Overview of The New Blue Book: GAAFR 2001.
GAAFR GAAFR Governmental Accounting, Auditing, and Financial Reporting 2001--the new Blue Book--is a definitive guidance masterpiece. This 680-page multi-purpose all-in-one (1) A combination computer printer, scanner, copy machine and fax machine. Some all-in-ones exclude the fax capability or make it an option.
(2) A desktop computer that houses every component except the keyboard and mouse inside the same case as the monitor. book of timely, understandable, comprehensive, and practical guidance is the "must have" book for governmental accounting Governmental accounting is an umbrella term which refers to the various accounting systems used by various public sector entities. In the United States, for instance, there are three levels of government which follow different accounting standards set forth by independent, private , reporting, and auditing professionals. This article reviews the new Blue Book and highlights sections of particular interest to practitioners.
It is likely that your office library is already stocked with Adj. 1. stocked with - furnished with more than enough; "rivers well stocked with fish"; "a well-stocked store"
furnished, equipped - provided with whatever is necessary for a purpose (as furniture or equipment or authority); "a furnished apartment"; up-to-date Governmental Accounting Standards Board The Governmental Accounting Standards Board (GASB) is currently the source of generally accepted accounting principles (GAAP) used by State and Local governments in the United States of America. (GASB GASB Governmental Accounting Standards Board )  guidance--including the latest Codification The collection and systematic arrangement, usually by subject, of the laws of a state or country, or the statutory provisions, rules, and regulations that govern a specific area or subject of law or practice. and Original Pronouncements volumes--as well as several contemporary governmental accounting textbooks. So why should a busy government finance officer, auditor auditor n. an accountant who conducts an audit to verify the accuracy of the financial records and accounting practices of a business or government. A proper audit will point out deficiencies in accounting and other financial operations. , or consultant purchase yet another governmental accounting, financial reporting, and auditing book?
Governmental Accounting, Auditing, and Financial Reporting: Using the GASB Statement No. 34 Model  is not "just another book." To the contrary, GAAFR 2001--the new Blue Book--is a definitive guidance masterpiece. This 680-page multi-purpose, all-in-one book of timely, concise, understandable, comprehensive, and practical guidance--what to do and how to do it--is the must have book for governmental accounting, reporting, and auditing practitioners.
What makes the new Blue Book so special? Consider the structure and content--which are summarized in Exhibit 1. Even a cursory cur·so·ry
Performed with haste and scant attention to detail: a cursory glance at the headlines.
[Late Latin curs review of Exhibit 1 indicates some of the new Blue Book's features. For example, it is:
* comprehensive--and includes guidance on budgeting, budgetary reporting, internal controls, and auditing as well as on governmental accounting and financial reporting;
* illustrative-including a series of illustrative il·lus·tra·tive
Acting or serving as an illustration.
Adj. 1. examples, a glossary A term used by Microsoft Word and adopted by other word processors for the list of shorthand, keyboard macros created by a particular user. See glossaries in this publication and The Computer Glossary. , and summary appendices ap·pen·di·ces
A plural of appendix. ;
* accessible--because it has both a comprehensive general index to its contents, including journal entries and financial statements and a detailed table of contents; and
* useful--including practical "how to" guidance on implementing GASB Statement No. 34 and preparing the GASB Statement No. 34 based comprehensive annual financial report (CAFR CAFR Comprehensive Annual Financial Report
CAFR California Association of Firearms Retailers ).
Moreover, GAAFR 2001 is written for both the novice and the experienced practitioner. The experienced practitioner can quickly review the "Introduction" and "Fund Accounting" sections--noting the key changes under GASB Statement No. 34--whereas the earlier sections are a tutorial An instructional book or program that takes the user through a prescribed sequence of steps in order to learn a product. Contrast with documentation, which, although instructional, tends to group features and functions by category. See tutorials in this publication. for the newcomer. All readers will ultimately focus extensively on the "Financial Reporting" section and the related "Appendices" illustrative examples, and most will at least scan the "Budgeting" and "Internal Controls and Auditing" sections.
These first four chapters are designed primarily for the newcomer but provide an excellent review and update for the more experienced reader. They can be studied carefully one-by-one or reviewed rapidly as a four-chapter section.
* 1--GAAP and the Governmental Environment--emphasizes the unique environment of state and local governments (SLGs), how the SLG See stereo lithography. environment led to correspondingly unique accounting and financial reporting principles and standards, how generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records.
Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP
See: Generally Accepted Accounting Principles
See generally accepted accounting principles (GAAP). ) applicable to SLGs are established, and the SLG GAAP hierarchy.
* 2--The Governmental Financial Reporting Model--briefly reviews the developments of fund accounting and reporting; the types of funds used, including their measurement focus and basis of accounting (MFBA MFBA Maine Farm Bureau Association
MFBA Multicast Fair Bandwidth Allocation
MFBA Memory Fine Base Address ); the evolution of the new integrated financial reporting model that includes government-wide statements as well as fund statements; and the interrelationships between the fund financial statements and government-wide financial statements.
* 3--Classification and Terminology--provides a summary overview of the several classes of SLG transactions (including nonexchange transactions) and interfund activity--and their appropriate accounting and reporting--as well as some of the specialized spe·cial·ize
v. spe·cial·ized, spe·cial·iz·ing, spe·cial·iz·es
1. To pursue a special activity, occupation, or field of study.
2. categories used in SLG financial reporting.
* 4--The Financial Reporting Entity--discusses applying the GASB criteria for when and how legally separate component units are "blended" or "discretely presented" in the financial statements for a single financial reporting entity.
The next four chapters are more technical than those in the introductory section. Chapters 5-8 focus on fund accounting--the "bread and butter" of governmental accounting--and how the fund data used to prepare the fund financial statements are converted and consolidated to prepare the government-wide financial statements.
* 5-Governmental Funds--discusses and illustrates the general rules of governmental fund accounting and their application--including revenue and expenditure recognition, other financing sources and uses, and asset and liability recognition.
* 6-Proprietary Funds--discusses and illustrates the accounting for enterprise funds and internal service funds--the business-type SLG funds--and the GAAP applicable to proprietary funds. Detailed guidance is included on topics such as impact fees, airport passenger facility charges, interest capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. during capital asset construction, and tap fees.
* 7--Fiduciary Funds, Joint Ventures, and Other Similar Multi-party Arrangements--focuses on fiduciary fiduciary (fĭd`shēĕ'rē), in law, a person who is obliged to discharge faithfully a responsibility of trust toward another. (trust and agency) funds and other entities or activities that are not reported in the government-wide financial statements but may be disclosed in the notes to the financial statements Notes to the financial statements
A detailed set of notes immediately following the financial statements in an annual report that explain and expand on the information in the financial statements. .
* 8--Government-wide Financial Reporting--focuses in detail on the relationships between the fund financial statements and the government-wide financial statements--with emphasis on converting governmental fund data to "governmental activities data in the government-wide financial statements--and including consolidation of internal service fund data in the government-wide financial statements.
The tone and sophistication so·phis·ti·cate
v. so·phis·ti·cat·ed, so·phis·ti·cat·ing, so·phis·ti·cates
1. To cause to become less natural, especially to make less naive and more worldly.
2. of the intermediate-level "Fund Accounting" chapters are necessarily higher than the more basic-level "Introduction to Governmental Accounting" chapters. The seven "Financial Reporting" chapters are deftly deft
adj. deft·er, deft·est
Quick and skillful; adroit. See Synonyms at dexterous.
[Middle English, gentle, humble, variant of dafte, foolish; see daft. ratcheted up to provide professional level guidance. These seven chapters on financial reporting cover:
* 9--Financial Reporting Overview--focuses on the accounting-financial reporting relationships and the various types of contemporary financial reporting.
* 10--Financial Statements--discusses and illustrates the format and content of each new basic financial statement. Exhibits illustrate the:
- calculation of the components of net assets Net assets
The difference between total assets on the one hand and current liabilities and noncapitalized long-term liabilities on the other hand.
See owners' equity.
- structure of the government-wide statement of activities
- proprietary fund statement of cash flows, including:
* categories of cash flows
* usual reconciling items between
operating income Operating Income
The profit realized from a business' own operations.
This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. and cash flows from operating activities.
* 11--Notes to the Financial Statements--discusses the most significant note disclosures required to be presented as an integral part of the basic financial statements, as well as note-related materiality MATERIALITY. That which is important; that which is not merely of form but of substance.
2. When a bill for discovery has been filed, for example, the defendant must answer every material fact which is charged in the bill, and the test in these cases seems to considerations.
* 12--Transaction-specific and Account-specific Guidance--deals with a variety of specific technical guidance topics related to the basic financial statements--including topics such as capital leases, investments, designations, and interfund debt.
* 13--The Comprehensive Annual Financial Report (CAFR)--focuses on the remaining topics related to the CAFR.
* 14--Professional Recognition Programs--discusses the GFOA GFOA Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting program and the GFOA Popular Annual Financial Reporting Award program--both designed to encourage and recognize excellent financial reporting.
* 15--Reporting for Specialized Entities--examines guidance applicable to specific types of governments or government activities--including pension plans, risk pools, investment pools, and states--and when certain special-purpose governments can merge government-wide and fund financial statements.
The body of the text concludes with discussions on two topics of interest to government finance officers--"Budgeting and Its Relationship to Accounting and Financial Reporting" and "Internal Controls and Auditing"--and GAAFR 2001 concludes with a series of Appendices and the General Index.
Budgeting's Relationship to Accounting
The next two chapters focus on the unique role of the budget, budgetary accounting, and budgetary reporting in government.
* 16--Budgetary Integration and Reporting--deals with the most significant aspects of public-sector budgeting, budgetary accounting, and budgetary reporting.
* 17--Performance Measurement--examines the current status of SLG performance measurement and its relationship to budgeting and financial reporting.
Internal Controls and Auditing
The final two chapters of GAAFR 2001 conclude its discussions of the accounting, auditing, and financial reporting cycle.
* 18--The Internal Control Framework--focuses on the internal control framework and its relationship to SLG accounting and financial reporting--including how specific control policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental can be evaluated.
* 19--Auditing in the Public Sector--discusses the different types of SLG audits, auditing standards, and auditors--and includes an "audit scope" chart designed to clarify the degrees of responsibility taken by the auditor for the presentations and disclosures in the CAFR.
Appendices and General Index
The seven Appendices and the General Index are extremely effective ancillaries to the GAAFR 2001 text--and comprise almost half of its 680 pages.
* A--Illustrative Journal Entries--presents most journal entries that lead to the basic statements in the illustrative CAFR (Appendix D). For ease of study and reference, the illustrative journal entries are:
- numbered sequentially;
- labeled with descriptive titles; and
- referenced in the General Index.
* B--Illustrative Trial Balances--presents for each fund for which illustrative entries are provided (in Appendix A) these current year trial balances:
- beginning of year;
- preclosing--end of the year; and
- postclosing--end of the year.
A matrix at the beginning of this appendix serves as its table of contents.
* C--Illustrative Conversion Worksheet--illustrates the use of a worksheet See spreadsheet.
worksheet - spreadsheet approach to converting and consolidating the illustrative data in Appendices A and B to develop the data needed to prepare the governmental activities data in the government-wide financial statements. Appendix C will be immensely useful to SLG practitioners, and Appendices C and D are likely to be among the most helpful and most used sections of GAAFR 2001.
* D--Illustrative Comprehensive Annual Financial Report (CAFR)--discusses and illustrates presentation of most of the new and changed requirements for preparing the CAFR in conformity with GASB Statement No. 34 and GFOA award program standards. Specifically, Appendix D addresses and illustrates:
- Letter of Transmittal--which is refocused under GASB Statement No. 34.
- Management's Discussion and Analysis Management's discussion and analysis (MD&A)
A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial (MD&A)--which is required for SLGs for the first time under GASB Statement No. 34.
- Government-wide Financial Reporting--also new under GASB Statement No. 34.
- Notes to the Financial Statements--which are impacted by GASB Statement No. 34, note additions and changes to existing notes.
- Combining and Individual Fund Presentations--provides a complete set of combining and individual fund financial statements and schedules that are consistent with the new financial reporting model.
- Budgetary Reporting--again, consistent with the new GASB Statement No. 34 provisions.
* E--Illustrative Accounts, Classifications, and Descriptions--revises and updates the time-tested GFOA sample chart of accounts to comply with the new reporting model.
* F-Glossary--provides a totally new glossary to assist practitioners in coping with the numerous new and changed technical terms introduced recently by the GASB, as well as other SLG accounting, financial reporting, and auditing terms.
* G--Transition and Summary of Changes--contains a concise summary of the GASB Statement No. 34 transition provisions and the most significant differences between the pre- pre- word element [L.], before (in time or space).
1. Earlier; before; prior to: prenatal.
2. and post-GASB Statement No. 34 financial reporting models.
* General Index--a unique comprehensive index that includes references to journal entries as well as to topics, terms, etc.
One of the most useful distinguishing features of the new GAAFR 2001 is it 41 exhibits. These tables, charts, flowcharts, and other exhibits are distinctive because they are based on careful analysis and are presented in a simple, straight-forward manner that makes them extremely useful to practitioners.
Three of the shorter exhibits are reproduced here to illustrate the various types of exhibits in GAAFR 2001:
* Exhibit 2--Classes of Transactions and Interfund Equity--presents new terminology and relationships from GASB Statement Nos. 33 and 34 in an understandable manner.
* Exhibit 3--Components of Fund Balances--clearly explains the composition and relationships of governmental fund assets Fund assets
The total value of a portfolio's securities, cash, and other holdings, minus any outstanding debts. , liabilities, and fund balance.
* Exhibit 4--Accounting and Financial Reporting for Joint Ventures--succinctly leads the reader to the proper conclusions regarding joint venture financial reporting.
These illustrative exhibits are indicative of some of the types of exhibits presented throughout GAAFR 2001. However, the immense value of its 41 exhibits is most apparent in their context in various chapters throughout the new Blue Book.
Journalism students are taught this premier rule of effective written communication: "Tell them what you're you're
Contraction of you are.
you're you are
you're be going to tell them, tell them, and then tell them what you told them." Author Stephen Stephen, 1097?–1154, king of England (1135–54). The son of Stephen, count of Blois and Chartres, and Adela, daughter of William I of England, he was brought up by his uncle, Henry I of England, who presented him with estates in England and France and Gauthier Gauthier is a French surname (corresponding to the Anglicised Walter).
The better known persons are:
pertaining to or emanating from analysis.
control of confounding by analysis of the results of a trial or test. exhibits and illustrative appendices for good measure.
SLG accounting, financial reporting, auditing, and consulting practitioners should stock their libraries with the GASB literature, textbooks, journal articles, and the new Blue Book, GAAFR 2001. But the most used of these will no doubt be the new Blue Book.
ROBERT Robert, Henry Martyn 1837-1923.
American army engineer and parliamentary authority. He designed the defenses for Washington, D.C., during the Civil War and later wrote Robert's Rules of Order (1876).
Noun 1. J. FREEMAN Freeman can mean:
(1.) Governmental Accounting Standards Board (GASB), Norwalk Norwalk (nôr`wôk').
1 City (1990 pop. 94,279), Los Angeles co., S Calif.; settled in the 1850s, inc. 1957. With the arrival (1875) of the Southern Pacific RR, it became a center for the dairy and logging industries, but , Connecticut Connecticut, state, United States
Connecticut (kənĕt`ĭkət), southernmost of the New England states of the NE United States. It is bordered by Massachusetts (N), Rhode Island (E), Long Island Sound (S), and New York (W). . www.GASB.org See .org.
(networking) org - The top-level domain for organisations or individuals that don't fit any other top-level domain (national, com, edu, or gov). Though many have .org domains, it was never intended to be limited to non-profit organisations.
RFC 1591. .
(2.) Gauthier, Stephen J., Government Finance Officers Association (GFOA), 2001.
STRUCTURE AND CONTENT OF THE NEW GAAFR
Introduction to Governmental Accounting
* Chapter 1: GAAP and the Governmental Environment
* Chapter 2: The Governmental Financial Reporting Model
* Chapter 3: Classification and Terminology
* Chapter 4: The Financial Reporting Entity
* Chapter 5: Governmental Funds
* Chapter 6: Proprietary Funds
* Chapter 7: Fiduciary Funds, Joint Ventures, and Other Similar Multi-party Arrangements
* Chapter 8: Government-wide Financial Statements
* Chapter 9: Financial Reporting Overview
* Chapter 10: Financial Statements
* Chapter 11: Notes to the Financial Statements
* Chapter 12: Transaction-specific and Account-specific Guidance
* Chapter 13: The Comprehensive Annual Financial Report
* Chapter 14: Professional Recognition Programs
* Chapter 15: Reporting for Specialized Entities
Budgeting and its Relationship to Accounting and Financial Reporting
* Chapter 16: Budgetary Integration and Reporting
* Chapter 17: Performance Measurement
Internal Controls and Auditing
* Chapter 18: The Internal Control Framework
* Chapter 19: Auditing in the Public Sector
* Appendix A: Illustrative Journal Entries
* Appendix B: Illustrative Trial Balances
* Appendix C: Illustrative Conversion Worksheet
* Appendix D: Illustrative Comprehensive Annual Financial Report
* Appendix E: Illustrative Accounts, Classifications, and Descriptions
* Appendix F: Glossary
* Appendix G: Transition and Summary of Changes
Source: GAAFR Review, January 2001, p. 5.
Exhibit 2 CLASSES OF TRANSACTIONS AND INTERFUND ACTIVITY Value given/received External Equal Exchange transactions Approximately equal Exchange-like transactions Not equal Nonexchange transactions: * derived tax revenues * imposed nonexchange revenues * Government-mandated nonexchange transactions * voluntary nonexchange transactions Value given/received Internal Equal Reciprocal interfund activity * interfund loans Approximately equal * interfund services/provided used Not equal Nonreciprocal interfund activity * interfund transfers * interfund reimbursements Source: GAAFR2001, p.41 Exhibit 3 COMPONENTS OF FUND BALANCE Assets available for spending and Liabilities normally expected to be not subject to legal limitations paid from current financial resources Undesignated unreserved fund balance [available for appropriation] Designated unreserved fund balance (subject to tentative management plans) [available for appropriation] Assets subject to legal limitations Unavailable assets Reserved fund balance (e.g., long-term loans receivable) [not available for apropriation]