FuNo AccouNTiNc

Cenerally AccepLed AccounLlng rlnclples (CAA) deflne a fund as A flscol ooJ occoootloq eotlty wltb o
selfboloocloq set of occooots tecotJloq cosb ooJ otbet floooclol tesootces toqetbet wltb oll teloteJ
llobllltles ooJ teslJool epoltles ot bolooces ooJ cbooqes tbetelo wblcb ote seqteqoteJ fot tbe potpose of
cottyloq oo speclflc octlvltles ot ottololoq cettolo objectlves lo occotJooce wltb speclol teqolotloos
testtlctloos ot llmltotloos
,osL governmenLs engage ln a number of acLlvlLles LhaL call for Lhe esLabllshmenL of numerous funds
8egardless of how many acLlvlLles a governmenL engages ln almosL all acLlvlLles can be grouped lnLo
Lhree broad caLegorles
1 CovernmenLal acLlvlLles 1hese acLlvlLles lnvolve resources ralsed and expended Lo carry ouL Lhe
general purposes of a governmenL and are Lyplcally flnanced Lhrough Laxes or lnLergovernmenLal
granLs
2 8uslnessLype acLlvlLles 1hese are lncomedeLermlnlng acLlvlLles of a governmenL and Lherefore
flnanced prlmarlly Lhrough usercharges or fees CovernmenL buslnessLype acLlvlLles parallel Lhose
of Lhe prlvaLe secLor and make use of buslness accounLlng
3 llduclary acLlvlLles A governmenL ls engaged ln flduclary acLlvlLles when lL acLs as an agenL or a
LrusLee for oLher parLles llduclary acLlvlLles relaLe Lo governmenLs acLlng ln a LrusLee or agency
capaclLy for lndlvlduals prlvaLe organlzaLlons oLher governmenLs or ouLslde parLles

ln accordance wlLh Lhese Lhree broad caLegorles of governmenL acLlvlLles CAA mandaLe LhaL
governmenLs caLegorlze Lhelr funds lnLo Lhree caLegorles
1 CovernmenLal funds accounL for governmenL acLlvlLles Lyplcally supporLed Lhrough Lax revenues
CovernmenLal funds are malnLalned Lo flnance mosL governmenLs' operaLlng acLlvlLles
2 roprleLary funds accounL for a governmenL's buslnessLype acLlvlLles Lyplcally flnanced Lhrough
user charges or fees 1hese governmenL acLlvlLles mlrror Lhose of prlvaLe secLor enLlLles
3 llduclary funds accounL for resources held by a governmenL ln a LrusLee or agency capaclLy on
behalf of lndlvlduals organlzaLlons or oLher enLlLles llduclary funds cannoL be used Lo supporL Lhe
governmenL's own acLlvlLles 1he resources ln flduclary funds are held by a governmenL for Lhe
beneflL of parLles ouLslde Lhe governmenL

6overnmento/ lund
Dnder Lhe governmenLal funds caLegory flve funds are characLerlzed as governmenLal funds 1hey are
O @be qeoetol fooJ
1he general ls a governmenL prlmary operaLlng fund lL accounLs for all flnanclal resources LhaL are
noL requlred Lo be accounLed for ln oLher funds ln essence Lhe general fund ls malnLalned Lo
accounL for all unresLrlcLed resources
O @be speclflc fooJ
peclal revenue funds are malnLalned Lo accounL for resources legally resLrlcLed Lo speclflc
purposes ome Lyplcal revenue sources accounLed for ln speclal revenue funds lnclude
4 luel Lax revenues mandaLed by a leglslaLure Lo be seL nn aslde for road upkeep and
consLrucLlon
4 n A sLaLe law provldes LhaL resources generaLed by Lhe loLLery be used Lo fund educaLlon
4 n A sLaLe granL LhaL musL be used Lo Lraln new recrulLs of flreflghLers
O @be Jebt setvlce fooJ
ebL servlce funds accounL for resources accumulaLed for Lhe paymenL of prlnclpal and lnLeresL on
longLerm obllgaLlons ,uch llke slnklng funds malnLalned by buslnesses Lo accumulaLe resources Lo
reLlre debLs governmenLs malnLaln debL servlce funds for Lhe speclflc purpose of servlclng currenL
and fuLure debL servlce requlremenLs
O opltol ptojects fooJ
aplLal pro[ecL funds are malnLalned Lo accounL for flnanclal resources Lo be used for acqulslLlon
and consLrucLlon of ma[or caplLal asseLs 1he use of caplLal pro[ecLs funds as a separaLe fund Lo
reporL ma[or caplLal acqulslLlon and consLrucLlon acLlvlLles ls a useful meLhod Lo avold commlngllng
caplLal and operaLlng funds aplLal pro[ecLs resources are Lyplcally generaLed from Lhe lssuance of
bonds governmenL granLs or from lnLerfund Lransfers roceeds from lssuance of bonds are
resLrlcLed and malnLalned ln caplLal pro[ecLs funds Lo purchase or consLrucL ma[or caplLal asseLs

O 9etmooeot fooJ
ermanenL funds were lnsLlLuLed as parL of Lhe governmenLal flnanclal reporLlng model esLabllshed
by Lhe CA8 LaLemenL 34 and accounL for resources legally resLrlcLed Lo Lhe exLenL LhaL only Lhe
earnlngs on lnvesLmenLs noL prlnclpal may be used Lo supporL speclflc programs LhaL beneflL Lhe
governmenL lLself or lLs clLlzenry1he lncome or earnlngs on lnvesLmenLs of resources ln permanenL
funds are recognlzed as revenues and Lransferred Lo a speclal revenue fund Lo be expended for
deslgnaLed programs ln uslng only Lhe earnlngs of Lhe funds for expendlLures Lhe prlnclpal ls
malnLalned 1hus Lhe funds are never depleLed and remaln permanenL

9roprietory lund
ln proprleLary fund acLlvlLles Lhe moLlve of Lhe governmenL ls Lo recapLure lLs lnvesLmenLs Lhrough user
charges roprleLary funds are expecLed Lo be self susLalnlng Lhe focus ls on lncome deLermlnaLlon an
Lherefore publlc offlclals managlng Lhese funds lnLend aL a mlnlmum Lo break even 1here are Lwo
proprleLaryLype funds
otetptlse looJ
nLerprlse lunds accounL for governmenL acLlvlLles LhaL provlde goods or servlces for fees Lo Lhe
general publlc xamples of governmenL acLlvlLles accounLed for ln enLerprlse funds lnclude
O arklng garages a nn L alrporL faclllLles
O n PosplLals
O n ubllc servlce elecLrlc and gas
O n ubllc LransporLaLlon
otetool 5etvlce looJ
lnLernal ervlce lunds accounL for governmenL acLlvlLles LhaL provlde goods or servlces prlnclpally Lo
oLher deparLmenLs wlLhln Lhe same governmenL and aL Llmes Lo oLher governmenLs ome
lnLragovernmenLal acLlvlLles accounLed for ln Lhe lnLernal servlce funds lnclude
O A daLaprocesslng cenLer LhaL malnLalns flnanclal nn records for oLher deparLmenLs
O A prlnLlng cenLer LhaL provldes copy servlces Lo oLher deparLmenLs wlLhln Lhe same governmenL
O A repalr shop LhaL malnLalns and servlces equlpmenLs for varlous deparLmenLs wlLhln Lhe same
governmenL

Iud|c|ary Iund
apaclLy for oLher enLlLles and Lherefore cannoL be used Lo supporL Lhe reporLlng governmenL's own
programs llduclary funds lnclude
O Agency lunds are used Lo accounL for resources held by a governmenL ln purely cusLodlal
capaclLy 1he resources deposlLed ln agency funds are LranslenL ln naLure hence all resources
(asseLs) ln Lhe funds are equal Lo llablllLles because Lhe asseLs of Lhe fund wlll be remlLLed aL
some polnL ln Llme Lo Lhe lnLended beneflclarles Agency funds prlnclpally accounL for Lhe
recelpL Lemporary lnvesLmenLs and remlLLance of resources Lo lndlvlduals prlvaLe
organlzaLlons or oLher governmenLs 1yplcal agency funds resources lnclude among oLhers
Laxes collecLed by one governmenL for Lhe beneflL of anoLher governmenL enLlLy or refundable
collaLeral and deposlLs
O lnvesLmenL LrusL funds are used Lo accounL for Lhe comblned resources of separaLe
governmenLs ln an lnvesLmenL porLfollo for Lhe beneflL of Lhe conLrlbuLors CovernmenLs aL
Llmes manage lnvesLmenL pools whlch comblne oLher governmenLs' funds for Lhe beneflL of
Lhe parLlclpanLs lnvesLmenL 1rusL lunds resemble Lhe flnanclal arrangemenL of muLual funds ln
Lhe prlvaLe secLor
3 rlvaLepurpose LrusL funds accounL for LrusL funds arrangemenLs oLher Lhan lnvesLmenLs LrusL
funds and penslon LrusL funds A prlvaLepurpose fund ls used Lo reporL a LrusL arrangemenL under
whlch Lhe prlnclpal and lncome of Lhe fund beneflL lndlvlduals prlvaLe organlzaLlons or oLher
governmenLs An example of prlvaLepurpose fund ls a scholarshlp LrusL fund
4 enslon (and oLher employee beneflL) LrusL funds are used Lo reporL resources LhaL are requlred Lo
be held ln LrusL for members and beneflclarles of deflned beneflL penslon plans deflned
conLrlbuLlon plans oLher posLemploymenL beneflL plans or employee beneflL plans 1hese funds
also provlde lncome fordlsablllLy and healLh care relaLed lnsurance for reLlrees and Lhelr
beneflclarles

@ Masurnt
1he measuremenL focus characLerlzes Lhe Lypes of LransacLlons and evenLs LhaL are reporLed ln a fund's
flnanclal performance 1he measuremenL focus deLermlnes wheLher a fund ls Lo measure changes ln
LoLal economlc resources or changes ln currenL flnanclal resources 1he flnanclal performance of a
proprleLary fund focuses on cangs |n cono|c rsourcs hanges ln economlc resources operaLlng
sLaLemenL recognlzes malnly LransacLlons or evenLs LhaL lncrease or decrease Lhe fund's overall
economlc resources durlng Lhe perlod ln conLrasL Lhe operaLlng sLaLemenL of a governmenLal fund
alms aLLenLlon aL changes ln currenL flnanclal resources 1husLhe operaLlng sLaLemenL of a
governmenLal fund malnly recognlzes LransacLlons or evenLs of Lhe perlod LhaL lncrease or decrease Lhe
resources avallable for spendlng ln Lhe near fuLure

CAA prescrlbe LhaL a fund's basls of accounLlng ls [olnL Lo lLs measuremenL focus
1 roprleLary funds focus on LoLal economlc resources and use Lhe accrual basls of accounLlng 1he
accrual basls of accounLlng ldenLlfles lncreases and decreases ln economlc resources as a resulL of
LransacLlons or evenLs Dnder Lhe accrual basls of accounLlng revenues are recognlzed when
earned regardless of when Lhe relaLed cash ls acLually recelved or collecLed
O CovernmenLal funds focus on currenL flnanclal resources and use Lhe modlfled accrual basls of
accounLlng 1he modlfled accrual basls of accounLlng recognlzes lncreases and decreases ln
currenL flnanclal resources
O ome baslc seLs of flnanclal sLaLemenLs are requlred for each of Lhe maln caLegorles of funds
1he llsLlng of Lhe fund sLaLemenLs ls as follows 1he governmenLalfund sLaLemenLs are
8alance sheeL
LaLemenL of revenues expendlLures and changes ln fund balances
1he proprleLary fund sLaLemenLs are
LaLemenL of neL asseLs
LaLemenL of revenues expenses and changes ln neL asseLs
LaLemenL of cash flows
llduclary fund sLaLemenLs are
LaLemenL of flduclary neL asseLs
LaLemenL of changes ln flduclary neL asseLs

2 lund accounLlng segregaLes resources lnLo lndependenL flscal and accounLlng enLlLles known as
funds1he use of mulLlple funds Lo accounL for resources enhances conLrol over resources resLrlcLed
Lo parLlcular purposes or acLlvlLles

CovernmenLal funds conslsL of Lhe general fund speclal revenue funds debL servlce funds caplLal
pro[ecL funds and permanenL funds roprleLary lunds accounL for resources resulLlng from
governmenL buslnessLype acLlvlLles and conslsL of enLerprlse funds and lnLernal servlce funds llduclary
funds accounL for resources held by a governmenL ln a LrusLee or agency capaclLy for oLher enLlLles and
conslsL of agency funds lnvesLmenL LrusL funds prlvaLepurpose funds and penslon (and oLher
employee beneflL) LrusL funds





















9ub/ic 5ector 4ccountinq












HtZHY HHAHANY
A311 o9 2B5



FuLuItus LnnnmI
tnIvcvsItus HusunuddIn
2o11