Question

Describe three items that require reconciliation between governmental fund financial statements and government-wide financial statements.

Answer 1

Following are the major reconciling items between fund financial statements and government-widefinancial statements:

a.Reporting capital outlays as expenditures in fund statements, but reporting depreciation expense ingovernment-wide statements

.b.Reporting proceeds of long-term debt as inflows of resources (and repayment of debts as outflowsof resources) in fund financial statements, but reporting them as liabilities and repayments ofliabilities on government-wide statements.

c.Reporting revenues on the modified accrual basis (when “measurable and available’) in fundfinancial statements, but reporting them on the accrual basis in government-wide statements.

d.Reporting expenditures in fund financial statements, but reporting expenses in government-widestatements.

e.Reporting Internal Service Funds as proprietary-type funds in the fund statements, but reportingthem mostly as governmental activities (and adjusting expenses by Internal Service Fund profitsand losses) in government-wide statements.