Chapter 09 - Financial Reporting of State and Local Governments

CHAPTER 9:

FINANCIAL REPORTING OF STATE AND LOCAL GOVERNMENTS

OUTLINE

Number )ue"$io*": 9-1 99-% 9-) 9-* 9-9-. 9-0 9-9 9-10 C!"e": 9-1 99-% 9-)

Topic

Type T!"#

S$!$u" %re: &' e( New New Same Same New 9-. 9-0 9-9 New Same 9-1 revised 9- revised New Same 9-1 revised 9- revised New Same New 9-- revised Same Same 9-9 revised Same

Special districts and primary government Letter of transmittal and !"#$ information &nterim reports Financial reporting entity +rimary government and component ,nits C$FR and general p,rpose reports Re/,ired financial statements Reconciliation of financial statements &ntra-entity transactions Contemporary iss,es &dentification of component ,nits !"#$ and statistical ta1les Classification of f,nd 1alances +op,lar reports

Compare Compare '(plain '(plain '(plain '(plain List '(amples '(plain '(plain $nalysis $nalysis $nalysis &nternet '(amine !,ltiple Choice '(amine 3o,rnal entries !atching !atching Calc,lation 'rror identification +reparation $d4,stments5 3's

E+erci"e" Prob,em": 9-1 '(amine the C$FR 92ario,s 9-% &nterim reports 9-) Comprehensive set of transactions 9-* F,nd 1alance classifications 9-$d4,sting net position 1alances 9-. Change in net position 9-0 Governmental f,nd financial statements 9-9 Government-wide financial statements 9-10 !odified accr,al to accr,al acco,nting

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Chapter 09 - Financial Reporting of State and Local Governments

CHAPTER 9:
$nswers to 6,estions 9-17

FINANCIAL REPORTING OF STATE AND LOCAL GOVERNMENTAL UNITS

$ccording to the 8,rea, of Cens,s a special district incl,des 9local entities :other than co,nties5 m,nicipalities5 townships5 or school districts; a,thori<ed 1y state law to provide only one or a limited n,m1er of designated f,nctions5 and with s,fficient administrative and fiscal a,tonomy to /,alify as separate governments7= $s can 1e seen from this definition a special district is a type of special p,rpose government7 $ primary government is 1roader in scope than a special district7 $ccording to G$S8 a primary government can 1e a state government5 a general p,rpose government5 or a special p,rpose government7 >o /,alify as a primary government5 G$S8 indicates a special p,rpose government needs to have a separately elected governing 1ody5 and 1e legally separate and fiscally independent of state or local governments7 >his definition is similar to the definition provided 1y the 8,rea, of Cens,s for a special district7 >herefore5 a special district co,ld 1e considered a type of primary government7

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>he letter of transmittal generally cites legal and policy re/,irements for the report7 &t can also provide information on factors relating to government services and operations7 Since the transmittal letter is generally not a part of the a,dit5 it can incl,de somewhat s,14ective information7 ?n the other hand5 the !"#$ is considered re/,ired s,pplementary information :RS&; s,14ect to review 1y the a,ditor7 $s s,ch5 the !"#$ can only contain material set o,t 1y the G$S8 standards7 Some of the information re/,ired to 1e incl,ded in the !"#$ is an overview of financial activity for the year5 e(planation of the contents of the C$FR5 and a description of the financial condition and financial trends of the government7 "isagree7 $dministrators need periodic reports in order to ma@e day-to-day operating and management decisions7 Government co,ncil mem1ers sho,ld e(pect at least monthly financial information so that they can provide oversight of the managers7 &nterim reports are especially helpf,l in eval,ating whether 1,dgets and cash needs are 1eing met7 $ccording to the G$S8 a financial reporting entity is a primary government5 organi<ations for which the primary government is financially acco,nta1le5 and other organi<ations for which the nat,re of their relationship with the primary government are s,ch that e(cl,sion wo,ld ma@e the reporting entityAs 1asic financial statements misleading7 ?rgani<ations ma@ing ,p a financial reporting entity are the primary government and its component ,nits7 >he primary government is a state or local generalp,rpose government5 or a special-p,rpose government7 Component ,nits are the entities for which the primary government is financially acco,nta1le7 $ component ,nit is a legally separate entity for which the primary government is financially acco,nta1le7 >he G$S8 also considers a component ,nit to 1e an entity

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Chapter 09 - Financial Reporting of State and Local Governments

Ch7 95 $nswers5 9-* :ContAd;

whose relationship with the primary government is so important that e(cl,ding it from the financial reports of the primary government wo,ld ma@e the primary governmentAs financial reports misleading7 Financially acco,nta1le means that the primary government appoints a voting ma4ority of the component ,nitAs governing 1oard and is a1le to impose its will on the component ,nit5 or there is the potential for the component ,nit to provide specific financial 1enefits to5 or impose specific financial 1,rdens on the primary government7 97-7 General p,rpose e(ternal financial reports incl,de managementAs disc,ssion and analysis5 1asic financial statements and related notes5 and re/,ired s,pplementary information7 $ C$FR provides information 1eyond the minim,m re/,irements of the general p,rpose e(ternal financial statements7 &ncl,ded in a C$FR are all general p,rpose e(ternal financial report information5 an a,ditorAs report :as appropriate;5 a narrative section :introd,ctory section;5 com1ining and individ,al f,nd statements and sched,les5 and a statistical section7 >he nine re/,ired statements areB >he two government-wide financial statementsCstatement of net position and statement of activities7 >he two governmental f,nd financial statementsC1alance sheet and statement of reven,es5 e(pendit,res5 and changes in f,nd 1alances7 >he three proprietary f,nd financial statementsCstatement of net positionD statement of reven,es5 e(penses5 and changes in f,nd net positionD and statement of cash flows7 >he two fid,ciary f,nd financial statementsCstatement of fid,ciary net position and statement of changes in fid,ciary net position7 Chapter 9 provides a list of the items re/,iring reconciliation when going from the modified accr,al to accr,al 1asis of acco,nting7 St,dents sho,ld 1e a1le to provide e(amples related to each of the nine items identified in Chapter 97 >he ,se of a state or local governmentAs C$FR :easily located thro,gh an &nternet search; will help st,dents provide e(amples7 &ntra-entity transactions are transactions 1etween the primary government and its component ,nits7 8oth e(change and none(change transactions are considered intraentity transactions7 &f transactions are occ,rring 1etween the primary government and a component ,nit that is 1lended5 the transaction activity m,st 1e eliminated for reporting at the governmentwide level7 >he reason is that the 1lended component ,nit is 9collapsed= with the primary governmentAs governmental activities7 'liminating the activity 1etween the primary government and the component ,nit will prevent do,1le-co,nting of the activity7 $s an e(ample of the effectCif the component ,nit is treated as a special reven,e type f,nd for 1lending p,rposes5 the effect of all activity 1etween the component ,nit and the governmental f,nds wo,ld 1e eliminated for reporting at the government-wide level7

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Chapter 09 - Financial Reporting of State and Local Governments

Ch7 95 $nswers5 9-9 :ContAd;

>his is the same as wo,ld occ,r if the activity was 1etween governmental f,nds5 s,ch as 1etween a special reven,e f,nd and any of the other governmental f,nd types :General F,nd5 de1t service f,nd5 capital pro4ects f,nd5 or permanent f,nd;7 97107?C8?$ stands for other comprehensive 1asis of acco,nting7 >hese 1ases are non-G$$+5 and for governments generally incl,de cash5 modified cash5 or reg,latory 1asis of acco,nting7 Governments may ,se ?C8?$ rather than G$$+ if they 1elieve the ?C8?$ ma@es it easier for management to maintain and prepare financial reports5 ma@es it easier for all ,sers to ,nderstand5 or is less costly than G$$+7 $n a,dit opinion m,st 1e modified to reflect that ?C8?$ rather than G$$+ was ,sed :see Chapter 11;7 Sol,tions to Cases 9-17 a7 >esser hospital is a component ,nit of the City of >esser7 >esser is financially acco,nta1le for the hospital since the mayor appoints the governing 1oard and the city is a1le to impose its will on the hospital thro,gh final approval of the 1,dget7 >he $t@ins Convention and 2isitorAs 8,rea, is a component ,nit of the City of $t@ins7 Since the city has the right to approve the rate of the ta( :i7e75 the city sets the ta(; it has the a1ility to impose its will on the Convention and 2isitorAs 8,rea, thro,gh its control over reven,e7 8eca,se the city can impose its will on the Convention and 2isitorsA 8,rea, it is financially acco,nta1le for the 1,rea,7 >he Sports $,thority is not a component ,nit of "awson Co,nty7 $s indicated5 the Sports $,thority is a legally separate entity with its own 1oardD therefore5 the only /,estion is if there is fiscal dependency on the co,nty7 Since the actions of the Sports $,thority are vol,ntary and the recommendations of the co,nty need not 1e incorporated5 no fiscal dependency is created7 >he Co,nty $viation $,thority is a component ,nit of the City of !iddle Falls7 &f the city is legally o1ligated to ass,me de1t responsi1ilities in the event of a defa,lt a financial 1,rden has 1een imposed on the cityD therefore5 the $viation $,thority wo,ld 1e considered a component ,nit7 >he opinion that the li@elihood of defa,lt 1y the $viation $,thority is remote does not affect the decision7 Eelp for Fids is not a component ,nit of $lice Co,nty7 >hro,gh its re/,est the co,nty is performing what is referred to as a 9ministerial= or compliance f,nction :G$S85 Codification5 Sec7 100711-;7 $ compliance f,nction is not considered to res,lt in fiscal dependence7 >he two primary governmental f,nds reven,e so,rces are property ta(es and intergovernmental reven,es7 &n 010 property ta(es represent over %* percent and intergovernmental represents over 19 percent of governmental f,nds reven,es7 >he percent of reven,es coming from property ta(es is ,p from a low of

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Chapter 09 - Financial Reporting of State and Local Governments

Ch7 95 Sol,tions5 Case 9- :ContAd;

97* percent in 00*7 Conversely5 the percent of reven,es coming from intergovernmental so,rces is down from a high of almost - percent in 00)7 b. St,dents will have interpreted the information provided in a variety of ways7 >he following disc,ssion provides some points st,dents may have considered7 Gith the e(ception of 0095 property ta(es have consistently increased as a percent of reven,e since 00*7 $ review of assessed and estimated act,al property val,es reveals that 1oth val,es increased d,ring 000 and 009 despite the ho,sing mar@et fail,re7 Eowever5 the assessed and estimated act,al property val,es have fallen in 0107 $ review of the ta1le indicates that the reason for the fall appears to 1e related to the large increase in ta( e(empt property7 Residential and commercial constr,ction was act,ally higher in 010 than 0097 >he increase in property ta( reven,e appears to 1e the res,lt of the increased millage rate7 >he property ta( indicators are generally strong7 Gea@er indicators relate to the large increase in ta( e(empt properties and the increased millage rate7 $nother pro1lem is the State of Florida 9roll1ac@ provisions= that limit the amo,nt 1y which the millage rate can 1e increased7 ?verall5 it appears that property ta( reven,e sho,ld contin,e to 1e a somewhat sta1le5 provided property val,es do not contin,e to fall5 1,t pro1a1ly not a growing so,rce of reven,e for 3ac@sonville over the ne(t two to three years7 St,dents will have interpreted the information provided in a variety of ways7 >he following disc,ssion provides some points the st,dents may have considered7 Sales ta( reven,e is the third largest so,rce of reven,es for 3ac@sonville7 Sales ta( reven,e is elastic in that it tends to move with the health of the economy7 $ review of the sales ta( reven,e indicates that sales ta( as a percent of reven,e has dropped over the past 10 years7 &n 010 sales ta(es provided 117) percent of the reven,e while in 00 they provided 1)7.* percent of the reven,e7 Sales ta( reven,es have dropped over the last two years7 >he !"#$ indicates that sales ta( reven,es are e(pected to 1e down % percent in the 010- 011 fiscal year7 >he decline in sales ta( reven,e over the past three years reflects the wea@ state of the economy and the high ,nemployment rate in 3ac@sonville and the State of Florida7 Gith the impact of the overall economy and the recent sales ta( trend5 sales ta( reven,es co,ld contin,e to decline or 1e flat over the ne(t two to three years7 Non-spenda1le means the assets can not 1e spent5 either :1; 1eca,se they are not in a spenda1le form s,ch as cash or financial assets that can 1e converted to cash5 or : ; 1eca,se contract,al re/,irements indicate the assets m,st remain intact7 For an advance5 which is a type of receiva1le5 to 1e non-spenda1le there m,st 1e an indication that it is not converti1le to cash in the near term d,e to the terms of the agreement ,nder which the advance was made7

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Chapter 09 - Financial Reporting of State and Local Governments

Ch7 95 Sol,tions5 Case 9-% :ContAd;

17 San !ateo reported all ,nassigned f,nd 1alances as part of the General F,nd7 $ccording to G$S8 standards5 only the General F,nd can report a positive ,nassigned f,nd 1alanceD therefore5 San !ateo has correctly reported its ,nassigned amo,nts7 c7 Since a restriction on the cityAs f,nd 1alance can only 1e imposed 1y an e(ternal party :incl,ding legislative action of a higher level of government;5 the remaining options for classifying the reserve wo,ld appear to 1e committed5 assigned, or unassigned7 >he information indicates that the 1oard adopted a policy on reserves in 19997 ?f importance in ma@ing the decision a1o,t classifying the reserve is a determination as to whether the policy was a formal action of the 1oard that can only 1e ,ndone 1y a similar formal action7 $dditionally5 for a reserve to 1e reported as committed5 the G$S8 re/,ires that the formal action incl,de additional information s,ch as the re/,irements for additions to the reserves and conditions ,nder which the amo,nts can 1e ,sed7 &f s,ch conditions are met the reserve amo,nts wo,ld 1e classified as committed7 &f the policy on reserves simply reflects the 1oardAs intent to set aside reso,rces for times of economic ,ncertainty the general reaction wo,ld 1e that the amo,nts can 1e classified as assigned7 Eowever5 the G$S8 standard specifically indicates that reserve amo,nts cannot 1e assigned7 >he answer is not apparent from the information provided7 >herefore5 st,dents co,ld arrive at different concl,sions7 >hose indicating the f,nds sho,ld 1e classified as committed may point to the fact that the policy is very specific as to its p,rpose and provides specific g,idelines for when amo,nts can 1e ,sed7 >he degree of detail indicates actions that are greater than intent7 Eowever5 there is no indication a1o,t how amo,nts are added to the reserve :see comments in prior paragraph;5 which negates the possi1ility of reporting the reserves as committed7 St,dents indicating the f,nds sho,ld 1e classified as assigned may point o,t there is no evidence that a formal action needs to 1e ta@en to 9,ndo= the policy7 Eere it sho,ld 1e pointed o,t that while the st,dentsA sol,tion appears logical5 the G$S8 specifically prohi1its reserves from 1eing reported as assigned7 Some st,dents may also indicate that the reserves sho,ld 1e unassigned since there is ins,fficient information to indicate the f,nds sho,ld 1e committed7 8ased on the limited information provided 1y San !ateo5 unassigned wo,ld 1e appropriate7 9-)7 a7 Eills1oro,gh Co,nty does prod,ce a pop,lar report in a downloada1le 7pdf form7 Cities and co,nties may 1e more li@ely to have e(perimented with pop,lar reports than smaller townships and villages7 St,dentsA responses will reflect the reports they were a1le to o1tain5 so answers will vary7 >he criteria for ,sef,lness developed 1y G$S8 in Concept Statement No. 1 or the F$S8 Concept,al Framewor@ will 1e helpf,l in addressing this

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Chapter 09 - Financial Reporting of State and Local Governments

Ch7 95 Sol,tions5 Case 9-) :ContAd;

/,estion7 &n order to 1e ,sef,l5 statements m,st 1e relevant5 relia1le5 ,nderstanda1le5 timely5 consistent5 and compara1le7 Sol,tions to '(ercises and +ro1lems 9717 Since each of the st,dents will have a different ann,al report5 the sol,tions to 9-1 sho,ld differ from st,dent to st,dent7 Note that not all reports that say 9C$FR= on the cover have three sections7 Some reports may only contain the middle or financial section7 17 7 %. )7 *7 a. d. a7 c7 d7 d7 -. .7 07 97 107 a7 b7 b7 c7 a7

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For the first half of 010 reven,es generally e(ceeded e(pendit,res :an e(ception was Fe1r,ary;7 Eowever5 the last five months of the year the trend reversed with e(pendit,res e(ceeding reven,es 1y increasingly larger amo,nts each month7 >he first three months of 011 indicate larger variances than were seen in 0107 $ltho,gh no trend is yet apparent5 it can 1e seen that once again Fe1r,ary e(pendit,res e(ceeded reven,es5 indicating that Fe1r,ary is a low point for reven,e collections7

b. &t appears Fort Collins has 1een a1le to maintain its 009 e(pendit,re level fairly well in 0107 $ltho,gh there are some months :Fe1r,ary5 $,g,st5 ?cto1er5 and "ecem1er; when the 010 e(pendit,res e(ceed those in 0095 generally5 the 010 e(pendit,res are slightly lower than 0097 c. >here appear to 1e two ,n,s,al spi@es in 011 relative to 0107 Reven,es for 3an,ary and Fe1r,ary are somewhat consistent with 010D however5 the !arch reven,es are m,ch higher7 >here is a similar pattern with e(pendit,res7 >he 3an,ary and !arch e(pendit,res are somewhat consistent with 010D however5 the Fe1r,ary e(pendit,res are m,ch higher7 $ /,estion wo,ld 1e whether there is a relationship 1etween the reven,e and e(pendit,re spi@es7 For e(ample5 perhaps one time e(pendit,res were inc,rred in Fe1r,ary for which grant reven,e was received in !arch7 &f there is no relationship5 the large increases in variances are somewhat of a concern that warrants monitoring since they indicate management may 1e having diffic,lty aligning e(pendit,res and reven,es7

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Chapter 09 - Financial Reporting of State and Local Governments

Ch7 95 Sol,tions :ContAd;

9-4. TRANS. FUND NO. OR ACTIVITY 1. GF

CITY OF LYNNWOOD ACCOUNT TITLE ESTIMATED REVENUES A##RO#RIATIONS $UDGETARY FUND $ALANCE AMOUNTS Debits Credits !"""!""" 1!99"!""" 1"!""" 1!94"!""" 9!""" 1!9'1!""" 1!94"!""" 9!""" 1!9'1!""" (!""" (!""" (!""" '""!""" +(!""" +"!"""

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TA%ES RECEIVA$LE&CURRENT ESTIMATED UNCOLLECTI$LE CURRENT TA%ES REVENUES

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TA%ES RECEIVA$LECURRENT ESTIMATED UNCOLLECTI$LE CURRENT TA%ES GENERAL REVENUES& #RO#ERTY TA%ES

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OFU&INTERFUND TRANSFERS OUT CAS)

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CAS) E*UI#MENT ACCUMULATED DE#RECIATION TRANSFERS IN

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INVESTMENTS&MAR,ETA$LE SECURITIES REVENUES&CONTRI$UTIONS FOR ENDOWMENT -""!""" -""!"""

Ch7 95 Sol,tions5 9-) :ContHd;

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Chapter 09 - Financial Reporting of State and Local Governments

TRANS. FUND NO. OR ACTIVITY

ACCOUNT TITLE CAS) REVENUES&INVESTMENT EARNINGS

AMOUNTS Debits Credits 4"!""" 4"!""" 4"!""" 4"!""" 4"!""" 4"!"""

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OFU&INTERFUND TRANSFERS OUT CAS)

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CAS) OFS&INTERFUND TRANSFERS IN

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INVESTMENTS&MAR,ETA$LE SECURITIES GENERAL REVENUES& CONTRI$UTIONS FOR ENDOWMENT CAS) #ROGRAM REVENUES&#AR,S AND RECREATION&O#ERATING GRANTS . CONTRI$UTIONS 4"!""" 1 (!""" 1 (!""" 1 4!""" 1 4!""" 1 (!""" 1 (!""" 4"!""" -""!""" -""!"""

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EF

DUE FROM OT)ER FUNDS C)ARGES FOR SERVICES CAS) DUE FROM OT)ER FUNDS

GF

E%#ENDITURES DUE TO OT)ER FUNDS

Ch7 95 Sol,tions5 9-) :ContHd;

TRANS. FUND
9-9

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Chapter 09 - Financial Reporting of State and Local Governments

NO.

OR ACTIVITY

ACCOUNT TITLE DUE TO OT)ER FUNDS CAS)

Debits 1 4!"""

Credits 1 4!"""

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E%#ENSES&GENERAL GOVERNMENT INTERNAL $ALANCES INTERNAL $ALANCES CAS)

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SU##LIES INVENTORY CAS)

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CAS) TA%ES RECEIVA$LE&CURRENT REVENUES

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CAS) TA%ES RECEIVA$LE&CURRENT #ROGRAM REVENUE&GENERAL GOVERNMENT&C)ARGES FOR SERVICES

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ISF

DUE FROM OT)ER FUNDS $ILLINGS TO DE#ARTMENTS

EF

E%#ENSES&ADMINISTRATIVE DUE TO OT)ER FUNDS

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Chapter 09 - Financial Reporting of State and Local Governments

Ch7 95 Sol,tions5 9-) :ContHd;

TRANS. FUND NO. OR ACTIVITY GF

AMOUNTS ACCOUNT TITLE Debits Credits E%#ENDITURES&GENERAL GOVERNMENT 1(!/"" DUE TO OT)ER FUNDS 1(!/"" -!1""

GA

INTERNAL $ALANCES #ROGRAM REVENUE&GENERAL GOVERNMENT&C)ARGES FOR SERVICES

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CAS) $ONDS #AYA$LE

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E*UI#MENT CAS)

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Chapter 09 - Financial Reporting of State and Local Governments

Ch7 95 Sol,tions :ContHd;

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Chapter 09 - Financial Reporting of State and Local Governments

Ch7 95 Sol,tions :ContHd;

9-/. TOWN OF LEES$URG Re0120i3i4ti12 15 t6e St4te7e2t 15 Re8e29es! E:;e2dit9res! 42d C642<es i2 F92d $43420es&G18er27e2t43 F92ds t1 t6e St4te7e2t 15 A0ti8ities F1r t6e Ye4r E2ded =92e '"! "14 Net 0642<e i2 592d b43420es > <18er27e2t43 592ds A7192ts re;1rted 51r <18er27e2t43 40ti8ities i2 t6e st4te7e2t 15 40ti8ities 4re di55ere2t be049se@ G18er27e2t43 592ds re;1rt 04;it43 19t34As 4s e:;e2dit9res. )1Be8er! i2 t6e st4te7e2t 15 40ti8ities t6e 01st 15 t61se 4ssets is 433104ted 18er t6eir esti74ted 9se593 3i8es 4s de;re0i4ti12 e:;e2se. T6is is t6e 47192t bA B6i06 04;it43 19t34As ?C1! ("!"""D e:0eeded de;re0i4ti12 ?C(9(!"""D. Tr42s40ti12s i28138i2< 04;it43 4ssets res93ted i2 4 31ss. T6e 31ss did 21t reE9ire t6e 9se 15 09rre2t 5i2420i43 res19r0es! 42d t6ere51re B4s 21t re;1rted i2 t6e <18er27e2t43 592ds. $12d ;r10eeds ;r18ide 09rre2t 5i2420i43 res19r0es t1 <18er27e2t43 592ds! b9t iss9i2< debt i20re4ses 312<-ter7 3i4bi3ities i2 t6e st4te7e2t 15 2et ;1siti12. T6is is t6e 47192t 15 t6e ;r10eeds. A de0re4se i2 400r9ed 3i4bi3ities i2di04tes t64t e:;e2dit9res re01rded i2 t6e <18er27e2t43 592ds e:0eed e:;e2ses 51r t6e 09rre2t ;eri1d. Re8e29es i2 t6e st4te7e2t 15 40ti8ities t64t d1 21t ;r18ide 09rre2t 5i2420i43 res19r0es 4re 21t re;1rted 4s re8e29es i2 t6e 592ds. C642<e i2 2et ;1siti12 15 <18er27e2t43 40ti8ities ? 1'1!/""

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Chapter 09 - Financial Reporting of State and Local Governments

Ch7 95 Sol,tions :ContHd;

9.-.

S17e 15 t6e 71di5i04ti12s 1r 01rre0ti12s t64t s6193d be 74de i2039de@ T6e B1rd E:;e2ses s6193d be 0642<ed t1 E:;e2dit9res i2 t6e st4te7e2t tit3e. A2 4243Asis s6193d be d12e 15 t6e Ot6er G18er27e2t43 F92ds 013972 t1 deter7i2e B6et6er 42A 15 t6e t6ree 592ds i2039ded i2 t6e 013972 7eet t6e de5i2iti12 15 4 74F1r 592d. I5 s1! t6e 592d s6193d be s61B2 i2 4 se;4r4te 013972 t1 t6e ri<6t 15 t6e Ge2er43 F92d. A T1t43 G18er27e2t43 F92ds 013972 s6193d be ;r18ided t1 t6e ri<6t 15 t6e Ot6er G18er27e2t43 F92ds 013972. Debt ;r10eeds is 21t 4 re8e29e. It s6193d be s61B2 i2 4 se;4r4te se0ti12 tit3ed Ot6er Fi2420i2< S19r0es CUsesD. T6is se0ti12 4;;e4rs 45ter e:;e2dit9res. Tr42s5ers 19t is 21t 42 e:;e2dit9re. It s6193d be s61B2 i2 4 se;4r4te se0ti12 tit3ed Ot6er Fi2420i2< S19r0es CUsesD. T6is se0ti12 4;;e4rs 45ter e:;e2dit9res. Debt ser8i0e s6193d be s61B2 se;4r4te3A 5r17 t6e Ge2er43 G18er27e2t 5920ti12. F9rt6er! debt ser8i0e s6193d s61B t6e e:;e2dit9res 51r ;ri20i;43 42d t6e e:;e2dit9res 51r i2terest. Ge2er433A! i251r74ti12 12 debt ser8i0e is s61B2 45ter t6e 5920ti1243 e:;e2dit9res. C4;it43 19t34A s6193d be s61B2 se;4r4te3A 5r17 t6e 5920ti12s 15 <18er27e2t. Ge2er433A! i251r74ti12 12 04;it43 19t34As is s61B2 45ter t6e 5920ti1243 e:;e2dit9res. T6e be<i22i2< 42d e2di2< 592d b43420es 51r t6e ;eri1d s6193d be i2039ded 45ter t6e Net C642<e i2 F92d $43420es.

9-1)

Chapter 09 - Financial Reporting of State and Local Governments

Ch7 95 Sol,tions :ContHd;

9-9.

TOWN OF FREAG STATEMENT OF NET #OSITION AS OF =UNE '"! "14 C"""S OMITTEDD

ASSETS: CURRENT ASSETS@ CAS) INVESTMENTS TA%ES RECEIVA$LE CNET ?49 OF ESTIMATED UNCOLLECTI$LE TA%ESD DUE FROM OT)ER GOVERNMENTS TOTAL CURRENT ASSETS CA#ITAL ASSETS@ LAND OT)ER CA#ITAL ASSETS CNET OF DE#RECIATIOND INFRASTRUCTURE CNET ?4(!+"'D $UILDINGS CNET ?-!" 1D MAC)INERY AND E*UI#MENT CNET ?1'!/-(D TOTAL CA#ITAL ASSETS TOTAL ASSETS LIABILITIES: CURRENT LIA$ILITES@ ACCOUNTS #AYA$LE ACCRUED LIA$ILITIES DUE TO OT)ER FUNDS CNETD CURRENT #ORTION OF LONG-TERM DE$T TOTAL CURRENT LIA$ILITIES LONG-TERM LIA$ILITIES@ $ONDS #AYA$LE TOTAL LIA$ILITES
Ch7 95 Sol,tions5 9-9 :ContHd;

? '!+'9 /! 99 (!/'9 +!'4' '!" " ? -!/ " 4"!1+( 1/!+(9 14!9'( -1!4/9 1"4!499

/!/+4 4!/+( 1"' -!+"" 1! ' -!/"" 49!9'

9-1*

Chapter 09 - Financial Reporting of State and Local Governments

NET POSITION@ NET INVESTMENT IN CA#ITAL ASSETS RESTRICTED&DE$T SERVICE UNRESTRICTED@ DESIGNATED&STREET RE#AIR UNDESIGNATED /!'+( TOTAL NET #OSITION ? (4!(+/ 9"" 44!1/9 !1 '

CN1te@ Net I28est7e2t i2 C4;it43 AssetsH?4(! (9 be<i22i2< b43420e > ?1!"-" de;re0i4ti12. U2desi<24tedH?+!(9- be<i22i2< b43420e I ?(-/ i20re4se i2 92restri0ted 2et ;1siti12 I ?1!"-" de;re0i4ti12 - ?9"" desi<24ted.D

9-1-

Chapter 09 - Financial Reporting of State and Local Governments

Ch7 95 Sol,tions5 9-9 :ContHd;

TOWN OF FREAG STATEMENT OF ACTIVITIES FOR T)E YEAR ENDED =UNE '"! "14 C"""S OMITTED D NET CE%#ENSESD REVENUES AND C)ANGES IN NET #OSITION S CA#ITAL GRANTS AND CONTRI$UTIONS GOVERNMENTAL ACTIVITIES

#ROGRAM REVENUES C)ARGES FOR E%#ENSES SERVICES O#ERATING GRANTS AND CONTRI$UTIONS

FUNCTIONS #RIMARY GOVERNMENT@ GENERAL GOVERNMENT #U$LIC SAFETY #U$LIC WOR,S #AR,S . RECREATION INTEREST ON DE$T TOTAL GOVERNMENTAL ACTIVITIES

? !4+11!(// (!'11 1!-1/ /49 JJJJJJ ? 1!9

? 4!411 99+

'"/ ? 1!+-"

? ! (" C1"!(-1D C'!+'1D C1!4(-D C/49D

'(9 JJJJJJ ? (!/++ JJJJJ ? '"/ JJJJJJ ? 1!+-"

JJJJJJ C14!1+9D

GENERAL REVENUES@ #RO#ERTY TA%ES LEVIED FOR GENERAL #UR#OSES INTEREST . #ENALTIES ON DELIN*UENT TA%ES INTEREST INCOME TOTAL GENERAL REVENUES INCREASE IN UNRESTRICTED NET #OSITION NET #OSITION! =ULY 1! "14 NET #OSITION! =UNE '"! "14 1'!++( /4+ '4( 14!/(+ (-/ ('!9-" ?(4!(+/

9-1.

Chapter 09 - Financial Reporting of State and Local Governments

Ch7 95 Sol,tions :ContHd;

9-1". MODIFIED ACCRUALK ACCRUAL ACCOUNT ACCRUAL ACCRUAL ACCRUAL ACCRUAL ACCRUAL MODIFIED ACCRUAL ACCRUAL ACCRUAL ACCRUAL ("!""" 1!1 ( 1!1 ( ("!""" ! (" 4-" 4-" 9(" 9(" 9!"49 9!"49 '9!1 ' '9!1 ' AD=USTMENT Debit Credit +/4!'"" +/4!'""

ACCOUNT AFFECTED 1. DE#RECIATION E%#ENSE $UILDINGS . E*UI#MENT . SALARY E%#ENSE SALARIES #AYA$LE '. $UILDINGS . E*UI#MENT E%#ENDITURES 4. $ONDS #AYA$LE ACCRUED INTEREST #AYA$LE INTEREST E%#ENSE

E%#ENDITURES&#RINCI#AL MODIFED ACCRUAL E%#ENDITURES&INTEREST MODIFIED ACCRUAL (. INTERNAL $ALANCES DUE FROM OT)ER FUNDS DUE TO OT)ER FUNDS INTERNAL $ALANCES ACCRUAL MODIFED ACCRUAL MODIFIED ACCRUAL ACCRUAL

9-10