Accounts and Reports

GAAP POLICY AND PROCEDURE MANUAL

• Items that should be reported as other financing sources and uses include face amount of long-term debt, issuance premium or discount, certain payments to escrow agents for bond refundings, transfers, and sales of capital assets (unless the sale meets the criteria, as defined in paragraph 56, for reporting as a special item). GASB 34 Paragraph 88 as amended by GASB 37 Paragraph 16.
• Significant transactions or other events within the control of management that are either unusual in nature or infrequent in occurrence are special items. Special items should also be reported separately in the statement of activities, before extraordinary items, if any. In addition, governments should disclose in the notes to financial statements any significant transactions or other events that are either unusual or infrequent but not within the control of management. GASB 34 Paragraph 56.
• Extraordinary items are transactions or other events that are both unusual in nature and infrequent in occurrence. APB Opinion No. 30, Reporting the Results of Operations - Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions, as amended and interpreted, defines the terms unusual in nature and infrequency of occurrence. As discussed in paragraph 53, extraordinary items should be reported separately at the bottom of the statement of activities. GASB 34 Paragraph 55.
• Special and extraordinary items, defined in paragraphs 55 and 56, should be reported separately after "other financing sources and uses." If both occur during the same period, special and extraordinary items should be reported separately within a "special and extraordinary items" classification. Significant transactions or other events that are either unusual or infrequent but are not within the control of management should be separately identified within the appropriate revenue or expenditure category in the statement of revenues, expenditures, and changes in fund balances or be disclosed in the notes to financial statements. (Because other financing sources and uses, rather than gains or losses, are reported for debt refundings in governmental funds, these transactions should not be reported as extraordinary items.) GASB 34 Paragraph 89.

• Generally nonoperating objects were shown as other financing sources and uses for the AFR.
• Agencies were directed with Informational Circular No. 02-A-008 to record interfund reimbursements as a reduction of expenditures previously paid in lieu of recording revenue with revenue sub-object code 62xx.
• STARS does not account for debt as a liability. Debt is accounted for as expenditures when principal payments are made using expenditure sub-object (ESO) codes 60xx and as receipts when proceeds are received using revenue sub-object (RSO) codes 60xx. Debt interest payments are recorded as expenditures using ESO codes 61xx.
• Payments to refunded bond escrow agents are recorded using ESO 7380.
• Sales of assets are recorded using RSO codes 61xx.
• Transfers are recorded using RSO codes 66xx and ESO codes 73xx.

• Reimbursements and refunds should be correct in STARS if agencies follow the Informational Circular. Amounts in RSO codes 62xx will be shown as other revenue using the assumption that they are immaterial amounts.
• Debt principal payments are shown as debt service expenditures at the modified accrual level so no adjustments are needed. Full accrual adjustments are done to reclass the expenditures by a debit to GL 2040 General Long Term Debt and a credit to GL 5001 Expenditures.
• Debt interest payments are shown as debt service expenditures at the modified accrual level so no adjustments are needed. No adjustments are done for full accrual because the expenditures will be shown as functional expense by the programming of access.
• Debt proceeds will be shown as other financing source at the modified accrual level. Full accrual adjustments are done to reclass the revenue by a debit to GL 4001 Revenues and a credit to GL 2040 General Long Term Debt.
• Payments to refunded bond escrow agents should be reported as an other financing use rather than as an expenditure at the modified accrual level. Full accrual adjustments are done to reclass the expenditures by a debit to GL 2040 General Long Term Debt and a credit to GL 5001 Expenditures.
• The proceeds from the sale of capital assets will be shown as other revenue as long as the amount is immaterial (under $500,000 per item) at the modified accrual level. When the amounts are material, they will be reported as an other financing source. When the amounts become significant, they may need to be reported as special items. Full accrual adjustments are done to debit GL 4001 Revenues, debit appropriate Accumulated Depreciation account, and credit appropriate Capital Asset account.
• Transfers should be recorded as other financing sources (RSO codes 66xx) to allow them to be distinguished from regular revenues and as other financing uses (ESO codes 73xx) to allow for the difference in substance from other expenditures. Full accrual adjustments should be made so that consolidated amounts are reported as transfers in the Government Wide-Statement of Activities. Transfers with discretely presented component units should be reclassified as revenues or expenditures rather than transfers.

• The information for the items mentioned in the conversion issues section are already being gathered based on the GAAP PPMs relating to debt, capital assets and eliminations. See those PPMs for further information.

• Reimbursements should be recorded as a reduction of expenditures.
• Gains (or losses) from the sale of assets are considered material if the amount is greater than $500,000 per item.