About Me
CPA
1 Regulation (REG)
1.1 Ethics, Professional Responsibilities, and Federal Tax Procedures
1.1 1 Professional ethics and responsibilities
1.1 2 Federal tax procedures and practices
1.1 3 Circular 230
1.2 Business Law
1.2 1 Legal rights, duties, and liabilities of entities
1.2 2 Contracts and sales
1.2 3 Property and bailments
1.2 4 Agency and employment
1.2 5 Business organizations
1.2 6 Bankruptcy
1.2 7 Secured transactions
1.3 Federal Taxation of Property Transactions
1.3 1 Basis determination and adjustments
1.3 2 Gains and losses from property transactions
1.3 3 Like-kind exchanges
1.3 4 Depreciation, amortization, and depletion
1.3 5 Installment sales
1.3 6 Capital gains and losses
1.3 7 Nontaxable exchanges
1.4 Federal Taxation of Individuals
1.4 1 Gross income inclusions and exclusions
1.4 2 Adjustments to income
1.4 3 Itemized deductions and standard deduction
1.4 4 Personal and dependency exemptions
1.4 5 Tax credits
1.4 6 Taxation of individuals with multiple jobs
1.4 7 Taxation of nonresident aliens
1.4 8 Alternative minimum tax
1.5 Federal Taxation of Entities
1.5 1 Taxation of C corporations
1.5 2 Taxation of S corporations
1.5 3 Taxation of partnerships
1.5 4 Taxation of trusts and estates
1.5 5 Taxation of international transactions
2 Financial Accounting and Reporting (FAR)
2.1 Conceptual Framework, Standard-Setting, and Financial Reporting
2.1 1 Financial reporting framework
2.1 2 Financial statement elements
2.1 3 Financial statement presentation
2.1 4 Accounting standards and standard-setting
2.2 Select Financial Statement Accounts
2.2 1 Revenue recognition
2.2 2 Inventory
2.2 3 Property, plant, and equipment
2.2 4 Intangible assets
2.2 5 Liabilities
2.2 6 Equity
2.2 7 Compensation and benefits
2.3 Specific Transactions, Events, and Disclosures
2.3 1 Leases
2.3 2 Income taxes
2.3 3 Pensions and other post-retirement benefits
2.3 4 Derivatives and hedging
2.3 5 Business combinations and consolidations
2.3 6 Foreign currency transactions and translations
2.3 7 Interim financial reporting
2.4 Governmental Accounting and Not-for-Profit Accounting
2.4 1 Governmental accounting principles
2.4 2 Governmental financial statements
2.4 3 Not-for-profit accounting principles
2.4 4 Not-for-profit financial statements
3 Auditing and Attestation (AUD)
3.1 Engagement Planning and Risk Assessment
3.1 1 Engagement acceptance and continuance
3.1 2 Understanding the entity and its environment
3.1 3 Risk assessment procedures
3.1 4 Internal control
3.2 Performing Audit Procedures and Evaluating Evidence
3.2 1 Audit evidence
3.2 2 Audit procedures
3.2 3 Analytical procedures
3.2 4 Substantive tests of transactions
3.2 5 Tests of details of balances
3.3 Reporting on Financial Statements
3.3 1 Audit report content
3.3 2 Types of audit reports
3.3 3 Other information in documents containing audited financial statements
3.4 Other Attestation and Assurance Engagements
3.4 1 Types of attestation engagements
3.4 2 Standards for attestation engagements
3.4 3 Reporting on attestation engagements
4 Business Environment and Concepts (BEC)
4.1 Corporate Governance
4.1 1 Internal controls and risk assessment
4.1 2 Code of conduct and ethics
4.1 3 Corporate governance frameworks
4.2 Economic Concepts
4.2 1 Microeconomics
4.2 2 Macroeconomics
4.2 3 Financial risk management
4.3 Financial Management
4.3 1 Capital budgeting
4.3 2 Cost measurement and allocation
4.3 3 Working capital management
4.3 4 Financial statement analysis
4.4 Information Technology
4.4 1 IT controls and security
4.4 2 Data analytics
4.4 3 Enterprise resource planning (ERP) systems
4.5 Operations Management
4.5 1 Strategic planning
4.5 2 Project management
4.5 3 Quality management
4.5 4 Supply chain management
2 4 2 Governmental Financial Statements Explained

4 2 Governmental Financial Statements Explained

Key Concepts

Governmental Financial Statements

Governmental financial statements provide a comprehensive view of the financial position and activities of government entities. These statements are designed to meet the unique needs of governmental entities, which differ from those of commercial enterprises.

Fund Accounting

Fund accounting is a system used by governmental entities to ensure accountability for the use of public resources. It involves segregating financial activities into separate funds, each with its own set of accounts and financial statements.

Example: A city government may have separate funds for its general operations, capital projects, and debt service. Each fund operates independently, with its own revenues, expenditures, and financial reporting.

Government-Wide Financial Statements

Government-wide financial statements provide a summary of the financial activities of the entire government entity, including all funds and component units. These statements are prepared using the economic resources measurement focus and the accrual basis of accounting.

Example: A state government's government-wide financial statements would include the financial activities of all departments, agencies, and special districts within the state.

Fund Financial Statements

Fund financial statements provide detailed information about the financial activities of individual funds within the government entity. These statements are prepared using the current financial resources measurement focus and the modified accrual basis of accounting.

Example: A county's fund financial statements would include separate statements for its general fund, special revenue funds, and capital projects fund, each detailing the specific financial activities of that fund.

Proprietary Funds

Proprietary funds are used to account for activities that are similar to those of commercial enterprises, where the intent is to recover costs through user fees or charges. These funds are reported using the economic resources measurement focus and the accrual basis of accounting.

Example: A city's water and sewer fund is a proprietary fund that charges customers for the use of water and sewer services. The fund's financial statements are prepared using the same principles as those of a commercial enterprise.

Fiduciary Funds

Fiduciary funds are used to account for assets held in a trustee capacity or for the benefit of others. These funds are not available for the government's own use and are reported using the accrual basis of accounting.

Example: A school district's pension trust fund is a fiduciary fund that holds assets to pay future pension benefits to retired employees. The fund's financial statements are prepared to reflect the fiduciary nature of the assets.

Examples and Analogies

Consider governmental financial statements as a "financial dashboard" for a government entity, providing a comprehensive view of its financial health. Fund accounting is like "compartmentalizing" the dashboard to track specific activities.

Government-wide financial statements are akin to a "summary report" that aggregates all the data from the individual compartments. Fund financial statements are like "detailed reports" for each compartment, providing specific insights.

Proprietary funds are like "business units" within the government, operating on a cost-recovery basis. Fiduciary funds are like "trust accounts" that hold assets for the benefit of others, ensuring transparency and accountability.

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