FIVE Characteristics of GNP organizations

1.  No profit motive / exempt from income tax

2.  Collective ownership – no equity shares, indirect means of showing dissatisfaction with the organization

3.  Indirect relationship between amounts paid by “customers” (constituents) and quantity/quality of goods/services received

4.  Major decisions may by elected body or body appointed by elected body

5. Open meetings, public records legally required

SIX Types of GNP organizations 

1.  Governmental

2.  Education

3.  Health and welfare

4.  Religious

5.  Charitable

6.  Foundations

1.  GNP is 1/3 of the economy

2.  GNP organizations may be as complex as for profits, therefore sound management is necessary.

3.  Growth in the GNP section equals increased job opportunities for both sides of the GL and therefore more coverage on the CPA exam

1.  Both are integral components of the economy, both use financial/capital/human resources

2.  Both obtain and convert resources into goods and servies

3.  Both require robust information systems for efficient and effective management

4.  Both require controls and analysis for optimal resource allocation

5.  In some cases both produce similar products/ services (electricity, water, cable)

1.  Objectives - GNP's objective is to provide maximum servies

2.  GNP's focus more on the year to year operations

3.  GNP's seek increased resources to produce more/better services or to cover increased costs (not to increase wealth of owners)

1.  Governments - tax

2.  Religious/Charitable - donations

3.  Colleges/Universities - donations, endowments, state appropriations, grants, tuition

4.  Hospital/Health Care - charges for services, grants, donations, foundation income, 

1.  Government services are often monopolies (police/fire)

2.  User charges are to recover costs and not in response to supply and demand.

3.  User charges sometimes only cover a portion of the costs to provide the services (subsidies)

4.  No direct relationship between amounts paid by customers and amount/quality of services received

1.  Legally constituted, elected governing body

2.  Personnel policies - who can hire/fire, compensation, promotions, pay increases

3.  Legally defined taxes, fees, ect. - maximum rates

4.  Legally confined purposes for use of resources

5.  Accounting systems may be prescribed by regulation

6.  Auditing requirements set by law

7.  Management has limited discretion

1.  Elected officers (GB) or officers appointed by GB of one or more SLGs

2.  Potential for dissolution by a govt with net assets going back to that govt

3.  Power to levy taxes/fees

4.   Authority to issue federally tax-exempt debt

1. structure of the US government

2.  Results of elections

3.  Legal restrictions on use of resources

Grants, taxes for special purpose, debt proceed restricted

to keep resources separated for compliance

1.  must show compliance 

2.  must report on budget variance

3.  restrictions on use may change revenue recognition

4.  measuring efficiency and effectiveness 

5.  many opportunities for improper accounting ( hiding resources, inappropriate fund structure)

6.  lack of comparability among state and local govts

7.  tax and debt limits

8.  materiality

9.  politics

1.  compare budget to actual

2.  assess financial condition and results of operations

3. determine compliance

4.  assess efficiency and effectiveness

assets, liabilities, changes in net assets (revenues and expenditures) and balances that may be used for governmental purposes.

Financial Assets – Related Liabilities = Fund Balance

              Fund Balance = net financial resources of the fund

  assets, liabilities, revenues, expenses and equity of SLGs’ business-type activities

  Assets (current+long-term)– Liabilities (current+long-term) = Net Assets

current operations( salaries, benefits, supplies, contractual services)

Capital Outlay (acquiring capital assets)

Principal and interest payment of L/T debt

1.  fund statements - specific

2.  government wide financial statements - general

3.  reconciliations

current financial resources (resources available to pay liabilities & expenditures of the accounting period)/financial assets (cash, receivables)

1.  revenues recognized if available, and measurable

2.  Expenditures recognized – when liabilities incurred or, for debt service, when principal and interest payments are due

Trust - Pension, Investment, Private Purpose

Agency - Held by gov't as custodians

S/T Due to/ Due From

L/T Advance to/ Advance From

Reported on Funds Balance Sheet

Government

1.  Revenues

2.  Expenditures

3.  Excess (Deficiency) of Revenues over Expenditures

4.  Other Financing Sources (Uses)

5.  Special and Extraordinary Items

6.  Net Change in Fund Balance

Proprietary

1.  Op Revenue

2.  Op Expenses

3.  Op Income (Loss)

4.  Nonop Revenue (expense)

5.  Income (loss) before Contributions, Transfers, and Extraordinary Items

6.  Special and Extraordinary Items

7.  Increase (decrease) in Net Assets

1.  Intro - letter of transmittal

2.  Financial Section -

Auditor opinion

MD&A

Basic Financial Statements -

     Government Wide Statements

          Statemnents of Net Assets, Activities    

     Fund Financial Statements (

          Government Funds

          Proprietary Funds

          Fiduciary Funds

     Notes

RSI and other - Pensions, OPEB, condition of   infrastructure, risk management

STATISTICAL  SECTION - trend info revenue, debt, demographics, economic info, operating info