Financial Statement/ Audit Report Review
Lolita New
Porfessor Donald Geiger
ACC 410 Government and not For Profit
November 3, 2014
There are many different methods of accounting used for general fund and all other funds in existence by the government. All of the funds are funds used under the government funds, which accounts for the receipt and disbursement of current financial resources to provide basic governmental services to the general public. The General Fund account for all financial resources except those required to be accounted for in another fund. Special Revenue Fund account for the proceeds of specific revenue sources that is legally restricted to expenditure for specified purposes. Capital Projects Fund account for financial resources to use for the acquisition or construction of major capital facilities that will benefit the general public. Debt Service Fund account for the accumulation of resources for, and the payment of, general long term debt principal and interest. Permanent Funds account for financial resources that are legally restricted to extent that only earnings, and not principal, may be used to support government programs. The reason behind the use of the method of accounting for each of the funds as required by GAASB is for employers who fund these benefits will generally be able to use more favorable accounting methods, which results in significantly lower OPEB costs.
GASB Statement 34 establishes financial reporting standards for state and local governments, including states, cities, towns, villages, and special purpose governments such as school districts and public utilizes. It also establishes basic financial statements and required supplementary information for general purpose governments. Basic financial statements include: government wide financial statement consisting of statement of net assets and a statements of activities. Fiduciary activities, whose resources aren’t available to finance the government’s program, should be excludes from the government wide statements. Fund financial statements consist of series of statements that focus on information about the government’s major governmental and enterprise funds. Fund financial statements should also report information about a government’s fiduciary funds and component units that are fiduciary in nature. GASB 34 represents a major change in financial reporting for local and state governments. While there are concerns about the value of some of these changes there is widespread agreement that state and local governments should implement these changes in order to prepare audited financial statements in accordance with generally accepted accounting principles. For many governments, implementing the new model should not be an overwhelming task but for all governments, it will mean careful planning, staff training and allocating the resources necessary to successfully make this change.
The MD&A should launch the basic financial statements and provide analytical overviews of the government’s financial activities. With both short term and long term analysis of the government’s activities presents, MD&A gives financial managers opportunities. MD&A should give basic financial information in a verbiage format for users of the financial statement that don’t desire to go into great detail on the various transactions and balances. MD&A provide an analysis of significant budget variance. MD&A should conclude with a description of currently known fact, decisions, or conditions that are expected to have a significant effect on financial position or result of operation. The significant changes in the assessed condition of eligible infrastructure assets compared with the previous
