs se tsa ndt hatinc l
ude di nr e st
ric t
e dAs s ets,r e spective l
y. GASBs tanda rdsa l
so
requirear econciliationofope ratingi nc omet one tc as
hpr ovi de dbyope rati
nga ctivities.
I
ll
ust
rat
ion7-
8
T OW N OF J IMMA
W A T E R UT IL IT Y F UND
ST A T E ME NT OF C A SH F L OW S
F OR T HE Y E A R E NDE D DE C E MBE R 31, 2002
C ash flows from operating activities:
Ca
shre
c ei
vedfr
omc ustome r
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. $680,000
Ca
shprovi
dedfromc ust
ome rdeposi
ts.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 1,205
Ca
shpaidtoemployeesforser
vices.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..(312,550)
Ca
shpaidtosup
plier
s...
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. (67,200)
Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 179
 Ac
coun
tingf
ort
heBus
ine
ss–TypeAc
ti
vit
ie
s
Ne
tca
shpr
ovi
dedbyope
rat
inga
cti
vit
ie
s..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
..
..
..
..
..
..
..
..
. $301,
455
C ash flows from capital and related financing activities:
Acqui
sit
ionandconst
ruct
ionofcapi
talass
ets.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. (
96,
400)
I
nter
estpai
donlong-t
ermbonds..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. (
105,
000)
NetCashusedf
orcapit
alandre
lat
edfinanci
nga ct
ivi
ti
es..
..
..
..
..
..
..
..
..
..
..
..
..
.. (
201,
400)
C ash flows from investing activities:
Int
erestanddivi
dendi ncome....
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 44,500
PurchaseofRe s
tri
ct
e dInvestment .
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. (
140,000)
Netc a
s hpr
ovidedbyi nvest
inga cti
vit
ies:
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. (
95,500)
NetInc r
easei
nCa sha ndCa shEqui val
ents.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 4,555
Casha ndCa s
hEqui vale
nts,1/1/2003..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 132,600
Casha ndCa s
hEqui vale
nts,12/31/2003..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. $137,155
R econciliation of C ash and C ash E quivalents to the Balance Sheet
EndofYear Be g.ofYear
Cas
ha ndCashEqui
val
entsincurr
entandaccruedasset
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 128, 365 126,
000
Res
tri
cte
dcashandcas
he qui
vale
nts..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 8,790 6,
600
Tot
alcasha
ndc a
shEquival
ent
s .
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 137, 155 132,
600
R econciliation of Utility Operating Income to Net C ash Provided by
Operating A ctivities:
Ut
il
it
yOpe
rat
ingi
ncome
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
..
..
..
..
..
..
..
. $204,
790
A djustments:
De
pre
cia
ti
one
xpe
nse.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..$102,
750
I
ncr
eas
eina
ccount
sPa
yabl
e.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
..
..
..
..
..
..
.. 4,800
I
ncr
eas
eina
ccr
uedl
ia
bil
it
ie
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
..
..
..
..
..
..
.. 2,050
De
cre
asei
ncus
tome
rde
pos
it
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. (935)
De
cre
asei
ninve
ntor
ies
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 4,000
I
ncr
eas
einr
ece
iva
ble
sfr
omot
herf
unds.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. (
5,000)
I
ncr
eas
eina
ccr
uedr
ece
iva
ble
s..
.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. (
1,120)
De
cre
asei
ncus
tome
rac
count
sre
cei
vabl
e..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 4,120
Cus
tome
radva
nce
sappl
ie
dtoc
ust
ome
rre
cei
vabl
es.
..
..
..
..
..
..
..
..
..
.
..
..
..
..
..
..
..
..
. (
14,000)
Tot
alAdj
ust
ment
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
..
..
..
..
..
..
..
. 96,665
Ne
tCa
shPr
ovi
dedbyOpe
rat
ingAc
ti
vit
ie
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. $301,455

E vents in F ollowing Y ear:

TheEstabl
ishmentofaSuppl i
esFundbytheTownofJimmaasofJanuar
y1,2003isi
ll
ust
rat
ed.The
Wa t
erUt i
li
tyFunda dvance
d$130,000toSuppli
esFundasal ong-t
ermloan.Theent
rybyt he
Suppl
iesFundisi l
lustr
atedinEntr
y2i nthe“I
ll
ust
rat
iveCa
se:Suppli
esFund”;t
hecorr
espondi
ng
ent
ryintheWa t
erUt i
lit
yFundwouldbe:
De
bit
s Cr
edi
ts
I
nte
rfol
dLoa
nst
osuppl
ie
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 130,
000

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 180
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
Cas
h...
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
...
..
..
..
..
..
..
...
..
..
..
..
..
.. 130,000
Towardthee ndof2003,t heSuppliesFundpa iditsfir
stinstal
lme ntof$6,500t
ot heWate
rUt il
ity
Fundasapa rt
ialrepaymentofthelong-t
erma dvance.Entry9oft heill
ustr
ati
veent
riesf
ort
hes upply
Fundshowne arl
ierinthechapt
erill
ustr
atest
hee ff
ectont heaccountsofthesuppl
ie
sFund.Thee ff
ect
ontheaccountsoftheWa t
erUtili
tyFundisrecordedbyt hefoll
owi ngentr
y:
De
bit
s Cr
edi
ts
Ca
sh.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..6.
500
I
ntendLoantoSuppl i
esFund—Conc ur
rent.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 6.
500

R egulatory A ccounting Principles (R A P)

Invest
or-owne dut i
li
ti
es,andgove rnme ntal
lyowne dut iliti
esi nsomes tate
s,arer e
quiredtor e
portina
presc
ribedma nnertos t
ateregul atoryc ommissions .El e
c tr
ica ndc e
rtai
not herutili
ti
ess ubje
cttothe
FederalPowe rAc tmus ta l
sol iker eportswi t
ht heFERC.Asme nt
ioneda ts ever
alpoi nt
si nthi
s
chapte
r,bot hNARUC a ndwi tht h eFERC pr e scr
ibec hart
sofa ccountsa nduni formf ina
ncia
l
stat
eme ntf ormatsforreportingt or egulator
ya ge ncies.Eve nthought het ownofJ IMMA f oll
ows
GAAPr a
the rtha
nR egulatory A ccounting Principles (R A P) i
nprepari
ngi t
sf i
nancialstat
ements,t
he
Townus est hecartofaccount sa ndsomeoft hef inanc i
a ls t
ate
me ntshowne ar
lie
ri nthischapterar
e
typi
caloft hoseforwitherfundsi nc l
udedi ncompr ehens ivea nnualfi
nanc i
alreport
s .

Forut i
lit
ie
st hatarer equir
edt oreporttoas taterateregulat
orc ommi ss
ionort heFERC,a ccounti
ng
andre port
ingp roceduresunde rRAPa requitedi f
fere
ntf or
m GAAP.Be c
a us eplantasse
tsandlong-
ter
mde btarecus t
oma r
il
ya nddomi nantshareoft hetotalass
etsa ndtotalde btofut i
li
ti
es,andcurrent
asset
sa ndc urr
entliabili
ti
esa r
ere l
ati
velyinsignifi
cantina mount,theregula toryba l
ancesheetf
orma t
displ
ayspl antasset
sbe f
orecurrentasset
sa ndl ong-t
erm debtbe for
ec urrentl iabi
li
ti
es.InIll
ust
rati
on
7-5,forexa mple,Ne tUt i
li
tyPlanta mountstoa lmost79pe rcentoftotalass ets,andlong-t
ermde btis
almost96pe r
centoft ota
lde b
t.

Unde rr egul ator

yr eportingUt i
lityPl anti nSe rvicei sstateda tor iginalc ost.Or iginalc osti sa
regulatoryc onc e
ptthatdi ffer
sf r
omhistorical cost,ac onc eptcommonl yus edi na ccountingf ora s
se t
s
ofnon- r
egul atedbus i
ne s
s .Ine ssence,historicalc ostisthea mountpa idfora na ssetbyi tspresent
owne r.Inc ontrast
,original cost i sthec ostt ot heowne rwhof i
r stde vot
e dt hepr ope rt
yt opubl i
c
servi
c e.Whe nar egulatedut ili
typur cha s
e spla nta ss
e t
sf rom a not herut i
lity,itmus tr ecordi ni t
s
account st hea mountss howi ngt hea ccountsoft hes elle
rf ortheUt i
li
tyPl a ntpurc haseda ndf ort he
relat
eda ccumul at
edde pr ecia
tion.Anypr emi um pa idbyt hepr es
e ntowne rove ra nda boves uchc ost
lessde prec i
at
ioni nthege ne r
alna tureofpa yme ntsf orgoodwi llbynon- uti
li
tye nterprises.Bututilit
ies
enjoymonopol ypr i
vilegea nda res ubjecttoc orrespondingr estri
ctions .Oneoft her est
ricti
onsist hat
earningss hallnote xce edaf airr at
eofr eturn.Si ncegoodwi lli st hec a
pi ta
lizedva l
ueofe xcess
earnings,ut il
itie
sc anha venogood will(int hea ccounti
ngs ense) .Pr emium onpl antpur chasedi s
thereforea ccountedf ora sUtility Plant A cquisition A djustments.Thea mountofa cqui
s i
tion
adjustme ntc apita
liz
e di sa mortizedove rape riodoft imede termi ne dbyt hea ppr opriateregulatory
body;a c
c umul at
eda mor tizat
ioni sdiscl
os e
di nt heAc cumul at
edPr ovisionforAmor t
izati
onofUt ili
ty
PlantAc qui si
tionAdj ustme ntsacc ount.

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 181
 Ac
coun
tingf
ort
heBus
ine
ss–TypeAc
ti
vit
ie
s

Othe
ra sse
ts ec
tionsofba lances he
etsprepar
e di ntheregula
toryf or
ma tareOthe rPropertya nd
I
nvest
me nt
sa ndDe ferr
edDe bits
.Onei te
m usuallyreport
edint heformersecti
onisSpe ci
alFunds ,
whic
hi ss i
milartot heRe str
ict
edAs setssecti
onoft heGAAP- f
orma tbala
nces heet
ss howni n
i
ll
ustr
ati
on7- 5and7- 6.Thus,asme nt
ionedpreviousl
y,OtherPropert
ya ndInvest
me nt
sisbroa derin
sc
opethanRe stri
ctedAs s
etsandma ycontai
ni t
emsot hertha
nr est
rict
eda s
set
s.Onei temt ypic
a l
ly
r
eport
edunde rtheDe fer
redDe bi
tscapti
onisUna mor
tize
dDe btDi s
countandExpe nse,whichunde r
GAAPi sreport
eda sanoffse
ttotherelat
edlong-t
e rmdebt.

A ccounting for Non-Utility E nterprise

Ea r
lyint hi
sc hapteritwa ss t
res
sedtha teachgove r
nme ntal
lyowne de nt
erpris
es houldfoll
ow the
account
inga ndf i
na nci
a lr
eporti
ngs t
anda r
dsdevelopedf roinvestor-
owne de nterpris
esinthes a
me
indust
ry.Ge neral
ly,thes t
andardsdevelopedbyt heFinanc ia
lAc count i
ngSt andardsBoa r
d,andi t
s
predece
ssors,havebe e
na cceptedbyt heGASB a sapplyingtoI nternalSe r
viceFundsEnt erpri
se
Funds.Cons e
quently,ma ny s ec
ti
onse arl
ieri
nt hi
sc hapter,whi ch discussge ner
all
ya cc
epted
account
ingpr inci
plesa ppl
icabl
et oInternalSer
viceFunds( sucha s“As se
tsAc quiredunderLease
Agr e
eme nts
”),applyequa l
lytoenter
pri
sef undsa
cc ount
ingfora ct
ivit
iesotherthanut il
it
ie
s.

A ccounting for Municipal Solid W aste L andfills

Ac counti
ngt oEnvi r
onme ntalProte
ctionAge ncy(E PA ) est
ima tes,ther
ea rea pproximatel
y6, 000
muni ci
palsolidwa s
telandfi
ll
s(MSW L F s) intheUnitedSt ates,ofwhi chabout80pe r
centareowne d
bys t
ateorl ocalgeneralpurposeors pecialproposeg overnme nts
.AnEPA Rul e,“SolidWa st
e
Di s
posalsFa ci
li
tyCrit
eria”(40CodeofFe der
a lRegulations,pa r
ts257a nd258) ,establi
shesce r
tai
n
closurerequire
me nt
sforMSWLFsa ndi mpos e
ss t
ri
ngentc rit
eriaforlocati
on,design,andope r
a t
ionof
landfi
lls
,gr oundwate
rmoni tori
nga ndc orrecti
vea ct
ion,pos t-cl
os ur
ec ar
e,a ndf i
nanc i
alassurance.
Stategove r
nme nt
sa r
ea ssi
gnedpr i
ma r
yr esponsibi
li
tyfori mpl eme nt
ingande nforci
ngt heEPAr ule,
andma yincreas
eorreduceitsprovis
ionsba sedons i
tecondi t
ionse xist
ingwithinthei
rs t
ates.

MSWLFowne rsa ndope ratorsma yi ncurava r ietyofc osts,bothduringt hepe ri

odofope r
ati
ona nd
afterclosure.The sec ostsinc ludethec ostofe qui pme nta ndf acili
ti
es(includingfinalc overi
ngoft he
MSWLFuponc losure)a ndc ostofservicesfors uc hit
e msa spost-cl
osurema intenancea ndmoni toring
forape r
iodof30ye arsa ft
e rc l
osur
e.TheEPAr e quireso wne rsandope ratorstoestima teindetailthe
currentd oll
arc os tofhi ringat hi
rdpa rtytoc l
oset hela rgestareaofa nMSWLFe xpe c
te dtorequirea
finalcove randt oc ar
ef ort heMSWLFove rthe30- yea rpos-closureperiod.Ea c
hye art heclosur
ea nd
post-clos
ur ec oste sti
ma tesmus tbead just
edf orinf lat
iona ndr evisedasne cessar
yt oreflectchange sin
plantorc ondi ti
ons .Owne r
sa ndope r
a torsofMSWLFmus tprovidea s
sur a
nce st
hata dequa t
efinanc ia
l
resourceswi llbea vailablet oc overthee sti
ma tedc os
tsofc losure,post
-c l
osurec a
r e
,a ndr emediation
orc ontai
nme ntofe nvironme ntalhazardswhe nt hel andf i
llhasbe enfill
e dtoc apacit
y.Se veralforms
off inanciala ssur ancea rea cc e
ptab
le ,includingt hi
r d-partyt r
usts,suretybonds ,l etter
sofc redit
,
insurance,ors tate-spons oredpl ans.

GASB s t
anda
rdsprovidegui
danc
ebothf
ormeasur
ingandrepor
ti
ngest
imat
edt
ota
lc l
osur
eand
pos
tcl
osurecost
s.Althought
hedeta
il
edc
oste
sti
mationpr
oce
duresar
ebeyondt
hescopeofthi
s

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 182
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
chapter,reporti
ngr equi r
eme nts.ForMSWLFst hatus epr oprieta
ryf unda ccountinga r
ede sc
ribe d
brief
ly.Ane xpe nsea ndal i
abi l
it
ys houl dber ecogni zedea chpe ri
odf orapor ti
onoft hee s t
ima te
dt otal
curre
ntc ostofMSWLFc l
os urea ndpos t
closurec a
re.Thepor t
ionoft ota lc osttober e c
ogni zedi s
basedont heuni ts-of-produc ti
onme thods othate sti
ma t
e dtotalc urrentc osti sa ssi
gne dt ope ri
odson
theba si
sofl andfillus agera t
he rthant hepa ss
ageoft i
me .Re cognitionbe gi nsint hepe riodi nwhi c h
theMSWLFf ir
sta cc eptssolidwa st
ea ndc onti
nue seachpe r
iodunt ilc losur e.Es ti
ma tedt otalc l
osur e
andpos t
closurec os tss houldber eeva l
ua tede achye a rdur ingope rationoft hel andf i
lla ndt he
cumul at
ivee ff
ec tofc hange sint hee stima tedcos ts
,ifa ny,s houldber epor tedi nt hepe ri
odoft he
change.Cos tsofe quipme nt,f acil
it
ies,s ervices,orf i
nalc ove ra cquire ddur ingt hepe r
iodoft he
change.Cos tsofe qui pme nt,facil
itie
s,s ervices,orf i
nalc overa cquireddur ingt hepe ri
oda rer e
por t
e d
asar educti
onoft hea c cr
uedl iabi
litya ndnota sca pit
alassets.Equi pme nta ndf acil
itiesi nstal
ledpr ior
tocomme nceme ntofope rat
io noft hela ndfi
llshoul dbef ull
yde pre c
iatedbyt hec losureda te
.
As s
etshe l
dbyt hi rd-partytrusteesori ns ure t
ys t
andbyt ruststome etf i
na ncia lassuranc er equireme nts
shouldb ereporteda s“ amount she ldb yt r
ustee”int her e
s t
rict
eda ssetss ectionoft heba lanc es heetand
asne ta ss
etsr e
s t
rictedf orc losurea ndpos t
closurec osts.Ea rni
ngsons uc hi nvestme ntss houldbe
report
eda srevenue .

GASBs t
anda r
dsalsoprovideguidanceforreport
ingofMSWLFSi ngovernme ntalfundt ypesorby
otherenti
ti
e ssucha scoll
e gesanduniversi
tie
s.Ac countingofMSWLFi nt heGe ne
ra lfund,for
example,requir
esthatane xpendit
ureandfundl i
abil
ityber eport
edforthec urrentclosurea ndpost
clos
urecoststobee xt
enttha tanaccr
uedlia
bili
tywoul db eset
tle
dwi t
ha vail
ablef undresources;any
remaini
ngliabil
it
ywoul dber e
port
edinthegove r
nme ntalact
ivit
iesca
tegorya tthegove rnme ntwide
leve
l,asdis
c uss
edinCha pter6.Regardl
essofthefundtypeore nti
tyreport
ingtheMSWLFa cti
vit
ies
,
GASBs t
anda r
dsrequi
redisclosur
es.

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 183
 Ac
count
ingf
orFi
duc
iar
yAc
ti
vit
ie
s

C hapter 8
A ccounting for F iduciary A ctivities ––A gency
and T rust F unds
T opics to Be Discussed:
 Fi
duciar
yFunds
 AgencyFunds
 TaxAgencyFunds
 Tr
ustFunds
 Pr
ivat
e–PurposeTrustFunds
 Pensi
onAcc ount
ing
 Requi
redDis c
los
uresforOthe
rPos
t-e
mpl
oyme
ntBe
nef
it
s(OPEB)

L earning Objectives:
Af
ters
tudyingt hi
sc hapte
r ,y
ous houl dbea bl
et o:
 Expl ai
nhowf i
duciar
yf undsa r
eusedtor eportonthefiducia
ryacti
vit
iesofagovernme nt.
 Di stinguisha monga gencyf undsa ndtrustfunds(pri
vate-pur
pos
e,investment
,andpe nsion)
.
 De s
c ri
bet heusesa ndcha r
ac ter
ist
icsofa gencyfunds.
 Expl ai
nt hec rea
ti
on,ope ration,accounting,andf i
nancialre
por
tingforac as
ha ndinve st
me nt
pool( includingani nvestme nttrustfund);apr ivat
e-purposet
rustfund;andape nsi
ont rust
fund.
 De s
c ri
bea ccountingforOt he rPost-
Empl oyme ntBenefit
s.

8.1) F iduciary F unds

Fiduc ia
ryfunds,unde rt heGASBSt atementNo.34r eport
ingmode ,areusedt oa ccountforonl ythose
ac t
ivit
iesi n whic h agove rnment aluni thol dsa ssetsa sa na gentort rusteef ori ndividuals
,
orga niz
ati
ons,orot he rgove rnmenta lunit
s.The sepr i
vate-purposef i
duciarya c
ti
vitiesarea ccounted
froi na gencyf unds,i nvestmentt rustfunds,pr ivate-purposet r
ustf unds,a ndpe ns
iont rustfunds.
Re sourcesthata r
ehe l
di ntrustfort hebe nefi
toft hegove r
nme nt’sownpr ogra
msori tsc it
izenry
shoul dbea ccount e
df ori nagove rnme nta
lf undr at
he rthanaf i
duciaryfund.Suc hpublic-purpose
trustsshouldbea ccount edforass pe ci
alrevenuef undsi fther e
sourcesa r
ee xpendablefort het r
ust
purpos e.Ape rma nentf und,asill
us tr
atedinCha pter4,s houldbeus e
dt oa ccountf ortr
ustsi nwhi ch
thet rustinwhi cht het r
ustprincipali spe r
ma ne ntl
yr estri
ct
e d,bute arningsma ybeus e dfort he
spec if
iedpubli
cpur pos e.

I
nl aw,the
reisac lea
rdisti
nct
ionbe twe e
na na gencyr el
ationshi
pandat r
ustrel
at
ionship.In
a
ccounti
ngpra
cti
ce,t
helega
lis
ti
cdi s
tinc
tionbe t
weentrus
tf undsa ndagencyfundsarenotofma j
or
s
igni
fic
ance
.Theimport
antandperhapsthes ol
econsi
derat
ionf roma nac
c ount
ingsta
ndpointiswhat
c
ana ndwhatcannotbedonewi t
ht hef und’sass
etsinac cordancewit
hl a
wsa ndotherpe rt
ine
nt

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 184
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
regula tions?Thena meofapa rticularfundi snotar elia
bl ec r
it
e r
ionf orde t
ermi ni
ngt hec or r
e c
t
account ingba sisfortrus tanda ge ncyf unds.Me r
elycall
ingaf undbyonena meora nothe rha sno
infl
u enc eont hetransacti
onsi nwhi chitma ye ngage.Trustfundsdifferfroma genc yfundspr i
nc ipally
inde gr e e:trustfundsof te
ne xistove ral onge rpe r
iodoft imet hana na ge ncyf und;r epr esenta nd
deve lopve stedintere
stofabe ne ficia
ryt oagr eaterext
ent;a ndinvolvemor ec ompl exa dmi nistration
andf ina nci
a laccountinga ndr epor t
ing.Age ncyfundsa r
eus edonlyi ft hegove rnme ntaluni thol ds
resour ce sinapur elycus todia
lc apac i
tyforot her
s.Asnot e
da bove ,specifi
ca ccount i
ngpr oce duresa nd
limitationsde pendont hee nactme ntthatbroughta boutcreat i
onofapa r
ticula rtrustora ge ncyf und,
plusa llothe rregulat
ionsunde rwhi chi tope ra
tes.Regulati
onsi ncl
udepe r t
inents tat
utes,or dina nce s
,
wi l
ls,t rustindentures,a ndot he ri ns
trume ntsofe ndowme nt,resoluti
onsoft hegove rningbody,
stat
e me ntsofpur posesoft hefund,ki ndsanda mountsofa s s
etshe l
d,a ndot hers.Thisa ggr ega teof
factors ,ors ucha sarea pplic
ablet ogive nfund,de t
erminesthet r
ansactionsi nwhi c hitma ya nds houl d
enga ge .

Thi scha
pt e
ri l
lust
rate
sa c
c ount
inga n
dfinanci
alre
porti
ngre quir
ement
sforfiduc
iar
yfunds.Be c
ause
fiduci
arya ct
iviti
esbe ne
fitonlyot he
rindi
vidual
s,organi
zations,a
ndgovernments,r
athe
rtha nthe
report
inggove rnment,GASBSt a
tementNo.34e xcl
udesther epor
ti
ngoffiduci
aryact
ivi
tie
si nthe
gove r
nme nt
-widef inanc
ials t
at
eme nt
s.Thus,fi
duci
arya c
tiviti
esarere
port
edonl yinthefiduci
ary
fundfinancialst
atements.

8.2) A gency F unds

GASBs ta
nda r
dsi denti
fyagency funds a soneoft hef ourtypesoffiduciaryfunds .A gency funds a re
usedt oa ccountf ora ssetshe l
dbyagove rnme ntaluni tacti
nga sa gentf oroneormor eot her
governme ntalunits,orf orindi vidual
sorprivateor ganizat
ions
.Simi l
a r
ly,ifaf undofagove rnmental
unitre gula
rlyr ece i
vesa s
s etst hataretobet ransmi tt
edt ootherf undsoft hatuni t,a na genc y
rel
ati
ons hipexist
s.As s
e tsac countedfori
na na genc yfundbe l
ongtot hepa rtyorpa rti
e sf orwhi cht he
governme ntalunita ct
sa sa ge nt.There
fore,agency fund assets are offset by liabilities equal in
amount; no fund equity exists.GASBSt ate
me ntNo.34r equi
resage ncyfunda ssetsandl i
abili
ti
est o
ber ecognizedont hea ccrua lba si
s.Revenues,expe nditur
es,ande xpens e
sa renotr ecogni zedint he
accountsofa gencyf unds ,howe ver.

Unles suseofa na genc yf undi sma nd at

edbyl aw,byGASBs tandar
ds ,orbyde c
isi
onoft hegove rning
boardo fago vernme ntaluni t,a na gencyr el
ationshipma ybea ccountedf orwi thingove rnme nta
l
and/orpr oprie
taryf unds .Fore xa mpl e
,localgove rnmentalunitsmus tactasa gentoft hef ede r
ala nd
stat
egove rnme ntsint hec ol
lec t
ionofe mployee s
’wi thhol
dingt a
xe s,ret
ireme ntc ontr
ibutions,a nd
socialsec uri
tyt a
xes .Int hea bsenc eofc ontr
aryl egalrequir
eme nt
sora dmini s
trat
ivede ci
sions,itis
perfectl
ya cceptabl
et oa ccountf ort hewi thholdingsa nd ther emi t
ta
nc et of ederala nd s tat
e
governme nt
s,wi thi
nt hef undst hata ccountfort hegr osspa yoft hee mploye es,a sshownbyt he
ill
ustrat
ivee ntrie
si nCha pter4.I ng enera
l,ifa na gencyr e
lati
onshipi sordinaril
ydi sc har
ge dona
rat
he rcurrentba si
s,a ndt hea mount sofa s
setshelda sagenttendtobes malli
nr el
ati
ont of unda ssets
,
ther
ei snone edtoc reatea na ge ncyf undunlessrequiredbyl a
wora dminist
rativedec isi
on.

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 185
 Ac
count
ingf
orFi
duc
iar
yAc
ti
vit
ie
s
A gency F und for Special A ssessment Debt Service
GASBs t
andar
dss pecif
ythatagove r
nmentalunitthatha snoobl iga
ti
ontoa s
sumede bts e
rviceon
speci
alass
essmentde btintheeventofproper
tyowne r’sdefault
,butdoesper
formthef uncti
onsof
bil
li
ngpropert
yowne r
sfortheass
essment
s,coll
e ct
ingins t
all
me nt
sofa s
ses
smentsandint
e r
estonthe
asses
sments
,andf rom thecoll
ect
ionspayinginter
e s
ta ndpr i
nc i
palonthespeci
alass
e s
sme ntdebt
,
shoulda
ccountforthoseact
ivi
ti
esbyuseofa nA gency F und.

Toil
lust
rat
ea ge
ncyfundaccounti
ngforspe
cia
lass
essmentde
btser
vicea
cti
vit
ie
s ,ass
umethes a
me
i
nfor
ma t
ionusedinChapt
er6fortheTownofXe xceptt
hatt
hegover
nment
alunitisnotobl
iga
tedin
anymannerfort
hespeci
alas
sessmentde
bt.

T he information is: As s
umet ha tspe ci
ala sses
sme ntbonds,s econdaril
yba cke dbythege ner a
lt a
xi ng
author it
yoft heTownofX,we rei ssuedt oc omplet
eas tree
t-wi deningproject.Uponc ompl et
ionoft he
projec ttheTownl evieda ss
essme nt
sa mount i
ngto$480, 000,pa yablein10e qua
linstal
lme ntswi th5
perce ntinter
e stonde ferr
edinstallme nts
,onowne r
sofpr ope rt
iesfronti
ngont heimprove ds t
reets.As
showni nEnt ry,1a l
lre cei
vabl
e sa rerecor dedatthet i
meoft helevy,butRe ve nuesi
sc re
ditedonl yf or
thea mou ntexpe c
tedt obec ol
lec tedwi thinoneye a rfr
omt heda teofthel evy;De f
e r
redRe venue sis
creditedf orthea mountofd e
f erredi nstall
me nts
.Be causet hee ntri
esa tthegove rnme nt
-wi del evel
woul dbes i
mi lar
,e xceptthati nterestExpe nsewoul db er eportedr a
thert hanExpe nditures,thos e
entri
e sa reomi tt
edfort hesakeofbr evity.Re quir
edbudge tarye ntr
ies,asshowne ar
lieri
nt hisc hapter
forse ria
lbonda ndte r
mbondde bts e r
vicef unds,areomitted.

Whenthea
sse
ssment
sintheamountof$480,
000,paya
blei
n10equa
linst
al
lment
s,we
rel
evi
edon
be
nef
it
edpr
opert
yowner
s,th
efol
lowingj
ourna
lentr
ywa sma
dei
ntheage
ncyfund.
De
bit
s Cr
edi
ts
1. As
ses
sment
sRec
eivabl
e––Curr
ent
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
4.
.
8.
,000
As
ses
sment
sRec
eivabl
e––Defe
rre
d..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
4.
.
3.
2,000
Duet
oSpeci
alAssess
mentBondholder
s––Pri
ncipal
..
..
..
..
..
..
..
..
..
. 480,
000

Allcurr
entasses
smentsrece
ivabl
ewe recol
lect
ed( SeeEntry2)alongwith$24,000inter
est(
5perce
nt
onthepreviousunpai
dr ec
eivabl
eba l
ance)
.Asi ndicat
edinCha pter6,anyamount snotcol
lec
tedby
theduedateshoul
dber ec
lassi
fi
edasAs s
essmentsRe ce
ivable
––De l
inquent
.
2. Ca sh.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
7
..
2
.,
000
As
ses
sme
ntsRe
cei
vabl
e–Cur
rent
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 48,
000
Duet
oSpe
cia
lAs
ses
sme
ntBondhol
der
s–I
nte
res
t.
..
..
..
..
..
..
..
.
..
..
..
..
..
..
.. 24,
000
Spe
cia
lasses
smentbondpr i
nci
pali
nthea
mountof$48,
000a
ndi
nte
res
tint
hea
mountof$24,
000
wer
epaidduri
ngthecur
rentyea
r.

3. Duet
oSpe
cia
lAs
ses
sme
ntsBondhol
der
s––Pr
inc
ipa
l.
..
..
..
..
.
..
..
..
..
..
..
..
..
..
..
..
..48,
000
Duet
oSpe
cialAsse
ssmentsBondholder
s––Int
erest
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.24,
000
Cash..
..
.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 72,
000

Thes
econdi
nst
al
lme
ntofa
sse
ssme
ntsr
ece
iva
blewa
sre
cla
ssi
fi
eda
tye
ar-
endf
rom t
heDe
fer
red
Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 186
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
c
ate
gor
ytot
heCurr
entcat
egor
y.
4. Ass
ess
me nt
sRecei
vabl
e––Cur
rent
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
4.
.
8.
.
,.
0
..
0
..
0
.
As
ses
sme
ntsRe
cei
vabl
e––De
fer
red.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.48,
000

Thi
spat
ter
nofjour
nalent
ri
eswi
llber
epe
ate
ddur
inge
achoft
her
ema
ini
ngni
neye
arsunt
ila
lls
pec
ial
as
ses
smentbon
dsarere
tir
ed.

8.2.1) T ax A gency F unds

Ana ge ncyr e l
at
ionshiptha tdoe s,logica l
ly,resultinthec reat
ionofa nage ncyf undisthec ol
lecti
onof
taxe
s ,orot he rrevenue s
,byonegove rnme ntalunitfors everaloft hef undsi tope r
atesa ndforot her
governme ntalunits
.St at
ego ve r
nme ntscommonl yc ollectsalesta xes,ga soli
net axes,andma nyot her
taxe
st hata reapportionedt os tatea g enciesandt ol ocalgove rnme ntaluni t
swi t
hinthes t
ate.Att he
loca
lgove rnme ntlevel,itisc ommonf ora ne l
ectedcount yoffici
a ltos ervea scol l
ect
orf ora l
lprope rty
taxe
sowe dbype rs
onsorc or porationsowni ngpr opertywi t
hint hec ountry.Ta xesleviedbya llfunds
anduni t
swi thinthec ountrya rec erti
fiedt otheCount yCol l
ectorf orc ollecti
on.TheCount yCol lector
isrequi r
edbyl awtoma kepe r i
odicdi stri
but i
onsoft axc oll
ecti
onsf ore achye artoe achf undoruni tin
thepr oportionthele vyf ort ha tfundoruni tbearstot hetotallevyf ortheye a r
.I nma nyj uri
sdictions,
thelawpr ovidesthatuni tsma yr eque stadva ncesor“ draws ”fromt het axa genc yfundpr iortor egular
dist
ributions ;advanc esa reus uall
yl imitedbyl a wt oas pecifi
e dpe r
c entage,of t
en90pe rcent,of
coll
ec ti
onsf orthepe riodf r
omt hela stdistr
ibutionunt i
ltheda t
eoft hea dva nce.

Ta xage ncyfundaccountingwoul dbequi tesimpl eifal

ltaxeslevi
e dforagive nyearwerecoll
ectedin
thatyea r.I
tisalmostalwa ystrue ,however,tha tcoll
ecti
onsdur i
nga nyye arrelat
etotaxeslevie
di n
severalpr i
ory ea
rsa swe l
la st axesl e
viedf ort hec urr
entye ar,ands ome ti
me sincl
udea dvance
colle
c t
ionsoftaxesforthef oll
owi ngyear.Inma nyjuri
sdict
ions
,notonl ydoe stot
altaxrat
eve r
yfrom
ye a
rtoye a
rbuttheportiont hattherat
eofe a chuni t(
ande achfund)be ar
stot hetotalr
ateals
ova ri
es
from ye artoye ar.Addi ti
on a
lly,interes
ta ndpe nal
tiesonde l
inquenttaxesmus tbec ol
lect
eda t
stat
utoryr at
esora mountsa tthet imede li
nque nttaxesarec ol
lected;i
ntere
sta ndpe na
lt
iescoll
ected
mus tbedi st
ri
bute
dt opa r
tici
pa ti
ngf undsa nduni t
si nthes amema nnert hattaxcollec
ti
onsa re
distr
ibuted.

Illustration of C omposition of T otal T ax R ates

As sumet hattheCountryCol lectorofCa mpbe llCount ryisrespons i
blef orcoll
e cti
ngthet axesduei n
2002f orthef undsandunitsloc ate
dwi t
hint heCount ry.Or di
narily,thet axe
sl eviedfore achfunda nd
unitwi thi
nt heCount r
ya res howni nc olumnf or
mi nane wspape radve rt
iseme ntasle galnoti
cet o
taxpayers.Ino r
dertokeept hei ll
ustrati
onsi nt histext,legi
blea ndc ompre hensibl
e,Illust
rat
ion8- 1
showst woc olumnsofsuc hal egala dvertiseme nt
.Re alpropertyt a
xs tateme nt
sa reprepa r
edfore ach
parcelofpr ope r
tylocat
edwi thint hej urisdi
c t
ionf orwhi chat axa ge ncyf undi sope r
a t
ed.Whe ther
eachs tate
me ntdiscl
osesthea mountoft axt hatwi l
lbedi s
tri
butedt oa llofthee ntit
ie
st hatle
vyt axes
ont hatparcel,orwhetherthes ta
t e
me nts howsonl yt het ot
altaxpa yabl etotheCount ryCol lect
or,the
Collector’sOf fi
cemustbea blet oc omput ea nddi str
ibutedalltaxesc ollect
edtot hea ppropri
ateuni t
s

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 187
 Ac
count
ingf
orFi
duc
iar
yAc
ti
vit
ie
s
a
ndf
unds
.
I
ll
ust
rat
ion8-
1
C OMPOSIT ION OF T A X E S T O BE C OL L E C T E D
BY C OUNT C OL L E C T OR OF C A MPBE L L C OUNT R Y
F OR C E R T A IN UNIT S W IT HIN T HE C OUNT R Y
F OR T HE Y E A R 2002
Was
hingt
on Townof
Townshi
p Washi
ngt
on
TotalStat
eRa te..
..
..
..
..
...
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
$.
0.01 $0.
01
CountyFunds :
Ge neral.
..
..
...
..
..
..
..
..
..
...
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
1.08 1.
08
Ca pit
alProject
s..
..
...
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
0.09 0.
09
De btSe r
vice..
..
..
..
..
..
...
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
0.20 0.
20
We l
fare.
..
..
...
..
..
..
..
...
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
0.11 0.
11
TotalCountryRa te..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
1.48 1.
48
Libr
a r
yFund. ..
...
..
..
..
..
..
..
...
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
0.25 0.
25
Towns hi
pFunds :
Ge neral.
..
..
...
..
..
..
..
..
..
...
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
0.07 0.
07
FireProtecti
on...
..
...
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
0.23 ––
TotalTowns hip..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
0.30 0.
07
SchoolFunds :
Ge neral.
..
..
...
..
..
..
..
..
..
...
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
4.50 4.
50
Ca pit
alProject
s..
..
...
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
0.18 0.
18
De btSe r
vice..
..
..
..
..
..
...
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
0.38 0.
38
TotalSchoolRa te..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
5.06 5.
06
Cit
yFunds :
Ge neral.
..
..
...
..
..
..
..
..
..
...
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 2.
53
Street
....
..
..
..
..
..
..
..
..
...
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 0.
33
Pens i
on...
..
...
..
..
..
..
..
..
...
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 0.
25
De btSe r
vice..
..
..
..
..
..
...
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 0.
08
TotalTownRa te..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 3.
19
TotalTaxRa t
esper$100As sess
edVa luat
ion.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..$7.10 $10.
06

Forexa mple,Ill
ustrat
ion8-1showsthatapa r
c e
lofpr opertylocat
edinWa s
hingtonTowns hi
poutside
theTownofWa s
hingtonwouldbet a
xeda ttherateof$7. 10pe r$100ofa s
sessedva l
uat
ion;whereas
ifthepa r
celwe rei ns
idetheTownl imit
s,thet a
xr atewoul dbe$10. 06.Therefor
e,ifapa rce
lwe re
insi
deinWa shingtonTowns hi
poutsi
detheTownha da na sses
sedvaluat
ionof$10,000,thetota
lreal
propert
yt a
xpa yablein2002woul dbe$710,butapa rcelwi t
hthes amea sse
ssedva l
uati
onlocated
withi
nt heTownwoul dbetaxe da
t$1,006.Thet otalofe achofthesetaxstate
me ntsiscompris
edof
thetaxesleviedfore achunit
,a ss
howni nIllust
rati
on8- 1.I ntur
n,thetaxeslevie
df oreachunitare
compr i
sedoft heta xe
slevie
df orf
undsoftheuni t,asalsos howninI ll
ust
rat
ion8-1.Ther el
ati
onship

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 188
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
betweendirectandoverl
appingdebtisdi
scussedinChapt
er6.NotethatIl
lust
rat
ion8-1showsthata
personororganizati
onowningproper
tywithintheTownofWa s
hingtonisrequi
redtopay66c e
ntsof
thetotalrat
ef ordebtse
rvice(20centst
oCa mpbel
lCountr
y,38c ent
stot heschooldi
str
ict
,and8
centstotheTo wnofWa shingt
on).I
ll
ustr
ation8-2summari
zest
hec ompositi
onofe ac
htaxstat
ement
bygove rnmentaluni
t.

Inthoses t
at
e sinwhi c htaxe sa r
el eviedonpe rs
ona lp r
operty,thefundsa ndunitsthatlevyt he
pers
onalpropertytaxesa rege neral
lya ss
ume dtobet heone stha tl
evytaxesont heres
idenceoft he
owner,unlessthereisc onvinc i
nge videncethatt
hes itusofthepe r
sonalproper
tyisatthea nother
loca
ti
on.Inasmuc ha sthetaxr atelevi
e dforeachunitande achf undoft
envariesfromyeartoye a
r,it
isneces
sarythatalltaxc ol
lectionsbei dent
if
iedwiththeye arforwhi c
htheta xe
swe rel
evieda swe l
l
aswiththeparti
cularpa r
celsforwhi chtaxeswerecollecte
d.

Operat
ionoftheCollec
tor’
sOf f
iceofte
nr equir
estheuseofs ubst
ant
ialadmini
str
ati
ve,cler
ical
,and
computert
imea ndpr
ovisi
onofextensi
vebui l
dingandcomput e
rfaci
li
tie
s.Accor
dingly,i
tiscommon
f
ortheCollect
ortobea ut
hori
zedtowi t
hholdac erta
inperce
ntagefr
omt hecoll
ect
ionsforeachunit
,
andtoremitt
otheCountryGeneralFund(orotherfundbear
ingtheexpendi
tur
esforoperat
ingtheTax
AgencyFund)thetot
alamountwithhel
dfromt hecoll
ect
ionsforot
herfunds.
I
ll
ust
rat
ion8-
2
Parcel L ocated
Outside T own In T own
St
a t
es.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.$
.
.1
.
..
0
..
0
..
..
..
..
..
..
..
..
..
. $1.
00
CountyFunds..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.1
.
.4
.
.8
.
..
0
..
0
..
..
..
..
..
..
..
..
..
.148.
00
Libr
ary.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.2
.
.5
.
..
.
0
..
0
..
..
..
..
..
..
..
..
..
.25.00
Township.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.3
.
.0
.
..
.
0
..
0
..
..
..
..
..
..
..
...
.. 7.
00
School.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.5
.
.0
.
.6
.
..
0
..
0
..
..
.
..
..
. 506.
00
Town...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. –– 319.
00
Total
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.$
.
.7
.
.1
.
.0
.
..
0
..
0
..
..
..
..
..
..
..
.$1,
006.
00

A ccounting T ax A gency F unds

Ta xesl eviedeachyea rshouldberecordedinthea ccountsofe
achf undofe achgovernmenta
luni ti
n
thema nneri l
lus
trat
edi npr ece
dingc hapter
s.Al t
hougha nal
lowa ncef oresti
mateduncollecti
ble
currentt axeswouldbee sta
bli
shedine achfund,thegr os
samountoft hetaxlevyforallf
undss houl
d
ber ecor dedintheTa xAge ncyFunda sar ece
ivable
.Not ether
eceivablei
sde si
gnate
da sbel
ongingto
otherf undsa ndunits,andt here
ceivableisoffs
etint ota
lbyaliabil
ity.As s
umingtotalr
ealpropert
y
taxesc er t
if
iedforcoll
ectionduri
ng2002a mountedto$10,516,
400,theTa xAge ncyFundentr
ywoul d
be:
De
bit
s Cr
edi
ts
1. Ta
xesRec
eiva
bleforOt
herFundsa
ndUni t
s––Current
..
..
..
..
..
..
..
..
..
..
..
.
1.
.
0.
,516,
400
DuetoOthe
rFundsandUnit
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 10,
516,
400

I
twoul
dbene
ces
sar
y,ofc
our
se,f
ort
heCount
ryCol
le
ctort
oke
epr
ecor
dsoft
het
ota
lamountof2002

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 189
 Ac
count
ingf
orFi
duc
iar
yAc
ti
vit
ie
s
ta
xestobec ol
lect
edforeachofthefundsanduni
tstha
tpart
ic
ipat
eint
heTaxAge nc
yFundinor
dert
o
dist
ri
but
etaxc ol
lect
ionsprope
rly.Assumethatt
he2002taxeswerel
evi
edforthef
oll
owi
ngunit
s(i
n
ordert
oreducethedetai
linthi
se xa
mple,anumberoftheuni
tsa
recombi
ned):

St
a t
e..
..
..
...
..
..
.....
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. $10,
400
Campbe l
lCou ntry..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 1, 480,
000
Wa s
hingtonSc hoolCorporati
on..
..
..
..
..
..
..
.. 5, 060,
000
TownofWa shington..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
.. 2, 400,
000
Otheruni
t s(shoul dbeitemize
d)..
..
..
..
..
..
..
.. 1, 566,
000
Total
..
..
..
....
..
..
....
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. $10,
516,
400

I
fcoll
ect
ionsof2002taxe
sdur
ingac
ert
ai
npor
ti
onoft
heye
ara
mount
edt
o$5,
258,
200,t
heTa
x
Age
ncyFunde nt
rywoul
dbe:
De
bit
s Cr
edi
ts
2. Ca
sh.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
5.
.
,.
258,
200
TaxesReceiva
bleforOtherFundsa ndUnits
–Current.
..
..
..
..
..
..
..
.. 5,
258,
200

Thet axc ol
lecti
onsmus tina nactualcasebeidentif
iedwi t
ht hepa r
celofpropertyaga ins
twhi chthe
taxeswe relevied,becaus
et heloc a
tionofe achpa r
celdeter
mi nesthegovernme nta
luni t
sa ndf unds
thatshouldreceivethetaxc ol
lect
ions.As s
umingf orthesakeofs i
mpl i
cit
ytha tt
hec ollect
ionsf orthe
periodrepresentcol
lect
ionof50pe rcentofthetaxeslevi
eda gains
te ac
hpa rceli
nCa mpbe llCount r
y,
andt hattheCountryGe ner
a lFundisgi ven1pe r
centofa l
lcollect
ionsforunit
sothert hantheCount y
asr ei
mb urse
me ntforthec ostofope rat
ingtheTa xAge ncyFund,t hedist
ributi
onoft he$5, 258,200
coll
e ct
ionswoul dbe:
Taxes Coll
ect
ionFee
Col
lec
ted (Charged) Ca
shtoBe
(
50%ofLe vy) Rece
ived Di
st
ri
but
ed
St
a t
e..
..
..
...
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. $$5,
200 $(52) $5,
148
Campbe l
lCount y..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 740,
000 45,182 785,
182
Wa s
hingtonSc hoolCorporat
ion.
..
..
..
..
..
..
..
. 2,
530,
000 (
25,300) 2,
504,
700
TownofWa s
hington.
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
. 1,
200,
000 (
12,000) 1,
188,
000
Otheruni
t s(s
houldbei t
emized).
..
..
..
..
..
..
..
. 783,
000 (
7,830) 775,
170
Tot al
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. $$5,
258,
200 $–0– $5,
258,
200

I
fca
shisnotdi
str
ibut
edassoonast
hea
bovec
omput
at
ioni
sma
de,t
hee
ntr
ybyt
heTa
xAge
ncyFund
t
ore
cor
dthelia
bil
itywoul
dbe :
De
bit
s Cr
edi
ts
3. Duet
oOthe
rFundsandUtili
ti
es.
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.5,
258,
200
Duet
oStat
e..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 5,
148
Duet
oCampb el
lCounty..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 785,
182
Duet
oWa shi
ngtonSchoolCorporat
ion..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 2,
504,
700

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 190
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
Duet
oTownofWashi
ngton.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 1,
188,
000
Duet
oOthe
rUti
li
ti
es.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 775,
170

I
f,a
sisl i
kel
y,col
lect
ionsdu r
ing2002inc
ludecol
lec
ti
onsoftaxest
hatwerele
viedfor2001,2000,
a
nd prece
ding ye
ars,c omputat
ionsmustbema det o de
ter
minethea ppr
opri
atedesti
tut
ion of
c
oll
ect
ionsforeac
ht axye a
rtoe achf
unda nduni
tthatl
evi
edt a
xesaga
instt
hepropert
yforwhi ch
c
oll
ect
ionshavebee
nr ecei
ved.

Whe nc ashisdist
ributedbyt heTaxAge ncyFund,t heli
abili
tyaccountss howni nEnt ry3s houl dbe
debite
da ndCa shcr e
dited.Ifcas
hi sadva ncedtooneormor egove r
nme ntalunitsorf undspr iortoa
regularperi
odicdis
tribut
ion,thedebit
stot hel i
abili
tyaccountsma yprecede dthecredits.Byye a r
-end,
al
la dvancesshouldbes ettl
ed,al
ldist
ributionsc omputeda ndrecorded,anda llcashdi str
ibut
e dtot he
unitsandfund sf
orwhi c
ht heTaxAge ncyFundi sbe i
ngope ra
ted.Therefore,ifallthosee ventsha ve
ta
ke nplace,theyea r
-endBa lanc
eSh eetfort heTa xAge nc yFundwoul dc onsi
stofonea s
set:Ta xes
Re cei
vableforOtherFundsa ndUni t
s-Delinquent ;a
ndonel i
abil
it
y;Duet oOt he
rFundsa ndUni t
s.

E ntries Made by F unds and Units Participating in T ax A gency F unds

Eachuni tthatre
c e
ivesadist
r i
buti
onmus trecordthea ppropri
at
eporti
onofi ti
seachofthefundsit
maintains.Ineachfunditmus tal
sorec
ordt hefacttha
tc as
hr ecei
veddi
ffer
sfromtheamountoftaxe
s
col
lec t
edbyt hefeepa i
dt ot heCountryGe ne
ralFund.Thef e
epa i
di s
,ofc our
se,rec
ordedas
Expe ndit
ure.Fore xample,thec omputa
tionf orthee nt
riestobema debyt hevar
iousfundsof
Wa shingtonSchoolCorporat
ionwouldbe( usingtherat
e sshowninIll
ust
rat
ion8-1)
:

Coll
ect
ions Coll
ect
ion Ca
sh
20
02Ra
te of2002Taxes FeePai
d Re
cei
ved
Sc
hoolFunds :
General.
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
$4.
50 $2,
250,
000 $22,
500 $2,
227,
500
Capi
talProje
cts.
..
..
..
..
..
..
..
..
..
..
..
..
.0.18 90,
000 900 89,
100
DebtServic
e..
...
..
..
..
..
..
..
..
..
..
..
..
..
..0.
38 190,
000 1,
900 188,
100
Total
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
$5.
06 $2,
530,
000 $25,
300 $2,
504,
700

Fr
om thecomput
at
ionsi
tcanbes e
enthatt
hee
ntr
ymadei
ntheWa
shi
ngt
onSc
hoolCor
por
ati
on
Gene
ralFundf
ort
he2002col
le
cti
onsdi
st
ri
but
eds
houl
dbe
:
De
bit
s Cr
edi
ts
Cash..
..
.
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
2
.,
227,
500
Expendi
tures.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 22,
500
TaxesReceiva
ble––Curre
nt..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 2,
250,
000

Si
milarent
ri
eswouldbemadeint heot
hertwofundsoftheWa s
hingtonSchoolCorpor
ati
onandinal
l
t
hefundsofuni
tst
hatpai
dataxc oll
ect
ionfeet
otheCountryGeneralFund.Coll
ect
ionbytheCount
ry
Gener
alFundofta
xescol
lec
tedforitandthefe
ec ol
le
cte
df ori
tiscomputedasfol
lows:
Col
le
cti
ons Col
le
cti
on Ca
sh

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 191
 Ac
count
ingf
orFi
duc
iar
yAc
ti
vit
ie
s

2002Ra
te of2002Ta
xes Fe
ePa
id Re
cei
ved
CountyFunds:
General.
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..$1.
08 $540,
000 $45,
182 $585,
182
Capit
alProje
cts.
..
..
..
..
..
..
..
..
..
..
..
..
. 0.09 45,
000 –0– 45,
000
DebtServic
e..
...
..
..
..
..
..
..
..
..
..
..
..
..
.. 0.
20 100,
000 –0– 100,
000
We l
far
e...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. .11 55,
000 –0– 55,
000
Total
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..$5.
06 $740,
000 $45,
182 $785,
182

Theentr
ytobema
dei
ntheGe
ner
alFundofCa
mpbe
llCount
ryf
ort
he2002c
oll
ect
iondi
st
ri
but
ed
shoul
dbe:

De
bit
s Cr
edi
ts
Ca
sh.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 585,
182
TaxesRecei
vable–Curr
ent 540,
000
.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..

Revenue
s 45,
182
.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..

8.2.2) “ Pass-T hrough” A gency F unds

Grants
,e nt
itle
me nts
,ors ha re
dr evenue sfrom thef ede ra loras tategove rnmentof t
e npas st
hr ougha
lowerlevelofgove r
nme nt( pri
ma ryrecipient)be f
oredi s tri
butiontoas econda r
yr eci
pient.Ac counting
forsuch“ pass-though”gr ant
sde pendsonwhe thert hepr ima r
yr eci
pientgove r
nme ntisde eme dt o
haveadministrative involvement ordirect financial involvement i nthegr ant
s.Ac cordingt oGASB
sta
ndards:
Ar ec
ipie ntgove rnme ntha sa dmi nis
trati
vei nvol veme ntif,f ore xampl e,it( a)moni tors
secondaryr eci
pientsf orc ompl iancewi th pr ogram- s
pe c
ifi
cr equir
e ment,(b)de t
e rmine s
eli
gibil
ityofs e
conda ryrecipi
e ntsorpr ojects,e ve nifus i
nggr antor-es
tabli
shedc rit
eri
a,or( c)
hasthel iabil
itytoe xerci
sed i
s cret
ioni nhowt hef undsa rea l
located.Ar ecipie
ntgove r nme nt
hasdirec tfi
nancialinvolveme ntif,fore xampl e,i tfinancessomedi r
ectprogramc ost
sbe c
aus e
ofagr antor-i
mpos edma t
chingr equireme ntori sl iablefordisall
owe dc ost
s.

Mor eofte
nt hannot,thecrit
eri
aforadminis
trat
iveordi r
ectfinanciali
nvolvementareme t
,inwhi ch
casetheprima r
yrecipi
entgovernmentmustrecogniz
ear evenuef ortherecei
ptandane xpendit
ureor
expensefort hetr
ansferinagove r
nme nt
alfund,privat
e-purpos
et rustfund,orpropr
ietar
yf und.If
,
howe ver
,neitheradminis
tra
tivenorfi
nanci
alinvolvementisde e
me dt oe xi
st
,thena“ Pass
-Through”
Age ncyFundmus tbeus e
da ndnorevenueorexpenditur
e/expens
ei srecogniz
ed.

Toi l
lust
rat
ea c
counti
ngfora“ Pa
ss-
Thr
ough”AgencyFund,ass
umet hat$5mi l
li
onoff eder
al
fi
nancia
lassi
st
anceisre
cei
vedbyast
at
egover
nmentf
romthedef
err
algover
nment
,theful
lamountof

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 192
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
whichmustbepa s
sedtolocalgover
nmentsaccordi
ngtopredet
ermi
nedeli
gibi
li
tyre
quir
ementsandin
amount
sa cc
ordingt oapredeter
minedformula.Sinc
ethes ta
tegover
nmentisservi
ngme r
elya sa
“ca
shconduit
”inthiscase,t
heus eofaPass-
ThroughAge ncyFundisdee
me dappr
opri
ate
.Thee ntr
y
t
orecor
dreceiptofthe$5milli
oninPass
-ThroughAge nc
yFundwoul dbe:
De
bit
s Cr
edi
ts
Ca
sh.
..
..
..
..
..
..
..
.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
5
.,
000,
000
DuetoOtherUnits.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 5,
000,
000

Ass
umi nga l
lmonie
swe redi
sbur
sedt
othese
conda
ryr
eci
pie
ntsdur
ingt
hec
urr
entf
isc
alye
ar,t
he
Pa
ss-ThroughAgencyFunde
ntrywoul
dbe:
De
bit
s Cr
edi
ts
Duet
oOtherUnit
s.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 5,
000,
000
Cas
h..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 5,
000,
000

Ther ec ei
ptofCa shorothera ssetsfromaPa ss-ThroughAge ncyFunds houl dbea ccountedf orbyt he
recipie ntinc onf
ormit
ywi t
hGASBs ta
nda r
dsdi scussedpr e
viousl
y:Gove rnme ntalf undt ypesa reto
recogni zea l
lgr a
ntsasr evenuewhe nthegr antproc eedsareavail
ablef orus efort hepur poseoft he
funda nde l
igibi
li
tyrequireme ntsha vebe e
nme t.I fgrantproceedsa rea vailablei mme dia t
ely,the
Re ve nu esa ccountiscredited;ifs omee l
igibil
ityr equire
me ntmus tbeme t,theDe fer
redRe venues
acc ounts houl dbec r
editeda tt het imet hegr antpr oceedsa r
er ecognizeda sa s
se ts
,a nda mounts
transfe rr
edf romDe f
err
e dRe venue st oReve nuesase li
gibi
li
tyrequirementsa reme t.Pr oprietar
yf und
type sr ecogni zeasnon-operati
ngr evenuesthepr oce edsofgrantsforope ra
tingpur pos es,ort hatma y
bee xpe nde da tt
hediscreti
onoft her eci
pientgove rnme nt
;ifthetermsoft hegr a ntre s
tri
ctt heuseof
thepr oc eedst otheacqui s
iti
onorc onst
ructionofc apita
la ss
ets
,thepr oc
e edsmus tber ecordeda s
capi t
a lcont r
ibuti
on(SeeCha pter7).

8.2.3) F inancial R eporting of A gency F unds

Asme nti
one dea rli
eri nthi scha pter
,f i
ducia
rya cti
viti
esa r
er epor t
edonl yi nt hefiduciaryfund
financialstat
ement s;the yha venoe ff
ectonthegovernme nta
lorbus iness-typea c
tiviti
esoftheprimary
gove rnmentr eportedi nt hegove rnme nt
-widefinanci
a lstat
eme nts.Ass howni nIll
us t
rat
ion2- 9,
age ncyfundf inanc i
ali nforma ti
oni sreport
edinas eparatecolumnoft heSt a
teme ntofFiduciaryNe t
As sets.Age ncyf undsa ren oti ncludedint heStatementofCha nge sinFi duci
a ryNe tAs set
s( s
e e
Illust
rati
on2- 10)be ca uset heyha venone tass
ets(asse
tsmi nusliabili
tiese qual
sz erone tass
e t
s)and
the r
eforeha venochanges i nne ta ss
ets.GASBs tandardsdonotr equiredi scl
osureoft hea s
setsand
liabil
iti
esofi ndi
vi duala genc yfunds ,butagove r
nme ntma yoptiona l
lyi ncludeini tsCompr ehensi
ve
Annua lFinancia
lRe por tac ombinings ta
tementofne ta s
setsdisplayingt hea ss
e tsandl i
abil
iti
esof
ea chagenc yfundi nse paratec ol
umns .

8.3) T rust F unds

I
naddi
ti
ont
oage
ncyf
unds
,jus
tdi
scus
sed,t
heFi
duc
iar
yFundc
las
sif
ica
ti
oni
ncl
ude
sInve
stme
nt

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 193
 Ac
count
ingf
orFi
duc
iar
yAc
ti
vit
ie
s
Tr
ustFunds
,Pr
iva
te-
Pur
pos
eTr
ustFunds
,andPe
nsi
onTr
ustFunds
.

Hi storical
ly,trustfundsha vebeenc reat
edt oaccountfora ss
etsreceivedbyt hegove r
nme nti nat rust
agr eeme ntinwhi c hthea s
setsar
et obei nvest
edt oproduc eincomet obeus e
dfors peci
fiedpur pos es
(ge nerall
yc ulturaloreducati
onal
).Thema jori
tyofs uchtrust
sbe nefi
tthegove r
nme nt’
sownpr ogr ams
ori tsc i
tizenry.Asdi scussedandil l
ust
ratedinCha pter4,unde rGASBSt ate
me ntNo.34,t rustst hat
be nefitthegove r
nme nt’sownpr ogramsorc it
izensatl ar
gea renowa ccountedfora seithe rs pec ia
l
reve nuef undsorPermanent F unds,de pendingonwhe therthepr i
ncipalofthegiftisexpe nda blef or
thes pecifi
edpur poseorpe r
mane ntl
yr est
ric
tedf orinv es
tment ,withonl ythee arni
ngst her efrom
expe nda blef orthes pecif
iedpurpos e
s.Asdi s
cussedi nCha pter4,bot hs peci
alrevenuef undsa nd
pe rma nentf undsa r
egove rnment
alf undstypes.Unde rtheprovisionsofSt a
tementNo.34,onl yt rus t
s
tha tbe nefitother,sucha si ndi
viduals,organizati
ons,orot hergove rnments,a r
ea ccount edf ori n
fiduc i
a r
yf unds .

Thef oll
owi ngs ec t
ioni ll
ustrat
edt hea ccountingf oranI nve s
tme ntPool ,inwhi chs omepa rtic
ipa nts
areot her( exte r
na l)gove r
nme ntsa nds omea ref undsoft hes ponsor i
nggove rnme nt.E xternal
Investment Pools a rec entr
allyma nagedi nves t
me ntportfolios(pool s
)tha tma na gethei nve s
tme ntsof
othergove rnme ntsa nd pe rhapsno t
-for-pr
of i
tor ganizationsout si
det her e
por t
ing e ntit
y oft he
gove rnme ntt ha ta dmi ni
s t
ersthepool( thes ponsoringgo vernme nt).Andinvestment trust fund i s
us e
dt oa c countf ort hea sse
ts,liabil
iti
es,ne ta ss
ets,andc hange sinne tas set
sc orrespondingt ot he
equityoft heexternal pa r
tici
pants.Ty pi
c al
ly,a sinthef ol
lowi nge xa mpl e,t
hes pons oringgove r
nme nt
alsopa r
ti
c ipatesi nt hepool ;howe v
e r
,i t
se quityi scons ideredinternal a ndi snotr epor t
edi nt he
financialsta t
eme ntsoft heinve st
me nttrustfund.Instead,thene tassetsa ndc hangest hereinre l
ati
ngt o
theint er
na lpor ti
onoft hepoola representedint hefinancials t
ateme ntsofe a chpa r
ti
c ipatingfund,a nd
int he gove rnme ntala ct
ivit
iesa nd bus i
ne ss-
type a ctivit
ies of t he s ponsori
ng gove rnme nt’s
gove rnme nt-wi def inancialstateme nt
s.Asme nti
onede a r
lierint hischa pter,thef i
nanc ialinforma t
ion
forinve st
me nttrus tfundsi sreportedonlyi nthef i
duc i
aryf undf inancials t
ateme ntsandi snotr epor t
e d
inthegove rnme nt-widef inancialstat
eme nts.

8.3.1) Investment Pools – Investment T rust F und A ccounting

Effectivema nage me ntofi nvest
me nts( a
ndi nsomec asesidlec ash)of t
eni se nha nc edbypl aci
ngt he
investme ntsoft hef undsi napoolunde rt hec ontr
oloft heTr e asure rorapr of es si
ona linvest
me nt
ma nage r,eit
he rwi thintheTr easurer
’sof f
ic eori naf i
na nci
ali nst
itutions uc ha saba nkori nvest
me nt
fir
m.I ftheinve stme ntpooli saninternal investment pool (
pa rti
cipatingf undsa rea llwi thinthesa me
gove rnme ntaluni t)
,t heinve st
me nt
si nthepoolma ypr operlybepl ac edunde ra ccount ingc ontr
olby
useofa na gencyf und.Howe ver,eachpa r
ticipati
ngfundi srequiredf orf i
na ncialre por ti
ngpur posest o
reporti tspr opor t
iona t
es hareofpool edc asha ndi nve st
me ntsa sf unda ss
e tsa ndt hea ss
etsa nd
lia
b i
litie
soft hea genc yfunda renotr eportedint hegove rnme ntaluni t’sexterna lfina ncialstat
eme nts.
Fori nternalma nage me ntpurpos es
,itma ybemor eus efulforpa rt
icipa t
ingf undst ous ethea ccount
tit
leEqu it
yi nPool e
dCa sha ndI nvestme nts,theac countt i
tleus edi nt hei l
lus t
r ativea gencyf und
journa lentri
ess hownl aterinthissect
ion.

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 194
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
Ifani
nves
tme ntpoolhasexternal par
ti
cipa
nts,GASBstanda
rdsrequir
etha ninvestment trust fund
ta
beest
abl
is
hedt oa c
countfort hee xt
ernali
nvest
mentpool.I
nvest
me nttr
ustf
undsarea ccount edf or
usi
nganeconomicresour
cesme asure
me ntf
ocusandt
hefulla
ccrua
lba si
sofac
count
ing.

C reation of an Investment Pool

Ea r
ning sonpool e di nve st
me ntsa ndc hange si nf ai
rva lueofi nvestme ntsa rea lloc ate
dt ot he
partic
ipa ntsha vinga ne quit
yi nt hepooli npr opor t
iont otheirrela
tivec ontributionst ot hepool.To
ensurea ne qui t
abledi visi
onofe ar
ningsa ndc hange sinf airva l
ue,i tisne cessaryt or e
valuea l
l
investme nt sint hepool ,anda llinvestme ntsbe ingbr oughtintothepoolorr emove dfromt hepool,to
theirF air V alue asoft het i
met hati
n vestme ntsofaf unda r
ebe ingbr oughti ntoorr emove dfromt he
pool.Ea chf undoft hes ponsoringgo vernme nta nde xt
ernalpa r
ti
cipantthatc ont r
ibutesinve stmentsto
thepools houl dde bitEqui tyinPool e dInve st
me nts,orsomes i
mi l
ara ccount,f orthef airva l
ueoft he
investme nt s,creditt heI nvestme ntsac c
ountf ort hec arr
yingva l
ue( costorf airva l
uea tt het i
met he
investme nt swe repr evious l
yma r
kedt of airva lue),andc redi
torde bitRe ve nue s
––Cha ngei nFa i
r
Va l
ueofI nve stme nts,de pendingonwhe thert hec urrentfairvaluei shighe rorl owe rt hanc arr
ying
value,r e spec t
ive l
y.Not ethatane tde bitba l
a ncei nt heRe venue s–Cha ngei nFa irVa lueof
Investme nt sa ccountwoul dber e
porteda sac ontra-r
evenuei temi nt heope rati
ngs tateme ntoft he
appropr iatef und,a sac ompone ntofi nvestme nti ncome ,andnota sane xpe nditureore xpe nse.
I
ll
ust
rat
ion8-
3 As
set
sTr
ans
fer
redt
oCr
eat
eDr
ewCount
ryI
nve
stme
ntPool
Fai
rVa l
ue FairVal
ue Change Accr
ued
a
t12-31-
01 at1-10-
02 i
n Int
ere
st
Fai
r
Value
DrewCount r
yDe btSe rviceFund:
Cash..
..
..
....
..
..
..
..
..
....
..
....
..
..
..
..
..
..
..
..
..
..
..
..
..
. $1,
000,
000 $1,
000,
000 $–0– $–0–
U.SAge nc yObliga t
ions .
..
..
..
..
..
..
..
..
..
..
..
..
. 13,
373,
000 13,
425,
000 52,000 425,000
TownofCa l
vingDe btSe rvic
eFund:
U.S.TreasuryBi l
ls .
..
....
..
..
..
..
..
..
..
..
..
..
..
..
..
. 9,568,
000 9,
545,
000 (
23,000) 192,
000
U.S.Age ncyObl igations..
..
..
..
..
..
..
..
..
..
. 158,
700 160,
000 1,300 3,
000
Cal
vinIndepe ndentSc hool
Dis
tri
ctCapitalProjectsFund:
U.S.Age ncyObl igations..
..
..
..
..
..
..
..
..
..
. 2,
789,
000 2,
800,
000 11,
000 76,
900
RepurchasingAgr e eme nt
s..
..
..
..
..
..
..
..
..
. 2,
060,
000 2,
060,
000 –0– 13,
100
.
..
...
..
..
..
..
....
..
..
..
..
..
....
..
....
..
..
..
..
..
..
..
..
..
..
..
..
Tot
als.
..
..
..
...
...
..
..
...
..
..
...
...
...
...
.
..
..
..
..
..
..
..
..
..
..
. $28,948,
700 $28,
990,
000 $41,
300 $710,
000

Illustration of the C reation of an Investment F und

OnJ anuary10,2002,Dr ewCount rydecidedt
oc r
eateanewinves
tmentpool,t
obea cc
ounte
dfora s
aninvestment trust fund.Oper
atinge xpe
ns e
softhepool
,pri
mari
lyforper
sonnelti
me,of
fic
esuppl
ie s
,
compute r
,telephone ,andpostage ,areconsi
der
ednomi na
landthere
for
ewi llnotbechar
gedtot he
pool.Thei ni
ti alpa rti
cipa
ntsi
nt hepoola r
etheCountry’
sownDe bServiceFundandtwoe xt
ernal

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 195
 Ac
count
ingf
orFi
duc
iar
yAc
ti
vit
ie
s
par
tic
ipant
s,theTownofCa lvi
n’sDe btSe rviceFunda ndt heCa lvi
nI ndependentSchoolDist
rict
’s
Capit
alProject
sFund.Asd isc
ussedpr eviously,thee qui
type rta
iningt otheDr ew Countr
yDe bt
Servi
ceFundr epre
s e
ntsaninternal i
nve s
tme ntpool,s oitsproportionateshareoftheInvest
me nt
Pool’
sa s
set
sa r
eall
oc at
edbacktotheDe btSe r
viceFundf orfinancia
lr eport
ingpurpose
sanda r
enot
re
portedaspartoftheInves
tmentTr us
tFund.Thepr oport
ionateshareofa sset
sall
ocate
dtoexternal
par
tic
ipant
s,however,ispr
operl
yr e
p or
tedint hefinanci
alst
a t
eme nt
soft heInvest
me ntTrus
tFund.

Ill
ustrat
ion8- 3s howsthes pe
cificcas
ha ndi nvestme nt
sthatwe retr
ansferr
edonJ anuary10,2002,t o
createtheDr ewCount ryInvestmentPool.Att het imetheDr ewCount r
yInvestmentPooli scre
a t
ed,
journale ntri
esa rerequir
edint hea cc
ount soft heDr ew Count ryDe btServi
ceFunda ndTownof
Ca l
v i
nDe btSe r
viceFund,theCa l
vinI ndepende ntSchoolDi str
ictCa pi
ta
lPr oj
ectsFund,a ndt he
Investme ntTr ustFundtor ec
ordc rea
ti
onoft hef und.Thej ournalentri
esintheDr ewCount ryDe bt
ServiceFunda ndDrewCount ryInvest
me ntTr ustFund( t
heI nvest
me ntPool)t
oc r
eatethei nvest
me nt
poola res howni nEnt r
ies1aa nd1bbe low.Ent riesinthefundoft hee xter
nalparti
cipantswoul dbe
similartot hatfortheDrewCount r
yDe btSe rvic
eFunda ndt here
foreareomi t
te
dhe reforthes akeof
brevity.
Debit
s Credi
ts
Drew C ounty Debt Service F und:
1a. Equ it
yinPool edI nvestme nt
s..
..
..
..
..
...
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
14,
850,
000
Ca s h..
..
..
..
....
..
..
..
....
....
..
..
..
..
..
..
...
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
.. 1
,000,
000
Inve stments––U. S.Age ncyObl igat
ions.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
.. 13
,373,
000
Re ve nues––Cha ngei nFairVa lueofInvest
me nt
s..
..
..
..
..
..
..
..
..
...
..
..
..
..
.. 52,
000
Re ve nues––Investme ntEarnings..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
.. 425,
000
Drew C ountry Investment Pool:
1b. Ca sh..
..
..
.....
..
..
..
..
....
..
..
..
......
..
..
..
..
..
..
..
...
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..1,
000,
000
Investme nts––U. S.Tr eas uryBill
s..
...
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..9,
545,
000
Investme nts––U.S.Age nc yObl i
ga t
ions..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
16,
385,
000
Investme nts––Re purchas eAg reements .
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..2,
060,
000
Ac cruedI ntere
stRe c
eiva ble..
..
..
..
..
..
...
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
.. 710,
000
Duet oDe btSer viceFund....
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
.. 14
,850,
000
Addi t
ions–De pos i
tsinPooledI nvest
ments–TownofCa l
vin..
..
..
..
.. 9
,900,
000
Addi t
ions–De pos i
ts i n Pool e
d I nvest
me nts
–Ca l
vin
I ndepende ntSc hoolDi st
rict.
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
.. 4
,950,
000

Atri
albal
anc
eprepar
e df
ortheDrewCount
ryI
nvest
me ntPooli
mme
dia
tel
yaf
terEnt
ry1bha
sbe
en
pos
tedt
othePool
’sgener
all
edge
rispr
ese
nte
dinIl
lus
tra
tion8-4.
I
ll
ust
rat
ion8-
4
DR E W C OUNT R Y
INV E ST ME NT POOL
T R A IL BA L A NC E
A S OF J A NUA R Y 10, 2002

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 196
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s

Ac c
ountTi tl
e Debits C redits
Ca s
h...
...
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
...
..
..
. $1,000, 000
Invest
me nt––U.S.TreasuryBill
s..
..
..
..
...
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
. 9, 545, 000
Invest
me nt––U.S.Age ncyObligat
ions..
..
...
..
..
..
..
..
..
..
..
..
..
..
...
..
..
. 16,385, 000
Invest
me nt––RepurchaseAgr e
eme nt
s...
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 2, 060, 000
Ac c
ruedI nte
restReceivabl
e...
..
..
..
..
..
..
...
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
. 710, 000
Duet oDe btServic
eFund. ..
..
..
..
..
..
..
..
..
...
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. $14,
850,
000
Additi
o ns–Deposit
sinPool edInvest
me nt–TownofCa l
vin..
..
. 9,
900,
000
Additi
o ns– De posit
si n Pool e
dI nvestment– Ca l
vin
IndependentSchoolDi st
rict
..
..
...
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
...
..
..
. 4,
950,
000
Totals
...
..
...
..
..
..
.
...
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
...
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
$29,
700, 000 $29,
700,
000

OnFe brua r
y1 ,2002,Dr ew Count rys oldta x-
supportedbondsi nt hea mountof$15, 000,
000on
financethec onstructionofr oa dsa ndbr idges.Thepr oc ee
dsoft hebondsa rea dde dtot hepoolf or
invest
me ntunt ils ucht i
mea sthe yar enee dedforCa pit
alPr oj
ectsFunddisbur
seme nts
.AsofFe bruary
1,2002,t heU. S.Tr easurybi llsinthepoolha veac urrentfai
rva l
ueof$9,535,000( $10,000l es
st han
thec a
rryingva l
uer eportedint hetrialba lanc
es heetshowni nI ll
ust
rati
on8-4),a ndt heU. S.Age ncy
Obl i
gati
o nsi nt hepoolha veaf ai
rva lue sof$15, 695,000($310,000mor etha nt hec arryi
ngva l
ue
report
edi nt hetr i
a lbalance);t hefairva l
ueoft herepurchaseagreementisthesamea sr eport
edint he
tria
lbalanc e
.Theba lanceoft heCa s hacc ountwa sstil
l$1,000,000asofFe br
ua r
y1,2002.The re
f ore
,
totalass
e tsoft hepool ,revalue dt of a
irva luea sofFe bruary1,2002,a mountto$30, 000,000(ane t
increa
seof$300, 000ove rt
hec a r
ryingva luespr e
viousl
yr eport
ed).

IntheI nves t
me ntPoola c counts,the$300, 000inc r
e asei nc arryingva l
ueofa sse t
ss houl dbec redi
ted
toal i
a bilit
ya ccountsf ort hes hareoft heinter
na lpa rtic
ipa nt(Dr ewCount ry’sDe btSe r
viceFund)a nd
to“ Add i
tions”a ccount s( addit
iont one ta sse
ts,s imi lart or e ve nue )f orthes ha re
soft hee xter
nal
parti
cipa nts,ba se
dont heire quit
ablepr oporti
onsi nt hepo oljus tpr iort othea sse tpa rt
ici
pa nts,based
ont heire quitablepr opor ti
onsi nt hepoolj ustpr iort ot hea ssetr e valua ti
on.Thel i
abi l
it
yt otheDe bt
Se r
viceFund,t herefore,i si ncr
eas e
dby$150, 000( 300, 0
00X14, 850/ 29,700);Addi ti
ons–Cha ngei n
Fa i
rVa l
ue –TownofCa lvini sc redite
df or$100, 000( 300,000X 9, 900/29,700) ;a ndAddi t
ions–
Cha ngei nFa irVa lue–Ca l
vinI nde pendentSc hoolDi stric
ti sc reditedf or$50, 000( 300,000X
4,950/2 9,700).Not et ha tthee quityo fe achpartic i
pa nti nt hepoolr ema i
nspr opor t
ionatelyt hes a
me
(i
.e.,thea mou ntduet ot heTownofCa lvinis$10, 000,000a fte rr evaluingt hei nve stmentst oc urr
ent
fairva lue;t ot
a lliabilit
iesa ndne ta sset
s( iftheAddi ti
onsa c count swe rec l
os e d)oft hepoola re
$30,000, 000;10, 000/ 30,000 = 9, 900/29,700,e tc.).The j our na le nt r
yi nt he I nvestme ntPool
summa rizingther eva luationofi nve stmentsandt heCa pitalPr ojec tsent ryintotheI nve s
tme ntPoolis
givena s :

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 197
 Ac
count
ingf
orFi
duc
iar
yAc
ti
vit
ie
s

Drew C ountry Investment Pool: De

bit
s Cr
edi
ts
2. Cas
h..
..
..
..
..
...
..
..
..
..
...
..
..
....
..
..
..
..
...
...
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
.15,
000,
000
I
nvest
ments––U.S.Age ncyObl igati
ons.
..
..
...
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
. 310,000
Invest
me nts––U. S.Trea s
uryBill
s...
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
. 10,
000
Duet oDe btSe rviceFund. .
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
. 150,
000
Duet oCa pita
lPr ojectFund...
..
..
..
..
..
..
...
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
. 15,
000,
000
Addi t
ions–Cha ngei nFa irValueofI nvest
me nts
–Town
ofCa l
vin...
..
..
....
..
..
..
..
...
...
..
..
..
..
..
..
..
...
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
. 100,
000
Addi t
ions–Cha nge i n Fa ir Value of I nvest
me nt
s–
Ca l
vinIndepe ndentSc hoolDistr
ict.
..
...
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
.
..
.. 50,
000

Afterr
eval
uat
ionofinves
tment
sinthepoolandre
cei
ptof$15,
000,
000c
ashfr
ompr oce
edsofbonds
soldtofi
nanc
er oadandbri
dgeconst
ruct
ion,t
heTri
alBala
nceoftheI
nves
tmentPoolbec
ome sas
showninIl
lus
tra
tion8-
5.
I
ll
ust
rat
ion8–5
DR E W C OUNT R Y
INV E ST ME NT POOL
T R A IL BA L A NC E
A S OF F E BR UA R Y 1, 2002
Ac
countTi
tl
e Debits C redits
Cash...
..
..
...
..
..
..
..
....
..
...
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
...
..
..
.$16,000,
000
Inv
estme nt––U.S.Tr easuryBill
s..
..
..
..
...
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
. 9, 535,
000
Inv
estme nt––U.S.Age ncyObligat
ions..
..
...
..
..
..
..
..
..
..
..
..
..
..
...
..
..
. 16,695,
000
Inv
estme nt––Repur chaseAgr e
eme nt
s...
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 2, 060,
000
AccruedI nte
restRe ceivabl
e...
..
..
..
..
..
..
...
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
. 710,
000
Duet oDe btServi c
eFund. ..
..
..
..
..
..
..
..
..
...
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. $15,
000,
000
Duet oCa pit
alPr oje
c t
sFund. .
..
..
..
..
..
..
...
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
. 15,
000,
000
Additi
ons –Depos it
sinPool edInvest
me nt–TownofCa l
vin..
..
. 9,
900,
000
Additi
ons– De posit
si n Pool e
dI nvestment– Ca l
vin
Ind
epe ndentSchoolDi st
rict
..
..
...
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
...
..
..
. 4,
950,
000
Additi
ons–Cha ngei nFa i
rVa l
ueofI nvestment–Townof
Calvi
n...
...
..
..
..
..
....
..
..
...
...
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
. 100,
000
Additi
ons–Cha ngei nFa i
rVa l
ueofI nvestment–Townof
Calvi
n...
...
..
..
..
..
....
..
..
...
...
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
. 50,
000
Total
s...
..
...
..
..
..
.
.....
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
...
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
$45,
000,
000 $45,
000,
000

Operation of a C ash and Investment Pool

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 198
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
Al t
houghthec apit
alprojec t
sf undi nves
ted$15,000,
000c ashi nt hepool ,upona dmi s
siontot hepool
thatFundnol ongerhasas pecificclai
mont hec as
hoft hepool ;rathe r,i
t( a
nde achFundoruni tt hati
s
ame mbe rofthepool )ha sapr oporti
onat
ei nt
ere
stine achoft hea ssetsoft hepool,andwi llsha r
ein
earni
ngs,ga i
ns ,and los sesoft hepooli nthatpr oportion.Or dina r
il
y,i tisi nconvenienta nd
unnecessar
ytoa pport
iont ol i
abi l
it
ya ndadditi
onstone tasseta ccount sf oreachreceiptofdivide ndsor
inter
estandeachr eva
lua t
ionoft heportf
oliotofai
rva lue( s
omepool sr evaluetofairvalueda i
ly) .Iti
s
simplertoaccumul at
et hee arningsi nanUndi st
ri
butedEa rningsonPool edInvest
me ntsaccounta nd
theunr e
a l
iz
eda ndre ali
zedga i
nsa ndl osse
sinaRe ser
vef orCha ngei nFairVa lueofPool ed
Invest
me nt
sa ccount(bothoft he sea c
countsarecl
earinga ccount s),a ndt oma keperiodicdist
ribut i
ons
fromtheseaccountstothes pecifi
cl i
abil
it
ya ndaddit
ionst one tasse ta ccountsforpoolpa r
ti
cipa nts.

Thef requencyofdi st
ri
butionde pendsonwhe thera llcashofa llf undsi spool eda longwi th
invest
me nts
,orwhe there achf undr etainsa nope rat
i ngcashacc
ount.I nt heforme rc as
e,t hepool
wouldha vefrequentrecei
ptsa t
tribut ablet oc ol
lec
tionsofr e
venuesandr eceivablesofthef unds,and
wouldha veda i
lydisburseme nt
sonb e halfoft hefunds ;int
hiscase
,t heinterestofea chfundi nthe
poolwoul dhavet ober e
comput ede ac hda y.If
,howe ver
,aworki
ngc as
hba l
ancei sreta
inedi neach
acti
vef und,ther ecei
ptsa nddi s burse me ntsofpoolc a
shwouldbemuc hle ssfrequent,a ndthe
dist
ri
butionofga i
nsa ndlosses,a nde a rnings,andr ecomputedoft
hei nteres
tofe achf undint hepool
couldbec orr
espondingl
yles sfr
e que nt.

Asa nexampl
eofa ccount
ingforea
rni
ngsoninves
tme
ntsofapool
,ass
umedthepoolshownin
I
llus
tr
ati
on8-5col
le
ctsinte
res
tof$1,
610,
000,i
ncl
udi
ng$710,
000a
ccr
uedasofMar
ch31,2002.An
appr
opri
at
eentr
ywouldbe :

De
bit
s Cr
edi
ts
3. Ca
sh.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
1.
.
,.
6
..
1
..
0,
000
Accr
uedIntere
stRe c
eivabl
e..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 710,
000
Undis
tri
butedEarni
ngsonPo oledInvest
me nt
s..
..
..
..
..
..
..
..
..
..
..
.. 900,
000

Byt het i
met hee arni
ngsa r
et obedi s
tribute
d,t hefai
rv alueofa llinves
tmentsma yhavec hanged.
Eveni fthi
si strue,thepropor ti
ona teint e
restofe achfundwi llnotha vechangedbe c ausee a
c h
par
ticipantconti
nue stobearga insa ndl ossesint hesamepr oporti
onunt i
lapa rt
ici
pantcont i
nuest o
bearga in
sa ndlossesinthesa mepr opor t
ionunt ilapart
ici
pa ntc hangesallpar
ti
cipant
s’propor ti
onate
int
erestint hepoolbyc ontri
but i
nga dditi
onala sset
stot hepoolort akingasset
soutoft hepool .
the
refore,inthi
se xample,whe ne arningsa redistri
but
edthes ha resapport
ionedtothefundsa re:Drew
Count r
yDe btSe r
viceFund,15/ 45or3/ 9;Dr ewCount r
yCa pitalProject
sFund,15/45or3/ 9;Townof
Calvin,10/45or2/ 9;andCalvinI ndepe ndentSc hoolDist
ri
c t,5/45or1/ 9.TheentryintheI nvest
me nt
Poolstodi s
tri
bute$900,000ofe a r
ningsi s:
Drew C ountry Investment Pool: De bi
ts Cr edits
4a. Undi
st
ri
but
edEarningsonPooledInves
tments.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
9
..
0
..
0,
000
DuetoDebtServic
eFund...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 300,
000
DuetoCa
pitalProje
ctsFund.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 300,
000

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 199
 Ac
count
ingf
orFi
duc
iar
yAc
ti
vit
ie
s
Additi
ons–Invest
me ntEarnings–TownofCa lvin.
..
..
..
..
..
..
..
..
..
..
.. 200,
000
Additi
ons–I
nvest
me ntEarnings–Calvi
nI ndependent
SchoolDist
ri
ct.
..
..
..
..
..
..
..
..
..
...
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
. 100,
000

Aft
ert
hedis
tri
but
ion,e
a c
hpar
ti
ci
pantha
sthes
amepr
opor
ti
ona
tei
nte
res
tint
hea
sse
tsoft
hepoola
sit
ha
dbefor
ethedis
tri
but
ion.

Asnot e dpreviously,int
e r
nalma nageme ntoft hepooli senhance di
fe achparti
ci
pantthati
same mbe r
ofthepoolma int
ainsa nasseta c
countwi t
hat itl
es ucha sEquityinPool e
dI nvest
ments.Thebala nce
oft hi
sa c c
ounti ne a
chme mbe r’
sfun dshoul dbet her eci
procalofthepool ’
sa cc
ountthatre
portst he
pool ’
sl i
abili
tyorne tassetbalancetotha tpart
icipant(deedingonwhe t
hertheparti
ci
pantisaninternal
me mbe rore xternalme mbe r
) .Thus,int heDr e
wCount r
ye xa
mpl e,theDr ewCountr yDebtSe rvice
Fund’ sEqui t
yi nPoole dInvestmentsha dade bitba l
anc eof$15,000,000asofMa r
ch31,2002,be fore
thee arningsdistr
ibuted.Uponnot i
fi
c at
ionoft hee arningsdist
ribut
ionont hepooledinvest
me nt
s,t he
De btSe rvic
eFundwoul dma kethefollowi ngentry:
Drew C ountry Investment Pool: De bit
s Credits
4b. Equi
tyi
nPooledInves
tments
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
3.
.
0.
.
0,000
Revenue
s–Inves
tmentEarni
ngs..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 300,
000

Interestanddi vide ndse a r

nedonpool edi nve stme nt
swoul d,ofc our se,increa
s ethee quit
yoft he
me mbe rsoft hepool ,a swou ldr eali
zedga insont hes ale
sofi nve st
me nt
s( exces
soff ai
rva lueonda t
e
ofs aleove rc arryingpr ice)a ndunr ea
lizedga insr esult
ingf rom pe riodicr eval
ua t
ionoft hepool ed
investmentpor t
fol i
ot of airva l
uei nt i
me sofr i
singma rke tvaluesofs ecuri
tie
she ldint hepor t
foli
ot o
fairva l
uei ni t
emsofr isi
ngma rketva lue sofs ecuriti
eshe l
di nt hepor t
foli
o.Re al
izedl osseson
securit
iess old(de ficitoff ai
rva luea tpriorr evalua t
ionda tecompa redwi thfairvaluea ttheda l
eda te)
,
andunr eali
zedl os esr esulti
ngf rom pe ri
odi cr eva l
uationoft hepor tfolioint i
me soff all
ingma rket
values,bot hde c r
e aset hee qui tyoff undst hata reme mbe rsoft hepool .i nt heDr ew Count ry
Investme ntPoole xa mpl e,eachme mberf undma intai
nsa nope ra
tingc a
sha ccount.Cons equently,the
pooldoe snotne edt odi str
ibutedga i
nsa ndl osse sda il
y,s oi taccumul at
esrealized and unrealized
gains and losses in a Reserve for Change in F air Value of Pooled Investments account.Thi sprocedure
all
o wsane tti
ngofga insa ndl ossesi nea cha ccount ,sot hatonl ythene treal
izeda ndunr eali
zedga in
(orloss)ne edbedi stributedtopoolpa rti
c i
pa nts,thuss avings omec l
ericalorc omput erti
me .

GASBs t
anda r
dsr equirethatreal
izeda ndunr eal
ize dga insandl os s
esber e
por te
da sas i
ngl ea mount ,
“Cha ngeinFa i
rVa lueofI nves
tments ,
”a sac ompone ntofi nvestmentincome ,rathert ha nbe i
ng
reporte
da ss eparat
ea mountsi nthefinanc i
alstateme nt.Howe ver,real
izeda ndunr e
a l
ize dga insand
l
os sescanbedi s
close dint henotest othef inanc i
als tat
eme nts,i fdesi
red.Ifagove r
nme nt
a lunit
i
nt endstodi scloser ealize
da nunr eali
zedga i
nsorl osses,orne edssuchi nformationf ori nternal
ma nageme ntpurpos e
s ,itmaybeus efultoma intainas e par
ateAllowance for Changes in F air Value of
Pooled Investments (
ac ontr
a-ass
etaccount )torec orda llchange sinf a
irvaluer at
hert hani ncreasi
ng
andde creasi
ngt heba lanceoftheinvestme ntaccount s
.Th i
stechni quepermitstheinvestme nta ccounts
t
obec arri
eda tcost.

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 200
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
As sumet hatduringf i
scalyear2002t her eal
ize
dga insons alesofpool edi nvest
me nt
soft heDr e w
Count ryCa shandI nve s
tmentsPool ,a llcredit
edtot heReservef orCha ngei nFairVa l
ueofPool ed
Inve s
tments,amount edto$2 35,000( measureda sexcessoffairva l
uea tthes al
edatesoverpriorf ai
r
value).Duringtheye ar,real
izedlosse s,alldebit
edtot heReservea ccount,tota
led$50,000(me asured
ast hed efi
citoff ai
rva l
uea tthes al eda t
esunde rpriorfai
rva lue).Thus ,ther
ewa sanetc r
e ditof
$185, 000forrealizedgainsandl osse sforthepe ri
od.Si mi
lar
ly,a ssumet hene teff
e c
tofma kingt he
portfoli
otof ai
rva l
uei sanunrea l
iz
e dga i
nor$265, 000,whichisc redit
edt otheRese r
veaccount.The
nete ffectofr e
c ognizi
ngt hesega insa ndl oss
esi nt heaccountoft heI nvest
me ntPool,pe nding
dist
r i
buti
on,issumma riz
e di
nEnt ry5 .
Drew C ountry Investment Pool: De bit
s Credits
5. I
nve
stments(
speci
fi
cinvest
me nt
sshouldbede bit
edor
credi
tedher
e).
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
..
..
..
..
..
..
..
4
..
5
..
0,
000
Reser
veforChangeinFairValueofInvestment
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 450,
000

Assumingnop ar
ticipant
sha vej oine
dt hepoolorwithdra
wnf romthepool,andt hefourparti
ci
pants
t
ha tha
vec onti
nue dt obeme mbe rsofthepoolhavenottransf
err
eda ddi
ti
onalasset
st othepool,nor
withdr
awna ny,ther eali
zeda ndunr eal
izednetgai
nsof$450,000shouldbedist
ribut
edt otheme mber
f
undsinthepr oportionsusedf orthedistr
ibut
ionofea
rnings(3/
9,3/
9,2/9,and1/9).Thedistr
ibut
ionis
showninthef ol
lowi ngentry:
Drew C ountry Investment Pool: Debits Cr e
dits
6. Re
ser
veforChangeinFa i
rVa l
ueofInvestment
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
4.
.
5.
.
0,000
DuetoDebtSe r
vic
eFund. .
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
..
..
..
..
.. 150,
000
DuetoCapita
lProje
ctsFund 150,
000
Addi
ti
ons–Change in Fai
r Va lue of
I
nvest
ment–TownofCa lvin.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 100,
000
Addi
ti
ons–Change in Fai
r Va lue of
I
nvest
ments–Calvi
nIndependentSchoolDist
ri
ct..
..
..
..
..
..
..
..
..
..
..
..
..
. 50,
000

AtDece
mbe r31,2002,i nt
ere
ste ar
ni ngsof$720,
000ha
dac
crue
dandwer
ere
corde
d,asshowni
n
Ent
ry7below
Drew C ountry Investment Pool: Debi
ts Cr
edits
7. Ac
crue
dInte
r e
stRec
eiva
ble.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
7.
.
2.
.
0,000
Undi
st
ribute
dEarni
ngsonPooledInvest
me nt
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 720,
000

Assumi
ngthatthea c
cruedi
nte
res
twa si
mme di
at
el
ydis
tri
but
edt
opoolpar
tic
ipantsint
hes
ame
pr
oport
ionl
is
tedforEntr
y6,t
hefol
lowi
ngent
rywoul
dbemadet
ore
cor
dthedi
st
ribut
ion:

Drew C ountry Investment Pool: De

bit
s Cr
edi
ts
8. Undi
st
ri
but
edEarningsonPooledInves
tments.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
7
..
2
..
0,
000
DuetoDebtServic
eFund...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 240,
000
DuetoCa
pitalProje
ctsFund.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 240,
000
Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 201
 Ac
count
ingf
orFi
duc
iar
yAc
ti
vit
ie
s
Additi
ons–Invest
me ntEarnings–TownofCa lvin.
..
..
..
..
..
..
..
..
..
..
.. 160,
000
Additi
ons–I
nvest
me ntEarnings–Calvi
nI ndependent
SchoolDist
ri
ct.
..
..
..
..
..
..
..
..
..
...
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
. 80,
000

Bothe nt
ri
es6a nd8woul
d,ofcour
se,lea
dtoe nt
ri
estore
cogniz
eaninc
rea
sei
neachpar
ti
cipant
’s
Equit
yi nPool
edInve
stme
ntsa
ndRe venue
s.Thoseent
ri
eswouldbes
imil
art
oEnt
ry4bandthusare
notshownhere
.

Afte
rallearni
ngsandc ha ngesinfairva l
ueha vebe enaccountedf orbyt heentr
iesi
ll
ust
rat
ed,t
he
equi
ti
esandproport
ionatei nter
estofthepart
ici
pa nt
sa r
e:
DebtServiceFund. ..
..
..
..
..
...
..
..
..
..
..
..
..
..
...
..
..
..
..
..$15,690,000,or3/9oftota
l
Capit
alProjectsFund. ..
..
...
..
..
..
..
..
..
..
..
...
..
..
..
..
..15,690,000,or3/9oftota
l
TownofCa lvin...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
....
..
..
..
..
..10,460,000,or2/9oftota
l
Calvi
ninI ndepe ndentSchoolDistr
ict..
..
..
..
..
..5,230,000,or1/9oftota
l
Tot
a l..
...
..
...
..
..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
...
..
..
..
..
..$47,070,000

W ithdrawals of A ssets from the Pool

I
fapa rti
cipa
ntinapoolwit
hdrawspa r
tofit
se quit
yf rom apool ,t
hatpart
ic
ipant
’sproporti
onat
e
i
nte
restisdecr
eas
edandal
lot
herparti
ci
pant
’spr
oportionatei
nter
estisinc
reas
ed.Befor
eawi thdra
wal
i
sma de,ther
eshoul
dbeanappor
tionmentofea
rnings,gains
,andl oss
estodare.Thesameist r
uein
t
heeventofcomplet
ewit
hdr
awalofoneormorepa r
tic
ipantsfr
omt hepool.

Cont
inui
ngwi t
ht heDrewCount r
yInvest
mentPoolexa
mple,as
sumedtheDebtServi
ceFundneedsto
wit
hdraw$5,000,000from thepoolt
or e
tir
ema t
ure
dbonds.Ignor
ingthef
actthati
nmos tpr
actic
al
ca
sesitwouldbene c
essarytofi
rstse
llsomeinves
tment
s,theent
ryintheInves
tmentPoolagency
f
undforthewithdrawalisgi
venas:

Drew C ountry Investment Pool: De

bit
s Cr
edi
ts
9a. Duet
oDe btSer
viceFund..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.5
.
.,
.
0
..
0
..
0
..
,
.0
.
.0
.
.0
.
..
..
..
..
..
..
..
.
Cas
h...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
5
..
,
.
0.
.
0.
.
0.
.
,.
000

Thec
orr
espondi
nge
ntr
yint
heDe
btSe
rvi
ceFundi
s:

De
bit
s Cr
edi
ts
9b. Ca
sh..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
5.
.
,.
0
..
0
..
0
..
,
.
0.
.
0.
.
0.
..
..
..
..
..
..
..
.
Equit
yinPooledInvestments.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
5.
.
,.
0
..
0
..
0
..
,
.
000

Aft
e rwi t
hdr awalof$5, 000,
000byt heDe btSe
r vi
ceFund,t heproport
iona
teint
ere
stsi
nthepool
become :
De btServiceFund...
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.$10,690,000,or25.
4%oft otal
CapitalProject
sFund. ..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
.15,690,000,or37.
3%oft otal
TownofCa lvi
n...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
...
..
..
..
..
..
.10,460,000,or24.
9%oft otal
CalvininI ndependentSchoolDistr
ict.
..
..
..
..
..
.5,230,000,or12.
4%oft ot
al

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 202
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
Tot
al.
..
.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
..
..
..
..
..
..
..
..
.$42,
070,
000

C losing E ntry
Toa ssis
tinpr epar
ingfinancialst
atements
,theAdditi
onsaccount
s(seeEntri
es1b,2,4a ,6and8),
whichr ef
lectc hangesi nt he ex t
erna
lpa rt
ic
ipants
’ propor
ti
onat
ei nte
restdue t o ne
tne w
deposits
/withdrawa l
s,i
nve s
tme nte
arnings
,andchangesinf
airval
ue,mustbecl
osedtotheappr
opri
at
e
netassetaccount s
,asshowni nEntry10be l
ow:
Drew C ountry Investment Pool: De b
i t
s Cr edi
ts
10. Addi
ti
ons
–De
pos
it
sinPool
edI
nve
stme
nts
–TownofCa
lvi
n..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
9,900.
000
Addi
ti
ons
–De
pos
it
sinPool
edI
nve
stme
nts
–Ca
lvi
nInde
pende
ntSc
hoolDi
st
ri
ct.
..
..
..
..
..
..
4,950,
000
Addi
ti
ons–Inve
s t
me ntEa
r nings–TownofCa l
vin.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 360,
. 000
Addi
ti
ons–I
nvestmentEarnings–Ca l
vinI
ndepende
ntSc hoolDi s
tri
ct.
..
..
..
..
..
..
..180,
. 000
Addi
ti
ons–Cha ngeinFairVa l
ueofInves
tments–TownofCa l
vin.
..
..
..
..
..
..
..
..
.. 200,
000
Addi
ti
ons
–Cha
ngei
nFa
irVa
lueofI
nve
stme
nts
–Ca
lvi
nInde
pen
dentSc
hoolDi
st
ri
ct.
..
. 100,
000
Ne
tAs
set
sHe
ldi
nTr
ustf
orPa
rti
ci
pant
s–TownofCa
lvi
n..
..
..
..
..
..
..
..
..
..
..
..
.. 10,
460,
000
Ne
tAs
set
sHe
ldi
nTr
ustf
orPa
rti
ci
pant
s–Ca
lvi
nInde
pende
ntSc
hoolDi
st
ri
ct.
..
..
. 5,
230,
000

8.3.2) Illustrative F inancial Statements

Il
lustra
tivef i
duc iar
yf unds t
ateme nts
,pr e
pa r
edf orinte
r n
alma nagementpurposes
,a r
epr esent
edi n
Il
lustra
tions8- 6a nd8- 7.Theses t
at
eme ntsarepr e
pareda sofDe cember31,2002,Dr ewCount r
y’s
fi
sca lyear-end.The s
es t
a t
eme ntsalsoprovidet heinforma t
iont ober eport
edinac olumnoft he
StatementofFi duciar
yFundNe tAs s
e t
s(seeIll
us t
rat
ion2-9)a ndSt at
ementofCha ngesinFiduc i
ary
Fundne tAs s
e t
s( seeI l
lust
rat
ion2- 10).I tshouldbenot edt hatonly,the$15,690,000ofa ss
e t
s
represen
t i
ngt he37. 3pe r
c e
ntpr oport
ionateinte
restoftheexternal part
ici
pants(t
heTownofCa l
vin
andt heCa lvinInde pendentSchoolDi st
rict
)isreportedinthef i
duc i
aryfund(Inve
stmentTrus tFund)
fi
na nci
als tateme nt
s.The62. 7pe rcentproporti
ona t
ei nt
erestsofDr e
w Count r
y’sownf undsa re
reporte
da sEqui t
yinPool edInve st
me nt
s(ora sCa s
h,Investments,andInter
estReceiva
ble,ifdesi
red)
i
nt heBa lanceShe e
t–Gove r
nme nt
alFunds.

1.St
at
eme
ntofNe
tAs
set
s

I
ll
ust
rat
ion8-
6
DR E W C OUNT Y
INV E ST ME NT POOL
ST A T E ME NT OF NE T A SSE T S
A S OF DE C E MBE R 31, 2002
A SSE T S
Cas
h(NoteA).
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. $4,
702,
898
I
nvest
ment(
NoteA)..
..
..
..
...
..
.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 10,
718,
579
Acc
ruedi
nte
res
trecei
vable(NoteA)..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 268,
524

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 203
 Ac
count
ingf
orFi
duc
iar
yAc
ti
vit
ie
s
Tot
alAs
set
s.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 15,
690,
000
L IA BIL IT IE S
Tot
alLi
abi
li
ti
es.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. –0–
NE T A SSE T S
He
ldintr
ustforpart
ici
pants
–TownofCa l
vin.
..
..
..
..
..
..
.
$.
.
1.
.
0,460,
000
Ca
lvi
nIndependentSchoolDis
tri
ct.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.
5.
,230,
000
Tota
lNe tAssets
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. $15,
690,
000

2. Statement of C hanges in Net A ssets

I
ll
ust
rat
ion8-
7
DR E W C OUNT Y
INV E ST ME NT POOL
ST A T E ME NT OF C HA NGE S IN NE T A SSE T S
F OR T HE Y E A R E NDE D DE C E MBE R 31, 2002
A DDIT IONS
Deposit
sofpa r
ti
c i
pa nt
s...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. $14,
850,
000
I
nve s
tmentEa rnings. .
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 540,
000
I
ncreaseinfairva lueofinvestments.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 300,
000
TotalAddi t
ions .
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 15,690,
000
DE DUC T IONS
TotalDe ductions .
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. –0–
ChangeinNe tAs set
s .
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 15,690,
000
NetAs s
ets,Januar y1,2002...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 15,690,
000
NetAs s
ets,De cembe r31,2002...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. –0–
NetAs s
ets,De cembe r31,2002...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. $15,
690,
000

8.4) Private-Purpose T rust F unds

Thefairva lueofasset
spl a
ce dint
rus
tunde ratrustagreementi
sr e
ferr
edtoa sthepr i
ncipal,orcorpus
,
ofthetrust.Unde rthereporti
ngmode lbei
ngs upe r
sededbyGASBSt a
teme ntNo.34,i fthepr i
ncipa
l
ofthet rustmus tbehe ldi nt
actinor de
rt opr oducei nc
ome ,thetrusti scalle
dnone xpendable
.
Nonexpe nda bl
et r
ustfundsa r
eoftenc al
lede ndowme ntfunds.Thei ncomef rom thea sse
tsofa
nonexpenda bletr
ustma ybeus edonlyforthepur posesspeci
fi
edbyt hetrustor
;theref
or e
,t heinc
ome
isexpenda ble.Iftheprincipalamountc anbee xpendedforthes peci
fi
e dpurpose,thet rus
tis
Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 204
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
r
efe
rre
dtound
ert
hemode
lbe
ings
upe
rse
deda
sane
xpe
nda
blet
rus
tfund.

Nota lltrustfundsr equi

ret hehi storicdisti
nctionbe tweenc or
pusa ndi ncome ;loanfundsope rat
eda s
tr
ustf undsa reus uallynone xpenda blebot ha stopr i
nc i
pa la ndinc ome ,whe re
aspubl ice mployee
ret
ireme ntsystemsa refundswhos epr i
ncipala ndincomea rebot hexpe nda blef orspeci
fi
e dpurposes.
Ina ddi
tiontot henone xpenda bleve rsusexpe nda bl
ec l
assificat
ion,trustf undsma ya l
sobec l
assi
fi
e das
pubicorpr i
vate.Publictrustfundsr ethosewhos eprinci
pa lori ncome ,orbot h,mus tbeus edforsome
publicpur pose;thebe nefic
ia ri
esofpr ivat
et rustfundsa repr i
va t
eindi vidua l
s ,organi
zations,orother
gove r
nme nt
s.Fundse st
abli
s hedf ort hepurpos eofhol dingpe rforma ncede pos it
soflicenseesunde ra
gove r
nme nt
alunit’sregulat
or ya ctiviti
esaree xa mpleofpr ivat
et rustfunds .Fundsus edtoa ccountfor
escheatpr opertya ri
singf r
om t hee st
ateofpe rsonswhodi ei nte
s t
atewi thouta nyknownhe irsis
anothere xampl eofapr iva t
et rus tfund.GASBSt ateme ntNo.34r e ferst ot hesetr
us tsaspubl i
c-
purposea ndpr ivat
e-purpose.

GASBSt a t
eme ntNo.34s ignif
icantlyc hangesa cc
ount inga ndf i
nancialr
eport
ingpract
icesfortr
usts
refer
redtoi nthepr evi
ousreporti
ngmode la snonexpe ndabl eande xpenda
bletrust
s.Becaus
e,mos tof
trus
tsarec r
e at
e dforpubl
icpur poses(fore xample,toma intai
npa rksandceme te
rie
sortoa cqui
reart
forpublicbui l
dings);t
heya r
ec onsideredgove rnme nt
a lratherthanfiduci
aryacti
vit
iesunderthenew
report
ingmode l
.Thus,none xpenda bl
epubl i
c-purposet rustsa r
enow a ccountedforaspe rmanent
fundsa nde xpendablepublic-
pur poset r
us t
sa rea c
c ountedf ora ss pe
cialrevenuefunds.The se
governme nt
a lfundtypesweredi sc
us se
da ndi l
lust
ratedi nCha pter4.

Private-
pur poset rus tf undsa rere l
ativel
yf ewc ompa redwi thpubl ic-pur poset rus tf unds.Furthe r
,
privat
e -
purpos etrus tf undsf oll
owa ccount i
nga ndf i
nancialreportingpr ac
t i
cest hata requi tesi
mi l
art o
thoseill
us t
ratedi nt hepr eviousse ct
iononi nvest
me nttrustfunds .Apr ivate-purpos et rustfundwhos e
princi
pa lispe rma ne ntlyr estr
ict
e df ori nvestme nt,wi thea r
ningsa va il
a blef oras pe c
ifi
edpr i
va te
purpose,i sa ccount e df ori nma nners imi l
art ot heTownofCol umbi aLi brar
yEndowme ntFund
ill
ustr
a t
edi nCha pte r4a saPe rma nentFund.Thepr i
ncipaldifferenc eist hatf i
nanc ialinf or
ma t
ionf or
apr i
va t
e-purpos et rusti sr eportedint heSt atementofFi duci
a r
yNe tAs setsa ndSt ateme ntsofchange s
inFi duciaryNe tAs se t
s ,whe r
east ha tforape rma nentfundi sr eportedi ntheBa la
nc eShee t–
governme nt a
lFundsa ndSt at
eme ntofRe venues ,Expe ndit
ures ,a ndCha nge sinFundBa l
ances–
Gove rnme ntalFunds .Eve nt houghapr ivate-purpos etrustreportsa ddi t
ionsa ndde duc ti
onsfrom ne t
asset
s( seeillus
tra ti
on8- 7f orane xampl e),thosei temsa reme asure dine s
s ential
lyt hes amema nnera s
revenuesa nde xpe ndi t
ur eso fape rma nentf und.Be causetherei sl it
tledi fferencei na ccount
inga nd
reporti
ngf orpr iva t
e -pur poset rustsa nd pe r
ma nentf undsa nd i nve stme ntt rus tf unds,a l
ready
ill
ustr
a t
ed,noj our na le ntriesorf inanc i
als t
ateme ntsa reprovide di nt hisc hapterf orpr i
vate-
purpos e
funds.

8.5) Pension A ccounting

Asse
tshel
dbypubli
cpe
nsi
onpl
ansf
orfi
sca
lyea
r1996-97amount
edt
onear
ly$1.5t
ril
li
on.Thus
,iti
s
notsur
pri
si
ngtha
ttheGASBhasdevot
edsubs
tant
ia
le f
for
ttoimpr
ovi
ngaccount
ingandfina
ncia
l

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 205
 Ac
count
ingf
orFi
duc
iar
yAc
ti
vit
ie
s
r
epor
ti
ngforpens
ionplans.Thiss
ect
ionprovi
desa
nove r
vie
w oftheaccount
ingandre
por
ti
ng
r
equi
reme
ntsf
orpens
ionpla
ns,aswe
lla
sthegover
nment
ale
mploye
rst
hats
ponsorsuc
hpla
ns.

Pens i
onpl a nsa r
eoft woge ne r
alt ypes ,defined contribution plans and defined benefits plans.A
defined contribution plan s pe ci
fiesthea mountorr a t
eofc ontributi
on,of te
nape rcentageofc overed
solar,thatthee mployera nde mpl oye esmus tc ontri
butetotheme mbers’a cc
ountsi nthepe nsionpl a
n.
Thel evelofbe nef
itspa yabl euponr etir
e me nti sde t
erminedbyt hetotala mountofc ontributionstoa
me mbe r’sa cc ount,e arningson i nve st
me nts,a nd a l
locat
ion off orfeit
edc ont ri
butionsofot her
me mbe rsc reditedtot hea c count.Be caus ef uturebe nefi
tsarene i
therf ormula-
ba sednorgua rantee
d,
t
her is
ka s
soc iatedwi thde finedc ont ri
butionpl ansr est
spr i
ma ri
lywi the mploye es;thee mpl oyer
’s
respons i
bil
itye sse
ntiall
ye ndsonc et her equi redc ontri
buti
oni sma de.Suc hpla nsor dinaril
ya renot
admi nist
eredona nac t
ua r
ia lba si
s;the ref
or e,a ccountingandf inancialreporti
ngr equireme ntsf orboth
t
hepl ana ndt hee mploye ra restraightforwa r da ndpr ese
ntf ewc ompl ic
ati
ons.Es s
entially,thepl an
reportsthef airva l
ueofpe ns iona ssetsanda nyl iabil
it
yf oraccrue dplanbe nefi
ts;thee mpl oyerr eport
s
expendi t
ures /
e xpensesf ort hea moun tc ont ributedtot hepl an.Bot ht hepl ana ndt hee mploye rare
requiredtopr ovideint heNot estotheFi nanc ialStatementsabr iefde s
c ri
pti
onoft hepla n,significa
nt
account i
ngpol ici
esf orthepl an,andc onc entrati
onsofi nvestme ntsina yoneor ga nizat
iont hate xceed
5pe rcentormor eofpla nne ta sset
s.

Adefined benefit plan pr ovidesas peci

fiedamountofbe ne f
itsbasedonaf ormul athatma yi nclude
suchf actorsa sa ge ,s ala
ry,a ndye arsofe mployme nt.De t
erminingthepr es
e ntva l
ueofpr ojected
pens i
onbe nefit
si nvol vesnu merousf actors,s
uc ha se mployeemor tal
ity,e mpl oyeet urnover,salary
progression,a ndi nve stme ntearnings.Toe nsuret hatpl ana sse
tswi l
lbea de quatetoc overf uture
bene f
it
s,pr ofessiona lactuari
esa reengage dtoc alculatethepr ese
ntva l
ueofbe nefit
sa ndther equired
contri
butionst ha tmus tbema debye mpl oyer
sa nd,ins omec ases
,empl oye es.Ofc ourse,theba si
c
assumpt i
onsun de r
lyinga ctuarie
s’pr oje
c t
ionsma yc hangeove rtime,givingr i
set ope r
iodicrevisions
inther equir e
dc ontribut i
ons.Be causeoft hene edt ore l
ye xtensi
velyona c tuaries’est
ima tes
,itisnot
surpris
ing t hata ccount i
ng forde f
ined be nefitpl ansi smuc h morec ompl ext ha nf orde fined
contri
butionpl ans .Ther emainderoft hissecti
onpr ovidesas umma ryove rviewoft hea ccounti
nga nd
fi
na nci
alr e port
ingr equirementsf orde fi
nedbe nefitpe ns
ionpl ans;ac ompl etedi s
cuss i
onoft hese
plansisc ons i
derablybe yondthes copeoft hist
e xt.

Thei llust
rati
vet ransac t
ionsforde fi
ne dbe nefitpensi
onpl anaccountingdiscussedi nthisse ct
iona re
basedona“ single-empl oyerpl
a n,”t hati s
,as ingleplana dminister
edbyas inglegove r
nme nt
al
empl oye r
.Reade rsshoul dbea ware ,howe ver,thatma nygovernme ntssponsormul tiplepensionpl ans
fordi ffe
rentclassesofe mployees( forexampl e ,aplanforgenerale mployeesandonemor es epa ra
te
andus ual
lymor ege nerousplansf orpubl i
cs a fet
ye mployees
).Further,i ns omes ta
tes,someora l
l
localgo vernme nte mpl oyeespar
ticip a
tei nas tat
ewidede f
inedbene fi
tpensionpl an,rathertha none
spons oredbythel oc algove r
nmenti tself
.Suc hpl ansorgroupsofpl ansareoftenrefe r
redtoa sPublic
E mployee R etirement Systems ( PERS) .TheGASBs t
a ndar
dstha tapplytoas i
ngl e-e
mpl oyerpl an
applya swe l
lt omul t
iple-empl
oye rpl ans,althougha ccounti
nga ndr eport
ingf ormul tipl
e-empl oyer
plansa remorec ompl ex.

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count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
UnderGASBSt at
eme ntNo.34,pensi
onpla
nsar
eaccounte
df ori
nt hebasicfi
duciar
yfundsta
tements
ofthesponsori
nggove rnment.Somepla
nsarea
dminis
tere
da slegall
yse para
teenti
ti
esandther
e f
ore
publi
sh“ st
and-al
one”f i
nancialst
at
ement
s,aswe lla srepor
ting the i
rpe ns
ion fund f
inanci
al
inf
ormati
oni nt
hefiduciar
yf undss
tat
ement
soft
hes
pons or
inggovernme nts
.

Unt il1996,gove rnme ntsha dc ons iderablel atit

uder e gar dingt hec hoic eofa ccount i
ngme t
hodf or
pens i
onpl a
ns .GASBSt ateme ntNo.1,i ssue din1984,pe r
mi t
tedgove rnmentst of ollow bot ht he
pens i
ona c c
ount i
nga ndr eporti
ngs t
a nda rdsse tforthinNCGASt at
eme nt1,i nNCGASt at eme nt6,or
inFASB St a t
eme ntNo.35,pe ndingt hei ssuanc ebyt heGASB ofas tat
eme ntors t
a te
me ntson
pens i
on a cc ount
ing a nd f inanc ialr e porti
ng.GASB St ateme ntNo.5,“ Disclosure ofPe nsi
on
Informa ti
onbyPubl i
cEmpl oyeeRe tireme ntSys temsa ndSt ateandLoc a lGove rnme nta lEmpl oye r
s,”
issuedi nl a
te1986,s upe rsededt hed isclosurer equire
me nt soft het hrees ta
tement sjus tc it
ed.Thos e
disclosureswe r
eve rye xt e
ns i
ve ,ofte nr esult
ingi nmor et ha n10pa gesofpe nsi
on- rel
ate ddi sclosures
int heNot e
st ot heFi nanc i
a lSta te
me nts.Af ters ever
a ly e arsofe ffort,t heGASBi ssuedt hreene w
standa r
dst ha tcollect
ive lypr ovi dec ompr ehe nsi
vegui da nc eonpe nsiona ccountinga ndf inanc i
al
reporting.The s
es tandar dsp rovi dea c countinga ndre por ti
nggui dancef orde finedbe ne fi
tpe nsi
on
plans( GASBSt atementNo.25P,po s
te mployme nthe althca r
epl ansa dmi nis
teredbyde finedbe nefi
t
pens i
onpl ans( GASB St at
e me ntNo.26) ,a ndt hes pons or/empl oyer( GASB St a
teme ntNo.27) .
Compl etete xtoft heses t
a ndar dsc a nbef oundi nt heGASB’ sCodification of Governmental
Accounting and F inancial Reporting Standards,Se ctionPe 5,Po50,a ndP20,r espe ctively.Mos t
obs erversa greet ha tt he n ew s tanda rdsha ve he lpedt oa chieve mor e uni form r eporting of
gove rnme ntalpens i
onpl ans .Mor eove r,r e
qui rednot edi sclosuresha vebe enre duceds ubs tantia
lly
unde rthene ws tandards.

R equired F inancial R eporting for Defined Benefit Pension Plans

GASB s t
andardse st
a bli
shaf ina
nc i
a lre port
ingf r
ame wor kf orde f
inedbe ne f
itpe nsionpl anst hat
i
ncludesbot hrequire
df i
na ncia lst
ateme ntsa ndr e
quire
ds chedul esofhi st
oricaltrendinf ormation.The
sc
he dul
esrequired supplementary information t hatmus tf ollow i mme di
ate l
ya f
te rthef ina nci
al
st
at
e ments.Twof inanc i
als ta tementsa ndt wos upple
me ntarys che dulesofhi stori
calt rendda taa re
r
equi r
ed.The s
er equi
r eme ntsa redes cri
be da s:
a . Astatement of plan net assets showi ngplanassets,li
abi l
ities,andne tas s
e t
s.Pl ana s
sess hould
bereporteda tfairva lue .(
Se eIllus t
rat
ion8-8fora ne xa mpl eofaPERSt hata dmi ni
stersthree
defi
nedbe nefitpe nsionpl ans.)
b. A statement of changes in plan net assets s howi nga dditionst oplanne tass ets
,de duc ti
ons
fr
ompl a nneta ssets,a ndne tincre as
e(de cr
ease)inplanne ta ssets
.(SeeI ll
ustration8-9.)
c . Aschedule of funding progress s howinghi s
tori
calt r
endda taa boutthea c t
uariallydetermi ned
st
atusofpl anf undi ng“ fr
om al ong-ter
m,ongoi ngpe rspe ct
ivea ndt hepr ogressma dei n
accumula t
ings uffici
e nta s
setstopa ybe nef
it
swhe ndue .”(Se eI l
lustr
ation8-10. )

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yAc
ti
vit
ie
s

I
ll
ust
rat
ion8-
8
C OL UMBINE R E T IR E ME NT SY ST E M
ST A T E ME NT S OF PL A N NE T A SSE T S
A S OF J UNE 30, 19X 2, A ND 19X 1
(IN T HOUSA NDS)
St
at
e School Muni
cipa
l 19X2 19X1
Empl
oyee
s Di
str
ict
s Empl
oyee
s Tota
l Tota
l
As
set
s
Ca sha nds hort-terminvestments.
..
..
..
..
..
.. $66,129 $116,
988 $26,
014 $210,
131 $440,
146
Re ceiva bles:
Emp loye r..
...
..
....
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 16,451 18,
501 2,
958 37,
910 45,
770
Emp loye r––LongTe r
m. ..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 33,495 986 –0– 986 1,
088
Interesta ndDi vidends..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. -0– 48,
299 4,
951 86,
745 81,
183
Tot alr eceiva ble..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 48,946 67,
786 7,
909 125,
641 128,
041
Inves tme nta tfairva l
ue:
U.S.Gove r
nme ntobligat
ions.
..
.. 541,
289 780,
541 80,
001 1,401,
831 1,
571,
404
Muni cipalbonds ...
..
..
..
..
..
..
..
..
..
..
.. 33,
585 48,
416 4,
969 86,
970 86,
417
Dome st
icc orpor atebonds..
..
..
..
.. 892,
295 1,
217,
251 191,
801 2,301,
347 1,
961,
288
Dome st
ics tock s.
...
..
..
...
..
..
..
..
..
..
..
. 1,
276,
533 1,
784,
054 183,
893 3,244,
480 3,
230,
446
Internationa lSt ocks..
..
..
..
..
..
..
..
..
.. 461,
350 665,
259 68,
187 1,194,
806 1,
187,
703
Mor tga ge s.
...
..
....
...
..
..
..
..
..
..
..
..
..
..
.. 149,
100 209,
099 24,
453 382,
652 319,
745
Re ale state..
...
....
..
..
..
..
...
..
..
..
..
..
..
.. 184,
984 266,
748 27,
350 479,
082 420,
806
Ve nturec apita
l ..
...
..
..
..
..
..
..
..
..
..
..
.. 26,
795 38,
638 3,
960 69,
393 37,
120
Tot ali nve st
me nts..
...
..
..
..
..
..
..
..
. 3,
565,
931 5,
010,
016 584,
614 9,160,
561 8,
814,
929
Propert
ie
s,a tc
ost
,netofacc
umul
ated
deprec
iat
ion of $5,
164 a
nd $4,
430,
re
s pe
cti
vely 6,
351 8,
924 1,
040 16,
315 16,
093
Tot alAs sets 3,
688,
357 5,
203,
714 620,
577 9,
512,
648 9,
399.
209
L iabilities
Re fundspa ya
blea
ndot
her 4,212 1,849 429 6,490 37,211
Ne
tas
set
she
ldi
ntr
ustf
orpe
nsi
onbe
nef
it
s $3,
684,145 $5,
201,865 $620,
148 $9,
506,158 $9,
361,998

d. Asc
hedul
eofempl
oye
rcont
ri
buti
onss
howi
nghi
stor
ica
ltr
enddat
aaboutt
heannua
lre
qui
red
c
ont
ri
buti
onsoft
heempl
oyer(ARC)andempl
oyercont
ri
but
ioninrel
at
iontoARC.(See

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le
dBy:TheG&NPAc
count
ingI
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s 208
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
I
ll
ust
rat
ion8-
11.
)

I
ll
ust
rat
ion8-
9
C OL UMBINE R E T IR E ME NT SY ST E M
ST A T E ME NT S OF C HA NGE S IN PL A N NE T A SSE T S
F OR T HE Y E A R E NDE D J UNE 30, 19X 2, A ND 19X 1
(IN T HOUSA NDS)
State School Municipal 19X 2 19X 1
E mployees Districts E mployees T otal T otal
Addi tions:
Cont ribut
ions:
Empl oyer $137,
916 $157,
783 $19,
199 $314,
898 $284,
568
Empl oyer-
long-term –0– 102 –0– 102 102
Planme mbe r 90,
271 117,
852 16,
828 225,
651 216,
106
Tota lcontri
butions 228,
887 275,
737 36,
027 540,
651 500,
776
Inves tmentIncome :
Ne ta ppreciat
ion( de
pre
cia
ti
on)inf
air
valueofi nvestme nts (
241,408) (
344,429) (
35,280) (
621,117) 788,
913
Interest 157,371 225,446 23,098 405,915 422,
644
Divide nds 123,953 177,654 18,191 319,798 560,
848
Re ale st
at
eope ratinginc
ome,ne
t 10,733 15,383 1,575 27,691 25,
296
50,649 74,054 7,584 132,287 1,
797,
701
Le
ssi
nve
stme
nte
xpe
nse 54,081 61,872 7,529 123,482 500,
674

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ingf
orFi
duc
iar
yAc
ti
vit
ie
s
Netinve s
tmentincome (
3,432) 12,
182 55 123,
482 1,
297,
027
Totaladdit
ions 225,455 287,
919 36,
082 8,
805 1,
797,
803
Deduc t
ions:
Benefit
s 170,434 172,
787 18,
073 361,
294 325,
881
Refundofc ontr
ibuti
ons 15,760 13,
200 3,
671 32,
621 38,
406
Admi nist
rat
iveexpense 4,984 5,
703 684 11,
381 12,
681
Totaldeducti
ons 191,168 191,
690 22,
438 405,
296 376,
981
Netincrease 34,287 96,
229 13,
644 144,
160 1,
420,
835
Neta ssetshe l
di nt r
ustf
orpe
nsi
on
benefi
ts:
Beginningofyea r 3,
649,858 5,105,
636 606,
504 9,361,
998 7,941,
163
Endofye ar $3,
684,145 $5,
201,
865 $620,
148 $9,
506,
158 $
9,316,
998

Inaddi
tion,t hepl ani sr equir edtop rovidenot etothef i
nanci
a lst
ate
me nt
sa ndnote
stother
equi
red
sche
dules.Thenot est ot hefina ncialsta
teme nt sshoulddi s
clos
et hefol
lowinginfor
mati
on.
a. Pland escriptions ,inc l
udi ng
1. Ide ntif
ica ti
onoft hetypeofp l
an.
2. Cl assesofe mpl oye esc overed.
3. Br iefde scriptionofbe ne f
itprovisions.
b. Summa ryofs igni f
ic anta ccountingpol icies
c. Descriptionofc ont ributionsa ndr eserves,including:
1. Thea uthor it
yunde rwhi c
hc ontributionsa r
ema de.
2. Fundi ngpol icies .
3. Re quire dc ontribut i
onr at
esofa c
tivepl anme mbe rs.
4. Br ie
fde scriptionofa nylong-termc ontract
sf orcontr
ibuti
on.
5. Ba lanc eoft hepl an’sl egall
yr equiredr eser
ve satthereport
ingdate.

I
ll
ust
rat
ion8-
10:Re
qui
redSuppleme ntaryInf
or mat
ion
SC HE DUL E S OF F UNDING PR OGR E SS
(DOL L A R A MOUNT S T HOUSA NDS)
Act
uar
ial Ac
tuari
alAcc
rue
d Unfunde
d Funde
d Cove
red UAALa sa
Act
uar
ial Val
ueof Li abil
it
y(AAL) AAL Rat
io Payr
oll Per
cent
ageof
Va
luat
ion As
set
s Ent
ryAge (UAAL) Cover
edPayrol
l
Date (
a) (
b) (b-
a) (
a/b) (
c) (
(b-
a)/
c)
SEPP
12/
31/
W6 $2,005,
238 $2,
626,
296 $621,
058 76.
4% $901,
566 68.
9%
12/
31/
W7 2411610 2,
092,
399 490,
789 83.
1% 956,
525 51.
3%

Compi
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 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
12/
31/
W8 2709432 3,
331,
872 622,
440 83.
3% 1,
004,
949 61.
9%
12/
31/
W9* 3001314 3,
604,
297 602,
983 83.
3% 1,
049,
138 57.
5%
12/
31/
X0 3366946 3,
930,
112 563,
166 85.
7% 1,
093,
780 51.
5%
12/
31/
X1 3658323 4,
284,
961 626,
638 85.
4% 1,
156,
346 54.
2%
SDEPP
12/
31/
W6 $2888374 $3,
499,
572 $611,
198 82.
5% $1,
205,
873 50.
7%
12/
31/
W7 3473718 3,
867,
483 393,
765 89.
8% 1,279,
383 30.
8%
12/
31/
W8 3902705 4,
439,
761 537,
056 87.
9% 1,344,
151 40.
0%
12/
31/
W9* 4323137 4,
802,
700 479,
563 90.
0% 1,403,
255 34.
2%
12/
31/
X0 4849798 5,
236,
922 387,
124 92.
6% 1,462,
695 26.
5%
12/
31/
X1 5269502 5,
709,
764 440,
262 92.
3% 1,546,
650 28.
5%
MEPP
12/
31/
W6 301,
305 342,
842 41,
537 87.9% 163,
508 25,
4%
12/
31/
W7 362,
366 378,
885 16,
519 95.6% 173,
476 9.
5%
12/
31/
W8 407,
117 434,
949 27,
832 93.65 182,
258 15.
3%
12/
31/
W9* 450,
975 470,
512 19,
537 95.8% 190,
272 10.
3%
12/
31/
X0 505,
714 513,
044 7,
330 98.6% 198,
368 3.
7%
12/
31/
X1 549,
696 559,
367 9,
671 98.3% 209,
715 4.
6%

Thenot
e st
ot herequi r
edschedulesshoul dprovide:
a.I denti
fic
ationofa c
tuari
a lme thodsus eda ndsignif
icanta c
tua
rialas
sumpti
onsforthemost
rec
e ntyearc over
edbyt her equiredsupplementar
ys chedules
.
b. Factorsasc hangesinbe nefi
tpr ovis
ions,employeesc overe
dbyt hepla
n,oract
uar
ialmet
hods
ora ss
umpti onsusedthatsignifi
c a
ntlyaffe
ctthetrendr epor
tedi
nt hes
chedul
es.

Illustration 8-11: Schedules of E mployer C ontributions (Dollar A mounts in T housands)

E mployee C ontributions
SE PP SDE PP ME PP
Ye a
rEnde
d Annual Pe
rce
ntage Annual Per
centage Annual Pe
rce
ntage
June30 Requir
ed Contr
ibut
ed Re quir
ed Cont
ribute
d Re quir
ed Contr
ibut
ed
Cont
ri
buti
on Cont
ri
buti
on Cont
ri
buti
on
19W7 $100,
729 100% $115,935 100% $15,
042 100%
19W8 106,
030 10
0 122,682 100 15,
959 100
19W9 112,
798 10
0 129,822 100 16,
768 100
19X0 118,
735 10
0 137,378 100 17,
505 100
19X1 124,
276 10
0 142,347 100 18,
049 100
19X2 137,
916 10
0 157,783 100 18,
653 100

Statement of Plan Net A ssets

I
ll
ust
rat
ion8-8,re
por
tedf
r heGASBCodification,p
om t res
ent
sthest
ate
mentsofpl
anneta
sse
tsfor
t
hehypothet
icalCol
umbineReti
reme
ntSys
te m,apubl i
cemploye
er et
ir
ementsys
tem(PERS).

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orFi
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ie
s
Columbi nea dminist
ersthreepe nsionpl a
ns:t
hes t
ateemp l
oyees’pl
an,thes chooldistri
c t
s’pla n,a nd
themuni c i
pale mployees’plan.Ass hown,planinve
s t
mentsshouldber e port
eda tf airvalue( l
a s
t
report
eds alespr i
ce)fora l
linve st
me ntsinsecuri
ti
esthattr
adeona cti
vee xchanges.Inve st
me ntsi n
mor t
gage sshouldbeba sedont hedi sc
ountedprese
ntvalueoffut
ureint
eresta ndprinci
pa lpayme ntsto
ber ecei
ve d.I nvest
me ntsinr e ale s
tateshouldber eport
eda tfairvalueba sedoni ndepe ndent
apprais
als.Al lotherinvestment ss h
ouldber eport
eda test
imatedfai
rva lue ,i
ncludingi nst
itutional
pricequotesforde btsecur
it
iesf orwhi chtr
adepri
cesareunavail
able
.

Depr eci
a bleasset
sofaPERS,t hatis,asset
she lda sproperty,plant,ande qui
pme ntforusebyt he
PERS,s houldber eport
eda tcostl e
ssa cc
umul atedde prec
iati
on.Ca s
ha nds hort-
ter
mi nvestments
(r
epor te
da tcost
),andr ece
ivable
st ypic
all
yr epr
e s
e ntami norpa r
toft het ot
alasset
sofaPERS.An
ast
uter e aderwillnotea l
sothea ssetsofaPERSa renotc lass
ifi
eda scurre
nta ndnoncurrent;t
he
dis
tinc t
ionnotbe i
ngi mpor t
antsinces hort
-ter
ml iabi
lit
iestypicallya r
ei mma t
eria
li nrelat
iont o
avai
la bl
epl ana sse
ts.PERSl iabil
iti
es,usual
lys hort-
ter
m( e.
g.,bene fi
tsduebutunpa id,re
fundsf or
ter
mi natede mployees,voucher
spa yable
,accruede xpenses,andpayr ol
ltaxespayable)
,arereport
eda s
ade duc tionfrom)ERSa sset
s;thedi ff
erencei sc apt
ioned“ Ne ta ss
e t
she l
di nt r
ustforpe nsi
on
benefits
.”

Statement of C hanges in Plan Net A ssets

Thes t
atementofCha ngesinNe tPla
nAs setsfortheCo lumbineRetir
eme ntSystemispr es
entedin
Il
lus
trat
ion8-9.Thiss t
ate
me ntr e
port
se mployerande mployeecontr
ibut
ionsa ndinvest
me ntinc
ome
asaddit
ionstonetas
se t
sratherthanasreve
nue s
.Similarl
y,benefi
tspai
d,refundsofcontr
ibuti
ons,and
admini
strat
iveexpensea rere port
edundert hec apt
ionde ducti
onsfrom ne ta s
set
sr a
therthana s
expens
es.Thene tincreas
e( decr
ease
)i nne tasset
si sa ddedt obeginning-of
-per
iodne ta s
sets
.
Additi
onsanddeductionsarere c
ogniz
edont heaccrualbasis
.

Schedule of F unding Progress

Ane xa mpleSc he dulesofFundi ngPr ogressispr es ente
di nI l
lus t
rati
on8- 10.Thi ss chedules hows
fundi ngpr ogressoft heplani nr e la
ti
o nt oa ct
uarialre quir
e ments.Ake yme asureofhowwe llthepl an
isf unde di sthefunded ratio.Thef unde dra t
ioist her a
tioofactuarial value of assets to actuarial
accrued liability (AAL) .Ac tuarialva lueofa s
setsist heva l
ueofpl ana s
set
sus edbyt hea ct
ua r
y;t he
me t
hodsofde termina t
ionf ort heva r iousa s
setss houl dbedi scl
os edi nthenotes .A ctuarial accrued
liability isdete r
mi nedbyu s
inga nyofs everalge ne r
allya cc
e pteda ct
uarialme t
hods( consist
e ncy
a ppli
e d,ofc our se)–i nt hisc ase,t heEnt ryAgeme t
hod–a ndi st hepresentva lueofpr ojected
be nefits,othe
rt ha nnor ma lc osts( bene fitsear
ne df rom c urr
enta ndf utureempl oyee ss ervi
ce).Thus ,
AAL a risespr i
ma r
ilyf rom pa stunde rf undinga nda dhocc ha ngei npl anpr ovis i
ons .Bot ht he
Sc hedul e ofFundi ng Pr ogr essa nd t he otherr equireds che dule,the Sc he dule ofEmpl oyer
Cont ribut i
ons
,s houldpr es
e nti nforma t
ionf orthec ur r
entye ara nda sma nypr iorye arsforwhi ch
c ompa r
a bl
eda tac anbepr ovi de d.Byt hesixtha nds ubsequentye ara ft
erimpl eme ntationofGASB
St at
eme ntNo.25,i nforma t
ions houl dbepr ovidedf orthec urr
e nta ndfivepr i
orye ars( si
xye arsi n
total).

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 212
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
Schedule of E mployer C ontributions
Theke yinformat
iont her eadershouldnot ei nt heSchedules of Employer Contributions shownin
Il
lus
trat
ion8-11ist heannual required contribution ( ARC)a ndwha tpe r
centageoft heARC t he
employerhascont
ributed.A nnual required contribution i
sana ct
ua r
ial
lyde t
ermineda mountt hatt
he
employershouldcontri
butee achye artoe nsuref ullactuar
ialf
undi ngofthepl an.Ca lculat
ionofthe
ARCi sdiscus
sedlaterinthes e
cti
onhe aded“ Empl oyer’sPensi
onAc c
ounting.
”

A lternative R eporting and Disclosure

Thet wof i
nancia
lsta
teme nt
sa ndt
wos che
dulesdi
scus
sedprevi
ousl
y,a
ndr e
lat
ednotedi
scl
osures
,are
thoserequir
edi nthestand-
alonestat
ementsofaplanorPERS.Thef ina
ncia
linf
ormati
ona ndnote
disc
losuresrequi
redshouldalsober e
port
edintheemployment’
sgove
rnmentsoff
iduci
arynetasse
ts
ands t
at
e mentofchangesinfiduci
aryneta
sset
sandrel
atednote
s.

I
ll
ust
rat
ion8-
12
J OHNSON C OUNT Y E MPL OY E E R E T IR E ME NT SY ST E M
ST A T E ME NT OF PL A N NE T A SSE T S
J UNE 30, 2001
A ssets
Ca sh..
..
..
..
..
..
..
...
..
...
..
....
...
..
..
..
...
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. $28, 569
Ac cruedint
erestreceiva ble.
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 2,507,
612
Investment(atfairva lue):
Bonds...
..
..
..
..
...
...
..
....
...
..
..
..
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.. 71,
603,
976
Commons tocks...
....
...
..
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.. 31,
957,
205
Comme r
cialpape ra ndrepurchaseagreements.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
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..
.. 12,
570,
401
Prope r
ti
es,atcost,ne tofa ccumulateddepreci
ati
onof$17,673...
..
..
..
..
..
.. 22,
644
Totalasse
ts..
..
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..118,
690,
407
Liabili
ti
es
Ac countpayab l
ea nda ccr
uede xpenses.
..
..
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Ne tasset
she l
di ntrustf orpensionbenefi
ts.
..
..
..
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.$118,
288,
826

Illustrative T ransactions for a Defined Benefit Pension Plan

AssumingtheJohnsonCountyEmployeeRetir
ementPl
ans t
art
edthefis
calyea
rbeginningJul
y1,
2002,witht
heStat
ementofPlanNetAsset
spre
sent
edinIl
lus
tra
ti
on8-12.Duri
ngfi
sca
lye a
r2002,t
he
fol
lowingtr
ansa
cti
onsoccur
redtha
trequi
redj
ourna
lent
ri
esasshown.
 Ac c r
uedint
ere
stre
cei
vableasofJ
une30,2001wascol
lect
ed:
De
bit
s Cr
edi
ts
1. Ca
sh.
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7.
.
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estReceivabl
e..
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612

 Me mbe rcont
ri
but
ionsi
nt hea
mo untof$8,
009,
400a
nde
mpl
oye
rcont
ri
but
ionsi
nthea
mountof
$14,126,292wer
erecei
vedincas
h:

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 213
 Ac
count
ingf
orFi
duc
iar
yAc
ti
vit
ie
s
De
bit
s Cr
edi
ts
2. Ca
sh..
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.
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9.
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2.
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ions–Membe r.
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400
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ions–EmployerContribut
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4.
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,.
1
.26,
292
 Annui
tybene
fit
sintheamou ntof$3,134,448a nddisabi
li
tybe nef
itsintheamountof$287,
590
werer
ecor
dedasli
abil
it
ies:
De
bit
s Cr
edi
ts
3. De
duct
ions–Annui
tyBenef
it
s.
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4.
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8.
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duct
ions–Dis
abi
lit
yBenef
it
s..
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5.
.
9.
.
0.
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Account
sPayablea
ndAc c
ruedExpenses 3,422,
038

 Ac
count
spa
yabl
eanda
ccr
uede
xpe
nse
spa
idi
nca
sha
mount
edt
o$3,
571,
969:
De
bit
s Cr
edi
ts
4. Ac
count
sPayabl
ea ndAccruedExpenses..
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3.
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.
969

 Te
rmi
nat
ede
mpl
oye
eswhos
ebe
nef
it
swe
renotve
ste
dwe
rer
efunde
d$2,
057,
265i
nca
sh.
De
bit
s Cr
edi
ts
5. De
duct
ions
–Re f
undstoTe r
mi na
tedEmpl oyee
s..
..
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.
.,
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0
..
5
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..
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.
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.
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.
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0.
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5.
.
7.
.
,.
256

Invest
mentincomerec
e i
vedincas
ha mounte
dto$9,440,
769;$4882.
076int
ere
s ti
ncomewasaccr
ued
aty ear
-end.Inaddi
tion,thefai
rva l
ueofi nves
tment
si nbondsde cr
eas
eddur ingtheye
arby
$5,626,
382a ndt
hefa
irvalueofi
nves
tmentsincommonstocksi
ncrea
sedby$3,472,
600.

 I
na ddi
ti
ont ot her e
quire
dma nageme nt
’sdisc
ussi
ona ndanalysi
s(MD&A) ,ba s
icfi
nanc
ial
s
tat
ements(government-
widea ndfund),andr e
quire
ds upple
me nta
ryinforma t
ionothert
hant
he
MD&A,t heCAFRs houldconta
ini nt
roduct
oryma t
eria
l,i
ndivi
dualfunda ndc ombini
ngfi
nanc
ial
s
tat
ements,s
chedulesneces
sarytode monst
rat
elegalcomplia
nce,andsta
ti
s ti
caltabl
es.
De
bit
s Cr
edi
ts
6a. Ca
sh..
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7.
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9.
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cruedInt
erestRecei
vable.
..
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0.
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7.
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6.
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Additi
ons–Inve
stmentIncome..
..
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.1
.
.4
.,
262,
845

6b. I
nvest
me ntinCommonStock...
..
..
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.
.,
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6
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Deduc
ti
ons –Changei
nFairValueofInvest
me nt
s..
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.
.9
.
.8
.
.,
.
7
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nBonds..
..
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5.
,626,
382

 Commer
cia
lpa
perandrepur
cha
sea
gre
eme
ntsc
arr
ieda
tac
ostof$1,
354,
568ma
tur
ed,a
ndc
ashi
n
t
hata
mountwa
srec
e i
ved.
De
bit
s Cr
edi
ts
7. Ca
sh.
..
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5.
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Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 214
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
Comme
rci
alPa
pera
ndRe
pur
cha
seAgr
eeme
nts.
..
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1.
.
,.
3
.54,
568

 Commons toc
kscar
ri
eda tfai
rval
ueof$6,
293,867weresol
dforthatamount
;$1,536,
364was
r
einve
ste
di ncommonstocksandt
here
ma i
nderinbonds
.Ana ddi
ti
onalamountof$29,
229,
967
wasal
soinvest
edi
nbonds:

De
bit
s Cr
edi
ts
8a. Ca
sh.
..
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2.
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9.
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3.
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nvest
me nti
nCommonSt oc
k...
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..
,
293,
867

8b. I
nve
stment
sinBonds..
..
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nve
stment
sinCommonSt ocks..
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5.
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3.
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,523,
834

 Admi
nis
tra
ti
vee
xpe
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):
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12. De
duct
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 Nomi
nala
ccount
sfort
heye
arwe
rec
los
ed:

De
bit
s Cr
edi
ts
13. Addi
ti
ons
–Me mber
sContri
but
ions.
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ti
ons
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ri
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Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 215
 Ac
count
ingf
orFi
duc
iar
yAc
ti
vit
ie
s
De
duc
ti
ons–Annuit
yBe ne f
its
...
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448
De
duc
ti
ons–Dis
abili
tyBe nefi
ts..
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. 287,
590
De
duc
ti
ons–Ref
undst oTe r
mi nat
edEmpl oyees.
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265
De
duc
ti
ons–Administ
rat
iveExpe nses.
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219
De
duc
ti
ons–Cha ngeinFa irVa l
ueofInvest
me nts
..
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782
Ne
tAsse
tsHel
di nTrustforPe nsi
onBe nef
its
..
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140,
233

Entr
ies1thr
ough13r e
s ul
ti nt hef ina
ncia
ls t
ate
me nt
sshownasIll
ust
rat
ions8-13and8-14,whe
n
appl
iedt
othea ccountse xis
tinga tt hebegi
nningoftheper
ioda
sshowninIl
lust
rat
ion8-
12.
 Statement of Plan Net A ssets

Illustration 8-13
J OHNSON C OUNT Y E MPL OY E E R E T IR E ME NT SY ST E M
ST A T E ME NT OF PL A N NE T A SSE T S
J UNE 30, 2002
A ssets
Ca sh. .
..
..
..
..
..
..
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..
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...
..
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Ac c ruedint
erestreceiva ble.
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.. 4,822,
076
Inve stment(atfairva lue):
Bonds ...
..
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965,
064
Commons tocks...
....
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.. 30,
627,
302
Comme r
cialpape ra ndrepurchaseagreements.
..
..
..
..
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..
..
..
..
..
..
..
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.. 11,
215,
833
Prope r
ti
es,atcost,ne tofa ccumulateddepreci
ati
onof$17,673...
..
..
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..
.. 19,
585
Tot alasse
ts..
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680,
709
Lia bili
ti
es
Ac c ountpayab l
ea nda ccr
uede xpenses.
..
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..
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..
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..
..
..
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Ne ta sset
she l
di ntrustf orpensionbenefi
ts.
..
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.$146,
429,
059

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 216
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s

 ST A T E ME NT OF C HA NGE S IN PL A NT NE T A SSE T S

I
ll
ust
rat
ion8-
14
J OHNSON C OUNT Y E MPL OY E E R E T IR E ME NT SY ST E M
ST A T E ME NT OF C HA NGE S IN PL A NT NE T A SSE T S
F OR T HE F ISC A L Y E A R E NDE D J UNE 30, 2002
Addi tions
Cont ributi
ons:
Empl oye r..
..
..
..
...
....
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..$14,126,292
Planme mbe rs.
...
....
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 8, 009,400
Totalc ontri
butions....
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 22,135,692
Investme ntincome :
Ne tde creas
ei nfairvalueofinvest
me nt
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..(2,198,782)
Inter
e standDi vidends..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 14,262,845
Totali nvest
me nti ncome...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 12,064,063
Totala dditi
ons .
..
....
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 34,199,755
De duc ti
ons:
Annui tyBe ne f
its
....
..
..
..
..
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..
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..
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..
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..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 3, 134,448
Disabi li
tyBe nefi
ts .
..
..
..
..
..
..
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..
..
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..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 287,590
Re fundt otermina te
de mployees.
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 2, 057,265
Admi nist
rat
ivee xpe nse
s..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 580,219
Totalde ductions....
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 6, 059,522
Ne tinc r
ease..
...
..
....
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. 28,140,233
Ne tass et
s,July1,2001. ..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..118,288,826
Ne tass et
s,June30,2002. ..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
$146,429,059

Empl
oye
r’sPe
nsi
onAc
count
ing
GASBs t
andardsforthee mployer’
sa c
counti
ngfordef
inedbenef
itpensi
onplansprovideguidancefor
mea s
urement
,r ec
ognition,anddisplayoftheemployer
’spensi
oni nf
ormati
on.Ina ddit
iontogene r
al
purposegovernmente mployers,t
hes t
andar
dsapplyalsotogover
nme nt
alpublicbenefi
tcorporat
ions
anda ut
hori
ti
es,utili
ti
es,hospital
s,andotherheal
thcareprovi
ders
,c ol
le
gesa nduniversi
ti
es,and,if
the
ya reemployers,t
opubl i
ce mployeeret
ir
ementsyst
ems.

Manyofthenoteands t
ati
st
ica
ldi s
closure
sa ppli
cabletode f
inedbenefi
tpensi
onplans,disc
ussedi n
t
hepre
cedingpara
graphs,a
pplya swelltotheemploye r
.Iftheplan(orPERS)isdeeme dtobepa rtof
t
hegover
nme nt
’srepor
ti
nge nt
ity,t
henma nyoft hee mployer’
srequir
eddiscl
osur
esarer e
dundantof
t
hoser
equire
doftheplan(apens i
ontrustfund).I
nt hi
sca s
e,theemployerneednotma kedisc
losures
t
hatwoulddupli
catethosema debyt hepl an.Ifthepla nissuesas t
andar
d-al
onefinancia
lr e
por t
,

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 217
 Ac
count
ingf
orFi
duc
iar
yAc
ti
vit
ie
s
however
,theemployerwillhavetoma kema nyofthesamedisclosur
esintheCAFRt hattheplan
makesini t
sstand-
alonereport
.Be causeoft hes i
mil
ari
tyoft hediscl
osuresands upple
me nt
ary
inf
ormat
ionrequir
edoft hee mploye
rt ot hoseenumer
atedpreviousl
yf orthepla
n,t hereaderis
ref
err
edtoGASBCodi fi
cat
ion,Sec.P.20.117,fors
peci
fi
cdisc
losurerequir
ementsapplic
abletothe
employe
r.

Whetheragovernmentemployeracc
ountsforpayr
olli
nagove r
nme nta
lfundorpropr
iet
aryfund,or
bot
h,therea
rethreepr
imaryme as
urestobecalc
ulat
eda ndr
epor
ted:(1)annua
lrequi
redcont
ribut
ion
(ARC),(2)a
nnualpensi
oncost,(
3)netpens
ionobli
gati
on(NPO).

C alculation of A nnual Pension C ost and Net Pension Obligation

Annua
lpensioncostmustbec a
lcul
ateda nddiscl
osedint
henot estotheemploye
r’sfina
nci
al
st
at
ement
s,asshowninIl
lus
tr
a t
ion8-15,theannualre
quir
edc
ontr
ibuti
on(ARC)isthest
art
ingpoi
nt
f
orunder
sta
ndingthec
alc
ulat
ionofa nnualpensi
oncost.Adi
scus
sionofthede
tai
le
dprocedure
sfor

Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 218
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
cal
cul
at
ingARCi swellbe
yondt
hes
copeoft
hist
ext
;the
ref
oreonl
yide
nti
fi
cat
ionoft
hec
ompone
nts
ofARCi sdi
scus
sedhe
re.

ARCi sc a
lculate
di nacc or
dancewithcer
ta inparameter
sprovi
dedinGASBs tandards.Thepa r
ame ters
requir
et hatforfinanci
a lre
porti
ngpu r
pose sana c
tuari
alval
uat
ionbepe r
for
me datleastbienniall
ya nd
thatARC beba se
dona nactuar
ialval
ua tiona sofada tenotmor ethan24mont hspr iortot he
beginningoft hec ur
rentfisc
alyear.A c ompone ntofARCi stheactuarial present value of total
projected benefits,allowingforproject
e ds al
aryincrea
sesanda ddi
ti
onals tat
utoryorc ontractual
agreeme nt
ss ucha sa dhocc ost
-of-
li
vingi nc
rease
sa ndothertypesofpos t
empl oyme ntbe ne fit
s
increa
se s.

Theparametersusedtoc a
lculat
eARCa ls
opr ovidebroadgui
danceregardingact
uaria
lande conomic
ass
umptions,eventhougha nyofsixa c
tuari
a lme thodsarepe
rmitt
ed,subj e
ctt
ot heli
mitat
ionthatin
mos tcas
est hes a
mea ct
ua r
ialmethods houl dbeus edbot
hf orfundi ngandf inanc
ialreport
ing
purpos
es.Furthe
r,boththeplanandtheempl oye rshouldbeus
ethesamea ct
uar
ialme t
hod.

Ane mploye r ’
sARCs houl
dincludenormal cost (
i.
e .
,thea ctuarialpre
sentvalueofbe nef
it
sa ll
oc at
ed
tot hec urre ntye arbyt hea ct
ua r
ialcostme thodbe i
ngus ed)a nda morti
zationofa nyunfunded
actuarial liability (samea sunfundeda c
tuaria
la c
cruedl iabil
ityde fi
nedprevious lyinthedis cuss
ion
oft here quir e
dSc heduleofFundi ngProgre s
s).Thepr ovis
ionf oramortiz
ationc a
nbede termined
usinge ithe rleve ldol laramount seachye aroral eve lpe rcentageoft hepr oje
ctedpayr ol
l.The
amor ti
zationpe riodmus tfal
lbe tweende fi
nedma xi
mum a ndmi ni
mum a mor tizat
ionperiods .The
ma ximuma mor ti
za t
ionpe r
iodf orthe10ye arsafte
rJ une15,1996,t hee ffe cti
veda t
eofGASB
StatementNo.25,i s40ye ar
s.Af t
erthef i
rst10ye ar
st hema ximum pe r
iodi s30ye ars
.Ifthe reisa
signifi
cantde cre asei nthetotalunfunde da c
tuar
ialliabilit
yc ausedbyac ha ngei na ct
uar i
alc ost
me thodorac hangei nasse
tvaluati
onme thod,thedecre
a semus tbea mort
izedove raperi
odofnotl es
s
than10ye a r
s .

Onc eARCha sbe enc a l

culat
ed,itb ecomesa ni nputt othec a l
cul
a t
ionofa nnualpe nsi
onc ost(see
Il
lustr
ation8-15).I fthe rewerenone tpensi
onobl igat
ion( NPO) ,thea nnualpens
ioncos twouldbet he
samea sARC,a ndt ha twouldbet hea mountthee mpl oyershouldc ontribut
eduringthepe ri
odt othe
pl
a ninor dert
of ullyf undc urr
ent-pe r
iodaccr
ue dbe nefit
s.Ifthee mployerhasunde rc
ont r
ibut
e dinthe
past,thenAr cwi llc ontainana mountf ort hea mortizat
ionoft heunf undeda ctuar
iall i
abil
it
y.
Mor eover,ifac t
ua lc ontri
buti
onsha vebeenl esst hana nnualpe nsi
onc ost
,NPO wi llhavepos iti
ve
balance.Thus ,a nnua lpe nsi
onc os twillbea ffe
c tedbyt hee xis
tenceofNPO,i nadditiontoAr c
.
Befored isc
ussingt hepr eci
secal
cul ati
onofa nnualpe nsioncosti nthepr ese
nceofa nNPO,i twillbe
usefultofir
stexa mi net hecompone nt
sofNPO.

Net Pension Obligation

Net pension obligation (
NPO)hastwocomponent
s:(1)thetr
ansactionpensionli
abi
li
ty(ora ss
et)
,if
any,e xi
st
i ngattheda t
aGASBSt at
ementNo.27wa simplementedand( 2)thecumula
tivediffe
rence
fr
om t heimpl e
me nt
a t
iondat
eofState
mentNo.27t othecurr
e ntbalancesheetdat
ebetwe enannual
pensionc ost(t
hea mounttha
tshoul
dbec ont
ri
bute
d)a ndtheempl oyer’
sa ct
ualcont
ri
butions.These
Compi
le
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 Ac
count
ingf
orFi
duc
iar
yAc
ti
vit
ie
s
i
nput
stoNPO( a
ctua
lcont
ri
but
ion,a
nnua
lpe
nsi
onc
ost
,andt
rans
it
iona
lli
abi
li
ty)a
res
hownc
lea
rlyi
n
I
ll
ust
rat
ion8-
15.

A nnual Pension C ost

Whe na ne mployerha sanNPO,annual pension cost i se qualt
o:(1)t heARC,pl us(2)oneye ar’
s
i
nte restont hebeginning-of-yearNOP,a ndminusorplus( 3)ana dj
ustmentfora nya mountsalr
eady
i
nc ludedi nARC f orpa sta mor ti
zati
onofc ont
ri
but
ionde fi
cienci
esore xc
es sc ont
ribut
ions
.The
adjus t
me ntisminusi fthebe ginningba l
anceofNPOispos iti
ve(contr
ibuti
onde fi
c i
encies)andpl
usif
NPO i sne gati
ve(e xcessc ontribut
ions).AsshowninI llustr
ati
on8- 15,thea djustmenttoARC i s
appr oximatedbyde ducti
nga na mounte qualt
othepresentva l
ueoft hebe gi
nningpe nsioncostand
NPOa rerelat
edandhowe achi scalcul
ated.

I
ll
ust
rat
ion8-
16:Ca
lcul
at
ionofAnnua
lPe
nsi
onCos
tandNe
tPe
nsi
onObl
iga
ti
on
Annualre
quiredc ontr
ibuti
on( ARC) .
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.. $165,485
I
ntere
stonne tpensionobligati
ons( ixNPO) .
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 5,070
Adjust
mentstoannua lrequiredc ont
ri
bution(PVofNPOb) .
..
..
..
..
..
..
..
..
..
..
..
. ( 3,692)
Annualpensi
onc ost..
..
..
..
...
..
..
...
..
...
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 166, 863
Contr
ibut
ionsma dedur i
ngt heye ar.
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
.(157,982)
I
ncreasei
nne tpensionobl i
gation..
..
..
..
..
..
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 8,881
Netpensi
onobl i
ga t
ion,January1,2001. .
...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. 67, 594
Netpensi
onobl i
ga t
ion,De cembe r31,2001...
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
..
. $76, 475

E mployer R eporting of Pension E xpenditure/E xpense

Re f
err i
ngtoI l
lustrati
on8- 15a nd8- 16,agove rnme ntalemploye rt
ha trepor t
spensione xpendi
turesin
agove rnme ntalf unds houl dre c
ogniz et hee xpendituresont hemodi f
ie dac c
rualba sis
.Thus ,the
amountr e
c ogniz edwi l
lbet heactuala mountc ontri
but edtothepl andur i
ngt heye ar.Iftheamountof
pensione xpe ndituresfort heye arisle ssthana nnua lpe ns
ionc ost
,thedi f f
erenceshouldbea ddedt o
NPO.I fthee xpe ndit
ur esa mounti sgr ea
tert hana nnualpe nsi
onc ost,thedi ffere
nc eshouldbe
deduc tedfromNPO.Anyc umul ati
vepos i
ti
veba l
anceofNPO,i ncl
udingat ransit
ionliabil
it
y,should
ber eportedi nt heSt ateme ntofNe tAs setsatt hegove r
nme nt-wi
del eve l.A nega t
iveNPO ba lance
shouldbeus e dtor educ ea nyot herliabili
tytot hepl antoz er
o,buts houldnotber eportedasa nasset
.
Annua lpens i
onc osts houl dbedi scl
os edi ntheNot e stotheFi nancialSt atements.Unde rorove r
fundingbyapr opr ie
tar
yf unde mpl oyers houldber epor t
edint hesamema nnerexcepttheNPOs hould
ber eporte
di nt heBa l
anc eShe e
toft hepr opri
eta r
yfund.Thea mountofpe nsi
one xpenser e
cognizedin
thepr oprietorsf unds houl dbet hes amea st hea nnua lpens i
onc ost.Thi sa mountwoul da l
sobe
recognizeda s pr ogram e x pe
nse si nt he gove rnme nt-
wide St ateme ntofAc t
ivi
ties
,bot hf or
gover nment alactivit
iesa ndbus ine s
s-t
ypea ct
iviti
es.

8.6) R equired Disclosures for Other Postemployment Benefits (OPE B)

Sinc
eu nf
unde
dotherPos
temployme
ntbe
ne f
it
s(OPEB),suc
ha shea
lt
hc a
rebene
fit
sforr
eti
rees
,may
re
prese
ntama t
eri
alli
abi
lit
y,GASB standar
dsrequi
rec e
rtai
ndiscl
osur
esbygove r
nme nt
al
Compi
le
dBy:TheG&NPAc
count
ingI
nst
ruc
tor
s 220
 Ac
count
ingf
orGove
rnme
nta
landNonpr
ofi
tEnt
it
ie
s
employer
stha
tprovideOPEB.I ftheOPEBpl anisadmini
st
ere
dbyade fine
dbenefi
tpe
nsionplan,the
OPEBf oll
owsthestandar
dssetfort
hi nGASBSt at
ementNo.26a ndc odif
iedi
nGASBCodi fic
a t
ion,
Sec.Po50.Thosestanda
rdsimposefinanc
ialr
eport
inganddis
closur
er equi
rement
sontheOPEBpl an
tha
ta r
everysi
milartothosefordefi
nedbenefi
tpensi
onp l
ans
,a ndthusdonotneedtobee l
aborated
onhere.

ForOPEBpl anst ha ta renota dmi nis tereda spa rtofade f

ine dbe ne f
itpe nsionpl an,GASBs tanda rds
provi
dedisclosures t anda r
dsonl y;f ina nc i
aldispl ayi ssue sr e
latingt os uchOPEB pl ansa rebe ing
examine
di nas epa ra tepr ojectbyt heGASB.TheNot estot heFi na ncialSt a
teme ntss houldpr ovide ,at
ami ni
mum,t hef ol lowi ngdi sclos ures ,e it
hers epa r
a t
e l
yf ore ac hOPEBori nt hea ggregatef ora l
l
OPEBpr ovided.
a. De scriptionoft heOPEB;e mpl oyeegr oupsc over
e d;e ligibil
ityr equireme nts;a ndt he
empl oye ra ndpa rt
icipa ntobl i
ga t
ionst oc ontri
but e,qua ntif
iedi ns omema nner.
b. De scriptionoft hes tatutor y,c ontract
ua l,orot he rauthor i
tyunde rwhi chOPEBpr ovisions
andobl iga tionst oc ont ri
b utea ree st
ablishe d.
c. De scriptionoft hea ccount inga ndf i
na ncingorf undingpol i
c iesfoll
owe d.
d. Expe ndi ture /expe nsei nf orma ti
on.I fOPEB a ref i
na nc e
donapa y-as-you-goba sis,t he
empl oye rs houl ddi sclos ee xpenditure s
/expe ns esre cogniz eddur ingt hepe ri
odbyt he
empl oye r( ne tofpa rticipa ntc ontributions)a ndt henumbe rofpa rtici
pant sc urrently
eli
giblet or e ceivebe nefits.I fOPEBa rea dva nc ef unde dona na ctuarial
lyde t
e r
mi ne d
basis,thee mpl oye rshoul ddi s c
losethenumbe rofa ctivepl anpa rti
c i
pa nts,t
hee mploye r ’
s
actuariallyr equireda nd a c t
ualc ontributions f or t he pe riod ( ne tof pa rti
c i
pa nt
contribut ions )
,a ndt hea mountofne ta ssetsa va i
lablef ort heOPEB,a ndt hea ctuar ia
l
accrue dl iabi lit
ya ndunf unde da ctuar
ia lacc r
uedl i
abilit
y.
e. De scription( anddol lare f
f ect,ifme asurable)ofa nys ignificantma tter
st hata ffectt he
compa rabi lityoft hedi sclos ureswi t
ht hos efort hepre viouspe ri
od.
f. Anya ddi t
iona linforma tiont ha tthee mpl oye rbe l
ie
ve swi llhe l
pus e rsa ss
e ssthena ture
andma gni tudeoft hec ostoft hee mploye r’scommi tme ntt opr ovideOPEB.

Empl
oyer
stha
tadva
ncefundonOPEBt hroughapens
ionpla
nha vet
heopt
ionoff
oll
owingr
equi
red
empl
oye
rpens
iondi
scl
osur
es,di
scus
sedpr
evious
lyi
nthisc
hapte
r,ort
heOPEBdisc
los
ure
sjus
tli
st
ed.

T ext: Ea
rlR.Wi
ls
on,Sus
anC.Ka
tt
el
us,Le
onE.Ha
y,( ,Accounting for Governmental and
2001)
Nonprofit Entities,12thEdi
ti
on,Mc
Gra
w–Hi
ll
,Inc
.,Uni
te
dSt
at
es

R eferences:
JohnH.Engs tr
oma ndPa ulA.Copl ey(2004),Essentials of Accounting for Governmental and Not-
for-Profit Organizations,7 Edi
t
h
t
ion,Mc Graw–Hi ll,Inc,Uni t
edSt a t
es
RobertJ
.Fr eema na ndCr aigD.Shoul ders(2003),Governmental and Nonprofit Accounting: Theory
and Practice, 7 Edi
t
h
tion,Prenti
ceHa llPubli
shing,Uni tedSt at
es
GranofH.(2007) ,Gove rnme nta ndNon- f
or-Profi
tAc count ing,4 Edi
t
h
t
ion,J ohnWi l
ey&Sons ,Inc,
Uni t
edSt ates

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le
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count
ingf
orFi
duc
iar
yAc
ti
vit
ie
s

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le
dBy:TheG&NPAc
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ingI
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ruc
tor
s 222