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In addition to the fund-basis statements, GASB requires government-wide statements that are prepared on the accrual basis using the economic resources measurement focus. The statements separately present information on component units, business-type activities (generally limited to enterprise funds), and governmental activities. Fiduciary activities are not reported in the government-wide statements.
Government-wide information may be taken directly from the fund-basis financial statements of enterprise funds and component units using the accrual basis. However, governmental funds are prepared using the modified accrual basis and current financial resources measurement focus and must be adjusted to meet the requirements for government-wide reporting. Our approach is similar to that used by most governments. Specifically, we use the modified accrual–based governmental fund financial statements as a starting point. These are adjusted for:
- Capital asset–related events.
- Long-term debt–related events.
- Differences in timing of the recognition of revenue and expenses between accrual and modified accrual accounting.
- Internal service fund activities.
- Interfund activities and balances.
The adjusted amounts are then presented in the governmental activities sections of the government-wide Statement of Activities and Statement of Net Position.
Many of the differences that arise between accrual and modified accrual accounting relate to the capital assets and long-term debt of governmental funds. These are often termed General Capital (or Fixed) Assets and General Long-Term Debt. Although GASB standards require these capital assets and long-term liabilities to be reported in the government-wide statements, the day-to-day accounting for these items is not prescribed. In the appendix to this chapter, we demonstrate a common method for recording capital asset and long-term debt transactions so that the information is available for preparation of government-wide financial statements. Reporting requirements for capital assets and long-term liabilities are also described.
- Perform the steps necessary to prepare government-wide financial statements, including:
- Prepare worksheet entries to convert the governmental fund records to the economic resources measurement focus and the accrual basis of accounting.
- Prepare worksheet entries to include internal service funds with governmental activities.
- Prepare required schedules reconciling the government-wide and fund-basis financial statements.
- Record events and transactions related to general fixed assets and general long-term debt and describe required schedules related to long-term debt.
- Capital Asset–Related Entries: Recording capital assets, removing expenditures for capital outlays, recording depreciation, and converting sales of capital assets to the accrual basis.
- Long-Term Debt–Related Entries: Recording long-term liabilities, changing “proceeds of bonds” to debt liabilities, changing expenditures for debt service principal to reduction of liabilities, amortizing bond premiums, and adjusting for interest accruals.
- Adjusting to convert revenue recognition to the accrual basis.
- Adjusting expenses to the accrual basis.
- Adding internal service funds to governmental activities.
- Eliminating interfund activities and balances within governmental activities
GASB requires that general capital assets be included in the government-wide financial statements. General capital assets include fixed assets other than those used by proprietary or fiduciary funds and are usually acquired through General, special revenue, or capital projects funds. Fixed assets acquired through proprietary funds are reported in the Statement of Net Position of those funds. Assume that the Village of Riverside maintains records for general capital assets, including the original cost and accumulated depreciation. Categories include land, buildings, improvements other than buildings (infrastructure), and equipment