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INTERMEDIATE GOVERNMENTAL
ACCOUNTING
FUND CLASSIFICATIONS AND
USE OF CONVERSION FUNDS
FUND ACCOUNTING
◼ Fund accounting is a traditional method of accounting used by state and local governments Each fund is a separate fiscal and accounting entity
Each fund reports its own assets, liabilities, equity, revenues and expenditures/expenses
Used to demonstrate legal compliance
Used to segregate resources
◼ Each fund maintains its own accounting equation A=L+E
A-L=E
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FUND ACCOUNTING
◼ Determines design of accounting system Separate data for each fund in the accounting system
Certain capital assets and long-term debt should be recorded in separate funds
◼ Minimum number of funds principal Need for separate accounting
May not need for separate reporting◼ Reported as a subfund of another fund
◼ Consolidate funds for reporting
◼ Consolidation versus disaggregation
FUND CLASSIFICATIONS
◼ Three broad fund categories
Governmental
◼ General governmental revenues and expenditures
◼ Generally nonexchange transactions
Proprietary
◼ Generally exchange transactions
Fiduciary
◼ Not our money
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FUND CLASSIFICATIONS
FUND CLASSIFICATIONS
◼ Eight generic fund types (or 11)Five Governmental
Two Proprietary
Four Fiduciary
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FUND CLASSIFICATIONS
◼ GASB Statement No. 54 defines the 5 governmental fund
types in use today
General
Special Revenue
Debt Service
Capital Projects
Permanent
FUND CLASSIFICATIONS
◼ General Fund
A government’s primary operating fund
To account for all financial resources not
accounted for in another fund
◼ Only one general fund permitted to be reported on
GAAP based statements
Sub funds or schedules for more than one
◼ Almost all governments should have one
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FUND CLASSIFICATIONS
◼ General Fund
Garbage can fund
Why can’t we account for a particular transaction, service,
activity or revenue source in the general fund?
◼ GAAP requirements (rarely)
◼ Legal requirements (sometimes)
◼ Sound financial administration suggests separate
accounting
◼ Someone wants a separate fund
FUND CLASSIFICATIONS
◼ Special Revenue Fund
Used to account for and report the proceeds of specific
revenue sources that are restricted or committed to
expenditure for specified purposes other than debt service
or capital projects
◼ One or more specific restricted or committed revenue
sources
Constraint on purpose of spending is not sufficient
Must have a specific revenue source(s)
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FUND CLASSIFICATIONS
◼ Special Revenue Fund
Restricted is defined as an “external” enforceable legal
restriction
◼ Enforceable legal restriction
External third party can compel or require compliance
◼ External means persons (e.g., bondholders) or bodies
(higher levels of government) outside of your
government
◼ Constitutional provisions
◼ Enabling legislation
FUND CLASSIFICATIONS
◼ Special Revenue Fund
Enabling legislation
◼ Enabling legislation authorizes a government to assess,
levy, charge, or otherwise mandate payment of
resources (from external resource providers) and
includes a legally enforceable requirement that those
resources be used only for the specific purposes
stipulated in the legislation
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FUND CLASSIFICATIONS
◼ Special Revenue Fund
Committed
◼ Committed is defined as constrained by limitations that
the government imposes upon itself by formal action
at its highest level of decision making and that
remains binding unless removed in the same manner.
Self-imposed
Formal action
Highest level of decision making authority
◼ Differentiate from enabling legislation
Lack of an external legal enforceability
FUND CLASSIFICATIONS
◼ Special Revenue Fund
Substantial portion of revenue source in the fund not from
restricted or committed revenues
◼ Not a special revenue fund
◼ Part of the general fund
◼ Substantial not defined
Other resources (e.g., transfers, investment income,
miscellaneous) can also be in the fund if not substantial
◼ Assigned is assumed in a separate fund
Expenditures must be reported in the fund
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FUND CLASSIFICATIONS
◼ Special Revenue Fund
Impact of definition
◼ MFT, restricted grants meet the definition
◼ Restricted property tax levies generally meet the
definition
◼ User fee/charges for service supported may not meet the
definition
Governing board may need to “commit” user fees to the
specified purpose
Annual fee ordinance
◼ Other uses may not meet the definition
FUND CLASSIFICATIONS
◼ Special Revenue Funds
What activities does your government report in
special revenue funds?
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FUND CLASSIFICATIONS
◼ Special Revenue Fund
GASB Statement No. 10
◼ Tort or liability insurance funds
General or internal service fund
GASB Statement No 66, Technical Corrections—
an amendment of GASB Statements No. 10 and 62
◼ Follow GASB S-54 definitions
◼ Can report the tort levy in a special revenue fund
FUND CLASSIFICATIONS
◼ Debt Service Funds
Used to account for and report financial resources
that are restricted, committed, or assigned to
expenditure for principal and interest
Does not apply to debt repaid by proprietary funds
Debt service funds should be used to report
resources if legally mandated.
Financial resources that are being accumulated for
principal and interest maturing in future years
should be reported in debt service funds
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FUND CLASSIFICATIONS
◼ Debt Service Funds
Restricted, committed same definitions as special revenue
funds
Assignment of funds
◼ Earmarking or intent
◼ Authority to assign funds
Budget officer? Board?
Use of separate funds
Accounting versus reporting
FUND CLASSIFICATIONS
◼ Capital Projects Fund
Used to account for and report financial resources that are
restricted, committed or assigned to expenditure for
capital outlays including the acquisition or construction of
capital facilities and other capital assets, excluding those
types of capital related outflows financed by proprietary
funds
◼ Expands definition in line with practice
◼ Restricted, committed same definition as special
revenue funds
◼ Exclusion for proprietary fund capital assets
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FUND CLASSIFICATIONS
◼ Permanent Funds
To report resources that are legally restricted by an external third party to the extent that only earnings, and not principal, may be used for purposes that support the government’s programs
Created by GASB Statement No. 34
Formerly expendable and/or nonexpendable trust
Can’t spend any for your programs, not a permanent fund
Common examples◼ Endowments
◼ Working cash (other than school districts)
PROPRIETARY FUND TYPES
◼ Business-type activities
◼ Enterprise Funds
◼ Internal Service Funds
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ENTERPRISE FUNDS
◼ Used to account for the total cost of providing a service Governmental funds generally account for the operating cost of
providing a service
◼ Fee charged to external users May or may not recover total cost of providing services
Assists in determining the extent any subsidy
◼ Use is not mandatory except in certain instances
ENTERPRISE FUNDS
◼ Use is mandatory State unemployment compensation trust
Public entity risk pools (with transfer of risk) (GASB S-10)◼ IRMA, IPBC
When debt is issued that is backed solely by fees and charges (i.e.,revenue bonds, IEPA Loans)◼ Does not apply to GO or GOARS bonds
Legal requirement to recover total cost or to measure total cost
Government’s policy is to recover the costs of providing a servicethrough user fees, whether or not achieving the policy
◼ Sample enterprise funds
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INTERNAL SERVICE FUNDS
◼ To account for any activities that provide goods orservices to other funds, departments, or agencieson a cost-reimbursement basis
Internal cost allocations or pools
Cost reimbursement basis◼ No ongoing deficits
◼ No ongoing surpluses
INTERNAL SERVICE FUNDS
◼ GASB S-34 impacts the use of internal service
funds in practice
Need to differentiate between governmental and
business type for consolidating at entity-wide
Some should be for governmental funds only (or
primarily)
◼ Inventory, equipment replacement
◼ Accounting versus reporting
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FIDUCIARY FUNDS
(not our assets)
◼ Used to account for assets held in a trustee or agent capacity on behalf of others Pension Trust Funds (and OPEB Trust Funds)
Investment Trust Funds
Private-Purpose Funds
Agency Funds
PENSION (AND OPEB) TRUST FUNDS
◼ To report resources that are required to be held in trust for the members and beneficiaries of defined benefit pension plans, defined contribution pension plans, other post-employment benefit plans, and other employee benefit plans.
◼ Separate fund for each pension plan.
◼ Separate plan for post-employment health care plan(GASB S-43)
◼ Single employer Police and Fire pension Plans in Illinois Pension trust fund in the employers financial statement
◼ Multiple employer pension plan IMRF
Teachers Retirement System
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INVESTMENT TRUST FUNDS
◼ To account for arrangements in which legally
separate governments commingle or pool their
resources in an investment portfolio for all
participants
◼ To account for one government holding investments
on behalf of units outside the government (individual
investment accounts) Illinois Funds in the State of Illinois CAFR
IMET separate CAFR
PRIVATE-PURPOSE TRUST FUNDS
❑ To report any trust arrangement not properly reported in a pension trust fund or an investment trust fund under which principal and income benefit individuals, private organizations, or other government
❑ Resources can’t be used for your government or its programs
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AGENCY FUNDS
◼ To account for situations where the government’s role is purely custodial, such as the receipt, temporary investment, and remittance of resources to individuals, private organizations, or other governments
◼ No trust agreement involved
◼ Assets = liabilities, no net position
◼ Only changes in assets and liabilities
No changes in net position
FIDUCIARY FUNDS
◼ GASB Statement No 84, Fiduciary Activities
◼ Define when to use a fiduciary fund
◼ Replace agency funds Custodial funds
Full statement of net position (NP), changes in NP
◼ Effective for fiscal years ending December 31, 2019 and thereafter
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SPECIAL ASSESSMENT FUNDS
◼ Used to be 5th governmental fund type
◼ GASB Statement No. 6 did away with this fund type
◼ Applies to special service areas in Illinois
◼ Service or maintenance type
General, special revenue, enterprise
◼ Capital oriented
Capital projects or enterprise
SPECIAL ASSESSMENT FUNDS
◼ Repayment of debt Obligated in some manner for repayment
◼ Bond repayment in a debt service fund
◼ Debt in the GLTDAG
Not obligated in any manner for repayment◼ Bond repayment in an agency fund
◼ Debt in the notes to financial statements
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ACCOUNT GROUPS
◼ Two (2) used in practice GFAAG (GCAAG)
GLTDAG
◼ Home for wayward debits and credits
◼ Offset by asset or equity accounts
◼ No longer reported as part of financial statements Needed for reporting at entity-wide
Interactive account groups (smart account groups)
◼ Capture CA and LT debt for reporting at entity-wide
◼ Capture conversion entries related to MFBA
CONVERSION ENTRIES
GCAAG95.000.1900 108,500.00 Capital Asset Additions Land FY '18
95.000.1901 70,000.00 Capital Asset Additions Equipment FY '18
95.000.1904 - Capital Asset Additions Buildings FY '18
95.000.1905 - Capital Asset Additions ROW FY '18
95.000.1906 1,960,217.45 Capital Asset Additions Infrastructure FY '18
95.000.1921 77,001.15 Capital Asset Additions Sewer Lines FY '18
95.000.1950 - Capital Asset Additions Const. in Progress FY '18
95.000.1955 - Capital Asset Additions Public Const. in Prog FY '18
95.385.3820 820,642.08 Purchases - Capital Contributions
95.385.3821 99,500.00 Purchases - Gen Govt
95.385.3822 - Purchases - Public Safety
95.385.3823 1,295,576.52 Purchases - Public Works
95.385.3824 - Purchases - Sanitation
Capital Asset Additions
95.000.1906 1,641,006.15 R/C CIP to Infrastructure
95.000.1950 1,641,006.15 R/C CIP to Infrastructure
95.000.1964 Building Disposals FY '18
95.385.3875 Building Disposals FY '18
95.000.1904 Building Disposals FY '18
95.000.1961 - Equipment Disposals FY '18
95.385.3875 Equipment Disposals FY '18
95.000.1901 - Equipment Disposals FY '18
95.000.1966 1,130,242.33 Infrastructure Disposals FY '18
95.385.3875 - Infrastructure Disposals FY '18
95.000.1906 1,130,242.33 Infrastructure Disposals FY '18
Capital Asset Disposals
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CONVERSION ENTRIES
GCAAG
95.490.4853 229,065.00 FY '18 Depreciation Sewer Lines - Storm
95.000.1981 229,065.00 FY '18 Depreciation Sewer Lines - Storm
95.490.4854 339,824.00 FY '18 Depreciation Sewer Lines - Sanitary
95.000.1981 339,824.00 FY '18 Depreciation Sewer Lines - Sanitary
95.490.4851 224,652.32 FY '18 Depreciation General Govt
95.490.4852 489,320.26 FY '18 Depreciation Public Safety
95.490.4853 1,975,571.85 FY '18 Depreciation Public Works
95.000.1961 64,855.14 FY '18 Depreciation Equipment
95.000.1964 452,997.09 FY '18 Depreciation Buildings
95.000.1966 2,171,692.20 FY '18 Depreciation Infrastructure
Current Year Depreciation
CONVERSION ENTRIES
GLTDAGGov Entries
96.000.2080 11,057.29 Adj Int. Payable
96.490.4706 11,057.29 Adj Int. Payable
96.000.2701 920,000.00 Adj GO Bonds Payable Payments
96.490.4705 920,000.00 Adj GO Bonds Payable Payments
96.000.2707 5,679.41 Amortize 2009 Bond Premium
96.490.4707 5,679.41 Amortize 2009 Bond Premium
96.490.4707 8,548.75 Amortize 2009 Loss on Refunding
96.000.1371 8,548.75 Amortize 2009 Loss on Refunding
96.490.4707 20,796.27 Amortize 2014 Loss on Refunding
96.000.1371 20,796.27 Amortize 2014 Loss on Refunding
96.000.2707 17,105.44 Amortize 2014 Bond Premium
96.490.4707 17,105.44 Amortize 2014 Bond Premium
983,187.16 983,187.16
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