Financial Statements of a Government Entity: Balance Sheet and Capital Assets, Lecture notes of Construction

Download Financial Statements of a Government Entity: Balance Sheet and Capital Assets and more Lecture notes Construction in PDF only on Docsity! Beginning Balances Step 1: Step 2: Link the trial balance beginning balance columns to the governmental fund statements for all the other accounts. Step 3: In Trial Balance Tab, there are yellow highlighted boxes. In these yellow boxes, prior year ending balances from the district wide statements should be entered. Remember: prior year’s ending balance = current year’s beginning balance. Notice there is a difference between the deferred revenue balance on the fund basis statements and the deferred revenue balance on the entity-wide statements in the prior year audit report. (You can also find this difference on the reconciliation.) You must make a conversion entry to remove fund basis revenues recognized in the current year that are prior year entity-wide revenues. The amount you enter for beginning NET POSITION must be adjusted by this amount or your trial balance will not balance for the first two columns. Conversion Entry (A) To record deferred property tax revenues as revenues on the entity-wide statements. Action Needed: Revenues of the current year should be recognized in the entity-wide statement of net assets regardless of whether they are available. Conversion Entry: dr. Deferred revenue 2,790,517 cr. GENERAL REVENUE-PROPERTY TAXES 2,790,517 Where do the Numbers Come From? The amount of deferred revenue reported for property taxes in the liability section of the fund statement balance sheet OR the portion of property tax receivable (net of any allowance) that is not expected to be collected with 60 days of year end. Conversion Entry (C) Elimination of Interfund Balances Action Needed: All interfund balances within governmental activities must be eliminated to avoid double-counting on the entity-wide statements. Conversion Entry: dr. Due to other funds 134,348$ cr. Due from other funds 134,348$ Where do the Numbers Come From? BALANCE SHEET - GOVERNMENTAL FUNDS (partial) General Special Debt Bond Permanent Capital Current Revenue Service Construction Improvement Projects Total Expense Fund Fund Fund Fund Fund Governmental ASSETS Cash and cash equivalents 14,418,996$ 1,618,673$ 2,462,528$ 12,191,001$ 1,206,706$ -$ 31,897,904$ Investments - - - - - - - Deposit with Workers' Comp. Commission 495,197 - - - - - 495,197 Taxes receivable, net 757,100 - 69,875 - - - 826,975 Food service receivable, net - 198,508 - - - - 198,508 Other receivables 134,798 338,598 - - - 134,348 607,744 Due from other governments: State aid receivable 486,210 - - - - - 486,210 PEIA allocation receivable 1,423,746 - - - - - 1,423,746 Reimbursements receivable - SBA 4,405,191 4,405,191 Due from other funds 134,348 - - - - - 134,348 Total assets 17,850,395$ 2,155,779$ 2,532,403$ 12,191,001$ 1,206,706$ 4,539,539$ 40,475,823$ LIABILITIES AND FUND BALANCES Liabilities: Salaries payable and related payroll liabilities 3,699,620$ -$ -$ -$ -$ -$ 3,699,620$ Workers' compensation payable 626,994 - - - - - 626,994 PEIA premiums payable 1,746,444 1,746,444 Accounts payable 165,682 113,396 235,432 1,064,250 1,578,760 Deferred revenue - 2,123 - - - - 2,123 Due to other funds - - - - - 134,348 134,348 Total liabilities 6,238,740 115,519 - 235,432 - 1,198,598 7,788,289 Conversion Entry (D) To record beginning balances of net capital assets and accumulated depreciation. Action Needed: NONE - Implementation Year Only Conversion Entry (E), (W) To record capital asset additions, accumulated depreciation, and depr expense for current year. Action Needed: Capital asset additions and related accumulated depreciation for current year must be recorded on the Statement of Net Position. Depreciation Expense must be recorded by function on the Statement of Activities. Conversion Entry (E): dr. LAND - dr. CONSTRUCTION IN PROCESS 9,802,390 dr. BUILDINGS & IMPROVEMENTS 1,411,679 12,818,965 dr. FURNITURE & EQUIPMENT 809,460 dr. VEHICLES 795,436 Cr. Expenditures - Student transportation 795,436 Cr. Expenditures - Food services 105,572 12,818,965 Cr. Expenditures - Capital Outlay 11,917,957 dr. Expenditures - Instruction 1,355,004 dr. Expenditures - Instructional staff 1,825 dr. Expenditures - Central administration 14,363 dr. Expenditures - School administration 31,007 2,168,866 dr. Expenditures - Business 6,991 dr. Expenditures - Operation and maintenance 56,139 dr. Expenditures - Student transportation 580,405 dr. Expenditures - Food services 123,132 cr. ACCUMULATED DEPRECIATION-BUILDINGS & IMPROVEMENTS 1,339,357 cr. ACCUMULATED DEPRECIATION-FURNITURE & EQUIPMENT 214,259 2,168,866 cr. ACCUMULATED DEPRECIATION-VEHICLES 615,250 To record the additions and accumulated depreciation for the current year. Conversion Entry (W): dr. Expenditures - Capital outlay 1,145,482 Cr. Expenditures - Instruction 647,391 Cr. Expenditures - Students 46,758 Cr. Expenditures - Instructional staff 51,018 Cr. Expenditures - Central administration 36,786 Cr. Expenditures - School administration 56,154 Cr. Expenditures - Business 17,083 Cr. Expenditures - Operation and Maintenance 111,678 Cr. Expenditures - Student transportation 105,592 Cr. Expenditures - Food services 66,992 Cr. Expenditures - Community services 6,030 To allocate the additional capital outlay to the various functions - auditor-proposed entry. Conversion Entry (E), (W) Sample County Schedule prepared by auditors Amount in Amount to Capital Outlay adjust to Capital Assets purchased from the following functions during the fiscal year: per fin stmt other functions Expenditures - Student transportation 795,436 Expenditures - Food services 105,572 Expenditures - Capital Outlay 11,917,957 10,772,474 1,145,483 12,818,965 Client was able to directly identify and allocate all but 1.2MM of capital additions for the year. Client allocated remaining additions to programs based on expenditures by program as a percentage of total. Not considered significant given amount of allocation involved and impact on line item, by program. Conversion Entry (F) To record capital asset deletions and remove related accumulated depreciation for current year. Action Needed: Capital asset disposals and related accumulated depreciation for current year must be recorded on the Statement of Net Assets. Losses should not be reported as direct expenses of specific functions, but should instead be included as part of the general government function. If such amounts are insignificant, the adjustment could be made to the current year's depreciation expense for the items. Conversion Entry: dr. ACCUMULATED DEPRECIATION-BUILDINGS & IMPROVEMENTS 291,204 dr. ACCUMULATED DEPRECIATION-FURNITURE & EQUIPMENT 98,951 dr. ACCUMULATED DEPRECIATION-VEHICLES 106,675 dr. Expenditures- Instruction 339,045 cr. BUILDINGS & IMPROVEMENTS 605,028 cr. FURNITURE & EQUIPMENT 119,726 cr. VEHICLES 111,121 Where do the Numbers Come From? Current Year Reports from WVEIS Fixed Asset Module: 1. Capital Asset Listing by Category for retirements/disposals 2. Accumulated Depreciation by Category for retired/disposed assets Conversion Entry (F) Information for Notes to the Financial Statements Beginning Balance Additions Disposals Ending Balance Capital assets, non-depreciable: Land 1,518,770$ 53,280$ -$ 1,572,050$ Construction in process 5,980,915 3,250,170 (5,980,915) 3,250,170 Total non-depreciable capital assets 7,499,685 3,303,450 (5,980,915) 4,822,220 Capital assets, depreciable: Buildings and improvements 94,143,592 7,914,726 (605,028) 101,453,290 Furniture and equipment 2,455,603 313,922 (119,726) 2,649,799 Vehicles 8,554,564 355,501 (111,121) 8,798,944 Total depreciable capital assets 105,153,759 8,584,149 (835,875) 112,902,033 Less accumulated depreciation for: Buildings and improvements (21,447,845) (1,205,547) 291,204 (22,362,188) Furniture and equipment (1,534,288) (203,927) 98,951 (1,639,264) Vehicles (4,656,665) (597,247) 106,675 (5,147,237) Total accumulated depreciation (27,638,798) (2,006,721) 496,830 (29,148,689) Total depreciable capital assets, net 77,514,961 6,577,428 (339,045) 83,753,344 Total capital assets, net 85,014,646$ 9,880,878$ (6,319,960)$ 88,575,564$ Conversion Entry (G) To move completed construction projects from the construction in process accounts to the building. Action Needed: When construction in process is completed, it must be recorded in the category in which it was placed in service. Conversion Entry: dr. BUILDINGS & IMPROVEMENTS 5,980,915 cr. CONSTRUCTION IN PROCESS 5,980,915 Where do the Numbers Come From? Other Reports: 1. Construction in Progress Report/Excel Workbook- PY Information for Notes to the Financial Statements Beginning Balance as Restated Additions Disposals Ending Balance Capital assets, non-depreciable: Land 1,518,770$ 53,280$ -$ 1,572,050$ Construction in process 5,980,915 3,250,170 (5,980,915) 3,250,170 Total non-depreciable capital assets 7,499,685 3,303,450 (5,980,915) 4,822,220 Capital assets, depreciable: Buildings and improvements 94,143,592 7,914,726 (605,028) 101,453,290 Furniture and equipment 2,455,603 313,922 (119,726) 2,649,799 Vehicles 8,554,564 355,501 (111,121) 8,798,944 Total depreciable capital assets 105,153,759 8,584,149 (835,875) 112,902,033 Less accumulated depreciation for: Buildings and improvements (21,447,845) (1,205,547) 291,204 (22,362,188) Furniture and equipment (1,534,288) (203,927) 98,951 (1,639,264) Vehicles (4,656,665) (597,247) 106,675 (5,147,237) Total accumulated depreciation (27,638,798) (2,006,721) 496,830 (29,148,689) Total depreciable capital assets, net 77,514,961 6,577,428 (339,045) 83,753,344 Total capital assets, net 85,014,646$ 9,880,878$ (6,319,960)$ 88,575,564$ Where do the Numbers Come From? Long-term debt table Bonds payable Balance, Beginning of Year Restatement Additions Deductions Balance, End of Year Amounts due within one year Amounts due past one year General obligation debt 10,550,000 - - 2,520,000 8,030,000 2,600,000 5,430,000 Compensated absences 175,448 - 573,976 - 749,424 - 749,424 Capital lease payable 769,231 - - 76,923 692,308 76,923 615,385 Long-term liabilities 11,494,679 - 573,976 2,596,923 9,471,732 2,676,923 6,794,809 Compensated Absences Adjustment Prior Year Liability 175,448 Current Year Liability 749,424 Net effect on Net Position 573,976 The chart below shows the change in compensated absences allocated to each function. Allocation Instruction 377,017 Support - Students 24,591 Support - Instructional staff 22,081 District administration 10,498 School administration 34,063 Business services 7,703 Operation & Maintenance 32,351 Student Transportation 44,504 Food services 21,168 Community services - Total 573,976 Conversion Entries (M, N, O, P) Convert debt principal payments to reduction of liability Action Needed: Debt principal payments are recorded as expenditures in the governmental funds but should be shown as a reduction of the liability in the entity-wide statements. To record the beginning balances: (prior year entries M, O) NOT NEEDED Conversion Entries (N P): dr. BONDS PAYABLE 2,520,000$ cr. Expenditures-Debt service-principal retirement 2,520,000$ dr. CAPITAL LEASE PAYABLE 76,923$ cr. Expenditures-Debt service-principal retirement 76,923$ Where do the Numbers Come From? Long-term debt table Bonds payable Balance, Beginning of Year Restatement Additions Deductions Balance, End of Year Amounts due within one year Amounts due past one year General obligation debt 10,550,000 - - 2,520,000 8,030,000 2,600,000 5,430,000 Compensated absences 175,448 - 573,976 - 749,424 - 749,424 Capital lease payable 769,231 - - 76,923 692,308 76,923 615,385 Long-term liabilities 14,883,382 7,113,568 573,976 2,596,923 19,974,003 13,179,194 6,794,809 Conversion Entry (Q) Record interest due but not paid as of June 30 - beginning balance Action Needed: Interest that has accumulated on debt but has not been paid as of June 30 must be accrued in the entity-wide statements to comply with full accrual accounting. Interest is recorded only when paid in the governmental funds. Conversion Entry: NOT NEEDED - Implementation Year Only To record the beginning balance in accrued interest payable. Where do the Numbers Come From? Revenue Check This sheet computes the allocation percentages for revenues not directly identified. This sheet also shows check figures for each revenue category and links to the DW Statement of Activities. Expense Charges for Services Operating Grants and Contributions Capital Grants and Contributions % from Directly Directly Directly Stmt of Act Identified Allocated Total Identified Allocated Total Identified Allocated Total Total Instruction 61.54% 36,055 281,842 317,897 11,631,609 500,078 12,131,687 - 3,161,455 3,161,455 15,611,039 Supporting Services Students 4.24% 63,726 19,418 83,144 484,477 34,455 518,932 - 217,819 217,819 819,894 Instructional Staff 4.62% 4,748 21,159 25,907 317,245 37,542 354,787 - 237,340 237,340 618,034 District Administration 3.34% - 15,297 15,297 385,354 27,141 412,495 - 171,584 171,584 599,376 School Administration 5.13% - 23,494 23,494 5,230 41,687 46,917 - 263,540 263,540 333,951 Business 1.55% - 7,099 7,099 - 12,595 12,595 - 79,627 79,627 99,321 Operation and Maintenance 10.19% - 46,668 46,668 75,000 82,805 157,805 195,000 523,484 718,484 922,957 Student Transportation 9.39% - 43,005 43,005 65,103 76,304 141,407 616,024 482,386 1,098,410 1,282,822 Food Services 0.00% - - - 5,869,561 - 5,869,561 - - - 5,869,561 Community Services 0.00% - - - - - - - - - - Interest on Long Term Debt 0.00% - - - - - - 300,325 - 300,325 300,325 Total 100.00% 104,529 457,982 562,511 18,833,579 812,607 19,646,186 1,111,349 5,137,235 6,248,584 26,457,280 General Revenues Property taxes 32,028,280 Unrestricted state aid 52,778,089 Unrestricted investment earnings 946,479 Unrestricted grants and contributions 1,181,615 Gain on sale of capital assets - Transfers In 3,159,039 Transfers out (3,159,039) Total Revenues Allocated 113,391,744 STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS General Special Debt Bond Permanent Capital Current Special Service Construction Improvement Projects Total Expense Revenue Fund Fund Fund Fund Governmental Revenues: Property taxes 28,737,348 - 3,293,413 - - - 32,030,761 Other Local sources 1,559,711 1,095,925 105,799 300,325 38,464 - 3,100,224 State sources 52,962,517 5,537,589 - - - 4,314,510 62,814,616 Federal sources 1,791,109 12,764,825 - - - - 14,555,934 Miscellaneous sources 221,859 - - - 668,350 - 890,209 Total revenues 85,272,544 19,398,339 3,399,212 300,325 706,814 4,314,510 113,391,744 Conversion Entry (U) Auditor adjustment Action Needed: Record auditor adjustment in the conversion worksheet. Conversion Entry: dr. Expenditures - Capital Outlay 1 dr. Expenditures - Instruction 4,846 cr. GENERAL REVENUE - UNRESTRICTED INVESTMENT EARNINGS 1 cr. NET POSITION 4,846 To record an auditors adjustment and an adjustment for rounding. Where do the Numbers Come From? The auditors. Conversion Entry (V) Record interest due but not paid as of June 30 Action Needed: Interest that has accumulated on debt but has not been paid as of June 30 must be accrued in the entity-wide statements to comply with full accrual accounting. Interest is recorded only when paid in the governmental funds. Conversion Entry: dr. ACCRUED INTEREST PAYABLE 11,550$ cr. NET POSITION 11,550$ To adjust the balance in accrued interest payable. Where do the Numbers Come From? Interest payment amount 90,532 Payable March 30 and September 30 each year Portion accrued at June 30 ((113,632/6 months) x 3 months) 45,266 Balance in accrued interest payable 56,816 Entry needed to adjust balance to actual at June 30 (11,550)$