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Accounting for
Governmental and
Nonprofit Entities
Fourteenth Edition

Earl R. Wilson, Ph.D., CPA

Professor Emeritus
University of MissouriColumbia

Susan C. Kattelus, Ph.D.,

CPA, CGFM
Professor and Department Head
Eastern Michigan University

Jacqueline L. Reck, Ph.D.,

CPA
Associate Professor and James E. Rooks
Distinguished Professor in Accounting
University of South Florida

Boston Burr Ridge, IL Dubuque, IA Madison, WI New York San Francisco St. Louis
Bangkok Bogot Caracas Kuala Lumpur Lisbon London Madrid Mexico City
Milan Montreal New Delhi Santiago Seoul Singapore Sydney Taipei Toronto
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ACCOUNTING FOR GOVERNMENTAL AND NONPROFIT ENTITIES

Published by McGraw-Hill/Irwin, a business unit of The McGraw-Hill Companies, Inc., 1221 Avenue of the Americas, New York, NY, 10020.
Copyright 2007 by The McGraw-Hill Companies, Inc. All rights reserved. No part of this publication may be reproduced or distributed in
any form or by any means, or stored in a database or retrieval system, without the prior written consent of The McGraw-Hill Companies, Inc.,
including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning.
Some ancillaries, including electronic and print components, may not be available to customers outside the United States.
This book is printed on acid-free paper.
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ISBN-13: 978-0-07-310095-1
ISBN-10: 0-07-310095-1
Editorial director: Stewart Mattson
Sponsoring editor: Steve DeLancey
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Executive marketing manager: Rhonda Seelinger
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About the Authors

Earl R. Wilson
Is Professor Emeritus of the School of Accountancy at the University of Missouri-
Columbia. He received his BA and MBA from Chapman University and his MA and
Ph.D. in Accountancy from the University of MissouriColumbia. He is a certified
public accountant (Missouri).
Professor Wilson has contributed substantially to standards setting in governmental
accounting and auditing, having served as an academic fellow with the Governmental
Accounting Standards Board (GASB) and as a member of the Governmental Account-
ing Standards Advisory Council, the U.S. Comptroller Generals Advisory Council on
Governmental Auditing Standards, the American Institute of CPAs Government
Accounting and Auditing Committee, and as chair of the Missouri Society of CPAs
(MSCPA) Government Accounting Committee and president of the American
Accounting Association Government and Nonprofit (AAA-GNP) Section. In addition,
he has served on several GASB task forces and conducted financial reporting research
for the GASB.
Dr. Wilson has published numerous research articles in journals such as The
Accounting Review; Journal of Accounting Research; Contemporary Accounting
Research; Journal of Accounting and Public Policy; Journal of Accounting, Auditing,
and Finance; Research in Governmental and Nonprofit Accounting; Public Budgeting
and Finance, and others. Many of these articles are frequently cited as influential stud-
ies of the municipal bond market. He has been an author of this text since the ninth edi-
tion in 1992. He has extensive experience teaching governmental and nonprofit
accounting, including online courses.
Professor Wilson has received a number of awards for his teaching and research,
including the Enduring Lifetime Contribution Award from the AAA-GNP section, the
Cornelius Tierney/Ernst & Young Research Award for 2003 from the Association of
Government Accountants, Outstanding Teacher of the Year for 2002 from the Kansas
City MU Business Alumni Association, and the 2000 Outstanding Educator of Year
Award from the MSCPA. He has chaired or served as reader of more than 30 doctoral
dissertations, many in the area of governmental accounting.

Susan C. Kattelus
Is a professor of accounting and Head of the Department of Accounting and Finance at
Eastern Michigan University. She received her BBA and Ph.D. from Michigan State
University and MSA from Eastern Michigan University. Professor Kattelus is a certi-
fied public accountant (Michigan) and a certified government financial manager.
Professor Kattelus has served on the Governmental Accounting Standards Advisory
Council as the academic representative of the American Accounting Association, (AAA)
President of the Government and Nonprofit Section of the AAA, and chair of the Non-
profit Task Force of the Michigan Association of CPAs (MACPA), she is currently a
board member of the MACPA. She has taught the public and nonprofit accounting course
for accounting majors and currently teaches the financial management for nonprofit
organizations course in the Nonprofit Management Graduate Certificate program.
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iv About the Authors

Dr. Kattelus has published articles in The Accounting Review; Research in Govern-
mental and Nonprofit Accounting; Journal of Government Financial Management;
Public Budgeting and Finance; Issues in Accounting Education; Journal of Account-
ing Education; and Journal of Public Budgeting, Accounting and Financial Manage-
ment, among others. She joined as an author on the 11th edition in 1999.

Jacqueline L. Reck
Is an associate professor and the James E. Rooks Distinguished Professor in Account-
ing of the School of Accountancy at the University of South Florida. She received a BS
degree from North Dakota State University, BS and MAcc degrees from the University
of South Florida, and her Ph.D. from the University of MissouriColumbia. She is a
certified public accountant (Florida).
Dr. Reck worked for state government for several years before joining academia.
Currently, she is active in several professional associations. In addition to teaching gov-
ernmental and not-for-profit accounting, Dr. Reck frequently presents continuing pro-
fessional education workshops and sessions. She has provided workshops on
governmental and not-for-profit accounting for local accounting firms and the state
auditor generals staff. Dr. Reck has received several teaching and research awards, is
currently the doctoral program coordinator for the School of Accountancy, and has
chaired or served on several doctoral dissertation committees.
Dr. Reck has published articles in The Journal of Accounting and Public Policy;
Research in Governmental and Nonprofit Accounting; Journal of Public Budgeting,
Accounting and Financial Management; and the Journal of Information Systems,
among others. She joins as author on the current edition.
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Preface
Welcome to the 14th edition of Accounting for Governmental and Nonprofit Entities.
This book continues to be the leading governmental and not-for-profit accounting text, in
part because of the tremendous contributions of Dr. Leon E. Hay, now retired. Dr. Hay
joined Professor R. M. Mikesell of Indiana UniversityBloomington in 1961 on the
third edition of this book, which was first published in 1951. Dr. Earl R. Wilson joined
with the ninth edition (1992) and Dr. Susan Kattelus with the 11th edition (1999) of the
text. Dr. Jacqueline Reck joins this edition of the text. Dr. Wilson and Dr. Kattelus have
followed Dr. Hays example by serving as President of the Government and Nonprofit
(GNP) Section of the American Accounting Association and as members of the Gov-
ernmental Accounting Standards Advisory Council, among other councils and boards.
Professors Wilson, Kattelus and Reck are active in many professional organizations.
Professors Kattelus and Reck regularly teach a GNP course at their universities. Drs.
Wilson and Hay are two of only eight people who have received the Enduring Lifetime
Contribution Award from the Government and Nonprofit Section of the American
Accounting Association.

ORGANIZATION AND CONTENT

Chapters 1 through 9 of this text focus on accounting and financial reporting issues of
governmental entities at the state and local levels that follow the reporting model pre-
scribed by GASB Statement No. 34 (GASBS 34). Chapters 10 and 11 are similar in that
they describe how decision makers can use audited annual financial statements to ana-
lyze the financial performance of an entity. Chapter 13 focuses on budgeting and cost-
ing of services provided by government. In Chapters 12 and 14 through 17, readers will
examine the accounting and financial reporting issues of federal government agencies,
the federal government as a whole, and not-for-profit organizations as they demonstrate
accountability for financial and operational performance and compliance with regula-
tions to resource providers and other interested parties. Chapters 14 and 15 describe
nongovernmental, not-for-profit organizations. Chapters 16 and 17 pay particular atten-
tion to the higher education and health care industries, respectively, encompassing enti-
ties that have governmental, commercial, and not-for-profit legal structures.

KEY CHANGES IN THIS EDITION

In this edition, users will find significant revisions to the text and several new or
revised illustrations that will enhance readability and understanding. The City and
County of Denvers financial information is used to provide real-world examples of
financial statements, schedules, and management discussion and analysis. More
emphasis has been placed on accounting for internal service funds, new information is
provided on reconciling modified accrual and accrual statements, and information is
provided on how users can convert from a modified basis of accounting to an accrual
basis. In addition, several new cases have been added to the end-of-chapter materials,
two versions of the Smithville computerized project are provided, and revisions and
additions have been made to the exercises and problems at the end of the chapters.
As always, readers can count on this edition to include authoritative changes from
the Financial Accounting Standards Board, Governmental Accounting Standards
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vi Preface

Board, Federal Accounting Standards Advisory Board, American Institute of Certified

Public Accountants, Office of Management and Budget, and Government Account-
ability Office. Update bulletins will be provided periodically on the text Web site as
new authoritative statements are issued.

INNOVATIVE PEDAGOGY
For state and local government accounting, the authors have found that dual-track
accounting is an effective approach in showing the juxtaposition of government-
wide and fund financial statements in GASBS 34s integrated model of basic
financial statements. It allows students to see that each transaction has an effect on
the fund financial statements (that are designed to show fiscal compliance with the
annual budget), on the government-wide financial statements (that demonstrate
accountability for operational performance of the government as a whole), or both.
This approach better serves students who will design and use accounting informa-
tion systems, such as enterprise systems, to allow information to be captured once
and used for several purposes. Accounting for federal agencies as well as non-
governmental, not-for-profit entities closely parallels this approach as traditional
fund accounting may be appropriate for keeping track of resources with restricted
purposes, but citizens and donors also need to see the larger picture provided by the
entity as a whole.
Governments may continue to prepare fund-based statements throughout the year
and convert to accrual-based government-wide statements at the end of the year until
they invest in information systems that can deliver real-time information for decision
making. We want students to think beyond being transaction-bookkeepers and aspire to
design and use the systems that will make government-wide financial information
available when managers and citizens need it. The City of Smithville Computerized
Continuous Problem is a teaching tool that develops these skills and perspective. The
authors feel so strongly that this general ledger software tool helps students understand
the material that we again provide it with the text. Students have enthusiastically told
us that they like learning by doing and that the City of Smithville problem helped
them to understand the concepts in the book.

TARGET AUDIENCE
The text continues to be best suited for senior and graduate accounting majors who
plan to sit for the certified public accountant (CPA) exam and then audit govern-
mental or not-for-profit entities. Public administration and other students who plan
to provide financial management or consulting services to government and not-for-
profit entities report that the text provides a more comprehensive set of competen-
cies than traditional public budgeting texts. Students in not-for-profit management
education programs find that the coverage of accounting, financial reporting, audit-
ing, taxation, and information systems for both governmental and not-for-profit enti-
ties provides the exposure they need to work across disciplines and sectors. Finally,
students preparing for the certified government financial manager (CGFM) exam
will also find chapters 1 through 12 useful for Examination 2. We encourage all stu-
dents who use this book to consider the challenge and rewards of careers in public
servicein federal, state, and local governments as well as nongovernmental, not-
for-profit organizations.
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Preface vii

SUPPLEMENT PACKAGE
These ancillary materials are prepared by the authors and are available on the Instruc-
tors Resource CD-ROM and/or the textbooks Web site, www.mhhe.com/business/
accounting/wilson14e.
Instructors Guide and Solutions Manual (including teaching and case analysis tips).
PowerPoint lecture presentations.
Test Bank (including a computerized version using Diploma software).
City of Smithville Instructors Version software, Instructors Utility Manual for the
City of Smithville, solution data files for Cases A and B, and solution page image
(.pdf) files for Cases A and B.
The City of Smithville Continuous Computerized Problema general ledger prac-
tice setpackaged free with each new copy of the textbook.
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Acknowledgments
We are thankful for the encouragement, suggestions, and counsel provided by many
instructors, professionals, and students in writing this book. They include the follow-
ing professionals and educators who read portions of this book and previous editions
in various forms and provided valuable comments and suggestions:
Mr. Robert Bramlett Ms. Melanie Nelson
Federal Accounting Standards Advisory California State UniversitySan Marcos
Board Dr. David OBryan
retired Pittsburgh State University
Dr. Kenneth W. Brown Dr. Suzanne M. Ogilby
Southwest Missouri State University California State UniversitySacramento
emeritus Dr. James Patton
Dr. Barbara Chaney Federal Accounting Standards Advisory
University of Montana Board and University of Pittsburgh
Mr. Jeremy Craig Dr. Terry K. Patton
Chesterfield, Missouri Governmental Accounting Standards
Ms. Rebecca Craig Board
St. Charles County, Missouri Ms. Janet Prowse
Mr. Michael Crawford University of Nevada, Las Vegas
Crawford & Associates Dr. Walter A. Robbins
Ms. Mary Foelster University of Alabama
American Institute of Certified Public Mr. Lawrence Roman
Accountants Cuyahoga Community CollegeEast
Ms. Marie Hunniecutt Campus
University of South Florida Dr. Relmond P. Van Daniker
Mr. J. Thomas Luter Association of Government Accountants
formerly, U.S. Department of the Mr. Jay Wahlund
Treasury Minot State University
Ms. Johanna Lyle Mr. James F. White
Kansas State University Harvard Extension School
Mr. Bruce K. Michelson Dr. William T. Wrege
U.S. Government Accountability Office Ball State University
Mr. Roger P. Murphy
Iowa State University
retired
We acknowledge permission to quote pronouncements and reproduce illustrations
from the publications of the Governmental Accounting Standards Board, American
Institute of Certified Public Accountants, International City/County Management
Association, and Crawford and Associates. Special thanks go to our spouses, Florence
J. Wilson and Albert F. Hohenstein, for their patience, understanding, and inspiration
in completing this book, and we dedicate it to them.
Although we are extremely careful in checking the text and end-of-chapter material,
it is possible that errors and ambiguities remain in this edition. As readers encounter
viii
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Acknowledgments ix

such, we urge them to let us know so that corrections can be made. We also invite every
user of this edition who has suggestions or comments about the material in the chap-
ters to share them with one of the authors, either by regular mail or e-mail. The authors
will continue the service of issuing Update Bulletins to adopters of this text that
describe changes after the book is in print. These bulletins can be downloaded from the
text website at www.mhhe.com/business/accounting/wilson13e or either of the authors
websites:
Dr. Earl R. Wilson
School of Accountancy
University of MissouriColumbia
303 Cornell Columbia, MO 65211
wilsonea@missouri.edu
http://www.missouri.edu/~accterw
Dr. Susan C. Kattelus
Department of Accounting and Finance
Eastern Michigan University
406 Owen Ypsilanti, MI 48197
Susan.kattelus@emich.edu
http://people.emich.edu/skattelus
Dr. Jacqueline L. Reck
School of Accountancy
University of South Florida
4202 East Fowler Avenue, BSN 3403
Tampa, FL 33620 jreck@coba.usf.edu
http:www.coba.usf.edu/departments/
accounting/faculty/reck
December 2005
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Brief Contents
Preface v 16 Accounting for Colleges and
1 Introduction to Accounting and Financial Universities 00
Reporting for Governmental and Not-for- 17 Accounting for Health Care
Profit Entities 00 Organizations 00
2 Principles of Accounting and Financial
Reporting for State and Local Govern- GLOSSARY 00
ments 00 GOVERNMENTAL AND
3 Governmental Operating Statement NOT-FOR-PROFIT
Accounts; Budgetary Accounting 00 ORGANIZATIONS 00
4 Accounting for Governmental Operating
INDEX 00
ActivitiesIllustrative Transactions and
Financial Statements 00
5 Accounting for General Capital Assets
and Capital Projects 00
6 Accounting for General Long-Term
Liabilities and Debt Service 00
7 Accounting for the Business-Type
Activities of State and Local
Governments 00
8 Accounting for Fiduciary Activities
Agency and Trust Funds 00
9 Financial Reporting of State and Local
Governments 00
10 Analysis of Governmental Financial
Performance 00
11 Auditing of Governmental and Not-for-
Profit Organizations 00
12 Accounting and Reporting for the
Federal Government 00
13 Budgeting and Costing of Government
Services 00
14 Accounting for Not-for-Profit
Organizations 00
15 Not-for-Profit OrganizationsRegulatory,
Taxation, and Performance Issues 00

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Table of Contents
Preface v Appendix: Summary Statement of Governmental
Chapter 1
Introduction to Accounting and Financial
Reporting for Governmental and Not-for-
Profit Entities 00
What Are Governmental and Not-for-Profit
Organizations? 00
Distinguishing Characteristics of Governmental and
Not-for-Profit Entities 00
Sources of Financial Reporting Standards 00
Determining Whether a Not-for-Profit Organization Is
Governmental 00
Objectives of Financial Reporting 00
Financial Reporting of State and Local Governments
Comprehensive Annual Financial Report 00
Expanding the Scope of Accountability
Reporting 00
Overview of Chapters 2 through 17 00
GASB Statement No. 34 Principles and Standards 00
Analysis of Governmental Financial Statements;
Financial Statement and Performance Audits 00
Accounting and Financial Reporting for the Federal
Government and Not-for-Profit Organizations 00
A Caveat 00
Key Terms 00
Questions 00
Cases 00
Exercises and Problems 00
Chapter 2
Principles of Accounting and Financial
Reporting for State and Local
Governments 00
Activities of Government 00
Governmental Financial Reporting Entity 00
Integrated Accounting and Financial Reporting
Model 00
Government-wide and Fund Financial Statements
Fiscal Accountability and Fund Accounting 00
Fund Categories 00
Accounting and Financial Reporting Principles 00
Key Terms 00
Selected References 00
Questions 00
Cases 00
Exercises and Problems 00
Chapter 3
Governmental Operating Statement
Accounts; Budgetary Accounting 00
Classification and Reporting of Revenues and
Expenses at the Government-wide Level 00
Reporting Direct and Indirect Expenses 00
Program Revenues and General Revenues 00
Reporting Special Items and Transfers 00
Structure and Characteristics of the General Fund;
Classification and Description of Operating
Statement Accounts 00
Governmental Fund Balance Sheet and Operating
Statement Accounts 00
Budgetary Accounts 00
Terminology and Classification for Governmental
Fund Budgets and Accounts 00
Classification of Appropriations and
Expenditures 00
Classification of Estimated Revenues and
Revenues 00
Budgetary Accounting 00
Recording the Budget 00
Budgetary Control of Revenues 00
Budgetary Control of Encumbrances and
Expenditures 00
Accounting for Allotments 00
Computerized Accounting Systems 00
Accounting for Government-wide Operating
Activities 00
Appendix: Accounting for Public School
Systems 00
00
Key Terms 00
Selected References 00
Questions 00

xi
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xii Contents

Cases 00 Illustrative Case 00

Exercises and Problems 00
Chapter 4
Accounting for Governmental Operating
ActivitiesIllustrative Transactions and
Financial Statements 00
Illustrative Case 00
Measurement Focus and Basis of Accounting 00
Dual-Track Accounting Approach 00
Illustrative Journal Entries 00
Recording the Budget 00
Interfund Transfer to Create a New Fund 00
Encumbrance Entry 00
Payment of Liabilities 00
Payrolls and Payroll Taxes 00
Revenues Recognized as Received in Cash 00
Accounting for Property Taxes 00
Recording Property Tax Levy 00
Collection of Current Taxes 00
Collection of Delinquent Taxes 00
Tax Anticipation Notes Payable 00
Repayment of Tax Anticipation Notes 00
Other Taxes 00
Interim Financial Reporting 00
Special Topics 00
Correction of Errors 00
Receipt of Goods Ordered in Prior Year 00
Revision of the General Fund Budget 00
Internal Exchange Transactions 00
Adjusting Entries 00
Pre-Closing Trial Balance 118 00
Closing Entries 00
Year-End Financial Statements 00
Special Revenue Funds 00
Accounting for Operating Grants 00
Financial Reporting 00
Interfund Activity 00
Reciprocal Interfund Activity 00
Nonreciprocal Interfund Activity 00
Intra- versus Inter-Activity Transactions
(Government-wide Level) 00
Intra-Entity Transactions 00
Permanent Funds 00
Budgetary Accounts 00
Journal EntriesPermanent Fund 00
Appendix: Concepts and Rules for Recognition of
Revenues and Expenses (or Expenditures) 00
Key Terms 00
Selected References 00
Questions 00
Cases 00
Exercises and Problems 00
Chapter 5
Accounting for General Capital Assets and
Capital Projects 00
Accounting for General Capital Assets 00
Required Disclosures about Capital Assets 00
Classification of General Capital Assets 00
General Capital Assets Acquired under Capital Lease
Agreements 00
Costs Incurred after Acquisition 00
Reduction of Cost 00
Asset Impairment and Insurance Recoveries 00
Illustrative Entries 00
Accounting for Capital Projects 00
Legal Requirements 00
Illustrative TransactionsCapital Projects
Funds 00
Illustrative Financial Statements for a Capital Projects
Fund 00
Alternative Treatment of Residual Equity or
Deficits 00
Bond Premium, Discount, and Accrued Interest on
Bonds Sold 00
Retained Percentages 00
Claims and Judgments Payable 00
Bond Anticipation Notes Payable and the Problem of
Interest Expenditures 00
Investments 00
Multiple-Period and Multiple-Project Bond Funds 00
Reestablishment of Encumbrances 00
Capital Projects Financed by Special Assessments 00
Financial Reporting for Capital Projects Funds 00
Key Terms 00
Selected References 00
Questions 00
Cases 00
Exercises and Problems 00
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Contents xiii

Chapter 6 Internal Service Funds with Manufacturing

Accounting for General Long-Term Activities 00
Liabilities and Debt Service 00 Internal Service Funds as Financing Devices 00
Dissolution of an Internal Service Fund 00
General Long-Term Liabilities 00 Enterprise Funds 00
Schedule of Future Debt Service Requirements 00 Illustrative CaseWater Utility Fund 00
Debt Limit and Debt Margin 00 Current and Accrued Assets 00
Overlapping Debt 00 Restricted Assets 00
General Long-Term Liabilities Arising from Capital Utility Plant 00
Lease Agreements. 00 Current Liabilities 00
Debt Service Funds 00 Liabilities Payable from Restricted Assets 00
Number of Debt Service Funds 00 Long-Term Liabilities 00
Use of General Fund to Account for Debt Service 00 Net Assets 00
Budgeting for Debt Service 00 Illustrative Accounting for a Water Utility
Types of Serial Bonds 00 Fund 00
Debt Service Accounting for Regular Serial Illustrative Statements 00
Bonds 00 External Financial Reporting of Enterprise
Second Year Transactions 00 Funds 00
Debt Service Accounting for Term Bonds 00 Regulatory Accounting Principles (RAP) 00
Financial Reporting 00 Accounting for Nonutility Enterprises 00
Deposit and Investment Disclosures 00 Accounting for Municipal Solid Waste Landfills 00
Valuation of Debt Service Fund Investments 00 Required Segment Information 00
Debt Service Accounting for Special Assessment Key Terms 00
Debt 00 Selected References 00
Use of Debt Service Funds to Record Capital Lease Questions 00
Payments 00 Cases 00
Accounting for Debt Refunding 00 Exercises and Problems 00
Advance Refunding of Debt 00
Disclosures about Advance Refundings 00 Chapter 8
Key Terms 00 Accounting for Fiduciary ActivitiesAgency
Selected References 00 and Trust Funds 00
Questions 00
Agency Funds 00
Cases 00
Agency Fund for Special Assessment Debt
Exercises and Problems 00
Service 00
Chapter 7 Tax Agency Funds 00
Illustration of Composition of Total Tax Rates 00
Accounting for the Business-Type Activities
Accounting for Tax Agency Funds 00
of State and Local Governments 00
Entries Made by Funds and Governments
Proprietary Funds 00 Participating in Tax Agency Funds 00
Financial Reporting Requirements 00 Pass-Through Agency Funds 00
Internal Service Funds 00 Financial Reporting of Agency Funds 00
Illustrative CaseSupplies Fund 00 Trust Funds 00
Internal Financial ReportingManagement Use 00 Investment Pools 00
Illustrative Statements 00 Creation of an Investment Pool 00
External Financial Reporting of Internal Service Operation of a Cash and Investment Pool 00
Funds 00 Withdrawal of Assets from the Pool 00
Assets Acquired under Lease Agreements 00
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xiv Contents

Closing Entry 00 Cases 00

Illustrative Financial Statements 00
Private-Purpose Trust Funds 00
Pension Accounting 00
Required Financial Reporting for Defined Benefit
Pension Plans 00
Statement of Plan Net Assets 00
Statement of Changes in Plan Net Assets 00
Schedule of Funding Progress 00
Schedules of Employer Contributions 00
Alternative Reporting and Disclosure 00
Illustrative Transactions for a Defined Benefit Pension
Plan 00
Employers Pension Accounting 00
Employer Recording and Reporting of Pension
Expenditure/Expense 00
Other Postemployment Benefits (OPEB) 00
Termination Benefits 00
Key Terms 00
Selected References 00
Questions 00
Cases 00
Exercises and Problems 00
Chapter 9
Financial Reporting of State and Local
Governments 00
The Governmental Reporting Entity 00
Entity Definition Criteria 00
Governmental Financial Reports 00
Need for Periodic Reports 00
Interim Financial Reports 00
Annual Financial Reports 00
Preparation of Basic Financial Statements
Fund Financial Statements 00
Required Reconciliations 00
Current Financial Reporting Issues 00
Communication Methods 00
Elements of Financial Statements 00
Popular Reporting 00
Other Comprehensive Basis of Accounting 00
Appendix: Converting Accounting Information from
the modified Accrual to the Accrual Basis of
Accounting 00
Key Terms 00
Selected References 00
Questions 00
Exercises and Problems 00
Chapter 10
Analysis of Governmental Financial
Performance 00
The Need to Evaluate Financial Performance 00
Government Financial Performance Concepts 00
Financial Position versus Financial Condition 00
Economic Condition 00
Internal Financial Trend Monitoring 00
Environmental Factors 00
Organizational Factors 00
Financial Factors 00
Analyzing Government-wide Financial
Statements 00
Use of Benchmarks to Aid Interpretation 00
Sources of Governmental Financial Data 00
Credit Analyst Models 00
Key Terms 00
Selected References 00
Questions 00
Cases 00
Exercises and Problems 00
Chapter 11
Auditing of Governmental and Not-for-Profit
Organizations 00
Financial Audits by Independent CPAs 00
Generally Accepted Auditing Standards 00
Types of Audit Reports 00
Types of Opinion 00
Materiality 00
00
Required Supplementary Information 00
Government Auditing Standards 00
Types of Audits and Engagements 00
Independence Standards 00
Single Audits 00
History of the Single Audit 00
Single Audit Act Amendments of 1996 00
Who Must Have a Single Audit? 00
What Does the Single Audit Require? 00
How Are Programs Selected for Audit? 00
What Reports Are Required for the Single Audit? 00
Other Single Audit Requirements 00
Impact of S-OX on Governments 00
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Contents xv

Chapter 12 Budgeting Governmental Appropriations 00

Accounting and Reporting for the Federal Budgeting Governmental Revenues 00
Government 00 Budgeting Capital Expenditures 00
Budgeting Cash Receipts 00
Federal Government Financial Management Budgeting Cash Disbursements 00
Structure 00 Budgeting for Performance 00
Comptroller General 00
Total Quality Management 00
Secretary of the Treasury 00
Customer Relationship Management 00
Director of the Office of Management and Budget 00
Service Efforts and Accomplishments 00
Director of the Congressional Budget Office 00 Costing of Government Services 00
Generally Accepted Accounting Principles for Federal Grants and Sponsored Agreements 00
Federal Agencies 00
Activity-Based Costing 00
Hierarchy of Accounting Principles and
Conclusion 00
Standards 00
Key Terms 00
Conceptual Framework 00 Selected References 00
Concept Statements 00 Questions 00
Funds Used in Federal Accounting 00 Cases 00
Required Financial ReportingU.S. Exercises and Problems 00
Government-wide 00
Required Financial ReportingGovernment Chapter 14
Agencies 00 Accounting for Not-for-Profit
Managements Discussion and Analysis 00
Organizations 00
Basic Financial Statements 00
Required Supplemental Information 00 Defining the Not-for-Profit Sector 00
Accounting for Social Insurance 00 GAAP for Nongovernmental NPOs 00
Dual-Track Accounting System 00 Financial Reporting and Accounting 00
Illustrative Transactions and Entries 00 Financial Reporting 00
Adjusting Entries 00 Accounting for Revenues, Gains, and Support 00
Illustrative Financial Statements 00 Accounting for Expenses 00
Summary of Accounting and Reporting for Federal Accounting for Assets 00
Government Agencies 00 Financially Interrelated Entities 00
Key Terms 00 Investments in For-Profit Entities 00
Selected References 00 Financially Interrelated NPOs 00
Questions 00 Funds Received as an Intermediary 00
Cases 00 Funds Held in Trust by Others 00
Exercises and Problems 00 Combinations of NPOs 00
Component Units of Governmental Entities 00
Chapter 13 Optional Fund Accounting 00
Budgeting and Costing of Government Accounting Information Systems for Not-for-Profit
Services 00 Organizations 00
Illustrative TransactionsVoluntary Health and
Objectives of Budgeting 00
Welfare Organizations 00
Implications of GASBS 34 for Public Budgeting 00
End-of-the-Year Adjusting Journal Entries 00
Interrelation of Planning, Budgeting, and Performance
End-of-the-Year Reclassification Journal Entries 00
measurement 00
End-of-the-Year Closing Journal Entries 00
Budgeting Approaches 00
Key Terms 00
Types of Budgeting 00
Selected References 00
Budgeting Procedures 00
Questions 00
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xvi Contents

Cases 00 Federal Financial Assistance 00

Exercises and Problems 00 Related Entities 00
Key Terms 00
Chapter 15 Selected References 00
Not-for-Profit OrganizationsRegulatory, Questions 00
Taxation, and Performance Issues 00 Cases 00
Exercises and Problems 00
Oversight Authority 00
State Regulation 00 Chapter 17
Nonprofit Incorporation Laws 00 Accounting for Health Care
Registration, Licenses, and Tax Exemption 00 Organizations 00
Lobbying and Political Influence 00
Federal Regulation 00 Health Care Industry 00
Tax-Exempt Status 00 GAAP for Health Care Providers 00
Unrelated Business Income Tax 00 Financial Reporting 00
Political Activity 00 Balance Sheet or Statement of Net Assets 00
Intermediate Sanctions 00 Operating Statement 00
Reorganization and Dissolution 00 Statement of Changes in Net Assets 00
Emerging Issues 00 Statement of Cash Flows 00
Governance 00 Accounting and Measurement Issues 00
Incorporating Documents 00 Revenues 00
Board Membership 00 Assets 00
Benchmarking and Performance Measures 00 Expenses 00
Summary 00 Liabilities 00
Key Terms 00 Illustrative Case for a Not-for-Profit Health Care
Selected References 00 Organization 00
Questions 00 Financial Reporting for a Governmental Health Care
Cases 00 Organization 00
Exercises and Problems 00 Related Entities 00
Other Accounting Issues 00
Chapter 16 Budgeting and Costs 00
Accounting for Colleges and Universities 00 Auditing 00
Taxation and Regulatory Issues 00
Accounting and Financial Reporting Standards 00
Prepaid Health Care Plans 00
Public Colleges and Universities 00
Continuing Care Retirement Communities 00
Private Colleges and Universities 00 Financial and Operational Analysis 00
Fund Accounting 00 Conclusion 00
Accounting and Reporting Issues 00 Key Terms 00
Statement of Net Assets or Financial Position 00 Selected References 00
Statement of Revenues, Expenses, and Changes in Net Questions 00
Assets 00 Cases 00
Statement of Cash Flows 00 Exercises and Problems 00
Segment Reporting 00
Illustrative Transactions for Private Colleges and
Glossary 00
Universities 00
Adjusting Entries 00 Governmental and Not-for-Profit
Closing Entries 00 Organizations 00
Other Accounting Issues 00 Index 00
Performance Measures 00
Auditing Colleges and Universities 00