Accounts and Reports

GAAP POLICY AND PROCEDURE MANUAL

• Separate financial statements should be presented for the primary government's governmental and proprietary funds. GASB 34 Paragraph 74.
• The focus of governmental and proprietary fund financial statements is on major funds. Fund statements should present the financial information of each major fund in a separate column. Nonmajor funds should be aggregated and displayed in a single column. GASB 34 Paragraph 75.
• The reporting government's main operating fund (the general fund or its equivalent) should always be reported as a major fund. Other individual governmental and enterprise funds should be reported in separate columns as major funds based on these criteria:
  1. Total assets, liabilities, revenues, or expenditures/expenses of that individual governmental or enterprise fund are at least 10 percent of the corresponding element total (assets, liabilities, and so forth) for all funds of that category or type (that is, total governmental or total enterprise funds), and
  2. The same element that met the 10 percent criterion in (a) is at least 5 percent of the corresponding element total for all governmental and enterprise funds combined. In addition to funds that meet the major fund criteria, any other governmental or enterprise fund that the government's officials believe is particularly important to financial statement users (for example, because of public interest or consistency) may be reported as a major fund. GASB 34 Paragraph 76, as amended by GASB 37 Paragraph 15.
• Governments should present a summary reconciliation to the government-wide financial statements at the bottom of the fund financial statements or in an accompanying schedule. In many cases, brief explanations presented on the face of the statements will be sufficient to allow users to assess the relationship between the statements. However, if aggregated information in the summary reconciliation obscures the nature of the individual elements of a particular reconciling item, governments should provide a more detailed explanation in the notes to financial statements. (See paragraphs 85, 90, and 104.) GASB 34 Paragraph 77.
• Required Financial Statements - Governmental Funds.
  1. Balance sheet
  2. Statement of revenues, expenditures, and changes in fund balances. GASB 34 Paragraph 78.
• Measurement focus and basis of accounting. Financial statements for governmental funds should be presented using the current financial resources measurement focus and the modified accrual basis of accounting, as the terms are discussed in NCGA Statement 1, as amended. GASB 34 Paragraph 79.
• Reporting general capital assets. General capital assets are capital assets of the government that are not specifically related to activities reported in proprietary or fiduciary funds. General capital assets are associated with and generally arise from governmental activities. Most often, they result from the expenditure of governmental fund financial resources. They should not be reported as assets in governmental funds but should be reported in the governmental activities column in the government-wide statement of net assets. GASB 34 Paragraph 80.
• Reporting general-long term liabilities. NCGA Statement 1, paragraph 32, provides that "a clear distinction should be made between . . . fund long-term liabilities and general long-term debt." That Statement, as amended, requires recognition of governmental fund liabilities using the modified accrual basis of accounting. Paragraph 43 of that Statement states that "general long-term debt is the unmatured principal of bonds, warrants, notes, or other forms of noncurrent or long-term general obligation indebtedness. General long-term debt is not limited to liabilities arising from debt issuances per se, but may also include noncurrent liabilities on lease-purchase agreements and other commitments that are not current liabilities properly recorded in governmental funds." Subsequent NCGA and GASB pronouncements also define the noncurrent portion of capital leases, operating leases with scheduled rent increases, compensated absences, claims and judgements, pensions, special termination benefits, and landfill closure and postclosure care liabilities as general long-term liabilities. Liabilities arising from interfund activities (see paragraph 112) do not constitute general long-term liabilities and therefore should be reported in governmental funds. GASB 34 Paragraph 81.
• General long-term liabilities should not be reported as liabilities in governmental funds but should be reported in the governmental activities column in the government-wide statement of net assets. GASB 34 Paragraph 82.
• The balance sheet should report information about the current financial resources (assets, liabilities, and fund balances) of each major governmental fund and for nonmajor governmental funds in the aggregate. A total column should be presented. Assets, liabilities, and fund balances of governmental funds should be displayed in a balance sheet format (assets equal liabilities plus fund balances). GASB 34 Paragraph 83.

• Determine on financial statement format (use simplest).
• Make a list of reconciling items (adjustments between different levels of financial statements).

• General description of the nature of the statements.

• Review of suggested financial statement formats in GASB 34.
• Review of early financial statement of entities' early implementing. These can be viewed on the GASB web site.

• Common account titles will be used throughout the financial statements.
• The adjustments from one level of reporting to the next will be shown on the face of the financial statements (rather than in the footnotes).
• A non-classified statement of net assets format will be used.
• A one page format will be used for the Statement of Activities.
• Budgetary schedules for the major funds will be presented using the same format as the other financial statements. We will use example G-4 (GASB 34 pages 272-273).
• Budgetary comparison schedules will be shown as required supplementary information.
• The components of the equity for the enterprise funds will be shown in the footnotes, rather than on the face of the statements.
• Combining statements for non-major funds will be required when preparing the report for submission to GFOA for the CAFR.
• Adjustments will not be made to allocate indirect costs (the state has an indirect cost plan in place).The direct method will be used for the statement of cash flows.