human
Write a summary that discusses the accounting method applied by Alpine City, which relies on the Generally Accepted Accounting Principles as outlined in the Government Accounting Standards Board.
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The text discusses the accounting method applied by Alpine City, which relies on the Generally Accepted Accounting Principles as outlined in the Government Accounting Standards Board. The statement is able to indicate all the details of operations while complying with the financial standards.
human
Write a essay that discusses the accounting method applied by Alpine City, which relies on the Generally Accepted Accounting Principles as outlined in the Government Accounting Standards Board. Exapnd on the summary above.
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##Reporting Standards for Government Entities Essay
The Accounting Method Applied
Alpine City relies on the Generally Accepted Accounting Principles as outlined in the Government Accounting Standards Board. Through this approach, the statements are able to indicate all the details of operations while complying with the financial standards. As a result, specific emphasis is laid on the factors affecting profitability and the availability of funds.
Assessment the Application of GASB Statement 34 for Each of the Funds
The Governmental Accounting Standards Board has outlined specific principles which have to be applied in the presentation of financial statements. These principles ensure conformity in the financial statements, thereby making it possible to perform horizontal and vertical analysis of the financial statements (Shirota, 2003). Statement 34 was designed to achieve specific objectives in the concepts of financial reporting by government institutions including the following two elements.
Retention of the Familiar
First, the statement hinges on ‘retention of the familiar’. It is important to note that government financial statements are comprised of a wide range of funds from varying activities. As a result, it is necessary for each of the departments to continue presenting sufficient information in a reliable format in order to eliminate ambiguity and confusion. Government entities are required to present the most prominent and major funds accompanied by an aggregate amount, making it easy for accountability (GASB, 1999). Such statements should also feature operating results from cash assets and other elements. Short-term and long-term performance is of utmost importance.
On the same note, the comparison of budgetary allocations is bound to provide novel analytical dimensions aimed at enhancing the utility of the reports. As a result, any information deemed necessary should be included in the statement, although the focus will be directed towards the familiar. Alpine City reports certain expenses separately, such as expenses of a non-recurrent nature according to Granof and Wardlow (2011). Consequently, these expenses are included as significant financial events for the financial year, such as the one-off purchase of a mower and the installations.
From the records, it is clear that assets and liabilities of a fixed nature are clearly included in the statements. Under the revenues section, emphasis is placed on the most familiar elements. Shirota (2003) directs that expenses that do not fall under any specific category are included in the general government expenses since they are not material in nature. Similarly, revenues that are not material are categorized as ‘other revenues’ in order to enhance the utility of the report.
##Introduction of New Information and Elements
According to GASB (1999), finance managers in government institutions have intrinsic knowledge of the requirements and transactions that take place during the operations of the entity. As a result, there are best placed to offer insights in the most appropriate manner of reporting the activities of the organization. From the financial records, new information which is material in nature is clearly presented in the MDA. Clear directions as to the reason why such information is new are provided, making it possible for users of the information to appreciate the inclusion of such financial details (GASB Flyer, 1999). For example, there are specific directions as to the causes of changes in the General Fund during the year. Further information about capital asset management is provided over and above the contents of the balance sheet in order for users of the information to understand the implication of the financial statements.
Management’s Discussion and Analysis (MDA)
The MDA offers an insight into the increase in net assets and direction towards the nature of the assets which caused the increase (Granof and Wardlow, 2011). This is a necessary element in understanding the reason why such changes are influential on the performance of the local government. Accompanying information regarding the commensurate changes in liabilities posits the net worth of the local government, thereby signifying the reasons for changes in the liabilities. It is also clearly indicated that the reports are structured in three sections, including the comprehensive financial statement, fund statement and accompanying information.
The MDA provides direction to the timing of recognition of assets and incomes. This offers directions towards the recognition of these elements. From the start, users of the information will be well aware that the city applies the accrual basis in the financial statement.
According to GASB Flyer (1999), on the same note, the most prominent elements of the financial statements including revenues, incomes, costs, expenses and liabilities are outlined in this section. The materiality of these aspects makes it necessary for the accountant to highlight their influence, with accompanying information regarding the accounting method used for such elements.