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1. When determining if a fund qualifies as a major fund, aggregate bund balance/equity is not used in either test a.

The general fund will always be a major fund b. Internal service fund will not be considered in the evaluation of major and non-major funds 2. Budgetary comparison schedules a. Show the original original budget, amended budget, and actual budgets i. Computation of avariances between budget and actual is optional ii. Computation of differences between original and final amended budget is optional 3. Other supplementary info (optional) a. Variance b. Combining statements for non-major funds 4. Non-reciprocal interfund activity a. Non exchange between funds b. Interfund transfer c. Interfund reimbursements i. Not in interfund transactions 5. Not for Profits --- FASB a. Full accrual basis accounting b. Emphasis: basic information for the organization as a whole i. Classification of net assets: unrestricted, temporarily restricted, and permanently restricted ii. Revenue recognition concepts related to unconditional pledges and support iii. Dist b/w restricted revenue & conditional pledges iv. Dist b/w restricted revenue and the absence of variance power c. Required f/s i. Statement of Financial Position (B/S) ii. Statement of Activity (I/S) iii. Statemetn of CF iv. Statement of Functional Exepnses 1. Voluntary health and welfare organizational d. Net Assets (restricted & Unrestricted) - PUT i. Internal board-designated funds unrestricted e. Expense classification in statement of activities i. Expenses 1. Decreases in unrestricted net assets 2. Program services 3. Support services a. Staff, fundraising, admin mgmt, leadership dvt 4. Combined costs f. Stmt of cf

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i. Required ii. Direct or indirect Contribution of unrestricted revenue later earmarked (board designated) for construction or purchase of long-lived assets operating statement of CF Not for profit CF- O,F&I FASB a. GAB 4 Functional support services - re voluntary health and welfare org a. Program support expenses b. Fundarising expenses c. Mgmt and general costs d. Multiple cost items Unconditional pledges a. Written/oral b. Revenue when promise made Multi year pledges a. Now-revenue b. Future- tem restricted revenue Unconditional pledges. Either a. Restricted b. Unrestricted Conditional pledges a. Not recorded as venue b. Liability Donated materials FMV Receipts restricted by a donor specific purposes restricted revenue. Inc restricted net assets Receipts restricted by a donor specific beneficiaries liabilities org has no variance power Losses securities decrease unrestricted Dividends, interest, other investment income a. Increase unrestricted unless investment is restricted Endowment Fund a. Permanent endowment i. Principal not permitted to be spent b. Term endowment i. Must be held for a specified term ii. Temp restricted net assets c. Quasi-endowment i. Internal governing board of institution (not donor) has det funds are to be retained and invested for specified purposes ii. Unrestricted net assets 1. Since internal governing board made decision Fund accounting a. Not for external reporting or non profits


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b. Entity reported in total. Emphasis: classification of net assets c. PUT funds Health care org a. Revenue (3) i. Patient Service Revenue 1. Accrual even if all not expected to be collected 2. Charity care not recorded as receivable or as revenue 3. Deductions a. Contractual adjustments to third-party payments b. Policy discounts c. Administrative adjustments ii. Other operating income 1. Tuition from schools 2. Rev from educational programs 3. Donated supplies & equip 4. Parking fees 5. Cafeteria revenue 6. Gift shop iii. Non-operating revenue & support g&L 1. Unrestricted int/divds/grants 2. Donated services Health care a. PUT Voluntary Health and welfare orgs a. Obtain most of their operating funds by donations from general public b. Ex: American red cross c. Full Accrual d. Income: large part. Pledges. e. Mandatory: Stmt of functional expenses f. Fundraising expenses associated with fundraising appeals must be shown separately on the face of the f/s either as i. Expense or ii. Deduction from revenue g. Fundraising support may not be displayed as a simple net amount Smt of activities operational accountability Budgetary schedules required supplementary info a. A schedule showing i. Original budget ii. Final appropriations budget & iii. Actual inflows, outflows & balances on the budgetary basis F10

1. FV a. Market based b. Does not include transactions costs i. May include transportation costs c. Orderly transaction i. Cannot be a forced transaction ii. Willing buyer/seller d. Transaction costs are not included in the final Fair value measurement e. Transaction costs are used to find the most advantageous market Valuation techniques a. A change in technique = change is estimate (prospectively) b. Market approach i. Prices, other relevant info from identical/similar A 0r L c. Income approach i. Pv (discounted CF) d. Cost approach i. Replacement cost e. Market approach i. Level 1 inputs identical. Most reliable ii. Level 2 similar iii. Level 3 discounted CF. unobservable inputs for A or L 1. Only use when no observable info (1 or 2) Formation of partnership a. Partners capital account i. Diff b/w Fv A contributed & FV L assumed b. Creation of new partnership interest investment of addtl capital i. Exact method (= BV) 1. No goodwill 2. Old partners capital account dollars stay the same a. % ownership changes ii. Bonus method 1. Recognize intercapital transfer 2. Do not affect partnership assets iii. Goodwill 1. Recognize intangible asset 2. Recognized based upon the total value of the partnership implied by the new partners contribution 3. Based on going investment (dollars) Partnership accts may be different than their perspective P&L ratios. Distributions/withdrawals will be at diff times and for diff reasons Withdrawal of partner a. Bonus method



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i. Step 1: revalue asset to FV 1. (Debit) asset adjustment 2. Credit: capital accounts ii. Step 2: pay off withdrawing partner Liquidation Partnership a. Order of preference distribution of assets i. Creditors ii. Partners capital Charge possible losses depending on partnership agreement before any distribution can be made to partners Capital deficiency a. Debit balance in partners capital account i. Partnership has a claim against the partner for the amount in the deficiency ii. Partnership has a legal right to offset iii. May use the loan acct to satisfy the capital deficiency The primary beneficiary of a variable interest entity must consolidate the variable entity. US GAAP all consolidation decisions are evaluated first under the VIE model. If consolidation is not required under the VIE model, then the investor (parent) determines whether consolidation is necessary under the voting interest model (own > 50%) Examples of variable interests: a. Explicit investments at risk b. Explicit guarantees of debt, the values of assets, or residual values of leased assets c. Implicit guarantees with related party involvement d. Most L, excluding sht term trade payables e. Most forward contracts to sell A owned by the entity f. Options to acquire leased A at the end of the lease term at specified prices g. Explicit in writing/legally enforceable An entity is a VIE if some of the equity investors have disaproportionate voting rights in comparison to their economic interest US GAAP a. VIE i. Primary beneficiary consolidates if 1. Has power and 2. Absorves P & L b. IFRS i. Focuses on the accounting for special purpose entities (specific type of VIE) often structured for financing purposes ii. Sponsoring company controls and must consolidate an SPE when: 1. Is benefited by the SPEs activities




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2. Has decision-making powers that allow it to benefit from the SPE 3. Absorbs the risks and rewards of the SPE 4. Has a residual interest in the SPE Asset Retirement Obligation (ARO) a. Recognize when i. Duty or responsibility ii. Little or no discretion to avoid iii. Obligating event Asset Retirement Cost (ARC) a. Amount capitalized (A) that increases the carrying amt of the long-lived asset when a liability for an ARO is recognized b. Asset retirement obligation i. Recorded at a discounted amount c. Acretion expense i. Growth of the liability over time ii. Reported at its total non-discounted value Other liabilities and debt covenants a. Sales taxes payable i. Sales taxes payable should be credited to a payable account after collection and until remitted ii. Sales taxes are not an expense of the company collecting the sales taxes from customers Unemployment taxes & employers share of payroll taxes a. Kept on books until remission Notes record at PV Non interest bearing payable a. Report at PV of CF b. Remaining is discount or prem No required PV calc a. Receivables and payables i. Arising from ordinary course of business (sht note < 1 year) b. Paid in property or services (not in cash) Under IFRS, FV option may only be applied on certain dates, if doing so eliminates, or significantly reduces a measurement or recognition inconsistency FV disclosures req for f/s a. Concentration of credit risk Required i. Of all financial instruments b. Market risk i. Changes in economic circumstances Beta ii. US GAAP 1. Disclosure encouraged but not required

iii. IFRS 1. Required: a. Disclosure of nature and extent of rising form financial instruments. Including i. Credit risk for each class ii. Liquidity risk iii. Market risk iv. Note: Disclosure Market risk is not optional under IFRS but is under GAAP 22. Common Derivatives a. OFFS i. O Options ii. F - Forwards iii. F- Futures iv. S Swaps 23. Market and credit risks inherent risks of all derivative instruments

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