4/28/2016 1 TODAYS TOPICS 1. MODIFIED VS. FULLACCRUAL 2. YEAR - - PDF document

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TODAY’S TOPICS

1. MODIFIED VS. FULLACCRUAL 2. YEAR END CLOSING PROCEDURES 3. CASH RECONCILIATION 4. MAJOR FUND DETERMINATION 5. FINANCIAL REPORTING

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MODIFIED VERSES FULL ACCRUAL ACCOUNTING

ACCRUAL ACCOUNTING ATTEMPTS TO RECORD THE FINANCIAL EFFECTS ON AN ENTERPRISE OF TRANSACTIONS AND OTHER EVENTS AND CIRCUMSTANCES THAT HAVE CASH CONSEQUENCES FOR AN ENTERPRISE IN THE PERIODS IN WHICH THOSE TRANSACTIONS, EVENTS, AND CIRCUMSTANCES OCCUR RATHER THAN ONLY IN THE PERIODS IN WHICH CASH IS RECEIVED OR PAID BY THE ENTERPRISE.

FULL ACCRUAL

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ACCRUAL ACCOUNTING IS CONCERNED WITH THE PROCESS BY WHICH CASH EXPENDED ON RESOURCES AND ACTIVITIES IS RETURNED AS MORE (OR PERHAPS LESS) CASH TO THE ENTERPRISE, NOT JUST WITH THE BEGINNING AND END OF THAT PROCESS.

MODIFIED VERSES FULL ACCRUAL ACCOUNTING – CONT. FULL ACCRUAL ‐ CONT

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MODIFIED VERSES FULL ACCRUAL ACCOUNTING – CONT.

FULL ACCRUAL BASIC PRECEPTS: RECOGNIZES EXPENSES NOT EXPENDITURES REVENUES ARE RECOGNIZED IN THE PERIOD IN WHICH THEY ARE BOTH MEASURABLE AND EARNED EXPENSES, IF MEASURABLE, ARE RECOGNIZED IN THE PERIOD INCURRED

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MODIFIED VERSES FULL ACCRUAL ACCOUNTING – CONT.

FULL ACCRUAL – CONT. BASIC PRECEPTS – CONT: REVENUES ARE CONSIDERED “EARNED” WHEN THE GOODS OR SERVICES ARE PROVIDED REVENUES ARE CONSIDERED “MEASURABLE” IF A REASONABLE ESTIMATE CAN BE PROVIDED EXPENSES ARE CONSIDERED MEASUREABLE AS SOON AS A COST IS INCURRED

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MODIFIED VERSES FULL ACCRUAL ACCOUNTING – CONT.

FULL ACCRUAL – CONT. BASIC PRECEPTS – CONT: ITS USE RESULTS IN A MEASUREMENT THAT RECORDS THE SUBSTANCE OF TRANSACTIONS, NOT MERELY CASH INFLOW OR OUTFLOWS RECOGNIZES NONCASH TRANSACTIONS AT THE TIME THEY OCCUR (ACCRUALS, DEFERRALS, ALLOCATIONS AND AMORTIZATIONS)

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BASIC PRECEPTS – CONT: RECORDS AND ALLOCATES REVENUES & EXPENSES PROPERLY AMONG FISCAL PERIODS (INVENTORIES, PREPAID EXPENSES, FIXED ASSETS, ACCRUED LIABILITIES, DEBT) RECORDING ACCRUED LIABILITIES IS VALUABLE IN ACHIEVING A RELIABLE INDICATOR OF FINANCIAL POSITION & RESULTS OF OPERATIONS.

MODIFIED VERSES FULL ACCRUAL ACCOUNTING – CONT.

FULL ACCRUAL – CONT.

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MODIFIED VERSES FULL ACCRUAL ACCOUNTING – CONT.

FULL ACCRUAL – CONT. BASIC PRECEPTS – CONT: FINANCIAL POSITION IS MORE ACCURATELY DISPLAYED BECAUSE ALL ASSETS AND LIABILITIES ARE KNOWN RESULTS OF OPERATIONS ARE MORE REALISTIC BECAUSE ALL KNOWN COSTS ARE INCURRED AND ALL REVENUES EARNED ARE RECORDED MEASUREMENT FOCUS IS ON THE FLOW OF ECONOMIC RESOURCES

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BASIC PRECEPTS – CONT: IT IS NOT USEFUL FOR CASH-FLOW MANAGEMENT, IN FACT IT MAY HIDE CASH-FLOW PROBLEMS. AS A RESULT, FULL ACCRUAL BASIS FINANCIAL STATEMENTS ARE NORMALLY ACCOMPANIED BY STATEMENTS OF CASH FLOWS

MODIFIED VERSES FULL ACCRUAL ACCOUNTING – CONT.

FULL ACCRUAL – CONT.

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MODIFIED VERSES FULL ACCRUAL ACCOUNTING – CONT. MODIFIED ACCRUAL

THE MAJOR DIFFERENCES IN APPLYING THE ACCRUAL CONCEPT IN GOVERNMENTAL FUND ACCOUNTING, AS OPPOSED TO PROPRIETARY FUND AND COMMERCIAL ACCOUNTING, RELATE TO DIFFERENCES IN THE ENVIRONMENT AND IN THE ACCOUNTING MEASUREMENT OBJECTIVES.

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MODIFIED VERSES FULL ACCRUAL ACCOUNTING – CONT. MODIFIED ACCRUAL – CONT.

MODIFICATIONS AND ADAPTIONS FOR THE PRACTICAL AND APPROPRIATE IMPLEMENTATION OF THE ACCRUAL CONCEPT IN GOVERNMENTAL FUND ACCOUNTING ARE BEST REFERRED TO AS THE “MODIFIED ACCRUAL BASIS” AND SHOULD BE APPLIED IN ALL GOVERNMENTAL FUND ACCOUNTING AND REPORTING

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MODIFIED VERSES FULL ACCRUAL ACCOUNTING – CONT.

MODIFIED ACCRUAL – CONT. BASIC PRECEPTS: RECOGNIZES EXPENDITURES NOT EXPENSES REVENUES ARE RECOGNIZED IN THE PERIOD IN WHICH THEY BECOME SUSEPTIBLE TO ACCRUAL, THAT IS WHEN THE ARE BOTH MEASURABLE AND AVAILABLE EXPENDITURES, IF MEASURABLE, ARE RECOGNIZED IN THE PERIOD INCURRED

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MODIFIED VERSES FULL ACCRUAL ACCOUNTING – CONT.

MODIFIED ACCRUAL ‐ CONT BASIC PRECEPTS – CONT: REVENUES ARE CONSIDERED “MEASURABLE” IF A REASONABLE ESTIMATE CAN BE PROVIDED REVENUES ARE AVAILABLE IF THEY ARE COLLECTIBLE WITHIN THE CURRENT PERIOD OR SOON ENOUGH THEREAFTER TO BE USED TO PAY LIABILITIES OF THE CURRENT PERIOD

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MODIFIED VERSES FULL ACCRUAL ACCOUNTING – CONT.

MODIFIED ACCRUAL ‐ CONT BASIC PRECEPTS – CONT: EXPENDITURES ARE CONSIDERED MEASUREABLE AS SOON AS A COST IS INCURRED MEASUREMENT FOCUS IS ON THE FLOW OF CURRENT FINANCIAL RESOURCES ATTEMPTS TO MATCH CURRENT RESOURCES WITH CURRENT COSTS

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MODIFIED VERSES FULL ACCRUAL ACCOUNTING – CONT.

CASH BASIS BASIC PRECEPTS: SIMPLEST TO ACCOMPLISH BUT PROVIDES THE LEAST DISCLOSURE MEASUREMENT FOCUS IS ON THE FLOW OF CASH RESOURCES IS CONSIDERED A BASIS OF ACCOUNTING OTHER THAN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

MODIFIED VERSES FULL ACCRUAL ACCOUNTING – CONT.

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PRACTICAL DIFFERENCES:

• RECEIPT OF LONG-TERM DEBT PROCEEDS
• REPAYMENT OF THE PRINCIPAL OF

LONG-TERM DEBT

• CAPITAL ACQUISITION
• EXHAUSTION OF CAPITAL ASSETS
• DEFERRALS AND AMORTIZATIONS

MODIFIED VERSES FULL ACCRUAL ACCOUNTING – CONT.

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ILLUSTRATIVE ENTRIES

RECEIPT OF LONG-TERM DEBT PROCEEDS: PROPRIETARY FUNDS: DR CR CASH $20,000 BONDS PAYABLE $20,000 GOVERNMENTAL FUNDS: CASH $20,000 OTHER FINANCES SOURCES $20,000

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MODIFIED VERSES FULL ACCRUAL ACCOUNTING – CONT.

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ILLUSTRATIVE ENTRIES – CONT.

REPAYMENT OF THE PRINCIPAL OF LONG-TERM DEBT: PROPRIETARY FUNDS: DR CR BONDS PAYABLE $5,000 INTEREST EXPENSE 300 CASH $5,300 GOVERNMENTAL FUNDS: EXPENDITURE- BOND PRIN. $5,000 EXPENDITURE-BOND INTEREST 300 CASH $5,300

MODIFIED VERSES FULL ACCRUAL ACCOUNTING – CONT.

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ILLUSTRATIVE ENTRIES – CONT.

CAPITAL ACQUISITION: DR CR PROPRIETARY FUNDS: EQUIPMENT $20,000 CASH $20,000 GOVERNMENTAL FUNDS: EXPENDITURE- CAP. OUT. $20,000 CASH $20,000

MODIFIED VERSES FULL ACCRUAL ACCOUNTING – CONT.

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ILLUSTRATIVE ENTRIES - CONT

PROPRIETARY FUNDS: DR CR DEPRECIATION EXPENSE $2,000 ACCUMULATED DEPRECIATION $2,000 GOVERNMENTAL FUNDS: DEPRECIATION IS NOT RECORDED

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MODIFIED VERSES FULL ACCRUAL ACCOUNTING – CONT.

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ILLUSTRATIVE ENTRIES- CONT.

DEFERRALS AND AMORTIZATIONS: PROPRIETARY FUNDS: DR CR DEFERRED CHARGES $26,000 CASH $26,000 AMORTIZATIONS EXPENSE $2,000 DEFERRED CHARGES $2,000

MODIFIED VERSES FULL ACCRUAL ACCOUNTING – CONT.

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ILLUSTRATIVE ENTRIES- CONT.

GOVERNMENTAL FUNDS: DR CR EXPENDITURE - ISSUE COSTS $26,000 CASH $26,000

CHECKLIST FOR YEAR‐END CLOSING ENTRIES

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GENERAL

• 1. Review year‐end budget to actual expenditure report

for budget overdrafts. Cover budget overdrafts by a resolution of the governing body authorizing the transfer of appropriations per Section 7‐6‐4031, MCA. However, total budget appropriations should remain the same within each fund as amended by resolution.

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CHECKLIST FOR YEAR‐END CLOSING ENTRIES ‐ cont.

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• 2. Verify that Transfers In (383XXX) equal Transfers Out

(521XXX) within all funds.

• 3. Verify that interfund loans receivable (131XXX – short‐

term 133XXX – long‐term) equal interfund loans payable (211XXX – short‐term or 233XXX – long‐term).

• 4. Verify that the trial balance for each fund is in

balance.

CHECKLIST FOR YEAR‐END CLOSING ENTRIES ‐ cont.

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• 5. Verify that the expenditure detail is equal to

the expenditure control (242000), and that the revenue detail is equal to the revenue control (172000) in those systems where control accounts are used. CHECKLIST FOR YEAR‐END CLOSING ENTRIES ‐ cont.

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• 6. Taxes/Assessments Receivable
• A. Reconcile

all taxes/assessment receivable accounts (11XXX) with the County Treasurer’s receivables, including protested taxes.

• B. Adjust deferred revenue accounts (223XXX) to

the corresponding receivable accounts for real, personal, protested and special assessments, and offset to the appropriate revenue accounts. (Do not defer taxes for proprietary funds.)

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CHECKLIST FOR YEAR‐END CLOSING ENTRIES ‐ cont.

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• 6. Taxes/Assessments Receivable
• C. Reconcile the deferred assessment receivable

account (119000) for each special improvement district (S.I.D.) with the future year’s principal

• assessments. (Verify that all prepaid assessments

have been deducted from the deferred assessment receivable account.)

CHECKLIST FOR YEAR‐END CLOSING ENTRIES ‐ cont.

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GOVERNMENTAL FUNDS AND ACCOUNT GROUPS

• 1. Review payroll and claims expenditures for possible

accruals, if deemed material. This would include any goods or services received prior to the end of the fiscal year. Also, review debt service funds for accruing any bond interest payable at year‐end or for bond principal payable within the next fiscal year. (Reclassify principal from general long‐term debt account group to short‐term payable of debt service fund.)

CHECKLIST FOR YEAR‐END CLOSING ENTRIES ‐ cont.

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GOVERNMENTAL FUNDS AND ACCOUNT GROUPS

• 2. Review revenue accounts for possible accruals, if

deemed material, But, keep in mind that these revenues must meet the revenue recognition criteria

• f measurable and available.

Revenue for federal and/or state grants that are reimbursed upon expenditure, should be recognized when the expenditure is made. (Some revenue susceptible to accrual may be interest on investments, state shared revenue P & I on delinquent taxes, etc.)

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CHECKLIST FOR YEAR‐END CLOSING ENTRIES ‐ cont.

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GOVERNMENTAL FUNDS AND ACCOUNT GROUPS

3. If inventory of supplies is deemed material, establish or adjust inventory account (15XXXX) and offset to reserve for inventory

• f supplies (250100).

4. Capital assets purchased by governmental funds should be added to the general fixed asset account group (GFAAG). Any assets traded-in or disposed of should be deleted. The balance in this account group should be reconciled with the capital asset inventory. Depreciation is required to meet the requirements of GASB Statement #34. (Note: The GFAAG is no longer required to be reported under GASB #34 but is maintained to generate information for the government-wide statements)

CHECKLIST FOR YEAR‐END CLOSING ENTRIES ‐ cont.

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GOVERNMENTAL FUNDS AND ACCOUNT GROUPS

• 5. Prepare worksheet on unused vacation, sick leave,

compensatory time and employer’s related payroll

• bligation.

Adjust compensated absences payable account within the general long‐term debt account group (GLTDAG). (Note: The GLTDAG is no longer required to be reported under GASB #34 but is maintained to generate information for the government‐wide statements)

CHECKLIST FOR YEAR‐END CLOSING ENTRIES ‐ cont.

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GOVERNMENTAL FUNDS AND ACCOUNT GROUPS

• 6. Adjust

the appropriate long‐term liability account (GLTDAG) for principal paid from governmental funds on contracts, loans, lease‐ purchase agreements, general

• bligation

bonds and/or special improvement district (S.I.D.) bonds.

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CHECKLIST FOR YEAR‐END CLOSING ENTRIES ‐ cont.

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GOVERNMENTAL FUNDS AND ACCOUNT GROUPS

• 7. Adjust

the appropriate amount available account (173XXX) in GLTDAG to the corresponding fund balance in the debt service fund types (3XXX) for general

• bligation bonds and special improvement

district (S.I.D.) bonds. CHECKLIST FOR YEAR‐END CLOSING ENTRIES ‐ cont.

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GOVERNMENTAL FUNDS AND ACCOUNT GROUPS

• 8. Adjust appropriate amount to be provided

account (174XXX) for all long‐term liability accounts within GLTDAG. This includes contracts, notes, lease purchases, compensated absences, G.O. bonds and S.I.D. bonds payable.

• 9. Close out revenue and expenditure accounts

to fund balance (271000). CHECKLIST FOR YEAR‐END CLOSING ENTRIES ‐ cont.

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PROPRIETARY FUNDS

• 1. If interim revenue accounts are used for

bond/loan proceeds, close these accounts to the appropriate general ledger account.

• 2. If interim expense accounts are used for

capital asset acquisition

• r

principal payments, close these accounts to the appropriate general ledger account. (18XXX for capital asset purchases and 23XXX for principal payments.)

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CHECKLIST FOR YEAR‐END CLOSING ENTRIES ‐ cont.

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PROPRIETARY FUNDS ‐ cont.

• 3. Prepare

journal vouchers for accrual

• f

revenue and/or expenses, if deemed material.

• a. Utility charges
• b. Interest receivable on investments
• c. Other revenue accruals

d. Claims payable

CHECKLIST FOR YEAR‐END CLOSING ENTRIES ‐ cont.

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PROPRIETARY FUNDS ‐ cont.

• 3. Prepare

journal vouchers for accrual

• f

revenue and/or expenses, if deemed material.

• e. Payroll payable

f. Interest payable

• g. Reclassify long‐term payable to short‐term
• h. Prepaid expenses

CHECKLIST FOR YEAR‐END CLOSING ENTRIES ‐ cont.

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PROPRIETARY FUNDS ‐ cont.

• 4. Reconcile accounts receivable and deposits

payable with detail of customer records.

• 5. If inventory of supplies is deemed material, adjust

inventory and offset to supply expense account(s).

• 6. Reconcile appropriate capital asset accounts with

capital asset schedules. Adjust for assets traded in, sold or disposed of.

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CHECKLIST FOR YEAR‐END CLOSING ENTRIES ‐ cont.

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PROPRIETARY FUNDS ‐ cont.

• 7. Prepare a depreciation schedule for the fiscal

year. Prepare a journal voucher for depreciation expense for each proprietary fund.

• 8. Adjust reserved retain earnings accounts

(25XXXX) to agree with appropriate restricted cash accounts (102XXX). CHECKLIST FOR YEAR‐END CLOSING ENTRIES ‐ cont.

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PROPRIETARY FUNDS ‐ cont.

• 10. If interest expense is to be capitalized for assets

constructed with tax exempt borrowings, close appropriate interest earnings/interest expense

• n

borrowings to the appropriate asset account. (Limited to construction period only.) 9. Determine the changes in closure and post‐closure costs and liability for the solid waste fund and adjust the necessary accounts appropriately. (430800580 Expense/236000 Liability) (Determined from a new engineer’s estimate).

CASH RECONCILIATION

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BOOK BALANCE VS. BANK BALANCE LEDGER BALANCES: 1. CHECK REGISTERS 2. INVESTMENT LEDGERS VS. BANKS STATEMENTS: 1. DEMAND ACCOUNTS 2. TIME DEPOSIT NOTICES 3. INVESTMENT ACCOUNTS

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CASH RECONCILIATION ‐ CONT

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BOOK BALANCE VS. BANK BALANCE

RECEIPTS VS BANK CREDITS: 1. DEPOSITS 2. AUTOMATIC DEPOSITS 3. ACCOUNT TRANSFERS

VS. DISBURSEMENTS VS BANK DEBITS:

1. CHECKS CLEARED 2. AUTOMATIC WITHDRAWALS 3. BANK CHARGES 4. ACCOUNT TRANFERS

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REVENUE CLASSIFICATIONS

• REVENUES

‐ PROGRAM ‐ GENERAL

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• GENERAL ‐ THOSE NOT REQUIRED

TO BE REPORTED AS PROGRAM REVENUES

REVENUE CLASSIFICATIONS

• FOR THE PURPOSES OF PREPARING THE

GOVERNMENT‐WIDE STATEMENT OF ACTIVITIES, GASB 34 CONSIDERS REVENUES TO BE EITHER:

• PROGRAM ‐ THOSE REVENUES

RESTRICTED FOR USE IN A SPECIFIC PROGRAM

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REVENUE SOURCES (TYPES)

• A. FROM THOSE WHO, PURCHASE, USE, OR

DIRECTLY BENEFIT FROM THE GOODS OR SERVICES OF A PROGRAM (MAY EXTEND BEYOND THE BOUNDARIES OF THE REPORTING GOVERNMENT’S CITIZENRY)

• GENERALLY, GOVERNMENTS

FINANCE THEIR PROGRAM FROM FOUR SOURCES (TYPES):

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REVENUE SOURCES (TYPES)

• B. PARTIES OUTSIDE THE REPORTING

GOVERNMENT’S CITIZENRY(I.E. OTHER GOVERNMENTS, NONGOVERNMENTAL ENTITIES OR INDIVIDUALS)

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C. TAXPAYERS OF THE REPORTING GOVERNMENT (INCLUDES ALL TAXPAYERS EVEN IF THEY DO NOT BENEFIT FROM PARTICULAR PROGRAM) D. REPORTING GOVERNMENT ITSELF (I.E. INVESTMENT EARNINGS)

REVENUE SOURCES (TYPES)

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CLASSIFICATION OF REVENUE TYPES

• TYPE (A) REVENUES ARE ALWAYS

A PROGRAM REVENUE (I.E. UTILITY CHARGES, SWIMMING POOL FEES, ETC.)

• FOR THE PURPOSES OF THE

STATEMENT OF ACTIVITIES:

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• TYPE (B) REVENUES ARE PROGRAM

REVENUES IF RESTRICTED TO A SPECIFIC PROGRAM AND A GENERAL REVENUE IF UNRESTRICTED (I.E. GAS TAX APPORTIONMENT, RESTRICTED GRANTS, PILT, ETC.)

CLASSIFICATION OF REVENUE TYPES

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• TYPE (C) REVENUES ARE ALWAYS A

GENERAL REVENUE, EVEN IF THEY ARE RESTRICTED TO A SPECIFIC PROGRAM (I.E. TAXES)

• TYPE (D) REVENUES ARE USUALLY

GENERAL REVENUES (I.E. INVESTMENT EARNINGS)

CLASSIFICATION OF REVENUE TYPES

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MAJOR FUNDS DETERMINATION

MAJ0R FUNDS CONCEPT

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• A COMPROMISE BETWEEN

THE MINIMUM SCOPE AUDIT AND THE FULL SCOPE AUDIT!

MAJOR FUNDS CONCEPT

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• MAJOR FUNDS MUST BE REPORTED

SEPARATELY

• NONMAJOR FUNDS REPORTED IN THE

AGGREGATE IN A SINGLE COLUMN

• A BALANCE SHEET TEST OR AN

OPERATING STATEMENT TEST

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IDENTIFYING MAJOR FUNDS

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• THE GENERAL FUND
• THIS FUND IS ALWAYS MAJOR
• OTHER FUNDS (BALANCE SHEET

TEST OR OPERATING STATEMENT TEST):

IDENTIFYING MAJOR FUNDS – CON’T.

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• A FUND NEED ONLY EXCEED 10% OF

ASSETS OR LIABILITIES OR 10% REVENUES OR EXPENDITURE/EXPENSES

• A FUND MUST PASS THE 10% TEST

BEFORE THE 5% TEST IS NECESSARY

• A FUND IS MAJOR IF THE 10% AND 5%

CRITERIA ARE MET FOR A SINGLE ELEMENT

IDENTIFYING MAJOR FUNDS – CON’T.

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IF ONLY GOVERNMENTAL OR ENTERPRISE FUNDS EXIST, THE 5% TEST IS NOT USED AND THE ENTITY NEED ONLY APPLY THE 10% TEST DATA TO BE USED FOR THE TESTS ARE THE GAAP AMOUNTS REPORTED IN THE FUND FINANCIAL STATEMENTS AFTER AUDIT ADJUSTMENTS

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IDENTIFYING MAJOR FUNDS – CON’T.

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A GOVERNMENT MAY OPT TO REPORT A NON‐MAJOR FUND AS A MAJOR FUND IF THE GOVERNMENT BELIEVES THE FUND IS OF PARTICULAR IMPORTANCE TO THE FINANCIAL STATEMENT USERS.

• PUBLIC INTEREST
• LONG TERM DEBT

IDENTIFYING MAJOR FUNDS – CON’T.

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TOTAL REVENUES MEANS ALL REVENUES NET OF ALLOWANCES, (BOTH OPERATING AND NONOPERATING OR ENTERPRISE) EXCLUDING OTHER FINANCING SOURCES, TRANSFERS IN, AND GAINS FROM EXTRAORDINARY ITEMS (GOVERNMENTAL FUNDS)

IDENTIFYING MAJOR FUNDS – CON’T.

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TOTAL EXPENDITURES/EXPENSES MEANS ALL EXPENDITURES OR EXPENSES (BOTH OPERATING AND NON‐OPERATING FOR ENTERPRISE) EXCLUDING OTHER FINANCING USES, TRANSFERS OUT AND LOSES ARISING FROM EXTRAORDINARY ITEMS (GOVERNMENTAL FUNDS)

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BALANCE SHEET TEST:

ASSETS OR LIABILITIES OF A FUND = 10% OR MORE OF TOTAL ASSETS OR LIABILITIES FOR THE GOVERNMENTAL FUND CATEGORY OR ENTERPRISE FUNDS AND ASSETS OR LIABILITIES OF A FUND = 5% OR MORE OF TOTAL ASSETS OR LIABILITIES FOR THE TOTAL OF THE GOVERNMENTAL CATEGORY AND ENTERPRISE FUNDS

IDENTIFYING MAJOR FUNDS – CON’T.

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MAJOR FUND THRESHOLD EXAMPLE – BALANCE SHEET TEST

FUND ASSETSLIABILITIES GENERAL $6,000,000 $4,000,000 LAW ENFORCEMENT 1,000,000 500,000 LIBRARY 50,000 8,000 TOTAL GOVERNMENTAL 7,050,000 4,580,000 WATER $ 2,000,000 $ 1,500,000 SEWER 1,500,000 750,000 TOTAL ENTERPRISE 3,500,000 2,250,000 GRAND TOTAL $10,550,000 $ 6,830,000

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ASSETS:

• 10% OF $7,050,000 = $ 705,000
• 10% OF $3,500,000 = $ 350,000
• 5% OF $10,550,000 = $527,500

MAJOR FUND THRESHOLD EXAMPLE – BALANCE SHEET TEST – CON’T.

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LIABILITIES:

• 10% OF $4,580,000 = $ 458,000
• 10% OF $2,250,000 = $ 225,000
• 5% OF $ 6,830,000 = $341,500
• THE MAJOR FUNDS WOULD INCLUDE:

GENERAL, LAW ENFORCEMENT, WATER AND SEWER

MAJOR FUND THRESHOLD EXAMPLE – BALANCE SHEET TEST – CON’T.

IDENTIFYING MAJOR FUNDS – CON’T.

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THE OPERATING STATEMENT TEST:

REVENUES OR EXPENDITURES.EXPENSES = 10% OR MORE OF TOTAL REVENUES OR EXPENDITURES/EXPENSES FOR THE TOTAL OF GOVERNMENTAL CATEGORY OR THE ENTERPRISE FUNDS AND REVENUES OR EXPENDITURES/EXPENSES = 5% OR MORE OF TOTALREVENUES OR EXPENDITURES/EXPENSES FOR THE TOTAL OF GOVERNMENTAL CATEGORY AND THE ENTERPRISE FUNDS

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MAJOR FUND THRESHOLD EXAMPLE – OPERATING STATEMENT TEST

EXPENDITURES FUND REVENUES EXPENSES GENERAL $2,000,000 $1,800,000 LAW ENFORCEMENT 700,000 690,000 LIBRARY 10,000 9,000 TOTAL GOVERNMENTAL 2,710,000 2,499,000 WATER $ 1,500,000 $ 1,390,000 SEWER 1,000,000 850,000 TOTAL ENTERPRISE 2,500,000 2,240,000 GRAND TOTAL $ 5,210,000 $ 4,739,000

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REVENUES:

• 10% OF $2,710,000 = $ 271,000
• 10% OF $2,500,000 = $ 250,000
• 5% OF $5,210,000 = $ 260,500

MAJOR FUND THRESHOLD EXAMPLE – OPERATING STATEMENT TEST – CON’T.

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EXPENDITURES (EXPENSES):

• 10% OF $2,499,000 = $ 249,900
• 10% OF $2,240,000 = $ 224,000
• 5% OF $ 4,739,000 = $ 236,950
• THE MAJOR FUNDS WOULD INCLUDE:

GENERAL, LAW ENFORCEMENT, WATER AND SEWER

MAJOR FUND THRESHOLD EXAMPLE – OPERATING STATEMENT TEST – CON’T.

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IDENTIFYING MAJOR FUNDS