Special Revenue Fund B. Capital Projects Fund C. General government financial resources that are required to be used to pay principal and interest on general government long-term debt are accounted for in A. A Capital Projects Fund. A Debt Service Fund. The General Fund. General government financial resources to be used to finance construction of a general government construction project typically should be accounted for in A.
The fund used to account for the acquisition or construction of major capital facilities and other capital assets is the A. The receipts of a special tax levy to retire principal and pay interest on general obligation bonds issued to finance the construction of a new fire hall should be accounted for in the A.
General Long-Term Liabilities accounts. General government financial resources that are required to be used to pay teacher salaries for a special education program are typically accounted for in a A. Receipts from a special fishing tax committed to maintain the no-charge public fishing pier should be accounted for in A. Incurring construction costs on a major general government capital project should require entries in a A. General Long-Term Liabilities account. Which fund should be used to account for the proceeds from the tax levy?
General Long-Term Liabilities Fund. A state enacts a gasoline tax that is restricted for new highway construction. Which fund should be used to account for the proceeds from the tax? All capital assets acquired by a government entity regardless of the fund purchasing the asset. Capital assets acquired with governmental fund resources that will be used in governmental fund activities. Capital assets acquired with debt proceeds only. Capital assets that are used by a variety of governmental and proprietary funds.
A government issues year bonds to finance construction of an addition to city hall. The bonds payable should be reported in the A. General Capital Asset accounts. To account for amounts owed to general government bondholders that must be paid in the future, a government should use A.
The General Long-Term Liabilities accounts. The General Fund D. A Private-Purpose Trust Fund. Assume that the City of Wakefield purchased a tract of land to be used as a public park. The purchase was financed with proceeds from a five-year note issued by a local lending institution.
Because of the time required for facilities construction and land improvements, the park itself will not be ready for public use for at least two years. At the date of purchase, the city would most likely account for the transaction in A. The Enterprise Fund. To account for a donation to the City where the principal is to remain intact forever and the earnings are to be used to benefit the Boy Scout and Girl Scout organizations in the City, the government should use what fund type?
The General Fund only. The Capital Projects Fund only. The minimum general purpose external financial reports required for state and local government entities do not include which of the following? Fund financial statements. Transmittal Letter. The Basic Financial Statements include all of the following except A. Combining financial statements. Notes to the financial statements.
GAAP requirements for external financial reporting include A. A comprehensive annual financial report. Note disclosures. Transmittal letter. Statistical Section. Basic financial statements exclude A. Which of the following accounts is not included in a balance sheet of a governmental fund?
Salaries Payable. Government-wide financial statements include A. A statement of net position. A budget-to-actual schedule. A statement of cash flows. A statement of revenues, expenses, and changes in net position. A statement of revenues, expenditures, and changes in fund balance is required for each A. Private-purpose Trust Fund. Which of the following would not be considered a fund financial statement? Balance sheet B. Statement of cash flows C. Statement of activities D. All of the following financial statements should be presented for an Internal Service Fund except for a A.
Statement of net position. Statement of revenues, expenses, and changes in fund net position. Statement of revenues, expenses, and changes in fund net position: budget and actual. A statement of cash flows is required for which of the following? Investment Trust Fund. The material in Chapter 2 is best suited for two types of problems: 1. Matching funds to fund types or fund definitions; and 2. Transaction analysis. Since transactions are an essential part of Chapters 3 through 12 and 16 through 18, we recommend using the transaction analysis with journal entries in those chapters.
To that end, transaction analysis will be further demonstrated in those chapters. Indicate how the following funds types would be classified as to category: G governmental, P proprietary, or as F fiduciary. Internal Service 2. Agency 3. All these controls, however, can be classified within one of the basic categories of controls described below. Detailed control procedures or monitoring activities may be included in each of these categories, depending on the size of the entity and the sophistication of the particular control environment.
Access Controls Certain controls prevent access to assets by unauthorized persons. Often these controls are physical in nature. For example, an organization might store inventories of supplies and commodities in locked storage areas, store currency in a vault or a locked drawer, and use alarm systems to restrict access by unauthorized individuals. If controls to prevent unauthorized access to assets are not effective, assets may be lost or stolen. If detective control procedures such as physical inventory counts are appropriately performed, shortages should be discovered in a timely manner.
In some cases, unauthorized access to assets may be gained through vulnerable accounting records-especially records maintained on computer systems. For example, if warehouse requisitions can be issued through a computer terminal, access to inventory may be gained through the system.
Controls over unauthorized access to assets through computer records may be physical e. Monitoring the control procedures that address unauthorized access includes observing physical control procedures, reviewing established access privileges with the manager of information systems, or reviewing reports of attempted computer access violations. Internal auditors often perform such activities. Access controls, however, do not prevent individuals who have authorized access to assets from misappropriating them.
Individuals who have authorized access to both assets and related accounting records may be in a position to conceal shortages of assets in the records. However, if duties are properly segregated, persons with access to assets will not have access to related accounting records, which may be altered to conceal shortages. Controls over authorized access to assets are important to an organization, not only to prevent thefts, but also to ensure that assets are committed only after proper consideration by individuals who are knowledgeable and experienced.
Authorization and approval are types of controls designed to prevent invalid or inappropriate transactions from occurring. An example is a procedure designed to ensure that disbursements are made only when authorized orders for goods and services have been received.
In many systems, access to computerized records e. Reconciliation and Comparison of Assets with Records Reconciling and comparing assets with accounting records establish a system of independent verification, either through preparing an independent control document used to reconcile accounting records and assets or by directly comparing accounting records with related assets.
Examples of these procedures include the reconciliation of physical inventory to accounting records and the preparation of a bank reconciliation. Analytical Reviews The purpose of analytical reviews is to evaluate summarized information by comparing it with expected results. Management personnel often perform analytical reviews to determine whether the entity is performing as planned.
For example, a common analytical review procedure is the comparison of budgeted to actual performance, with investigation of any significant or material variances as determined by the analyst. Often, analytical reviews may be used to monitor other underlying control procedures. Authorization and Approval Authorization and approval procedures prevent invalid transactions from occurring. Thus, this type of control typically involves authorization or approval of transactions at specific dollar thresholds and manual e.
The effectiveness of these procedures often depends on general computer controls over information security. Reviews of Output Reviews of output should be performed by district personnel who have the knowledge and experience to identify errors. Such reviews could be performed in both computer and manual systems. These reviews check the validity and accuracy of output by comparing it in detail with expected results. For example, a purchasing manager may compare recorded amounts or quantities purchased with separate records of purchase orders.
Transactional Reviews Transactional reviews check the validity and accuracy of transaction processing by comparing it in detail with expected results. Reviews often use exception reports usually computer-generated , which list items that failed to be processed because they did not meet specified criteria.
For example, a computer-generated check may be rejected if it exceeds some dollar amount and requires a manual signature. Monitoring these types of control procedures involves reviews of results performed by management. General Computer Controls Computer systems frequently have common areas of control and related control procedures referred to as general computer controls.
These controls directly or indirectly affect all systems that operate within a computer-processing environment. General computer controls include the usual elements of effective internal control, that is, an individual or group responsible for control procedures and monitoring activities. Managers of the information systems function usually monitor the performance of general computer controls. Monitoring activities include observation, exception reporting, reviews of work performed, reviews of program changes, oversight by information system steering committees, and the monitoring of user complaints.
For example, the effectiveness of programmed control procedures such as edit checks and approvals depends on general computer controls that ensure that program changes are not made improperly. General computer controls include controls over computer operations; systems acquisition, development, and maintenance; information security; and information systems support, as detailed below: Computer operations.
The computer operations staff is responsible for the day-to-day processing activities of the entity's system. It ensures that jobs are scheduled and processed as planned, data are properly stored on the system or tapes, and reports are distributed in a timely and accurate fashion. Systems acquisition, development, and maintenance. The systems acquisition, development, and maintenance staff is responsible for planning, acquiring or developing, testing, and implementing new application systems and changes to existing application systems.
Such controls are usually important in larger processing environments where there is more development and maintenance activity. The systems are more complex and there is less reliance on purchased software.
Information security. The information security function is responsible for administering and maintaining an entity's information security program, including both physical and logical security.
The primary goal of such a program is to ensure that access to program data, online transactions, and other computing resources is restricted to authorized users. Information systems support. Information systems support includes such functions as system software maintenance, database administration, communications and network management, end-user computing, and other groups with technical and administrative support responsibilities. Certain governmental entities may use external service organizations for executing and recording certain transactions, such as payroll processing.
In such situations, the entity needs to ensure that the service organization has adequate controls over processing the transactions. In the final analysis, maintaining the internal control environment and related control procedures is an integral part of management's responsibilities.
In the context of governmental accounting and reporting, the control environment has a direct impact on an entity's ability to collect and present accurate financial information.
Thus, the internal control environment and related procedures are key areas of concern to an entity's external auditor. School districts are the most common special governmental units. In some states, school districts operate as a fiscally dependent part of another local governmental entity such as a city or county; in other states, school districts are legislatively independent with authority to levy taxes and set budgets.
School districts may or may not have common boundaries with another political subdivision. Regardless of whether districts are component units of another financial reporting entity, are joint ventures of several reporting entities such as consolidated educational agencies , or meet the definition in GASB Codification, Section as separate reporting entities, many school districts prepare separate financial statements to accomplish one or more of the following: Support state or federal aid applications Report financial activities to parent, taxpayer, and citizen groups Prepare a financial report for use in an official statement for bond issuance purposes Although school districts are a common type of government, they face a number of unique issues that make them distinct from states, cities, counties, or other local governmental entities.
These issues often result in internal control and operational challenges that district management must address. The total column from these statements becomes a single column in the major fund statements along with a separate column for each major fund.
The major funds statements undergo a conversion process and are combined with the component units financial statements to complete the government-wide statements. Information from all the financial statements and the schedules are used to prepare the notes to the financial statements.
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