Overview of Governmental Accounting, Budgeting, … · Overview of Governmental Accounting, Budgeting, Contracts/Purchasing, Accounts Payable and Treasury
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Overview of Governmental Accounting, Budgeting, Contracts/Purchasing, Accounts Payable and Accounts Payable and
Treasury
Course Instructors
• Al Friedrich, Office of the Auditor-Controller
• Paul Lewis, CAO – Budget and Analysis
• Mike Derr, CAO – Contracts/Purchasing
• Ma Mon, Office of the Auditor-Controller
• Eamonn Mahar, Office of the Treasurer-Tax Collector
Finance AcademyFinance Academy
Overview
AnnualBudget
Contracts/Purchasing
Accounts Payable
GeneralAccounting
Treasury
Payroll
GovernmentalGovernmental
Accounting
Accounting Standards
• Generally Accepted Accounting Principles (GAAP)
• Financial Accounting Standards Board (FASB) • Financial Accounting Standards Board (FASB) - Business & Not-for-Profit Organizations
• Government Accounting Standards Board (GASB) - State and Local Governments
• County Budget Act – County Governments
Governmental Accounting –Funds
• Governmental resources are allocated and accounted for in separate entities, called FundsFunds
• The Funds are based on the purposes for which monies are to be spent and controlled
Types of Funds
• Governmental Funds
• Tax supported Activities
• Legally Adopted Budgets• Legally Adopted Budgets
• Includes:
• General Fund
• Special Revenue Funds
• Capital Project Funds
• Debt Service Funds
Types of Funds (cont’d)
• Proprietary Funds• Self-sustaining, Fee Supported Activities
• Enterprise Funds• Enterprise Funds
• Internal Service Funds
• Fiduciary Funds• Trustee Activities on behalf of Outside Parties
Accounting Methods
Cash Accounting
• Recognize Revenue when Cash is Received
• Recognize Expense when Cash is Paid• Recognize Expense when Cash is Paid
Full Accrual Accounting –Proprietary Funds
• Revenues recognized when Earned regardless of Cash timing
• Expenses recognized when Incurred • Expenses recognized when Incurred regardless of Cash timing
• Balance Sheet• Accounts Receivable – Current & Non-Current
• Accounts Payable – Current & Non-Current
• Current and Long-Term Capital Assets
• Current and Long-term Notes Payable
Balance Sheet
Assets
Liabilities
Net
Assets
Full Accrual
Cash Full
Accrual
Assets
Cash
$ 10,000
$ 10,000
Investments 100,000 100,000
Cash
Full
Accrual
Assets
Cash
$ 10,000
$ 10,000
Investments 100,000 100,000 Receivables -- 50,000 Total Assets 110,000 160,000
Investments 100,000 100,000
A/R -- 50,000 Total Assets 110,000 160,000
Liability
Payables -- 5,000 Prepaid -- 20,000
Total Liabilities -- 25,000 Net Assets 110,000 135,000
Total 110,000 160,000
Liability
Payables -- 5,000 Deferred Rev. -- 20,000
Total Liabilities -- 25,000 Net Assets 110,000 135,000 Total Liab. & Net Assets 110,000 160,000
Modified Accrual Accounting –Governmental Funds
• Revenues recognized in period available and measurable – 60 Days after June 30th
• Expenditures recognized in the time • Expenditures recognized in the time period incurred
• Balance Sheet
• Current Assets
• Current Liabilities
• Fund Balance
Balance Sheet
Current
Current
Liabilities Modified
AccrualAssets
Fund
Balance
Accrual
Noncurrent
Assets
Noncurrent
Liabilities
Other Net
Assets
Not considered in
Modified Accrual
Capital Assets
• Capital Assets
+ Assets that benefit more than one Fiscal Period
and worth more than Capital Asset thresholds.and worth more than Capital Asset thresholds.
+ Capital Assets are differentiated from Maintenance
• Capital Asset Policy• Monterey County Website ���� Office of the Auditor-
Controller ���� Under Policies & Procedures
Long-Term Liabilities
• Debt Service
• Self Insurance• Self Insurance
• Workers Compensation
• Unfunded Pension Liability
• Accrued Leave
Budgetary AccountingBudgetary Accounting
• Annual Budgets are required by the County Budget Act (State Government Code)
• Adopted Budgets include Legal Appropriations
Budgetary Accounting –Governmental Funds
• Adopted Budgets include Legal Appropriations and Estimated Revenues. An appropriation is a legal authorization granted by the legislative body to incur liabilities for purposes specified in the Annual Budget Resolution
• Budgets are used control expenditures (Budget to Actuals) and measure revenue inflows
BUDGET
Appropriations = Estimated Revenue + Fund Balance
Budgetary and Operating Equations & Relationship
ACTUAL – June 30th
Revenues minus Expenditures
ASSETS = LIABILITIES + FUND BALANCE
Encumbrance Accounting
• An encumbrance is an estimated amount recorded for purchase orders, contracts, or other expected expenditures chargeable to an other expected expenditures chargeable to an appropriation
• The encumbrance is a placeholder until the expenditure is made.
Available
Appropriations Expenditures Encumbrances Balance
Date Explanation CR (DR) DR (CR) DR (CR) CR (DR)
Ledger for Budgetary Control
Date Explanation CR (DR) DR (CR) DR (CR) CR (DR)
7-1-14 Budget authority 1,500 1,500
7-2-14 Purchase order 500 1,000
8-15-14 Voucher payable 500 (500) 1,000
Financial ReportingFinancial Reporting
In our opinion, based on our audit the financial statements present fairly, in all material respects, the respective financial
Audit Opinion from Independent Auditor
material respects, the respective financial position of the County of Monterey, as of June 30, 2013 in accordance with accounting principles generally accepted in the United States of America.
Financial Statements
• Proprietary Funds (Full Accrual)
• Governmental Funds (Modified Accrual)
• GASB #34 requires reconciliation of Governmental Funds (Modified Accrual) to Government-Wide (Full Accrual)
Reconciliation of Government Funds to Government-Wide
Governmental Funds –Fund Balance $220,057,489
Capital, Long-term & ISF Assets minus Long-term Liabilities
$691,242,120minus
$232,748,828
Government-Wide –Net Position $678,550,781
Who Reviews Financial Reports?
• Bond Holders & Trustees
• Rating Agencies• Rating Agencies
• Prospective Creditors
• Grantors
• Federal and State Government
What do They Look For?
• Financial Stability
• Status of Reserves
• Risks for Existing Debt
• Continuing Disclosure – Alerts to New Risks
• Financial Statemets fairly present the County’s fiscal position
Single Audit –Federal Programs
• Report on whether the County complied with the types of compliance requirements for major Federal Programsrequirements for major Federal Programs
• Report on internal controls concerning compliance
• Report on the schedule of expenditures of Federal Awards as required by OMB Circular A-133.
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