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 Governmental Accounting and Not-for-Profit Accounting Explained

4 Governmental Accounting and Not-for-Profit Accounting Explained

Key Concepts

Governmental Accounting

Governmental accounting is the process of recording and reporting financial transactions for government entities. It focuses on accountability and transparency, ensuring that public funds are used efficiently and effectively. Governmental accounting often uses fund accounting to segregate financial activities based on their purpose and source of funding.

Not-for-Profit Accounting

Not-for-profit accounting is the process of recording and reporting financial transactions for organizations that do not have profit as their primary objective. These organizations include charities, religious groups, and educational institutions. Not-for-profit accounting emphasizes stewardship and accountability to donors and stakeholders.

Fund Accounting

Fund accounting is a method used by governmental and not-for-profit entities to manage and report financial activities. It involves creating separate accounts, or funds, for different purposes or sources of funding. Each fund operates independently, with its own set of assets, liabilities, revenues, and expenses.

Example: A city government might have a General Fund for day-to-day operations, a Capital Projects Fund for infrastructure projects, and a Debt Service Fund for managing bond payments.

Financial Reporting for Governmental Entities

Financial reporting for governmental entities includes the preparation of financial statements that comply with Generally Accepted Accounting Principles (GAAP) for state and local governments. These statements provide information on the financial position, results of operations, and cash flows of the government. Key reports include the Comprehensive Annual Financial Report (CAFR) and the Management Discussion and Analysis (MD&A).

Financial Reporting for Not-for-Profit Organizations

Financial reporting for not-for-profit organizations includes the preparation of financial statements that comply with GAAP for not-for-profit entities. These statements provide information on the organization's financial position, changes in net assets, and cash flows. Key reports include the Statement of Financial Position, Statement of Activities, and Statement of Cash Flows.

Revenue Recognition in Governmental and Not-for-Profit Entities

Revenue recognition in governmental and not-for-profit entities follows specific guidelines to ensure that revenues are recorded in the period in which they are earned. For governmental entities, revenue recognition often depends on the availability of funds. For not-for-profit organizations, revenue recognition is based on the nature of the transaction, such as contributions, grants, and program service revenue.

Example: A not-for-profit organization receives a grant for a specific project. The revenue is recognized over the period during which the project is performed, in proportion to the expenses incurred.

Expense Recognition in Governmental and Not-for-Profit Entities

Expense recognition in governmental and not-for-profit entities follows the matching principle, where expenses are recorded in the period in which the related revenues are earned. For governmental entities, expenses are often categorized by function, such as public safety, education, and transportation. For not-for-profit organizations, expenses are categorized by program services, management and general, and fundraising.

Example: A governmental entity incurs expenses for public safety services. These expenses are recognized in the period in which the services are provided, and they are reported under the public safety function.

Examples and Analogies

Consider governmental accounting as "public financial management," where every dollar spent is tracked and reported to ensure transparency and accountability. Not-for-profit accounting is like "stewardship accounting," where the focus is on managing resources responsibly to achieve the organization's mission.

Fund accounting can be thought of as "financial compartments," where each compartment (fund) operates independently but contributes to the overall financial health of the entity. Financial reporting for governmental entities is akin to "public financial disclosure," providing detailed information to the public and stakeholders.

Revenue recognition in not-for-profit entities is like "earned income tracking," ensuring that contributions and grants are recognized in the period they are earned. Expense recognition in governmental entities is like "public service costing," where expenses are categorized by the services they support.

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