| accounting entity | Where an entity is established for the purpose of accounting for a certain activity or activities. See fiscal entity.
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| accrual basis | Basis of accounting under which revenues are recorded when earned and expenditures (or expenses) are recorded as soon as they result in liabilities for benefits received, notwithstanding that the receipt of cash or the payment of cash may take place, in whole or in part, in another accounting period.
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| activity | Specific and distinguishable line of work performed by one or more organizational components of a governmental unit for the purpose of accomplishing a function for which the governmental unit is responsible. For example, "Food Inspection" is an activity performed in the discharge of the "Health" function. See also Function.
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| actuarial basis | Basis used in computing the amount of contributions to be made periodically to a fund so that the total contributions plus the compounded earnings thereon will equal the required payments to be made out of the fund. The factors taken into account in arriving at the amount of these contributions include the length of time over which each contribution is to be held and the rate of return compounded on such a contribution over its life. Commonly used to compute annual required contributions (q.v.) to pension and other postemployment benefit plans.
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| additions | GASB term for fiduciary fund financial reporting, replacing the term revenues. Additions are reported on the accrual basis.
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| ad valorem | In proportion to value. Basis for levy of taxes on property.
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| advance refunding | A bond refunding (q.v.) in which the proceeds are placed in an escrow account pending the call date or the maturity date of the existing debt. In this case, the debt is said to be defeased (q.v.) for accounting purposes.
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| advances, interfund | Long-term loans between funds. A long-term loan to another fund would be represented in the account Advances to Other Funds. A long-term loan from another fund would be represented in the account Advances from Other Funds. Should be contrasted with Due to and Due from accounts, which represent short-term interfund loans.
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| adverse opinion | Audit report in which the auditor states that the financial report "does not present fairly" due to major departures from generally accepted accounting principles (q.v.).
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| agency fund | Fiduciary fund consisting of resources received and held by the governmental agent for others; for example, taxes collected and held by a municipality for a school district.
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| agent multiple-employer defined benefit pension plan | Statewide pension plan in which separate account balances are maintained for each participating employer, expected to fund any deficits. Contrast with cost-sharing multiple-employer defined benefit pension plan.
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| American Institute of Certified Public Accountants (AICPA) | Organization of Certified Public Accountants that provides auditing guidance, including the GAAP Hierarchy (q.v.) and accounting and auditing guidance, in the case of Audit and Accounting Guides, when approved by the FASB (q.v.) and/or the GASB (q.v.).
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| annual required contributions | Term used by GASB to determine the amount required by a retirement fund (including other postemployment benefit plans) to be contributed, including normal cost and funding of past service cost. Used in the Schedule of Employer Contributions (q.v.).
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| annuity | Series of equal money payments made at equal intervals during a designated period of time. In governmental accounting, the most frequent annuities are accumulations of debt service funds for term bonds and payments to retired employees or their beneficiaries under public employee retirement systems.
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| appropriation | Authorization granted by a legislative body to incur liabilities for purposes specified in the appropriation act (q.v.).
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| appropriations, expenditures, and encumbrances ledger | Subsidiary ledger used by governmental funds in which a budget is recorded to track the appropriations, expenditures, and encumbrances that apply to the subsidiary account. Using this ledger, a department head, for example, could determine the unencumbered balance in the department.
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| ARC | The actuarially computed annual required contribution.
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| assessed valuation | Valuation set on real estate or other property by a government as a basis of levying taxes. A state government may provide that the local governments within its jurisdiction assess property at 100 percent, 331⁄3 percent, or other percentages of market value.
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| assessment | (1) Process of making the official valuation of property for purposes of taxation. (2) Valuation placed on property as a result of this process.
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| asset impairment | An unexpected decline in the usable capacity of a capital asset. An asset is deemed to be impaired if the decline is not part of the normal life cycle of an asset and the amount of the decline in service utility is large.
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| assets whose use is limited | Account title used by health care organizations to indicate those assets that are unrestricted but limited by board action, bond resolutions, or the like.
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| attestation agreements | Under Government Auditing Standards (q.v.), concerns examining, reviewing, or performing agreed upon procedures on a subject matter or an assertation about a subject matter and reporting on the results.
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| audit | Examination of documents, records, reports, systems of internal control, accounting and financial procedures, and other evidence and the issuance of a report relating to the examination.
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| auditor's report | Report included with financial statements that expresses an opinion of the fairness of the material presented.
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| authority | Governmental unit or public agency created to perform a single function or a restricted group of related activities. Usually such units are financed from service charges, fees, and tolls, but in some instances they also have taxing powers.
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| auxiliary enterprises | Activities of a college or university that furnishes services to students, faculty, or staff on a user-charge basis. Charge is directly related to, but not necessarily equal to, the cost of the service. Examples are college unions, residence halls, stores, faculty clubs, and intercollegiate athletics.
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| available | One condition that must be met before a revenue can be recognized under modified accrual accounting. The amount must be available in time to pay expenditures related to the current period.
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| balance sheet | Format where assets equal liabilities plus net assets (fund balance). Required governmental funds basic statement; may be used as governmentwide and proprietary fund in lieu of Statement of Net Assets.
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| basic financial statements | The primary financial statements required by the GASB in order for state and local governments to meet GAAP. The nature of the government (general-purpose, special-purpose) and of the govern-mental activities (governmental-type, business-type, and fiduciary-type) determine which statements are basic.
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| basis of accounting | Rule (or rules) used to determine the point in time when assets, liabilities, revenues, and expenses (expenditures) should be measured and recorded as such in the accounts of an entity. An organization might use the cash, modified accrual, or accrual basis of accounting.
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| blending, blended presentation | One method of reporting the financial data of a component unit in a manner similar to that in which the financial data of the primary government are presented. Under this method, the component unit data are combined with the appropriate fund types of the primary government and reported in the same columns as the data from the primary government. See discrete presentation.
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| bonded debt | That portion of indebtedness represented by outstanding bonds.
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| bonds, authorized and unissued | Bonds that have been legally authorized but not issued and that can be issued and sold without further authorization. Note: This term must not be confused with the term legal debt margin, which represents the difference between the legal debt limit (q.v.) of a governmental unit and the debt outstanding against it.
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| budget | Plan of financial operation embodying an estimate of proposed expenditures for a given period and the proposed means of financing them. Used without any modifier, usually indicates a financial plan for a single fiscal year.
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| budgetary accounts | Accounts that reflect budgetary operations and conditions, such as Estimated Revenues, Appropriations, and Encumbrances, as distinguished from proprietary accounts (q.v.). Other examples include Estimated Other Financing Sources, Estimated Other Financing Uses, Budgetary Fund Balance, and Budgetary Fund Balance Reserved for Encumbrances. As distinguished from actual revenues, expenditures, etc.
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| budgetary comparison schedule | Schedule, part of RSI (q.v.) where actual revenues and expenditures are compared with the original and revised budget. Required for General Fund and all special revenue funds for which an annual budget is legally adopted. A basic statement may be prepared in lieu of this schedule.
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| budgetary fund balance | Budgetary account for state and local governmental funds that reflects the difference between estimated revenues, estimated other financing sources, and so on and appropriations, estimated other financing uses, and so on. Closed at the end of the year.
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| budgetary fund balance reserved for encumbrances | Budgetary account for state and local governmental funds that reflects the amount offsetting Encumbrances (q.v.), or purchase orders or contracts issued during the current year. Year-end balance closed to Fund Balance Reserved for Encumbrances, an equity account.
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| business-type activities | Business-type activities are reported separately in the governmentwide statements and include activities normally accounted for in enterprise funds.
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| CAFR | See Comprehensive Annual Financial Report.
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| capital and related financing activities | Cash flow statement category required by GASB. Includes proceeds from bond issues, payment of debt, acquisition of fixed assets, and payment of interest on capital-related debt.
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| capital assets | Term used by GASB to include land, improvements to land, easements, buildings, building improvements, vehicles, machinery, equipment, works of art and historical treasures, infrastructure, and all other tangible or intangible assets that are used in operations and that have initial useful lives extending beyond a single reporting period.
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| capital lease | Lease that substantively transfers the benefits and risks of ownership of property to the lessee. Any lease that meets certain criteria specified in applicable accounting and reporting standards. See also operating lease.
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| capital outlays | Expenditures that result in the acquisition of or addition to fixed assets. One of the Character classifications, the others being Current and Debt Service.
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| capital projects fund | Fund created to account for all financial resources to be used for the construction or acquisition of designated fixed assets by a governmental unit except those financed by proprietary or fiduciary funds.
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| cash basis | Basis of accounting under which revenues are recorded when received in cash and expenditures are recorded when cash is disbursed.
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| cash equivalent | Short-term, highly liquid investments that are both readily convertible into known amounts of cash and so near their maturity (with original maturities of three months or less) that they present insignificant risk of changes in value due to changes in interest rates.
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| character classification | Grouping of expenditures on the basis of the fiscal periods they are presumed to benefit. The three groupings are (1) current expenditures, presumed to benefit the current fiscal period; (2) debt service, presumed to benefit prior fiscal periods primarily but also present and future periods; and (3) capital outlay, presumed to benefit the current and future fiscal periods.
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| charitable gift annuity | Split interest agreement that exists when no formal trust agreement is signed but that otherwise is similar to a charitable remainder trust (q.v.) in which a specified amount or percentage of the fair value of assets is paid to a beneficiary during the term of the agreement; at the end of the agreement, the trust assets go to the not-for-profit organization.
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| charitable lead trust | Split interest (q.v.) agreement in which an organization receives a fixed amount (charitable lead annuity trust) or a percentage of the fair value of the trust (charitable lead unitrust) for a certain term. At the end of the term, the remainder of trust assets is paid to the donor or other beneficiary.
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| charitable remainder trust | Split interest (q.v.) agreement in which a fixed dollar amount (charitable remainder annuity trust) or a specified percentage of the trust's fair market value (charitable remainder unitrust) is paid to a beneficiary. At the end of the term of the trust, the trust principal is paid to a notfor- profit organization.
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| codification | A listing of GASB or FASB pronouncements by topic. In contrast to a chronological listing in the GASB (FASB) Original Pronouncements.
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| cognizant agency | Under Single Audit Act and amendments, an agency that deals with the auditee, as representative of all federal agencies. Is assigned by the U.S. Office of Management and Budget (q.v.) for auditees with more than $50 million in federal awards.
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| collection | Under both FASB and GASB standards, collections are works of art, historical treasures, etc., that are (1) held for public exhibition, education, or research in furtherance of public service, other than financial gain; (2) protected, kept, unencumbered, cared for and preserved; and (3) subject to an organizational policy that requires the proceeds from sales of collection items to be used to acquire other items for collections. Collections may or may not be capitalized and depreciated.
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| combining financial statements | CAFR section where nonmajor funds are presented. The total column of the nonmajor funds in the combining statements is equal to the nonmajor funds column in the basic financial statements.
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| compliance audit | Audit designed to provide reasonable assurance that a governmental entity has complied with applicable laws and regulations. Required for every audit performed in conformity with Government Auditing Standards.
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| compliance supplement | Supplement to OMB Circular A–133 (q.v.) that provides specific guidance to use when conducting audits of certain programs.
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| component unit | Separate governmental unit, agency, or nonprofit corporation that, pursuant to the criteria in the GASB Codification, Section 2100, is combined with other component units and the primary government to constitute the reporting entity (q.v.).
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| comprehensive | Annual Financial Report (CAFR) A governmental unit's official annual report prepared and published as a matter of public record. In addition to the basic financial statements (q.v.) and required supplementary information, the CAFR should contain introductory material, schedules to demonstrate compliance, and statistical tables specified in the GASB Codification.
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| comptroller | General of the United States Head of the U.S. Government Accountability Office. One of the Principals that reviews the recommendations of the Federal Accounting Standards Advisory Board (FASAB)(q.v.).
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| concepts statements | Documents issued by the GASB (q.v.), FASB (q.v.), and FASAB (q.v.) to provide guidance to those boards and a conceptual framework that can be used to establish future standards.
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| condition | Under both FASB and GASB, a condition is an event that must take place in order for a donation or grant to be recognized, such as a requirement for a matching pledge. Neither FASB nor GASB permits a pledge containing a condition to be recorded as a revenue.
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| construction work in progress | Cost of construction work that has been started but not yet completed. Fixed asset account.
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| consumption method | Refers to method used to recognize expenditures for governmental funds (q.v.) in which an expenditure (q.v.) is recognized when inventory is consumed. Similar to the method of expense recognition used by commercial organizations.
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| contingencies | Term used by both GASB and FASB. Something must happen (for example a matching requirement) before a revenue (expense) can be recognized. For GASB, an eligibility requirement.
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| contributions | Amounts given to an individual or to an organization for which the donor receives no direct private benefits. Contributions may be in the form of pledges, cash, securities, materials, services, or fixed assets.
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| control account | Account in the general ledger in which are recorded the aggregate of debit and credit postings to a number of identical or related accounts called subsidiary accounts (q.v.). For example, Expenditures is a control account supported by the aggregate of individual balances in individual departmental expenditure accounts.
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| cost-sharing multiple-employer defined benefit pension plan | Statewide pension plan in which separate account balances are not maintained for each participating employer. Contrast with agent multiple-employer defined benefit pension plan.
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| current | Term that, applied to budgeting and accounting, designates the operations of the present fiscal period as opposed to past or future periods. One of the Character classifications of expenditures.
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| current financial resources measurement focus | Measurement focus used for governmental funds by GASB that measures current financial resources, not fixed assets and longterm debt. Contrast with economic resources measurement focus (q.v.).
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| current refunding | A bond refunding (q.v.) in which new debt is issued, and the proceeds are used to call in the existing debt. Contrast with advance refunding (q.v.).
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| debt limit | Maximum amount of gross or net debt that is legally permitted.
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| debt margin | Difference between the amount of the debt limit (q.v.) and the net amount of outstanding indebtedness subject to the limitation.
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| debt service fund | Fund established to finance and account for the payment of interest and principal on all tax-supported long-term debt, including that payable from special assessments in which the government assumes some level of liability.
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| deductions | GASB term for fiduciary fund financial reporting, replacing the term expenses. Deductions are reported on the accrual basis.
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| defeased | In an advanced refunding (q.v.) where proceeds are placed in an escrow account pending the call date or maturity date of the existing debt, the old debt is considered not to exist and to be replaced by the existing debt.
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| deferred revenues or deferred credits | In governmental or nonprofit accounting, items that may not be recognized as revenues of the period in which received and the related asset (cash or receivable) is first recognized.
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| deferred serial bonds | Serial bonds (q.v.) in which the first installment does not fall due for two or more years from the date of issue.
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| deficit | (1) Excess of liabilities and reserved equity of a fund over its assets. (2) Excess of expenditures and encumbrances over revenues during an accounting period; or, in the case of Enterprise and Internal Service Funds, excess of expense over revenue during an accounting period.
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| defined benefit retirement plans | Retirement plans in which the benefit is defined, normally as a percentage multiplied by average or highest salaries multiplied by the number of years worked.
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| defined contribution retirement plans | Retirement plans in which the amount to be paid at retirement is based on employee and employer contributions and interest income.
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| delinquent taxes | Taxes remaining unpaid on and after the date on which a penalty for nonpayment is attached. Even though the penalty may be subsequently waived and a portion of the taxes may be abated or canceled, the unpaid balances continue to the delinquent taxes until abated, canceled, paid, or converted into tax liens.
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| derived tax revenues | One of the four classes of nonexchange transactions established by GASB. Examples are sales taxes and income taxes.
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| designated | (1) In nonprofit accounting, assets, or equity set aside by action of the governing board, as distinguished from assets or equity set aside in conformity with requirements of donors, grantors, or creditors, which are properly referred to as restricted. (2) In governmental accounting, equity that is unreserved but set aside by the governing board, as opposed to equity that is committed or otherwise tied up beyond the control of the governing board, which is reserved.
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| direct debt | Debt that a governmental unit has incurred in its own name or assumed through the annexation of territory or consolidation with another governmental unit. See also overlapping debt.
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| direct method | Method for cash flow statements in which operating cash flows are presented "directly" such as receipts from customers, payments to suppliers and employees, etc. Contrast with indirect method (q.v.). GASB requires the direct method, whereas FASB permits either the direct or indirect method.
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| disclaimer of opinion | Audit report in which the auditor does not provide an opinion due to a severe scope limitation or for other reasons.
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| discrete presentation | Method of reporting financial data of component units (q.v.) in a column or columns separate from the financial data of the primary government (q.v.).
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| donated services | Services of volunteer workers who are unpaid or who are paid less than the market value of their services. In certain circumstances, donated services are recognized as revenues of nonprofit organizations.
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| economic resources measurement focus | Term used by GASB to indicate measurement focus for governmentwide, proprietary fund, and fiduciary fund statements. The economic resources measurement focus measures all economic resources, including fixed assets and long-term debt. Contrast with current financial resources measurement focus (q.v.).
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| eligibility requirements | Term used by GASB, in Statement 33, that describes certain conditions or events that must be met before a nonexchange revenue can be recognized. The four eligibility requirements are (1) required characteristics of recipients, (2) time requirements, (3) reimbursements, and (4) contingencies.
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| encumbrances | The estimated amount of purchase orders, contracts, or salary commitments chargeable to an appropriation.
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| endowments | Exist when a donor contributes an amount, never to be expended by donor restriction. The income from endowments may or may not be restricted (q.v.). See also term endowment.
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| enterprise fund | Fund used in state and local government accounting. Established to finance and account for the acquisition, operation, and maintenance of governmental facilities and services that are entirely or predominantly self-supporting by user charges; or for which the governing body of the governmental unit has decided periodic determination of revenues earned, expenses incurred, and/or net income is appropriate. Government-owned utilities and hospitals are ordinarily accounted for by enterprise funds.
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| escheat property | Private property that reverts to government ownership upon the death of the owner if there are no legal claimants or heirs.
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| estimated other financing sources | Amounts of financial resources estimated to be received or accrued during a period by a governmental or similar type fund from interfund transfers or from the proceeds of noncurrent debt issuances. Budgetary account.
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| estimated other financing uses | Amounts of financial resources estimated to be disbursed or accrued during a period by a governmental or similar type fund for transfer to other funds. Budgetary account.
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| estimated revenues | Budgetary account providing an estimate of the revenues that will be recognized during an accounting period by a governmental fund, such as the General Fund.
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| estimated uncollectible taxes (credit) | Provision out of tax revenues for that portion of taxes receivable that it is estimated will never be collected. Amount is shown on the balance sheet as a deduction from the Taxes Receivable account in order to arrive at the net taxes receivable.
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| exemption | Statutory reduction in the assessed valuation of taxable property accorded to certain taxpayers. Typical examples are senior citizens and war veterans.
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| exchange transactions | A transaction in which each party receives and gives up essentially equal values. FASB and GASB require that exchange transactions be recognized when the exchange takes place. See nonexchange transactions.
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| exchange-like transactions | Where the values exchanged, though related, may not be quite equal or in which the direct benefits may not be exclusively for the parties to the transaction. Recognized in same manner as exchange transactions (q.v.).
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| expendable | Resources, where focus is on the receipt and expenditure of resources; for example, modified accrual accounting. See nonexpendable.
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| expended | Term describing outflow of resources or reduction of liabilities associated with receipt of goods or services. Especially used in budgetary accounting, e.g., when an appropriation (q.v.) is expended.
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| expenditures | Recorded when liabilities are incurred pursuant to authority given in an appropriation (q.v.). Designates the cost of goods delivered or services rendered, whether paid or unpaid, including current items, provision for interest and debt retirement, and capital outlays. Used for governmental funds of governmental units.
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| face value | As applied to securities, the amount of liability stated in the security document. Sometimes called par value.
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| fair value | Amount at which an investment could be exchanged in a current transaction, other than a forced or liquidation sale, between willing parties. Certain investments are required by the FASB and GASB to be reported at fair value.
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| Federal Accounting Standards Advisory Board (FASAB) | Standards-setting body that promulgates federal government accounting and financial reporting standards.
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| fiduciary activities | Fiduciary activities are not included in the governmentwide statements but are included, as fiduciary funds, in the fund financial statements.
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| fiduciary funds | Any fund held by a governmental unit in a fiduciary capacity, ordinarily as agent or trustee. Also called trust and agency funds. Four categories exist: agency funds, pension trust funds, investment trust funds, and private-purpose trust funds.
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| Financial Accounting and Reporting Manual (FARM) | Issued by the National Association of College and University Business Officers (NACUBO) (q.v.) as additional illustrative guidance for accounting and financial reporting for both public and private institutions of higher education.
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| Financial Accounting Foundation (FAF) | Parent organization of the Financial Accounting Standards Board (FASB) and the Governmental Accounting Standards Board (GASB). Responsible for overall policy direction, raising funds, and selecting board members, but not for setting standards.
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| Financial Accounting Standards Board (FASB) | Independent seven-member body designated to set accounting and financial reporting standards for commercial entities and nongovernmental not-for-profit entities.
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| financial audits | Under Government Auditing Standards (q.v.), type of governmental audit that provides assurance about the fairness of financial statements.
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| Financial reporting entity | See reporting entity.
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| financial section | One of the three major parts of the Comprehensive Annual Financial Report (q.v.). Contains the auditor's opinion, the MD&A, the basic financial statements, required supplementary information, and any combining and individual fund financial statements and schedules.
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| financing activities | Cash flow statement category required by FASB. Includes all borrowing and repayment of debt.
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| fiscal agent | Bank or other corporate fiduciary that performs the function of paying interest and/or principal on debt when due on behalf of the governmental unit, nonprofit organization, or other organization.
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| fiscal entity | Where assets are set aside, for example in a fund, for specific purposes. See accounting entity.
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| 501(c)(3) entities | Not-for-profit organizations that receive tax-exempt status through Section 501(c)(3) of the Internal Revenue Code.
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| forfeiture | Automatic loss of cash or other property as a punishment for not complying with legal provisions and as compensation for the resulting damages or losses.
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| Form 990 | Tax form information return filed by certain tax exempt organizations under Section 501(c)(3)(q.v.) of the Internal Revenue Code.
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| full faith and credit | Pledge of the general taxing power for the payment of debt obligations. General obligation bonds are backed by the full faith and credit of a given governmental unit.
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| function | Group of related activities aimed at accomplishing a major service or regulatory responsibility for which a governmental unit is responsible. For example, public health is a function. The GASB provides for functional reporting of expenditures for governmental funds, and the FASB provides for functional reporting of expenses for private-sector not-for-profit organizations.
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| functional classification | Grouping of expenditures on the basis of the principal purposes for which they are made. Examples in government are public safety, public health, and public welfare. Examples in notfor- profit organizations are the various programs, fund-raising, management and general, and membership development.
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| functional expenses, statement of | Statement that displays, in a matrix format, expenses reported by function (q.v.) and expenses reported by object (q.v.). Required by the FASB for voluntary health and welfare organizations and recommended for other not-for-profit organizations, either as a statement or in the notes.
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| fund | Fiscal and accounting entity with a self-balancing set of accounts recording cash and other resources together with all related liabilities, net assets or fund balances, and changes therein that are segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions, or limitations.
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| fund accounting | Accounting system organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures, or expenses, as appropriate.
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| fund balance | Term used for governmental funds (q.v.) representing the difference between assets and liabilities. Fund balance may be reserved for various purposes or unreserved (q.v.).
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| fund balance—reserved for encumbrances | Portion of fund equity of governmental and expendable trust funds that is set aside for outstanding purchase orders and contracts.
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| fund balance—reserved for inventories | Portion of fund equity of governmental funds that is set aside for inventories reported as fund assets.
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| fund balance—reserved for long-term advances | Portion of fund equity of governmental funds that is set aside for long-term receivables reported as fund assets.
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| fund balance—unreserved | In governmental accounting, portion of Fund Equity (q.v.) that is available for appropriation.
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| fund equity | Excess of fund assets and resources over fund liabilities. A portion of the equity of a governmental fund may be reserved (q.v.) or designated (q.v.).
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| fund financial statements | Fund financial statements are required by GASB Statement 34 as well as governmentwide statements. Statements include those for governmental funds (q.v.), proprietary funds (q.v.), and fiduciary funds (q.v.).
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| GAAP hierarchy | Priority listing of Generally Accepted Accounting Principles (GAAP) (q.v.) established by the American Institute of Certified Public Accountants for governmental and nongovernmental units.
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| general fixed assets | Fixed assets of a governmental unit that are not accounted for by a proprietary or fiduciary fund.
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| general fund | Fund used to account for all transactions of a governmental unit that are not accounted for in another fund.
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| general long-term debt | Long-term debt legally payable from general revenues and backed by the full faith and credit of a governmental unit.
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| general obligation bonds | Bonds for whose payment the full faith and credit of the issuing body is pledged. More commonly, but not necessarily, considered to be those payable from taxes and other general revenues (q.v.). In some states, called tax-supported bonds.
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| general revenues (governmental) | All tax revenues and those other revenues that are not associated directly with a particular function or program. Deducted from net program costs in Statement of Activities (q.v.).
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| general-purpose government | Includes states, counties, municipalities, and other governments that have a range of purposes. General-purpose governments are by definition primary governments. In addition, general-purpose governments are required to prepare the full range of basic financial statements, including governmentwide and fund.
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| Generally Accepted Accounting Principles (GAAP) | Body of accounting and financial reporting standards as defined by Rule 203 of the American Institute of Certified Public Accountants (AICPA). "Level A" GAAP is set by the FASB, the GASB, and the FASAB.
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| Generally Accepted Auditing Standards (GAAS) | Standards prescribed by the American Institute of Certified Public Accountants to provide guidance for planning, conducting, and reporting audits by Certified Public Accountants.
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| Government Accountability Office, U.S. Legislative Branch | Agency of the federal government that prepares Government Auditing Standards (q.v.), responsible for audit of U.S. government executive branch.
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| Government Auditing Standards (GAS) | Auditing standards set forth by the Comptroller General of the United States to provide guidance for federal auditors and state and local governmental auditors and public accountants who audit federal organizations, programs, activities, and functions. Also referred to as Generally Accepted Government Auditing Standards (GAGAS).
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| Government Finance Officers Association (GFOA) | Association of government finance officials, primarily state and local. Sponsored the National Council on Governmental Accounting (NCGA), the predecessor standards-setting body to the GASB. Administers the Certificate of Achievement programs to encourage excellence in financial reporting and budgeting by state and local governments.
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| Governmental Accounting Standards Board (GASB) | Independent agency established under the Financial Accounting Foundation in 1984 to set accounting and financial reporting standards for state and local governments and for governmentally related not-for-profit organizations.
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| governmental activities | Governmental activities are reported separately in the governmentwide statements and include activities normally accounted for in the governmental funds and internal service funds.
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| governmental funds | Generic classification used by the GASB to refer to all funds other than proprietary and fiduciary. Includes the General Fund, special revenue funds, capital projects funds, debt service funds, and permanent funds.
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| government-mandated nonexchange transactions | One of the four classes of nonexchange transactions established by GASB. Example would be a grant to a school district to carry out a mandated state program.
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| governmentwide financial statements | Governmentwide statements included in the financial reporting requirements of GASB Statement 34 include the Statement of Net Assets and Statement of Activities.
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| grant | Contribution by one governmental unit to another unit. The contribution is usually made to aid in the support of a specified function (for example, education), but it is sometimes also for general purposes or for the acquisition or construction of fixed assets.
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| Health Care Guide | The AICPA (q.v.) Auditing and Accounting Guide: Health Care Organizations, which provides guidance for all health care entities, governmental, not-forprofit, and for-profit.
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| imposed tax revenues | One of the four classes of nonexchange transactions established by GASB. Examples are property taxes and fines and forfeits.
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| indirect method | Method for cash flow statement in which operating cash flows begin by reconciling from change in net assets to cash flows from operations. Contrast with direct method (q.v.). GASB prohibits the indirect method, whereas FASB permits either the direct or the indirect method.
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| infrastructure assets | Long-term assets including roads, bridges, storm sewers, etc. Under Statement 34, governments are required to capitalize and depreciate infrastructure, or to use the modified approach (q.v.).
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| in-substance defeasance | Transaction in which low-risk U.S. government securities are placed into an irrevocable trust for the benefit of debt holders and the liability for the debt is removed from the accounts of the entity even though the debt has not been repaid.
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| interfund loans and advances | Interfund transaction where one fund provides a shortterm loan or a long-term advance to another. Type of reciprocal interfund transaction (q.v.). One fund recognizes a receivable and the other a liability.
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| interfund reimbursements | Type of interfund transaction in which one fund reimburses another for expenditures already incurred. One fund recognizes an expenditure or expense; the other reduces an expenditure or expense.
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| interfund services provided and used | Interfund transaction in which one fund provides service to another. Type of reciprocal interfund transaction (q.v.). One fund recognizes a revenue and the other fund recognizes an expenditure or expense. Replaces the term quasi-external transaction.
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| interfund transactions | GASB term to describe transactions between funds. Four types of interfund transactions exist. Reciprocal interfund transactions (q.v.) include interfund loans and advances (q.v.) and interfund services provided and used (q.v.). Nonreciprocal interfund transactions include interfund transfers (q.v.) and reimbursements (q.v.).
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| interfund transfers | Type of interfund transaction in which one fund transfers resources to another, without an exchange transaction. One fund recognizes an Other Financing Source (q.v.) (or Transfer In) and the other fund recognizes an Other Financing Use (q.v.) (or Transfer Out).
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| intergovernmental revenue | Revenue from other governments, a source classification of revenues in governmental accounting. Includes grants, shared revenues, and entitlements.
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| internal service fund | Fund established to finance and account for services and commodities furnished by a designated department or agency to other departments and agencies within a single governmental unit or to other governmental units. Type of proprietary fund. Resources used by the fund are restored either from operating earnings or by transfers from other funds so that the original fund capital is kept intact.
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| Interpretations | Documents issued by the GASB (q.v.), FASB (q.v.), and FASAB (q.v.), that provide guidance regarding previously issued statements (q.v.).
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| introductory section | One of the three major parts of the Comprehensive Annual Financial Report (CAFR)(q.v.), including the letter of transmittal, organization chart, and list of principal officials.
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| invested in capital assets, net of related debt | Equity account, used for governmentwide and fiduciary fund statement of net assets (q.v.) that represents the amount reported for capital assets (q.v.), net of accumulated depreciation, less debt issued to obtain those capital assets.
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| investing activities | Cash flow statement category required by both FASB and GASB. FASB and GASB have differing content requirements for this category.
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| investment trust fund | Fiduciary fund that accounts for the external portion of investment pools reported by the sponsoring government.
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| IRS 457 deferred compensation plans | Tax deferred plans allowed by law to be offered by state and local governmental units. In some cases, reported as Pension Trust Funds.
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| lapse | As applied to appropriations, denotes the automatic termination of an appropriation. As applied to encumbrances, denotes the termination of an encumbrance (q.v.) at the end of a fiscal year.
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| levy | To impose taxes, special assessments, or service charges for the support of governmental activities. Total amount of taxes, special assessments, or service charges imposed by a governmental unit.
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| limited obligation debt | Debt secured by a pledge of the collections of a certain specified tax (rather than by all general revenues).
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| low-risk auditee | Auditee determined by an auditor who is auditing under the Single Audit Act (q.v.) to have met certain criteria.
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| major funds | Major funds must be displayed in the basic statements for governmental and proprietary funds. Funds are considered major when both of the following conditions exist: (1) total assets, liabilities, revenues, or expenditures/expenses of that individual governmental or enterprise fund constitute 10 percent of the governmental or enterprise activity; and (2) total assets, liabilities, revenues, or expenditures/expenses are 5 percent of the governmental and enterprise category.
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| major programs | Programs that must be audited under the provisions of the Single Audit Act (q.v.). Determined by a riskbased approach. Auditors must audit larger (Type A) programs unless they judge them to be low risk; auditors must audit smaller (Type B) programs if they judge them to be high risk.
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| Management's Discussion and Analysis (MD&A) | Required part of the financial section of a CAFR that provides an opportunity for management to explain, in plain-English terms, an overview of the government's financial activities. Considered Required Supplementary Information (q.v.) by the GASB.
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| matured bonds payable | Bonds that have reached their maturity but remain unpaid.
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| matured interest payable | Bond interest that is due but remains unpaid.
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| measurable | One condition that must be met before a revenue can be recognized under the modified accrual basis of accounting. The amount must be measurable.
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| measurement focus | Nature of the resources, claims against resources, and flows of resources that are measured and reported by a fund or other entity. For example, governmental funds measure and report current financial resources, whereas proprietary and fiduciary funds measure and report economic resources.
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| mill | Tax rate (q.v.) expressed in thousands per net assessed valuation. For example, a tax rate of $2.50 per $100 net assessed valuation would be $0.25 per $1,000 net assessed valuation, or 25 mills.
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| modified accrual basis of accounting | Basis of accounting required for use by governmental funds (q.v.) in which revenues are recognized in the period in which they become available and measurable, and expenditures are recognized at the time a liability is incurred except for principal and interest on long-term debt, which are recorded when due.
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| modified approach (infrastructure) | When a government chooses not to depreciate infrastructure assets (q.v.). Under this approach, improvements and additions would be capitalized; expenditures that extend the life would be expenses. When using the modified approach, a government must provide certain RSI (q.v.) schedules that demonstrate that infrastructure is maintained at a certain level.
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| National Association of College and University Business Officers (NACUBO) | Association of college and university financial vice presidents, controllers, budget officials, and other finance officers that produces and distributes Financial Accounting and Reporting Manual for Higher Education (q.v.).
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| National Council on Governmental Accounting (NCGA) | Body that established accounting and financial reporting standards for state and local governments prior to the formation of the Governmental Accounting Standards Board.
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| net assets | Difference between total assets and total liabilities. Used by the FASB and GASB to describe equity accounts.
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| net assets—invested in capital assets, net of related debt (governmental) | The portion of net assets of a governmental unit representing capital assets less accumulated depreciation less debt associated with the capital assets.
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| net assets—permanently restricted (not for-profit) | Used in accounting for not-forprofit organizations indicating the amount of net assets whose use is permanently restricted by an external donor.
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| net assets—restricted (governmental) | That portion of net assets of a governmental unit or proprietary fund that is restricted. See restricted (governmental).
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| net assets—temporarily restricted (notfor- profit) | Used in accounting for not-forprofit organizations indicating the amount of net assets whose use is temporarily restricted by donors or grantors. Released by program, time, plant acquisition, and term endowments.
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| net assets—unrestricted (governmental and not-for-profit) | Used in accounting for governmental and not-for-profit organizations indicating that portion of net assets that is unrestricted.
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| net increase/decrease in fair value of investments | Account title used by governments to report realized and unrealized gains or losses on investments.
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| Net Pension Obligation (NPO) | In a pension plan, anticipated present value of future payments based on past service.
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| nominal interest rate | Contractual interest rate shown on the face and in the body of a bond and representing the amount of interest to be paid, in contrast to the effective interest rate (q.v.).
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| nonaudit services | Under Government Auditing Standards (q.v.), gathering, providing, or explaining information requested by decision makers or providing advice or assistance to management officials.
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| noncapital financing activities | Cash flow statement category required by GASB. Includes cash flows from financing not related to capital acquisition, including borrowing and transfers to and from other funds.
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| nonexchange transactions | Transactions that are not the result of arms-length exchange between two parties that are bargaining for the best position. Contrasted with exchange transactions, such as sales and services for user charges. Examples are taxes and contributions. GASB has established accounting rules for nonexchange transactions in Statement 33.
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| nonexpendable | Resources, which are maintained, and focus is on the recognition of revenues and expenses; for example, in accrual accounting. See expendable.
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| nonmajor funds | All funds other than major. Nonmajor funds are not required to be presented separately in the basic fund financial statements of governmental and enterprise funds. See major funds.
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| nonreciprocal interfund transactions | Type of interfund transaction where the direction is "one-way." Includes interfund transfers and interfund reimbursements. The interfund equivalent of nonexchange transactions (q.v.).
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| normal cost | Amount that would be required to be contributed to a retirement plan (or other postemployment benefit plan) and charged as expenditure/expense, assuming the plan was currently funded; present value of future payments based on current earnings.
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| Not-for-Profit Guide AICPA (q.v.) | Audits of Not-for-Profit Organizations, which provides guidance for private-sector colleges and universities, voluntary health and welfare organizations, and other not-for-profit organizations, excluding health care.
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| not-for-profit organization | An entity that possesses the following characteristics: (1) receives significant resources from donors who do not expect equivalent value in return; (2) operates for purposes other than to provide goods or services at a profit; and (3) lacks an identifiable individual or group of individuals who hold a legally enforceable residual claim. Entities that fall outside this definition include all investor-owned enterprises and other organizations that provide economic benefits to the owners, members, or participants.
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| notes to the financial statements | Required part of the basic financial statements for state and local governments. Includes a summary of significant accounting policies, other required, and optional disclosures.
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| Object | As used in expenditure classification, applies to the article purchased or the service obtained (as distinguished from the results obtained from expenditures). Examples are personal services, contractual services, materials, and supplies.
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| object classification | Grouping of expenditures on the basis of goods or services purchased. See also Functional Classification, Activity Classification, and Character Classification.
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| objectives statements | Issued by the FASB, FASAB, and GASB for guidance and reference when preparing standards of accounting and financial reporting.
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| Office of Management and Budget, U.S. (OMB) | Executive agency of the federal government responsible for the preparation of the executive budget proposal and for the form and content of agency financial statements. The director is one of the Principals (q.v.) that approves the recommendations of the Financial Accounting Standards Advisory Board (FASAB) (q.v.).
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| OMB Circular A–133, Audits of States, Local Governments, and Not-for-Profit Organizations Receiving Federal Awards | Replaces former OMB Circular A–128 for state and local governments and A–133 for not-for-profit organizations. Provides guidance for auditors when engaged in audits required by the Single Audit Act. See compliance supplement.
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| OPEB obligation | The cumulative difference between the amounts provided by a government to fund other postemployment benefits and the actuarially determined annual required contributions (ARC).
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| operating activities | Cash flow statement category required by both FASB and GASB. Includes receipts from customers, payments to suppliers and employees, etc.
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| operating lease | Rental-type lease in which the risks and benefits of ownership are substantively retained by the lessor and that does not meet the criteria in applicable accounting and reporting standards of a capital lease (q.v.).
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| opinion units | Under the AICPA State and Local Government Guide (q.v.), opinion units are reporting levels where materiality is set and audit reporting is done. Opinion units are (1) governmental activities (q.v.), (2) business-type activities (q.v.), (3) each major govern-mental and enterprise fund (q.v.), (4) the aggregate of all discretely presented compo-nent units (q.v.), and (5) the aggregate of all remaining fund information.
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| other financing sources | Operating statement classification in which financial inflows other than revenues are reported; for example, proceeds of general obligation bonds and transfers in.
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| other financing uses | Operating statement classification in which financial outflows other than expenditures are reported; for example, operating transfers out.
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| other not-for-profit organizations | Term describing category of not-for-profit organizations. Includes all but voluntary health and welfare organizations (q.v.), colleges and universities, and health care organizations.
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| other postemployment benefits | Health plan payments for retirees and other payments made pursuant to agreements between employers and employees. Resources available to pay these benefits are reported in pension (and other employee benefit) trust funds.
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| overlapping debt | Proportionate share of the debts of local governmental units located wholly or in part within the geographic borders of the government reporting entity that must be borne by property owners within each governmental unit.
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| oversight agency | Under Single Audit Act and amendments, agency that deals with auditee, as representative of all federal agencies. Agency with the most dollars expended by the auditee assumes the role.
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| pass-through entity | Entity that receives federal funds and transfers some or all of the funds to other entities, called subrecipients (q.v.).
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| pension (and other employee benefit) trust fund | One of the fiduciary fund types. Accounts for pension and other employee benefit plans when the governmental unit is trustee.
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| performance audits | Under Government Auditing Standards (q.v.), an independent assessment of the performance and management of a program against objective criteria.
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| performance indicator | Used in Health Care Guide (q.v.) to describe a measure of operations. Required in the Statement of Operations (q.v.) by the Health Care Guide.
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| permanent fund | Governmental fund that is legally restricted so that only earnings, not principal, may be expended, and for purposes to benefit the government and its citizenry.
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| permanently restricted net assets | Category used by FASB in not-for-profit accounting to describe net assets (q.v.) as being permanently restricted by donors. Permanent Endowments (q.v.) represent an example.
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| perpetual trust held by third party | Split interest (q.v.) agreement in which trust assets are held by a third party but the income is to go to a not-for-profit organization.
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| pooled life income fund | Split-interest agreement described in AICPA Not-for-Profit Guide (q.v.) in which several life income agreements are pooled together. A life income fund represents a situation where all of the income is paid to a donor or beneficiary during his or her lifetime.
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| primary government | State government or general-purpose local government. Also, special-purpose government that has a separately elected governing body, is legally separate, and is fiscally independent of other state or local governments.
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| principals | The Director of the Office of Management and Budget (q.v.), the Secretary of the Treasury (q.v.), and the Comptroller General of the United States (q.v.). These three individuals review standards passed by the FASAB (q.v.) and, unless they object, those standards become GAAP (q.v.).
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| private organizations | Organizations and entities that are not owned or controlled by any governments. They include for-profit and not-for-profit organizations. In contrast to public organizations.
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| private-purpose trust fund | All trust arrangements other than pension and investment trust funds under which principal and income benefit individuals, private organizations, or other governments.
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| proceeds of bonds (or long-term notes) | Account used in governmental accounting for governmental funds to indicate the issuance of long-term debt. Considered an "other financing source." (q.v.) program expense ratio. The most common financial ratio used to evaluate not-for-profit organizations. It is computed as program services expenses divided by total expenses.
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| program revenues (governmental) | Charges for services, operating grants, and contributions, and capital grants and contributions that are related to specific programs and subtracted from those programs in the Statement of Activities (q.v.) to obtain net program costs.
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| program services | Category of functional expenses used by many not-for-profit organizations to describe expenses related to fulfilling the mission of the organization. Contrasted with supporting services. Program expenses are listed individually with all direct and allocated costs assigned.
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| property taxes | Taxes levied by a legislative body against agricultural, commercial, residential, or personal property pursuant to law and in proportion to the assessed valuation of said property, or other appropriate basis. See ad valorem.
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| proprietary funds | One of the major fund classifications of governmental accounting, the others being governmental (q.v.) and fiduciary (q.v.). Sometimes referred to as income determination or commercial-type funds. Includes enterprise funds and internal service funds.
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| public charity | Churches, schools, hospitals, governmental units, and publicly supported charities and certain other entities. Distinguished from private foundations, which are subject to different tax rules.
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| Public Employee Retirement Systems (PERS) | Organizations that collect retirement and other employee benefit contributions from government employers and employees, manage assets, and make payments to qualified retirants, beneficiaries, and disabled employees.
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| public organizations | Organizations owned or controlled by a government, including government authorities, instrumentalities, and enterprises. In contrast to private organizations.
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| purchases method | Refers to method used to recognize expenditures for governmental funds (q.v.) in which an expenditure (q.v.) is recognized when inventory is acquired.
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| qualified opinion | Audit report in which the auditor provides an "except for" opinion, due to failure to follow generally accepted accounting principles (q.v.) or due to a scope limitation.
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| quasi-endowment | Term to describe a situation where a governing board of a not-for-profit organization takes resources that are unrestricted and sets them aside "as if" those resources were an endowment; the intent is to never expend those funds. Such funds continue to be unrestricted for financial reporting purposes.
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| quasi-external transaction | Outdated term. See interfund services provided and used.
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| reciprocal interfund transactions | Type of interfund transaction where all funds receive benefit. Includes interfund loans and advances (q.v.) and interfund services provided and used (q.v.). The interfund equivalent of exchange transactions (q.v.).
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| reclassification | Term created by the FASB to describe the transfer of net assets from temporarily restricted to unrestricted. Done when restrictions have expired, for expiration of time restriction, for expiration of term endowments, for satisfaction of program restrictions, or for satisfaction of plant acquisition restrictions.
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| reconciliation | As used in state and local government accounting, reconciliations are required between fund statements and governmentwide statements. Specifically, a reconciliation is required between the governmental fund Balance Sheet and the governmentwide Statement of Net Assets. Also, a reconciliation is required between the governmental fund Statement of Revenues, Expenditures, and Changes in Fund Balances and the governmentwide Statement of Activities.
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| refunding bonds | Bonds issued to retire bonds already outstanding. May be sold for cash and outstanding bonds redeemed in cash or may be exchanged with holders of outstanding bonds.
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| reimbursements | An eligibility requirement imposed by GASB. A nonexchange revenue (or expense) cannot be recognized until the resources are expended, when a grant or contribution makes this requirement. Also, see interfund reimbursements.
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| reporting entity | Primary government and all related component units, if any, combined in accordance with the GASB Codification Sec. 2100 constituting the governmental reporting entity.
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| repurchase agreement | Agreement wherein a governmental unit transfers cash to a financial institution in exchange for U.S. government securities and the financial institution agrees to repurchase the same securities at an agreed-upon price.
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| required characteristics of recipients | An eligibility requirement imposed by GASB. A nonexchange revenue (or expense) cannot be recognized unless the recipient government meets the characteristics specified by the provider.
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| Required Supplementary Information (RSI) Information required by GASB to be reported along with basic financial statements. Includes MD&A (q.v.) and, when applicable, the Schedule of Funding Progress, the | Schedule of Employer Contributions, Budgetary Comparison Schedules, and information about infrastructure assets required using the modified format.
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| reserve | Account that records a portion of the fund equity that must be segregated for some future use and that is, therefore, not available for further appropriation or expenditure. Fund Equity is often reserved for encumbrances (q.v.), inventories (q.v.), and long-term advances to other firms (q.v.).
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| restricted (governmental) | According to GASB, a restriction on resources of a state or local government is (a) externally imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments, and (b) imposed by law through constitutional provisions or enabling legislation. See net assets—restricted.
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| restricted (not-for-profit) | According to FASB, in order to report resources as restricted, those resources must be restricted by a contributor or grantor. See permanently restricted assets and temporarily restricted net assets.
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| restricted assets | Assets (usually of an enterprise fund) that may not be used for normal operating purposes because of the requirements of regulatory authorities, provisions in bond indentures, or other legal agreements but that need not be accounted for in a separate fund.
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| revenue bonds | Bonds whose principal and interest are payable exclusively from earnings of a public enterprise.
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| revenues | Additions to fund financial resources other than from interfund transfers (q.v.) and debt issue proceeds.
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| revenues ledger | Subsidiary ledger, used in accounting for governmental funds that record budgets to support the Revenues control account. Normally established by revenue source.
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| reverse repurchase agreement | Agreement in which a broker-dealer or financial institution (buyer-lender) transfers cash to a governmental entity (seller-borrower); the entity transfers securities to the broker-dealer or financial institution and promises to repay the cash plus interest in exchange for the same securities or for different securities.
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| risk-based approach | Approach to be used by auditors when conducting audits with the newly revised A–133 to determine major programs, based on perceived risk as well as size of programs.
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| risk management | Policies adopted by a governmental or not-for-profit organization to manage risk that might result in liabilities for health care, accidents, and so on, including the purchase of insurance, selfinsurance, and participation in public entity or other risk pools.
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| RSI | See Required Supplementary Information.
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| Sarbanes-Oxley Act | A federal act intended to improve corporate governance and limit the services accounting firms may provide to their audit clients. While the Act applies only to corporations filing with the Securities and Exchange Commission, many of the Act's best practices have been adopted by governments and not-for-profit organizations.
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| schedule of employer contributions | Schedule required by the GASB to be presented as Required Supplementary Information (RSI) (q.v.) for public employee retirement systems, other postemployment benefit plans, and pension trust funds. Compares the annual required contributions with the contributions actually made.
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| schedule of funding progress | Schedule required by the GASB to be presented as Required Supplementary Information (RSI) (q.v.) for public employee retirement systems, other postemployment benefit plans, and pension trust funds. Compares the actuarial accrued liability with the actuarial value of plan assets.
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| schedules | Explanatory or supplementary statements that accompany the balance sheet or other principal statements periodically prepared from the accounts.
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| segment information | Note disclosures required in general-purpose financial statements to report the financial condition and operating results of individual enterprise activities.
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| self-insurance | Decision of an entity not to purchase insurance but instead to accept the risk of claims as a part of its riskmanagement policy. When a government uses one fund to report that risk, it is required to use either the General Fund or an internal service fund.
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| serial bonds | Bonds the principal of which is repaid in periodic installments over the life of the issue.
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| service efforts and accomplishments | Conceptualization of the resources consumed (inputs), tasks performed (outputs) and goals attained (outcomes), and the relationships among these items in providing services in selected areas (e.g., police protection, solid waste garbage collection, and elementary and secondary education).
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| shared revenue | Revenue levied by one governmental unit but shared, usually on a predetermined basis, with another unit of government or class of governments.
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| single audit | Audit prescribed by federal law for state and local governmental units, colleges and universities, and not-for-profit organizations that receive federal financial assistance above $500,000.
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| Single Audit Act Amendments of 1996 | Legislation that extended the single audit to not-for-profit organizations and provided for a risk-based approach to determine major programs.
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| solid waste landfill | Landfill accepting waste from citizens and also waste management firms. Charges are normally levied against those depositing waste. Managed by government. Due to certain federal environmental requirements to maintain those land-fills many years, the GASB (q.v.) has adopted accounting requirements that bring forward future charges to offset current revenues.
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| special assessment | Compulsory levy made against certain properties to defray part or all of the cost of a specific improvement or service that is presumed to be a general benefit to the public and of special benefit to such properties.
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| special assessment bonds | Bonds payable from the proceeds of special assessments (q.v.).
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| special district | Independent unit of local government organized to perform a single governmental function or a restricted number of related functions. Examples of special districts are water districts, drainage districts, flood control districts, hospital districts, fire protection districts, transit authorities, port authorities, and electric power authorities.
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| special item | Classification by GASB in financial statements to indicate that a revenue, expense, gain, or loss is either unusual or infrequent and within the control of management.
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| special-purpose government | Governments that are not general-purpose (q.v.) governments and have a more limited range of purposes. Often includes townships, park districts, sanitation districts, and authorities.
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| special revenue fund | Fund used to account for revenues from specific taxes or other earmarked revenue sources that by law are designated to finance particular functions or activities of government. An example is a motor fuel tax fund used to finance highway and road construction.
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| split-interest agreement | Agreement between a donor and a not-for-profit organization in which the donor (or beneficiary) and the organization "split" the income and/or principal of the gift. Examples are charitable lead trusts (q.v.) and charitable remainder trusts (q.v.).
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| State and Local Government Guide AICPA (q.v.) | Audits of State and Local Governmental Units, which provides guidance for state and local governmental units.
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| statement of activities (not-for-profit accounting) | One of the three statements required for not-for-profit organizations by FASB Statement 117. Requirements are to show revenues, expenses, gains, losses, and reclassifications (q.v.) and to show the change in net assets by net asset class (unrestricted, temporarily restricted, permanently restricted).
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| statement of activities (governmental accounting) | Required basic governmentwide financial statement in which program revenues are subtracted from expenses to get net program costs. General revenues are then deducted, to get the change in net assets.
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| statement of cash flows | Required basic statement for proprietary funds for governmental units and for public colleges and universities. Also required statement for nongovernmental not-for-profit organizations.
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| statement of changes in fiduciary net assets | Required basic statement for fiduciary funds. Reported by fund type.
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| Statement of Federal Financial Accounting Concepts (SFFACs) | Concepts statements passed by the FASAB that provide objectives of accounting and financial reporting for the federal government. Do not have the authoritative status of statements.
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| statement of fiduciary net assets | Required basic statement for fiduciary funds where assets less liabilities equals net assets. Reported by fund type.
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| statement of financial accounting concepts | Concepts statements passed by the FASB that provide objectives of accounting and financial reporting for nongovernmental entities. Do not have the authoritative status of statements.
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| Statement of financial position | Required basic statement that reports assets, liabilities, and net assets.
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| statement of functional expenses | Statement required by FASB Statement 117 for voluntary health and welfare organizations (q.v.). Shows a matrix of expenses by function (q.v.) and by object classification (q.v.).
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| statement of net assets | Balance sheet format where assets less liabilities equal net assets. Encouraged for governmentwide statements and may be used for proprietary and fiduciary fund statements.
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| statement of operations | Required by the Health Care Guide (q.v.) to be prepared by all health care organizations. Includes a performance indicator (q.v.).
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| statement of revenues, expenditures, and changes in fund balances | Basic operating statement for governmental funds, included in the CAFR.
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| statement of revenues, expenses, and changes in fund net assets | Basic statement used for proprietary funds to reflect operations and changes in net assets.
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| Statements | Issues by the GASB (q.v.), FASB (q.v.), and FASAB (q.v.) outlining accounting principles for those entities under each board's jurisdiction. Constitutes GAAP (q.v.). Also principal financial presentations of governments and not-for-profit organizations.
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| statistical section | One of the three major parts of the Comprehensive Annual Financial Report (CAFR) (q.v.), listing schedules that assist users in evaluating the financial condition of a government and its community.
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| subrecipient | Entity that receives federal funds through another government or not-forprofit entity. For example, a state may pass through funding to certain local governments. See pass-through entities.
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| subsidiary account | One of a group of related accounts that support in detail the debit and credit summaries recorded in a control account. An example is the individual property taxpayers' accounts for taxes receivable in the general ledger.
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| subsidiary ledger | Group of subsidiary accounts (q.v.) the sum of the balances of which is equal to the balance of the related control accounts. This text illustrates the Revenues Ledger (q.v.) and the Appropriations, Expenditures, and Encumbrances Ledger (q.v.).
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| supporting services | Functional expense category recommended, but not required, by the FASB for not-for-profit organizations. Includes fund-raising, management and general, and membership development expenses.
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| tax agency fund | Agency fund, usually maintained by a county official, to handle the collection of all property taxes within the county or other jurisdiction and the distribution of proceeds to all governments within the borders of that county or other jurisdiction.
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| tax increment debt | Debt issued by a governmental unit to finance improvements in a Tax Increment Financing (TIF) District; the incremental taxes from those improvements are dedicated to the repayment of the debt.
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| tax rate | Amount of tax stated in terms of a unit of the tax base; for example, $2.50 per $100 of net assessed valuation, or 25 mills (q.v.).
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| tax supported bonds | Bonds supported by the full faith and credit of the governmental unit, by specific taxes.
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| technical bulletins | Issues by the staffs of the standards-setting bodies and approved by the boards, providing additional information regarding questions and answers that might be addressed by those bodies.
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| temporarily restricted net assets | Category used by FASB to describe net assets (q.v.) as being restricted by donors, but are not permanently restricted net assets (q.v.). Temporarily restricted net assets may be restricted for purpose, time, plant acquisition, or term endowments (q.v.).
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| term bonds | Bonds for which the principal is paid at the end of the term. Contrast with serial bonds (q.v.).
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| term endowments | Exist when a donor contributes an amount, which is not to be expended for a certain period of time. Term endowments are classified as temporarily restricted net assets (q.v.) by FASB.
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| time requirements | An eligibility requirement imposed by GASB. A nonexchange revenue (or expense) cannot be recognized until the time specified by the donor or grantor or contributor for expenditure.
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| transfers | As used in state and local government accounting, the shifting of resources from one category to another. In fund reporting, the transfer of resources from one fund to another. In governmentwide reporting, the transfer of resources from one type of activity to another, such as from governmental activities to business-type activities. Transfers may be regularly recurring and routine (formerly called "operating transfers") or non-routine (formerly called "equity transfers").
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| Treasury, U.S. Department of | Federal executive branch agency; prepares Consolidated Financial Statements of the Federal Government. One of the "principals" that approves FASAB standards of financial reporting for the Federal Government.
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| trust fund | Fund consisting of resources received and held by the governmental unit as trustee, to be expended or invested in accordance with the conditions of the trust. In governmental accounting, includes investment (q.v.), private-purpose (q.v.), and pension trust (q.v.).
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| unfunded actuarial liability | In a pension plan, difference between the net pension obligation (NPO) (q.v.) and the net assets available for benefits. Included in the Schedule of Funding Progress.
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| unqualified opinion | Audit report in which the auditor states that the financial statements are "fairly presented." Unrelated Business Income Tax (UBIT) Tax that applies to business income of otherwise tax-exempt not-for-profit entities. Determined by relationship to exempt purpose and other criteria.
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| unrestricted net assets | Portion of the excess of total assets over total liabilities that may be utilized at the discretion of the governing board of a not-for-profit entity. Separate classification provided in FASB Statement 117 and in GASB Statement 34.
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| voluntary health and welfare organizations | Not-for-profit organizations formed for the purpose of performing voluntary services for various segments of society. They are tax exempt, supported by the public, and operate on a not-for-profit basis.
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| voluntary nonexchange transactions | One of the four classes of nonexchange transactions established by GASB. Examples are contributions and grants for restricted purposes but which purposes are not mandated independent of the grant.
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