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sanju06
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Posted: 16 Mar 2009 at 12:22 | IP Logged  

In accordance with GASB 34, a reconciliation must be shown of the items that cause the difference between 1) the total of the fund balances that appears on the balance sheet for the governmental funds and 2) the total net assets that are disclosed for governmental activities on the government wide statement of net assets.

Which of the following items would be disclosed in this reconciliation

a) capital assets used in governmental activities

b)Assets and lilabilities of internal service funds included in governmental activites.

Correct answer is both a) and b)

I understand the first part . however I thought internal service fund follows economic  resources and shows all assets and liabilities in the B/S. , which is the same as government wide financials. Then why is  it reconciled.

Please help.

Thanks

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divyagovil1
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Posted: 16 Mar 2009 at 14:37 | IP Logged  

The reconciliation is from the governmental fund perspective to the government-wide financial statements.

On page F9-21 in Beckers, if we read through the steps for reconciliation, we would note that we take the fund balance of GRASPP funds and then start reconciling....

It's true that internal service funds follow full accrual accounting, however, remember that these have to be included in governmental activities column.

Internal service funds are reported separately on fund financial statements... they were not a part of the aggregated governmental funds. Now, we are simply including them in the aggregated governmentak funds for the presentation of government wide financial statements....

In the other way, we are basically following two kinds of reconciliations here:

1.) Converting modified accrual to full accrual for GRASPP funds

2.) Including full accrual Internal service funds in governmental funds.

On government-wide financial statements,

governmental funds = GRASPP + Internal service

 



Edited by divyagovil1 on 16 Mar 2009 at 14:46


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REG - 08/29/09 - 95
AUD - 11/21/09 - 92
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sanju06
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Posted: 16 Mar 2009 at 19:09 | IP Logged  

Thanks Divyagovil. I was actually getting confused by the terms governmental funds with governmental activities.

Internal service funds along with the other governmental funds(GRASPP) are shown as governmental activities in the government wide financials.Enterprise fund is shown seperately as business activity.

So, now I understand why they add internal service fund to the governmental funds to arrive at government wide financials.

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divyagovil1
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Posted: 16 Mar 2009 at 19:43 | IP Logged  

Correct !! You have got it right :)

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Divya - CO State

Passed using Becker Review :
FAR - 04/11/09 - 94
BEC - 05/30/09 - 86
REG - 08/29/09 - 95
AUD - 11/21/09 - 92
Ethics - 2011
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Far2Pass
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Posted: 09 Apr 2009 at 23:06 | IP Logged  

thanks for all these post,,, this has been my weakest link, now it is all becoming clearer.

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BEC 86(lost credit)83 (10/08)
AUD 90 (10/07)
REG 69, 70, 78 (11/08)
FAR 71 (02/09); 94 (5/20/09)
ETHICS 95 (06/09)
NOW IT IS FINISHED!
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