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Wiley CPAexcel Exam Review 2014 Focus Notes: Financial Accounting and Reporting by Ray Whittington

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Focus on: Governmental (State and Local) Accounting—Module 21

GOVERNMENTAL (STATE AND LOCAL) ACCOUNTING

Governmental Accounting and Standards Board (GASB) Concept Statements set forth fundamentals on which governmental accounting and reporting standards will be based

Objective of governmental accounting and reporting—accountability

  • Provide useful information
  • Benefit wide range of users

Concepts Statement No. 1 identified three primary users of the external state and local governmental financial reports

1. The citizenry
2. Legislative and oversight bodies
3. Investors and creditors

Governmental financial information should:

  • Demonstrate operations within legal restraints imposed by citizens
  • Communicate compliance with laws and regulations related to raising and spending money
  • Demonstrate interperiod equity—Current period expenditures financed with current revenues

To demonstrate full accountability for all activities, information must include:

  • Cost of services
  • Sufficiency of revenues for services provided
  • Financial position

The concepts statements encourage Service Efforts and Accomplishment (SEA) reporting

  • SEA reporting provides more complete information about a governmental entity’s performance than can be provided by traditional financial statements and schedules.

Funds

Government comprised of funds—Self-balancing sets of accounts—three categories

1. Governmental
2. Proprietary
3. Fiduciary

Methods of Accounting

Funds of a governmental unit use two methods of accounting ...

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