Essentials of Accounting for Governmental and Not-for-Profit Organizations / Edition 13

by Paul A. Copley

Overview

Copley's Essentials of Accounting for Governmental and Not-for-Profit Organizations, 13e is best suited for those professors whose objective is to provide more concise coverage than what is available in larger texts. The main focus of this text is on the preparation of external financial statements which is a challenge for governmental reporting. The approach in this edition is similar to that used in practice. Specifically, day to day events are recorded at the fund level using the basis of accounting for fund financial statements. Governmental activities are recorded using the modified accrual basis. The fund-basis statements are then used as input in the preparation of government-wide statements. The preparation of government-wide statements is presented in an Excel worksheet. NEW for the 13th edition is McGraw-Hill Connect, a digital teaching and learning environment that saves students and instructors time while improving performance over a variety of critical outcomes.

Product Details

ISBN-13:	9781259741012
Publisher:	McGraw-Hill Professional Publishing
Publication date:	01/31/2017
Edition description:	Older Edition
Pages:	448
Product dimensions:	6.30(w) x 9.00(h) x 0.70(d)
Age Range:	18 Years

Table of Contents

Preface iii

Chapter 1 Introduction to Accounting and Financial Reporting for Governmental and Not-For-Profit Organizations 2

Generally Accepted Accounting Principles 4

Sources of Generally Accepted Accounting Principles 6

Definition of Government 8

Objectives of Accounting and Financial Reporting 9

Objectives of Accounting and Financial Reporting for State and Local Governmental Units 9

Objectives of Financial Reporting by the Federal Government 10

Objectives of Financial Reporting by Not-for-Profit Entities 11

State and Local Government Financial Reporting 11

Comprehensive Annual Financial Report 11

Measurement Focus and Basis of Accounting 13

Fund Structure for Stale and Local Government Accounting and Reporting 14

Number of Funds Required 17

Chapter 2 Overview of Financial Reporting for State and Local Governments 20

The Governmental Reporting Entity 21

Reporting by Major Funds 23

Overview of the Comprehensive Annual Financial Report (CAFR) 23

Introductory Section 24

Financial Section: Auditor's Report 25

Management's Discussion and Analysis (MD&A) 26

Statement of Net Position 28

Government-wide Statement of Activities 30

Governmental Funds: Balance Sheet 32

Governmental Funds: Statement of Revenues, Expenditures, and Changes in Fund Balance 34

Proprietary Funds: Statement of Net Position 36

Proprietary Funds: Statement of Revenues, Expenses, and Changes in Fund Net Position 38

Proprietary Funds: Statement of Cash Flows 40

Fiduciary: Statement of Fiduciary Net Position 42

Fiduciary: Statement of Changes in Fiduciary Net Position 42

Notes to the Financial Statements 44

Required Supplementary Information Other Than MD&A 46

Combining Statements 48

Statistical Information 48

Summary 49

Chapter 3 Modified Accrual Accounting: Including the Role of Fund Balances and Budgetary Authority 54

Modified Accrual Accounts 55

Balance Sheet Accounts 55

Financial Statement Activity Accounts 60

Budgetary Accounts 62

Expenditure Cycle 62

Revenue Recognition for Nonexchange Transactions 64

Summary 67

Appendix: Budgetary Accounting Illustrated 67

Budgets and Budgetary Accounts 67

Accounting for Revenues 69

Accounting for Encumbrances and Expenditures 70

Budget Revisions 74

Budgetary Comparison Schedule 74

Chapter 4 Accounting for the General and Special Revenue Funds 83

Overview of Modified Accrual Accounting 84

Interfund Transactions 85

Interfund Loans 85

Interfund Set-vices Provided and Used 87

Interfund Transfers 87

Interfund Reimbursements 87

Illustrative Case-General Fund 87

Use of Budgetary Accounts 88

Recording the Budget 88

Re-establishment of Encumbrances 89

Recording Prior-Year Property Taxes as Revenues 89

Tax Anticipation Notes Payable 89

Payment of Liabilities as Recorded 90

Encumbrance Entry 90

Recording Property Tax Levy 90

Collection of Delinquent Taxes 90

Collection of Current Taxes 91

Other Revenues 91

Repayment of Tax Anticipation Notes 92

Recognition of Expenditures for Encumbered Items 92

Payrolls and Payroll Taxes 92

Payment on Account and Other Items 93

Correction of Errors 93

Amendment of the Budget 94

Interfund Transactions 94

Write-off of Uncollectible Delinquent Taxes 96

Accrual of Interest and Penalties 97

Deferral of Property Tax Revenue 97

Special Item 97

Preclosing Trial Balance 97

Closing Entries 99

Year-End Financial Statements 101

Illustrative Case-Special Revenue Fund 102

Motor Fuel Tax Revenues 103

Expenditures for Road Repairs 105

Reimbursement to General Fund 105

Reimbursement Grant Accounting 105

Closing Entry 106

Year-End Financial Statements 106

Recognition of Inventories in Governmental Funds 107

Summary 108

Chapter 5 Accounting for Other Governmental Fund Types: Capital Projects, Debt Service, and Permanent 118

Capital Projects Funds 120

Illustrative Case 121

Debt Service Funds 126

The Modified Accrual Basis-As Applied to Debt Service Funds 126

Additional Uses of Debt Service Funds 127

Debt Service Accounting for Serial Bonds 127

Illustrative Case-Regular Serial Bonds 127

Other Issues Involving Payment of Long-Term Debt 130

Debt Service Accounting for Deferred Serial Bonds 130

Debt Service Accounting for Term Bonds 130

Bond Refundings 130

Permanent Funds 131

Financial Reporting for Governmental Funds 133

Financial Statements-Governmental Funds 133

Summary 137

Chapter 6 Proprietary Funds 146

Internal Service Funds 148

Establishment and Operation of Infernal Service Funds 149

Illustrative Case-Supplies Fund 149

Other Issues Involving Internal Service Funds 153

Risk Management Activities 153

Implications for Other Funds 154

Enterprise Funds 154

Illustrative Case-Water Utility Fund 156

Proprietary Fund Financial Statements 161

Statement of Net Position 162

Statement of Revenues, Expenses, and Changes in Fund Net Position 162

Statement of Cash Flows 164

Environmental Liabilities 167

Accounting for Municipal Solid Waste Landfills 167

Pollution Remediation Costs 168

Summary 168

Chapter 7 Fiduciary (Trust) Funds 182

Agency Funds 185

Tax Agency Funds 185

Accounting for Tax Agency Funds 186

Financial Reporting for Agency Funds 187

A Note about Escheat Property 187

Private-Purpose Trust Funds 189

Accounting for Investments 189

Illustrative Case-Private-Purpose Trust Funds 190

Investment Trust Funds 192

Public Employee Retirement Systems (Pension Trust Funds) 193

Accounting and Reporting for Defined Benefit Pension Plans 194

Additional Disclosures 197

Other Postemployment Benefit Trust Funds 200

A Note about IRS 457 Deferred Compensation Plans 202

A Final Comment on Fund Accounting and Reporting 202

Chapter 8 Government-Wide Statements, Capital Assets, Long-Term Debt 213

Conversion from Fund Financial Records to Government-wide Financial Statements 214

Capital Asset-Related Entries 216

Long-Term Debt-Related Entries 221

Adjusting to Convert Revenue Recognition to the Accrual Basis 222

Adjusting Expenses to the Accrual Basis 226

Adding Internal Service Funds to Governmental Activities 226

Eliminating Interfund Activities and Balances within Governmental Activities 229

Worksheet to Illustrate the Adjustments 232

Government-wide Financial Statements 232

Statement of Net Position 232

Statement of Activities 235

Required Reconciliation to Government-wide Statements 238

Summary 240

Appendix: Accounting for Capital Assets and Long-Term Debt in Governmental Activities 241

Accounting for General Capital Assets, Including Infrastructure 241

The Modified Approach for Reporting Infrastructure 242

Collections 243

Asset Impairment 244

Accounting for Long-Term Debt 244

Types of General Long-Term Debt 245

Debt Disclosures and Schedules 245

Chapter 9 Advanced Topics for State and Local Governments 260

Reporting by Special-Purpose Entities 261

Special-Purpose Governments Engaged in Governmental Activities 261

Special-Purpose Governments Engaged Only in Business-type Activities 263

Special-Purpose Governments Engaged Only in Fiduciary-type Activities 265

Special Assessments 265

Acquisition of Capital Assets by Lease Agreements 266

Accounting for Equipment Acquired under Capital Leases-Governmental Activities 266

Accounting for Equipment Acquired under Capital Leases-Businesslike Activities 268

Leases: Proposed Changes 269

Employer Reporting for Pensions 269

Reporting of Pension Liabilities 269

Reporting of Pension Expenditure-Governmental Funds 270

Reporting of Pension Expense-Accrual Basis (Economic Resources Focus) Statements 270

A Final Note: Pension Discount Rates 274

Employer Reporting for Other Postemployment Benefits 274

Summary 275

Chapter 10 Accounting for Private Not-For-Profit Organizations 281

Organizations Covered in This Chapter 283

Overview of Not-for-Profit Accounting 283

Three Classes of Net Assets 283

Financial Reporting 284

Note Disclosures 285

Accounting for Contributions, Including Reclassifications of Net Assets 285

Reporting of Expenses and Assets 286

Special Topics: Accounting for Contributions 287

Illustrative Transactions and Financial Statements 289

Beginning Trial Balance 289

Transactions 290

Financial Statements 297

Alternative Procedure for Recording Fixed Assets 302

Performance Evaluation 302

Mergers and Acquisitions 304

Changes in Not-for-Profit Reporting 305

Summary of Not-for-Profit Accounting and Reporting 306

Chapter 11 College and University Accounting 317

Overview of College and University Accounting 318

Financial Statements 319

Revenue and Expense Classification 319

Illustrative Case-Comparison of Public and Private Colleges 322

Illustrative Case-Journal Entries 323

Illustrative Case-Closing Entries 330

Illustrative Case-Financial Statements 331

Split-Interest Agreements 335

Summary: College and University Accounting 339

Chapter 12 Accounting for Hospitals and Other Health Care Providers 345

Accounting and Reporting Requirements of the Health Care Guide 347

Financial Statements 347

Revenues 349

Classifications 349

Illustrative Transactions and Financial Statements 349

Beginning Trial Balance 350

Illustrative Statements for Private Sector Not-for-Profit Health Care Entities 357

Financial Reporting for Governmental Health Care Entities 358

Financial Reporting for Commercial (For-Profit) Health Care Entities 361

Summary: Health Care Accounting and Reporting 362

Chapter 13 Auditing, Tax-Exempt Organizations, and Evaluating Performance 369

Governmental Auditing 370

The Single Audit Act and Amendments 376

The Sarbanes-Oxley Act 378

Tax-Exempt Organizations 379

Applying for Tax-Exempt Status 380

Federal Filing Requirements 381

State Filing Requirements 383

Unrelated Business Income Tax (UBIT) 383

IRS Oversight 384

Summary and Some Conclusions Related to Exempt Entities 385

Evaluating Performance 385

Analysis of Not-for-Profit Organization Financial Statements 385

Analysis of State and Local Government Financial Statements 386

Service Efforts and Accomplishments Reporting 388

Chapter 14 Financial Reporting by the Federal Government 397

Federal Government Accounting Standards 398

Financial Reporting by Federal Agencies 399

Balance Sheet 400

Statement of Net Cost 400

Statement of Changes in Net Position 402

Statement of Budgetary Resources 402

Statement of Custodial Activity 402

Consolidated Financial Report of the U.S. Government 403

Budgetary and Proprietary Accounting 406

Budgetary Accounts 407

Proprietary Accounts 409

Summary of Federal Government Reporting 410

Appendix: Illustrative Example 410

Glossary: Governmental and Not-for-Profit Accounting Terminology G-1

Index I