Accounts and Reports

GAAP POLICY AND PROCEDURE MANUAL

• Fund financial statements should be used to report additional and detailed information about the primary government. Governments should report governmental, proprietary, and fiduciary funds to the extent that they have activities that meet the criteria for using those funds. GASB 34 Paragraph 63.
• Governmental fund reporting focuses primarily on the sources, uses, and balances of current financial resources and often has a budgetary orientation. The governmental fund category includes the general fund, special revenue funds, capital projects funds, debt service funds, and permanent funds. With the exception of permanent funds, those governmental funds are defined in NCGA Statement 1, as amended. GASB 34 Paragraph 64.
• Permanent funds should be used to report resources that are legally restricted to the extent that only earnings, and not principal, may be used for purposes that support the reporting government's programs - that is, for the benefit of the government or its citizenry. GASB 34 Paragraph 65.
• Proprietary fund reporting focuses on the determination of operating income, changes in net assets (or cost recovery), financial position, and cash flows. The proprietary fund category includes enterprise and internal service funds. GASB 34 Paragraph 66.
• Enterprise funds may be used to report any activity for which a fee is charged to external users for goods or services. Activities are required to be reported as enterprise funds if any one of the following criteria contained in GASB 34 Paragraph 67 a, b, or c are met: Governments should apply each of these criteria in the context of the activity's principal revenue sources.
  1. The activity if financed with debt that is secured solely by a pledge of the net revenues from fees and charges of the activity. 
  2. Laws or regulations require that the activity's costs of providing services, including capital costs (such as depreciation or debt service), be recovered with fees and charges, rather than with taxes of similar revenues.
  3. The pricing policies of the activity establish fees and charges designed to recover its costs, including capital costs (such as depreciation or debt service). GASB 34 Paragraph 67.
• Internal service funds may be used to report any activity that provides goods or services to other funds, departments, or agencies of the primary government and its component units, or to other governments, on a cost-reimbursement basis. Internal service funds should be used only if the reporting government is the predominant participant in the activity. Otherwise, the activity should be reported as an enterprise fund. GASB 34 Paragraph 68.
• Fiduciary fund reporting focuses on net assets and changes in net assets. Fiduciary funds should be used to report assets held in a trustee or agency capacity for others and therefore cannot be used to support the government's own programs. The fiduciary fund category includes pension (and other employee benefit) trust funds, investment trust funds, private-purpose trust funds, and agency funds. The three types of trust funds should be used to report resources held and administered by the reporting government when it is acting in a fiduciary capacity for individuals, private organizations, or other governments. These funds are distinguished from agency funds generally by the existence of a trust agreement that affects the degree of management involvement and the length of time that the resources are held. GASB 34 Paragraph 69.
• Pension (and other employee benefit) trust funds should be used to report resources that are required to be held in trust for the members and beneficiaries of defined benefit pension plans, defined contribution plans, other postemployment benefit plans, or other employee benefit plans. GASB 34 Paragraph 70.
• Investment trust funds should be used to report the external portion of investment pools reported by the sponsoring government, as required by GASB 31 Paragraph 18 and Paragraph 71.
• Private-purpose trust funds, such as a fund used to report escheat property, should be used to report all other trust arrangements under which principal and income benefit individuals, private organizations, or other governments. GASB 34 Paragraph 72.
• Agency funds should be used to report resources held by the reporting government in a purely custodial capacity (assets equal liabilities). Agency funds typically involve only the receipt, temporary investment, and remittance of fiduciary resources to individuals, private organizations, or other governments. GASB 34 Paragraph 73.
• The government-wide statements require reporting expenditures by function and revenues by source (GASB 34 program revenues).

• There are some funds, expenditures sub-object codes (ESOs) and revenues sub-object codes (RSOs) that don't work correctly based on the conversion tables in Access. Adjustments are needed so that the data is correctly reported. These adjustments include the following:
  • Adjustments so that the RSOs such as 30xx's point to Program Revenues or General Revenues as appropriate based on the fund.
  • Adjustments so that ESOs point to the correct function for agencies that have multiple functions per fund.
  • Adjustments to record transfers for universities appropriated funds expenditures so that cash stays in tact with the rest of the appropriated funds.
    Dr. GL 5001 Expenditures
        Cr. GL 5030 Appropriations Transfer
    Adjustment for university special revenue funds
    Dr. GL 5031 Appropriations Transfer Out
        Cr. GL 5001 Expenditures
    Adjustment for university appropriated funds
  • Adjustments to record net income (net loss) for Internal Service Fund activity since these funds are coded to appear on the Proprietary Funds Statements but not appear automatically on the statewide Statement of Activities.
• There are also adjustments needed to record amounts that don't exist properly in STARS. These adjustments include the following:
  • Reclass fund balance, revenues and expenditures for agency funds so that assets equal liabilities.
  • Reclass revenues and expenditures for investments and long term obligations to show the increas or decrease to the appropriate balance sheet account. 
• Major funds are determined using queries in Access after the adjustments have been entered.

• Description of the major governmental funds.
• Description of the major business-type funds.
• Other fund types used (internal service, pension trust, investment trust and agency).

• A conversion table was prepared that will be used to convert the fund used in STARS (over 2,000 funds) to the new fund listing established for GASB 34 financial statement reporting. See qryFunds_e in Access.
  • The agency index listing was reviewed to determine the type of agencies that were established in STARS.
  • A listing of all the current funds used in STARS was produced.
  • Each agency's listing of funds were sent to the agency, along with a survey, asking them to properly classify the funds according to the GASB 34 fund classification guidelines.
  • The above listing was used extensively in determining which funds would be special revenue vs. agency funds.
  • A new listing of funds was established for GASB 34 financial statement reporting.
  • It was determined that there were no funds to be reported as a private purpose trust fund.
  • It was determined that KPERS would be reported as a pension trust fund.
  • It was determined that the Pooled Money Investment Fund (agency 671, fund 7537) would be reported as an investment trust fund.
  • It was determined that the following agencies would be reported as component units: KDFA - agency 176, KTEC - agency 371. Kansas, Inc. - agency 360, is also a component unit but will not be treated as such due to immaterial size. It has been included in Regulatory Boards and Commissions special revenue fund.
  • The following funds were determined to be internal service funds: Agency 172 - funds 6130 and 6131, Agency 173 - funds 6102, 6105, 6109, 6110, 6113, 6114, 6146, 6147, 6148, 6149, 6151, 6161, 6162, 6163, Agency 280 - funds 6143, 6155, Agency 410 - fund 6115, Agency 494 - fund 6164, agency 710 - fund 6145.
  • The state does not properly separate out debt service fund activity from capital project funds activity. (debt proceeds, spending of debt proceeds, and repayment of debt is all recorded in one fund). Therefore, we reviewed the activity in the debt service / capital project funds to determine how these funds would be classified for GASB 34 financial statement purposes. If debt payments were being made, then the fund was classified as debt service; all others were then classified as capital projects funds. This fund type classification will need to be reviewed on an annual basis.
  • The following were determined to be enterprise funds: Agency 264 - funds 7530, 7531, 7538, 7539, Agency 270 - fund 7404, Agency 296 - funds 7054, 7055, 7056, 7057, Agency 331 - fund 7354, Agency 450 - funds 5123, 7381. Additionally, university funds were determined to be enterprise funds (see below).
  • Several agencies' funds were combined for GASB 34 financial statement reporting, as follows:
    • Numerous funds were combined to form the State Regulatory Boards and Commissions special revenue fund. This includes funds at the following agencies 16, 28, 55, 58, 94, 100, 102, 105, 122, 143, 149, 159, 167, 204, 206, 234, 247, 261, 266, 328, 330, 359, 360, 373, 391, 482, 488, 523, 531, 543, 549, 553, 562, 625, 626, 634, 663, 694, 700, and 709.
    • Numerous funds were combined to form the Universities enterprise funds. This includes funds at the following agencies: 246, 367, 368, 379, 385, 561, 682, 683, and 715. However, the appropriated funds like fund 1000 are not coded to enterprise funds but to the respective appropriated funds. Adjustments are processed for the appropriated fund activity.
    • Numerous funds were combined to form the Correctional Facility special revenue fund. This includes funds at the following agencies: 147, 177, 195, 313, 319, 325, 350, 355, 400, 408, 412, 521, 522, 581, 660, and 712.
    • Numerous funds were combined to form the Social and Rehabilitation special revenue fund. This includes funds at the following agencies: 363, 410, 494, 507, 555, and 629.
    • Several funds were combined to form the Legislative special revenue fund. This includes funds at the following agencies: 422, 425, 428, 540 and 579.
    • Two agencies were combined to form the executive special revenue fund. This included funds for agencies 252 and 446.
    • Two agencies were combined to form the Attorney General Special Revenue fund. This includes funds for agencies 082 and 083.
    • Two agencies were combined to form the State Treasurer special revenue fund. This included funds for agencies 670 and 671.
    • Two agencies were combined to form the Judicial special revenue fund. This includes funds for agencies 349 and 677. 
• The data integrity of the funds conversion table was tested by matching this listing against the funds table in STARS.
• The funds conversion table must be updated annually.
• The data integrity testing of the fund conversion table must be performed annually.
• It was determined that the funds as established in STARS would not be changed.
• Agency fund (usually clearing fund) assets should equal liabilities in the Statement of Fiduciary Net Assets. At 6/30 each fiscal year end, we will need to determine amounts not classified as assets or liabilities. We might need to survey state agencies to determine the amounts that should be properly reported as assets or liabilities in other state funds or that belong to other than state entities. Remaining debit and credit balances should offset each other and have an effective zero balance.
• Escheat property (private property for which the legal owner can not be found) reverts to the State. The rightful owners retain their legal claim to the asset. Unclaimed Property Claims Fund, Stars fund 7758 is converted to GAAP fund 222-State Treasurer because the likelihood of paying the entire balance back to the legal owner is VERY slim.
• Food stamps processed in STARS fund 9219 EBT Settlement Fund will be reported with GAAP fund 204-SRS Special revenue fund to properly report the revenues and expenditures per GASB 24.