Essentials of Accounting for Governmental and Not-for-profit Organizations

by COPLEY PAUL A.

• ISBN13: 9780073379425
• ISBN10: 0073379425
• Edition: 9th
• Format: Paperback
• Copyright: 2007-11-08
• Publisher: McGraw-Hill/Irwin

Summary

Copley's Essentials of Accounting for Governmental and Not-for-Profit Organizations, 9e is best suited for those professors whose objective is to provide more concise coverage than what is available in larger texts. There is more comprehensive coverage of accounting for governmental and not-for-profit organizations than what is available in an advanced text but concise enough to be used effectively in a semester, quarter, or even a half term course focusing on just these areas. The main focus of this text is on the preparation of external financial statements which is a challenge among governmental reporting. This edition incorporates all of the FASB, GASB, GAO and AICPA pronouncements passed since the last edition.

Table of Contents

Preface	p. iv
Introduction to Accounting and Financial Reporting for Governmental and Not-for-Profit Organizations	p. 1
Generally Accepted Accounting Principles	p. 3
Objectives of Accounting and Financial Reporting	p. 6
Objectives of Accounting and Financial Reporting for the Federal Government	p. 8
Objectives of Financial Reporting by Not-for-Profit Entities	p. 8
Objectives of Accounting and Financial Reporting for State and Local Governmental Units	p. 9
State and Local Government Financial Reporting	p. 10
Comprehensive Annual Financial Report	p. 10
Measurement Focus and Basis of Accounting	p. 12
Fund Structure for State and Local Government Accounting and Reporting	p. 13
Number of Funds Required	p. 15
Budgetary Accounting	p. 15
Accounting for Capital Assets, Including Infrastructure	p. 16
Accounting for Long-Term Debt and Other Long-Term Liabilities	p. 16
Additional Resources	p. 17
Overview of Financial Reporting for State and Local Governments	p. 22
The Governmental Reporting Entity	p. 23
Overview of the Comprehensive Annual Financial Report (CAFR)	p. 25
Example Comprehensive Annual Financial Report	p. 26
Introductory Section	p. 26
Financial Section: Auditor's Report	p. 27
Required Supplementary Information-Management's Discussion and Analysis (MD&A)	p. 28
Basic Financial Statements-Statement of Net Assets	p. 30
Government-wide Statement of Activities	p. 32
Reporting by Major Funds	p. 34
Governmental Funds: Balance Sheet	p. 34
Governmental Funds: Statement of Revenues, Expenditures, and Changes in Fund Balance	p. 36
Proprietary Funds: Statement of Net Assets	p. 38
Proprietary Funds: Statement of Revenues, Expenses, and Changes in Fund Net Assets	p. 40
Proprietary Funds: Statement of Cash Flows	p. 42
Fiduciary: Statement of Fiduciary Net Assets	p. 44
Fiduciary: Statement of Changes in Fiduciary Net Assets	p. 44
Notes to the Financial Statements	p. 46
Required Supplementary Information Other than MD&A	p. 48
Combining Statements	p. 50
Statistical Information	p. 50
Special-Purpose Governments	p. 51
Public Colleges and Universities	p. 51
Other Governmental Not-for-Profit Organizations	p. 52
Budgetary Accounting for the General and Special Revenue Funds	p. 58
Budgets as Legal Documents	p. 59
Balance Sheet and Operating Statement Accounts	p. 60
Budgets and Budgetary Accounts	p. 62
Recording the Budget	p. 63
Accounting for Revenues	p. 65
Accounting for Encumbrances and Expenditures	p. 66
Budget Revisions	p. 70
Budgetary Comparison Schedule	p. 70
Classification of Estimated Revenues and Revenues	p. 72
Classification of Appropriations and Expenditures	p. 72
AD Valorem Taxes	p. 73
Accounting for the General and Special Revenue Funds	p. 82
Modified Accrual Accounting	p. 83
Revenue Recognition	p. 83
Expenditure Recognition	p. 86
Interfund Transactions	p. 86
Interfund Loans	p. 87
Interfund Services Provided and Used	p. 87
Interfund Transfers	p. 87
Interfund Reimbursements	p. 87
General Fund Account Structure	p. 87
Illustrative Case-General Fund	p. 87
Recording the Budget	p. 88
Reestablishment of Encumbrances	p. 88
Recording Prior-Year Property Taxes as Revenues	p. 89
Tax Anticipation Notes Payable	p. 89
Payment of Liabilities as Recorded	p. 89
Encumbrance Entry	p. 90
Recording Property Tax Levy	p. 90
Collection of Delinquent Taxes	p. 90
Collection of Current Taxes	p. 91
Other Revenues	p. 91
Repayment of Tax Anticipation Notes	p. 92
Recognition of Expenditures for Encumbered Items	p. 92
Payrolls and Payroll Taxes	p. 93
Payment of Vouchers and Other Items	p. 93
Correction of Errors	p. 94
Amendment of the Budget	p. 94
Interfund Transactions	p. 95
Write-off of Uncollectible Delinquent Taxes	p. 97
Reclassification of Current Taxes	p. 97
Accrual of Interest and Penalties	p. 98
Deferral of Property Tax Revenue	p. 98
Special Item	p. 98
Preclosing Trial Balance	p. 98
Closing Entries	p. 100
Year-End Financial Statements	p. 101
Illustrative Case-Special Revenue Fund	p. 104
Motor Fuel Tax Revenues	p. 104
Expenditures for Road Repairs	p. 104
Reimbursement to General Fund	p. 105
Reimbursement Grant Accounting	p. 105
Closing Entry	p. 105
Year-End Financial Statements	p. 107
Recognition of Inventories in Governmental Funds	p. 107
Accounting for Other Governmental Fund Types: Capital Projects, Debt Service, and Permanent	p. 118
Capital Projects Funds	p. 120
Illustrative Case	p. 121
Other Issues Involving Acquisition of Capital Assets	p. 126
Acquisition of General Fixed Assets by Lease Agreements	p. 126
Construction of General Fixed Assets Financed by Special Assessment Debt	p. 127
Debt Service Funds	p. 128
The Modified Accrual Basis-As Applied to Debt Service Funds	p. 128
Additional Uses of Debt Service Funds	p. 129
Debt Service Accounting for Serial Bonds	p. 129
Illustrative Case-Regular Serial Bonds	p. 130
Other Issues Involving Payment of Long-Term Debt	p. 132
Debt Service Accounting for Deferred Serial Bonds	p. 132
Debt Service Accounting for Term Bonds	p. 132
Debt Service Accounting for Capital Lease Payments	p. 132
Bond Refundings	p. 133
Permanent Funds	p. 134
Financial Reporting for Governmental Funds	p. 136
Balance Sheet-Governmental Funds	p. 136
Statement of Revenues, Expenditures, and Changes in Fund Balances-Governmental Funds	p. 140
Proprietary Funds	p. 149
Internal Service Funds	p. 151
Establishment and Operation of Internal Service Funds	p. 151
Illustrative Case-Supplies Fund	p. 152
Other Issues Involving Internal Service Funds	p. 156
Risk Management Activities	p. 156
Implications for Other Funds	p. 156
Enterprise Funds	p. 157
Illustrative Case-Water Utility Fund	p. 158
Preclosing Trial Balance	p. 163
Proprietary Fund Financial Statements	p. 164
Statement of Net Assets	p. 166
Statement of Revenues, Expenses, and Changes in Fund Net Assets	p. 166
Statement of Cash Flows	p. 167
Accounting for Municipal Solid Waste Landfills	p. 170
Pollution Remediation Costs	p. 171
Fiduciary (Trust) Funds, Interfund Transactions	p. 186
Agency Funds	p. 187
Tax Agency Funds	p. 189
Accounting for Tax Agency Funds	p. 189
Financial Reporting for Agency Funds	p. 191
Private-Purpose Trust Funds	p. 191
Accounting for Investments	p. 193
Illustrative Case-Private-Purpose Trust Funds	p. 193
A Note about Escheat Property	p. 195
Investment Trust Funds	p. 196
Public Employee Retirement Systems (Pension Trust Funds)	p. 196
Accounting and Reporting for Defined Benefit Pension Plans	p. 197
A Note about Other Postemployment Benefits	p. 201
Summary of Employer Reporting	p. 204
A Note about IRS 457 Deferred Compensation Plans	p. 205
Interfund Transactions	p. 205
Reciprocal Interfund Activity-Interfund Loans and Advances	p. 206
Reciprocal Interfund Activity-Interfund Services Provided and Used	p. 207
Nonreciprocal Interfund Activity-Interfund Transfers	p. 207
Nonreciprocal Interfund Activity-Interfund Reimbursements	p. 207
A Final Comment on Fund Accounting and Reporting	p. 208
Government-Wide Statements, Fixed Assets, Long-Term Debt	p. 220
Conversion from Fund Financial Records to Government-Wide Financial Statements	p. 221
Recording Capital Assets, Removing Expenditures for Capital Outlays, Recording Depreciation, and Converting Sales of Capital Assets to the Accrual Basis	p. 223
Changing "Proceeds of Bonds" to Debt Liabilities, Changing Expenditures for Debt Service Principal to Reduction of Liabilities, Amortizing Bond Premiums, and Adjusting for Interest Accruals	p. 225
Adjusting to Convert Revenue Recognition to the Accrual Basis	p. 227
Adjusting to Record Expenses on Accrual Basis	p. 230
Adding Internal Service Funds to Governmental Activities	p. 230
Eliminating Interfund Activities and Balances within Governmental Activities	p. 232
Worksheets to Illustrate the Adjustments	p. 233
Government-Wide Financial Statements	p. 236
Statement of Net Assets	p. 236
Statement of Activities	p. 236
Required Reconciliation to Government-wide Statements	p. 240
Accounting for Fixed Assets, Including Infrastructure	p. 242
Accounting for General Fixed Assets	p. 242
Accounting for Infrastructure	p. 243
The Modified Approach for Reporting Infrastructure	p. 244
Collections	p. 245
Asset Impairment	p. 245
Accounting for Long-Term Debt	p. 246
Types of General Long-Term Debt	p. 246
Debt Disclosures and Schedules	p. 247
Accounting for Special-Purpose Entities, Including Public Colleges and Universities	p. 265
GASB Statement 34 Reporting Rules for Special-Purpose Entities	p. 265
Reporting by Special-purpose Local Governments Engaged in Governmental Activities	p. 266
Reporting by Special-purpose Local Governments Engaged Only in Business-type Activities	p. 268
Reporting by Special-purpose Local Governments Engaged Only in Fiduciary-Type Activities	p. 271
Accounting and Financial Reporting for Public Colleges and Universities	p. 272
The Environment of Public Higher Education	p. 272
Accounting and Financial Reporting for Public Institutions of Higher Education	p. 273
Illustrative Case-Northern State University-Beginning Trial Balance	p. 275
Illustrative Case-Journal Entries	p. 275
Illustrative Case-Closing Entries	p. 282
Illustrative Case-Financial Statements	p. 285
Summary	p. 289
Accounting for Private Not-for-Profit Organizations	p. 297
Organizations Covered in this Chapter	p. 299
Overview of Not-For-Profit Accounting	p. 300
Three Classes of Net Assets	p. 300
Financial Reporting	p. 300
Note Disclosures	p. 301
Accounting for Contributions, Including Reclassifications of Net Assets	p. 301
Reporting of Expenses and Assets	p. 303
Special Topics: Accounting for Contributions	p. 304
Illustrative Transactions and Financial Statements	p. 305
Beginning Trial Balance	p. 305
Transactions	p. 306
Financial Statements	p. 313
Alternative Procedure for Recording Fixed Assets	p. 316
Performance Evaluation	p. 318
Mergers and Acquisitions	p. 319
Summary of Not-For-Profit Accounting and Reporting	p. 320
College and University Accounting-Private Institutions	p. 329
Overview of Private College and University Accounting	p. 331
Financial Statements	p. 331
Net Asset Classification	p. 332
Revenue Reduction versus Expenses	p. 333
Academic Terms Encompassing More Than One Fiscal Year	p. 333
Expenses	p. 333
Other Accounting Guidance	p. 334
Illustrative Transactions and Financial Statements	p. 335
Illustrative Transactions	p. 335
Illustrative Financial Statements for Private Colleges and Universities	p. 342
Split-Interest Agreements	p. 342
Summary of Accounting and Reporting	p. 347
Accounting for Hospitals and Other Health Care Providers	p. 355
Accounting and Reporting Requirements of the Health Care Guide	p. 357
Financial Statements	p. 357
Revenues	p. 359
Classifications	p. 359
Illustrative Transactions and Financial Statements	p. 360
Beginning Trial Balance	p. 360
Illustrative Statements for Private-Sector Not-for-Profit Health Care Entities	p. 366
Financial Reporting for Governmental Health Care Entities	p. 369
Financial Reporting for Commercial (For-Profit) Health Care Entities	p. 371
Summary and Conclusions Regarding Health Care Accounting and Reporting	p. 371
Auditing, Tax-Exempt Organizations, and Evaluating Performance	p. 378
Governmental Auditing	p. 379
The Single Audit Act and Amendments	p. 385
The Sarbanes-Oxley Act	p. 388
Tax-Exempt Organizations	p. 389
Applying for Tax-Exempt Status	p. 390
Federal Filing Requirements	p. 391
Public Disclosures	p. 395
State Filing Requirements	p. 395
Unrelated Business Income Tax (UBIT)	p. 395
IRS Oversight	p. 396
Summary and Some Conclusions Related to Exempt Entities	p. 396
Evaluating Performance	p. 397
Analysis of Not-for-Profit Organization Financial Statements	p. 397
Analysis of State and Local Government Financial Statements	p. 398
Service Efforts and Accomplishments Reporting	p. 403
Glossary: Governmental and Not-For-Profit Accounting Terminology	p. 414
Index	p. 437
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