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Fund Accounting -- Government Entities. Hartwell C. Herring III University of Tennessee. The Four Governmental Funds. General Fund Special Revenue Funds Capital Projects Funds Debt Service Funds. Accounting for Governmental Funds.

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fund accounting government entities

Fund Accounting -- Government Entities

Hartwell C. Herring III

University of Tennessee

the four governmental funds
The Four Governmental Funds
  • General Fund
  • Special Revenue Funds
  • Capital Projects Funds
  • Debt Service Funds
accounting for governmental funds
Accounting for Governmental Funds
  • The Measurement Focus is Flow of Current Financial Resources
  • The Basis of Accounting for Governmental Funds is Modified Accrual accounting - accruals are made for operating items but debt service and capital expenditures are charged to operations -- there are no long-term assets and liabilities
general fund
General Fund
  • Primary operating fund for general government operations
  • Resources -- tax revenues, intergovernmental transfers, grants, debt
  • Outflows --
    • Expenditures for operations, debt service, capital
    • Transfers to other funds
special revenue
Special revenue
  • Established for legally restricted resources such as road use and fuel taxes, wildlife resources management, and Federal entitlement programs
  • Accounting procedures are identical to the GF
capital projects
Capital Projects
  • Expendable fund used to account for construction of general capital projects (not fund projects)
  • Uses modified accrual accounting
  • When the project is completed, the asset and related debt are recorded in Account Groups and the fund is closed
debt service
Debt Service
  • A fund established to make principal and interest payments on General Long Term Debt
  • Note that only General Long Term Debt is paid from the DS fund. The long term debt of proprietary funds is in the proprietary fund
  • DS funds use “when due” accounting
there are two account groups
There are Two Account Groups
  • General Fixed Asset Account Group
  • General Long Term Debt Account Group
accounting in account groups
Accounting in Account Groups
  • Account groups are just listings of assets or liabilities in a double entry format
  • Account groups are not funds because they have no resources available for expenditure
there are two types of proprietary funds
There are Two Types of Proprietary Funds
  • Enterprise Funds
  • Internal Service Funds
enterprise funds
Enterprise Funds
  • Enterprise Funds are established to account for business type activities that are run by a government.
  • Examples include Utilities, Airports, Golf Courses, and Transit Companies
  • These funds use full accrual -- flow of economic resources measurement focus
internal service
Internal Service
  • These are established to account for activities that sell goods and services to other areas of government.
  • Examples include Motor Pools, Data Processing, and Self Insurance Pools
  • These funds also use full accrual -- flow of economic resources measurement focus
there are four types of fiduciary funds
There are Four Types of Fiduciary Funds
  • Expendable Trust Funds
  • Non-Expendable Trust Funds
  • Pension Trusts
  • Agency Funds
expendable trusts
Expendable Trusts
  • Account for gifts that can be spent -- either principle and interest or interest from a non-expendable trust
  • These funds use modified accrual accounting
non expendable trusts
Non-expendable trusts
  • A full accrual fund for gifts that are permanently restricted by external donors
  • Only the income can be spent
  • Income is transferred to an expendable trust for disbursement
pension trusts
Pension trusts
  • Pension assets of governmental organizations are a significant factor in our economy
  • State and Local Government pension plans are generally fairly fully funded defined benefit plans
  • Some government and most nonprofit workers have defined contribution plans
agency funds
Agency Funds
  • These funds are established for funds that the government holds in trust
  • The principles examples are pass-through situations and tax agency funds
two current funds
Two current funds
  • Current unrestricted -- accounts for operations financed by unrestricted sources
    • Tuition
    • Most appropriations
    • Unrestricted current gift income
    • Sales of services
  • Current restricted -- accounts for externally restricted income for research and other items
four plant funds
Four Plant Funds
  • Unexpended -- money for new plant
  • Renewals and replacements -- money to replace plant
  • Retirement of indebtedness -- money to retire long term debt
  • Investment in plant -- the plant assets and the long-term debt related to those assets
numerous trusts
Numerous trusts
  • Permanent endowment
  • Temporary endowment
  • Life income
  • Annuity
  • Agency
government college and university accounting
Government College and University Accounting
  • Generally modified accrual is used
  • Reporting is fragmented into funds
  • The financial statements are difficult to use and understand
  • No attempt is made to measure many critical performance variables