Accounting for governmental and nonprofit entities 16e by wilson & reck solutions manual and test bank
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Book Description
Accounting for Governmental and Nonprofit Entities provides users with extensive, accurate, and up-to-date coverage of accounting and financial reporting for government and not-for-profit organizations, in addition to information on governmental auditing and performance measurement. The textbook uses a unique dual-track approach to teaching governmental accounting and features two independent computerized government practice sets to enhance student learning.
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CHAPTER
17: ACCOUNTING AND REPORTING FOR THE FEDERAL GOVERNMENT
OUTLINE
Number
|
Topic
|
Type/Task
|
Status
(re:
15/e)
|
|
Questions:
|
||||
17-1
|
Federal financial management
responsibilities
|
Identify
|
New
|
|
17-2
|
Federal GAAP hierarchy
|
Compare
|
New
|
|
17-3
|
Conceptual framework
|
Describe
|
11-3
|
|
17-4
|
Accounts used in federal
accounting
|
Explain
|
11-4
|
|
17-5
|
Net position and net assets
|
Compare
|
11-5
|
|
17-6
|
FASAB compared to GASB
|
Contrast
|
||
17-7
|
Federal funds
|
Identify, compare
|
New
|
|
17-8
|
Stewardship assets
|
Define, compare
|
New
|
|
17-9
|
Budgetary accounts used by
federal agencies
|
Identify
|
11-9
|
|
17-10
|
Performance accountability
report
|
Explain, identify
|
New
|
|
Cases:
|
||||
17-1
|
Agency
|
Calculate, explain
|
New
|
|
17-2
|
FASAB
|
Internet
|
New
|
|
17-3
|
Internet, evaluate
|
11-3 revised
|
||
Exercises/Problems:
|
||||
17-1
|
Various
|
Multiple Choice
|
11-1 revised
|
|
17-2
|
Fund balance with U.S. Treasury
|
Compute
|
11-2
|
|
17-3
|
Agency financial statements,
continuation of 17-2.
|
JE
|
11-3
|
|
17-4
|
Statement of net cost
|
JEs, FS
|
11-4
|
|
17-5
|
Statement of budgetary
resources
|
Prepare FS
|
11-5, revised
|
|
Transactions and statement of
financing
|
JEs, FS
|
11-6
|
||
17-7
|
Financial statement analysis
|
Analysis
|
New
|
|
CHAPTER
17: ACCOUNTING AND
REPORTING FOR THE FEDERAL GOVERNMENT
Answers to Questions
17-1. Although the three principals of the Joint
Financial Management Improvement Program (JFMIP) have the authority for
establishing sound financial management policy and oversight, the principals
have delegated the responsibility to the Office of Management and Budget’s
Office of Federal Financial Management, the Office of Personnel Management, and
the Chief Financial Officers Council. The delegation occurred in 2004, once the
principals of the JFMIP were satisfied with the operations of the FASAB. JFMIP no longer meets as a stand-alone
organization. (The three principals of the JFMIP are the Comptroller General,
the Secretary of the Treasury, and the Director of Office of Management and
Budget.)
17-2.
The
GAAP hierarchies for the federal government and state and local governments are
quite similar. One major difference is
that federal authoritative guidance comes from FASAB while state and local
government authoritative guidance is issued by GASB. There are also some differences in the type
of outside guidance accepted as authoritative by the two standard-setting
bodies. Both hierarchies have been
codified by the respective standard-setting bodies, the FASAB and the
GASB.
There are four categories of
principles with the highest level (category a)
being the statements and interpretations issued by the respective
standard-setting bodies. Category a principles can also be found in the
FASB or AICPA pronouncements if made applicable to state and local governments
by the GASB. The category b principles include the Technical
Bulletins issued by the respective standard-setting bodies. AICPA Industry and Accounting Guides are also
considered category b principles if
made applicable to federal entities by the FASAB or state and local governments
by the GASB. The GASB can also make
AICPA Statements of Position applicable. Category c principles are different for the two hierarchies. Technical Releases
of the Accounting and Auditing Policy Committee of the FASAB are considered
category c for federal entities;
whereas, AICPA Practice Bulletins made applicable by GASB are considered
category c for state and local
governments. Category d guidance is the same, consisting of
implementation guides issued by the respective standard-setting bodies, as well
as widely accepted practices.
17-3.
The
conceptual framework for the federal government is at about the same stage as
that for state and local governments, even though the GASB was established six
years earlier.
The FASAB has issued six
concepts statements, and the GASB five. Statement
of Federal Financial Accounting Concepts (SFFAC)
No. 1 identifies the users of federal financial information and their
information needs, and establishes the objectives of financial reporting for
the federal government, much like GASB Concepts Statement No. 1. SFFAC
No. 2 provides criteria for determining the reporting entity and provides
guidance on the nature of the financial statements to be prepared and their
form and content. The GASBS 14 (a
reporting standard rather than a concepts statement) provides
comparable criteria to
SFFAC No. 2 for defining the reporting entity. SFFAC
No. 3 describes the Management Discussion & Analysis as does GASBS No. 34. SFFAC
No. 4 for the federal government describes five intended audiences and
qualitative characteristics for the consolidated financial report of the U. S.
Government, as does the GASB’s Concepts
Statement No. 1 for state and local governments. SFFAC
No. 5 describes the elements of financial statements, similar to GASB’s Concepts Statement 4 titled “Elements of
Financial Statements.”
Recently
issued SFFAC No. 6 is similar to the
GASB’s Concepts Statement 3 on
communication methods in general purpose external financial reporting.
17-4.
The
account name Estimated Revenues used by state and local governments is a
budgetary account representing the government’s estimate of the amount of
revenue expected to be realized during the year. Federal agencies use the
account Other Appropriations Realized in their budgetary track to
capture the amount Congress has appropriated to an agency for the upcoming
year. Other Appropriations Realized
is for basic operating appropriations, rather than appropriations earmarked for
specific purposes. Other
Appropriations Realized is closer in meaning to Appropriations of
state and local governments than it is to Estimated Revenues.
A federal agency uses
the account Fund Balance with U.S. Treasury in its proprietary track as
an asset that represents the balance available to the agency at the Department
of Treasury. This account would be most similar to cash and cash equivalents at
the state and local government level. Fund
Balance with U.S. Treasury will be reduced throughout the year by the
dollar value of checks drawn. See
Illustration 17-12 for a comparison of these terms. Because they are budgetary accounts, Estimated Revenues and Other Appropriations Realized have more in common with each
other than either one does with Fund Balance with the U.S. Treasury.
17-5.
Agree,
in part. The net position account on the
balance sheet of a federal agency represents the difference between assets and
liabilities, as net position does for a state or local government. However, net position is classified into two
categories: unexpended appropriations and cumulative results of operations,
which are different than the classifications of net position for a state or
local government. Unexpended
appropriations is the amount of the entity’s appropriations represented by
undelivered orders and unobligated balances. Cumulative results of operations is measured since
the inception of the activity as the net difference between expenses/losses and
financing sources, which includes appropriations, revenues, and gains.
17-6.
Agree, in part. It is true that the FASAB sets standards for
external financial reporting for federal agencies; however, its mission is
considerably broader than GASB’s mission in that it also sets standards for
internal management accounting and performance measurement. For example, FASAB’s objectives for external
financial reporting are designed to assist users in evaluating budgetary
integrity, operating performance, stewardship, and adequacy of systems and
controls. The audiences for federal
financial
reports include
Congress, federal executives, program managers, as well as citizens and their
intermediaries. Although the GASB does
provide guidance in presenting information on service efforts and accomplishments,
its mission and activities to date have been primarily focused on external
financial reporting and governmental GAAP.
17-7.
The
two groups of funds used by federal government entities are federal funds and
trust funds. There are three federal
fund types—General Fund, special funds, and revolving funds. The General Fund is similar in intent to the
General Fund of state and local governments.
It receives all revenue and other receipts not earmarked (or identified)
for a specific purpose. General
appropriations are made from the General Fund.
Special funds are established for a specific non-business-type
purpose. These funds are most similar to
a special revenue fund used by state and local governments. Revolving funds are established for
business-type activities making them similar to the proprietary funds of state
and local governments.
The second fund group
is trust funds. There are two types of
trust funds—trust funds and deposit funds.
Trust funds are established when a law or statute indicates that funds
must be used for a specific purpose.
Frequently, the purpose benefits those external to the federal
government, similar to trust funds of state and local governments. However, this is not always the case. In some instances the trust funds of the
federal government actually benefit the government, making the funds similar to
special revenue funds at the state and local government level. The second type of trust fund is a deposit
fund. Deposit funds hold receipts on
behalf of others, making them similar to agency funds at the state and local
government level.
17-8.
Stewardship assets are of two
types—heritage assets and stewardship land.
Heritage assets have historical or natural significance; cultural,
artistic, or educational significance; or are architecturally significant. Stewardship
land is land that is not used by the federal government for operating purposes.
General
property, plant and equipment (PP&E) of the federal government is used for
operating purposes and as such is accounted for in the same manner as PP&E
of state and local governments, not-for-profit entities, and for-profit
entities. The costs of the assets are
capitalized and if the asset is depreciable, depreciation expense is recorded
periodically. Stewardship assets,
however, are not recorded. Rather they
are noted on the financial statements with disclosures in the notes to the
financial statements. The note
disclosure should provide information on major categories of heritage assets,
multi-use heritage assets, and stewardship land. Additionally, changes in stewardship assets
should be provided, including physical units added and withdrawn during the
year; methods of acquisition and withdrawal; and condition information
17-9.
The budgetary accounts required by the
U.S. Government Standard General Ledger are:
·
Other Appropriations Realized—the account that represents the
agency’s available resources for the year.
This account normally has a debit balance.
·
Budgetary accounts that explain where
funds are in the spending cycle— Unapportioned Authority, Apportionments, Allotments,
Commitments, Undelivered Orders, and Expended Authority. These budgetary accounts normally have a
credit balance and when summed will add to the Other Appropriations Realized.
·
The use of the Commitments account
is optional, though highly recommended.
Budget
authority flows down through the accounts in the sequence given in Illustration
17-11. This sequence is the same as the
order provided in the second bullet point that lists the accounts explaining
where funds are in the spending cycle.
17-10.
A PAR
is the consolidated performance and accountability report prepared annually by
most federal agencies. It contains
several components including:
·
An agency head
message—analogous to a transmittal letter.
·
A management’s discussion and
analysis.
· Performance
report—provides information on the agency’s success in achieving the goals in
its strategic plan and performance budget.
· Financial
statements—there are seven reports, two (statement of social insurance and
statement of net changes in social insurance amounts) of which are only
prepared by a limited number of agencies.
The other five statements are the balance sheet, statement of net costs,
statement of changes in net position, statement of budgetary resources, and
statement of custodial activity.
· Other
accompanying information—includes summary statements and information from the
Inspector General concerning any serious management and performance challenges.
Solutions to Cases
17-1. The information provided in the solution is
based on NASA’s 2010 financial statements.
Numbers presented are in millions of dollars.
a. The portion of NASA’s
assets that is represented by PP&E is 52.6 percent ($9,635/$18,328). As you can see, and would be expected, a
considerable portion of NASA’s assets are PP&E. Two major depreciable assets reported are the
International Space Station and the Space Shuttle.
NASA operated with a
negative change in net assets in both 2010 (-$2,080) and 2009 (-$3,251). Although the total change was not as negative
in 2010 as in 2009, the agency’s net position dropped from $19,536 in 2009 to
$14,015 in 2010, a decline of 28.3 percent.
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