What is the Appropriate Level of Cash Reserves?

That is a question that the management of many governmental entities asks. Governmental entities also have another layer of complexity in determining appropriate levels of cash reserves due to the fact that there are many different funds within a governmental entity. For example, a governmental entity may have General, Special Revenue, Debt Service, Capital Improvement …

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There’s A Pocket Guide for That?

While trying to research something both useful and interesting for government clients, I came across a “Pocket Guide for Government Employees” entitled:  “Protecting Federal Tax Information. While the guide was primarily addressing the need for state tax agencies which receive federal tax returns and return information, it reminded me that now many cities, towns and …

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Governments and Business Entities

Can governments apply the accounting and financial reporting standards that business entities use? The simple answer is no.  Governments and for-profit entities are different in a variety of ways.  One of the biggest differences is the stakeholders, and how separate accounting and financial reporting standards are in place to provide the appropriate information to meet …

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Governments Get Special Treatment

Recently our audit team had been presented with an unusual circumstance regarding losses due to impairment of capital assets.  While performing research surrounding this situation I was reminded of the three different ways a governmental agency can present a loss due to impairment, one of which is different from that of a private entity. GASB …

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Government Asset Impairment Determination

According to GASBS 42: A capital asset is considered impaired if the following apply: 1.) The decline in service utility of the capital asset is large in magnitude and 2.) The event or change in circumstances is outside the normal life cycle of the capital asset. However, it is not necessary to repeatedly review all assets for …

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GASB 54, the Devil is in the Details

As most readers of this blog know by now, governmental entities are now required to adopt “Governmental Accounting Standards Board Statement 54 (GASB 54) Fund Balance Reporting and Governmental Fund Type Definitions” for their Comprehensive Annual Financial Reports (CAFR) for the year ending June 30, 2011.  We at Henry & Horne are well into our …

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Two helpful QuickBooks tips to protect prior period data

It’s hard to deny how easy QuickBooks accounting software is to use. However, the very thing you love about the software can also be a source of trouble for you when it comes to certain activities. Because it is so easy to use, transactions can be changed easily, most times without thought to how these …

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Determining if July Debt Payments should be Accrued in Governmental Funds

Is your government about to obtain new debt in their governmental funds? If there is a payment in July following fiscal year end; should the payment be recorded in the current year or next fiscal year? Under cash basis, there should not be an expenditure recorded until amounts are due and payable; however there is …

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Adoption of A Capitalization Policy

One of the ways a Henry & Horne auditor can add value to a client’s audit, is to provide recommendations for client staff economies in bookkeeping.  Over the past year, one of the recommendations that I have been able to make is the following: In small governments (e.g. Special Districts), an often overlooked item is the …

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The differences between GAAP, cash basis and modified cash basis of accounting

Generally Accepted Accounting Principles in the U.S. (GAAP) are just that – generally accepted. However, it’s not the only choice of accounting basis available to nonprofit and government organizations, and many organizations select another basis of accounting. There could be many reasons for presenting a different basis, one being that it may be more in …

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