needs links added once other pages are done. And possibly sub pages
Overview of Conversion Process - Old Model to New
Introduction
While it is not the goal of these help screens to provide all of the accounting theory and all of the details of the conversion process, this overview is presented to assist the user in understanding the data flow in and through the system. Accounting theory and specific information related to the conversion process that is summarized in this overview is explained in more detail in the generic conversion plans that are available through the Auditor of State. From their website (www.auditor.state.oh.us), click on Local Government Resources and find the GASB Implementation Files. Generic plans are available for schools, as well as for cities and counties.
Since proprietary funds were reported on the accrual basis of accounting and included capital assets and debt, the change to GASB 34 is much less significant for them. While the equity is reported in net assets accounts, rather than contributed capital and retained earnings, the total assets, liabilities and resulting equity remain the same for the fund financial statements. Therefore, most of this overview will focus on the governmental funds and activities.
The conversion from previously reported GAAP information to financial statements that conform to the new GASB 34 reporting model is a bit more complicated than the conversion process needed for the old model. The obvious reason for this is the need to create the new district-wide statements on a full accrual basis. There are two aspects of those statements that complicate the conversion process beyond simply applying a new basis of accounting. The first is the need to split net assets into restricted net asset components and to distinguish between major categories of restrictions. The second is the requirement to identify program revenues and then associate them with the programs reported on the statement of activities.
It would be a straight forward process to compute the accrual information for governmental activities if you could simply roll the modified accrual information for the governmental funds together and then convert this to accrual information using journal entries that encompassed all governmental activities. The problem with this approach is that you lose the ability to identify restricted net assets by category. For example, from the modified accrual statements, the fund balance available for debt service is evident. Once all governmental funds are rolled together and the governmental activities accrual entries are entered in total, the ability to identify the net assets restricted for debt service without significant additional analysis is lost.
One way to address this issue is to split the accrual journal entries based on the categories of restricted net assets they affect. The other is to take the additional step of entering the journal entries needed to calculate restricted net assets at the fund level. This is the method we have adopted. This method permits restricted net assets to be categorized in as much detail as the reporting government could ever want. It permits the accrual entries to be calculated at the same time and in the same manner as the modified accrual entries. It also generates trial balances that facilitate analytic review, which is beneficial both to the preparer and to the auditors. The entering of accrual entries at the fund level also facilitates the identification of program revenues by program.
Program revenues will be identified at this fund level and will be posted in a separate column on the restricted net assets trial balance for each governmental fund. Posting at this level is much easier, as the revenues can be analyzed as the individual statement is prepared, and then split to the programs (functions) for which the revenues are associated and against which expenses they are offset to report net expenses. A complete discussion regarding the identification and classification of program revenues is included in the sample conversion plan mentioned earlier.
This overview is provided to summarize the steps needed in order to convert the School District’s financial statements from the old reporting model to the new reporting model. Each step in this overview is explained in much more detail in the generic conversion plans. It should be noted that this overview will address three significant conversion components, getting ready to convert, preparing appropriate beginning balances in accordance with the reporting requirements of GASB 34, and preparing appropriate ending balances which include the relevant activity accounts such as revenues, expenditures/expenses, special and extraordinary items, and so forth. Preparing to convert will require more time and effort in the initial year with review and any necessary updates in subsequent years. For example, one must verify that the major funds previously reported are still appropriate and complete given subsequent year changes and ending balances. Preparing appropriate beginning balances will require extensive effort in the initial year. Preparing the appropriate ending balances with the relevant activity accounts describes the basic annual conversion process.
Getting Ready to Covert
Each fund contained within the school district’s financial records (USAS) should be classified by fund type using the new fund structure and fund definitions. The governmental funds include the general fund, special revenue funds, debt service funds, capital project funds, and permanent funds. The proprietary funds include enterprise funds and internal service funds. The fiduciary funds include pension (and other employee benefits) trust funds, investment trust funds, private-purpose trust funds, and agency funds. The new requirements define the fiduciary funds more narrowly than trust and agency funds were previously defined, by eliminating other funds from the definition, “to account for resources held by a governmental unit in a trustee capacity or as an agent for individuals, private organizations, other governmental units, and/or other funds, when externally reporting fiduciary funds. As GASB 34 states, fiduciary funds should be used to report assets held in a trustee or agency capacity for others and therefore cannot be used to report resources used to support the government’s own programs. These definitions and requirements are explained in more detail in the fund classification section of the conversion plan.
As part of identifying the fund structure, consider the possibility of consolidating small funds (or fund special cost centers) of a similar purpose for reporting purposes. The system allows the mapping of those funds and fund-special cost centers in the maintain fund codes option in the setup menu. Once the mapping is set, the system will report the funds that have been mapped together as one fund.
Major governmental and enterprise funds are reported individually in the funds financial statements. A spreadsheet is available from the Auditor of State website to identify major funds. This determination is often made with prior year balances to start the conversion process, but must also be reviewed using the current year ending balances to make sure the preliminary classifications are still appropriate and complete. Significant current year changes could cause a fund that formerly met major fund criteria to no longer meet them or vice versa. In addition to mandatory major fund reporting, management may decide to present a governmental or enterprise fund as a major fund even though it does not meet the criteria for mandatory major fund reporting. This is also discussed in more detail in the fund classification section of the conversion plan.
As part of preparing to convert one should prepare draft financial statements by identifying appropriate accounts and activities. This is discussed in the general purpose external financial statements and accounts section of the generic conversion plans. Deciding at what level of detail to report will allow the information to be accumulated at the appropriate level of detail and will save a lot of time and frustration in the conversion process. The necessary journal entries can then be coded using the proper GAAP accounts. The system base chart of accounts has provided several alternative account choices for statement presentations. For example capital assets could be presented in the statements in two accounts, nondepreciable capital assets and depreciable capital assets, net. If this option is selected, one would not want to enter journal entries to land, construction in process, or accumulated depreciation, for example. Each account with a balance will be reported as a separate account when the financial statements are produced.
If one decides to aggregate certain accounts on the statement of net assets, relevant detailed information must be disclosed in the notes to the financial statements. For example, if nondepreciable and depreciable capital asset accounts are selected for the financial statements, the amounts for land and land improvements, buildings and building improvements, equipment, construction in process, and so forth would be disclosed in the notes along with the related accumulated depreciation.
For the Statement of Net Assets, one must chose either the order of liquidity or classified format; determine the accounts to be included; determine the classifications of restricted net assets; and determine the method of accumulating restricted net assets. This system was designed to accumulate restricted net asset data at the fund level.
For the Statement of Activities, one must determine the level of expense presentation (It should be noted that school districts do not have to follow the same function breakdown for expense presentation.); determine whether to present a discretionary column for indirect cost allocation (This option is not currently available within this system.); determine presentation of program revenues (charges for services, operating grants, and capital grants); and determine classification of general revenues and the level of detail to be reported.
One may report more than one column under each major category of program revenues. (While this is permitted, it has not yet been addressed within the system. Should there be enough demand for this it can be addressed at a later date.) To maintain an audit trail, one may want to create a program revenue worksheet to track specific program revenues throughout the conversion process for all funds with multiple activities by listing each transaction type by type of program revenue and associated activity. Also bear in mind, the system can produce a report of journal entries that were entered using the program revenue transaction type.
In addition one must determine the breakdown between activities and enterprise funds. One cannot assume that business-type activities are only enterprise funds or are only at the fund level. For example, a business-type activity must be presented for each different and identifiable activity reported within an enterprise fund.
Finally one must determine the presentation of any component units. It is important to note that the discretely presented component units will only be presented on the district-wide financial statements, therefore the financial information of the component units will also need to be converted to the GASB 34 format. Three options exist to meet the disclosure requirements for discretely presented component units. One may report multiple discretely presented component units as a combined total on the face of the school district-wide financial statements with the combining information included as part of the notes to the basic financial statements; one may report multiple discretely presented component units as a combined total on the face of the district-wide financial statements with a separate combining statement included in the basic financial statements; or one may report multiple discretely presented component units in separate columns on the face of the school district-wide financial statements. Component units that are fiduciary in nature, however, should be reported only in the fund financial statements with the primary government’s fiduciary funds. Blended component units should be reported as part of the primary government and would therefore be reported in the appropriate fund financial statements as well as in the entity-wide statements as either a governmental activity or business-type activity, as appropriate.
Preparing Appropriate Beginning Balances
After considering the various system account options one must finalize the account structure and presentation format and based on the account structure which was determined from the draft financial statement, prepare and enter the appropriate entries for the Initial Year Governmental Fund Trial Balances and the Initial Year Governmental Consolidation Trial Balance. The Initial Year Governmental Fund Trial Balance is used to adjust and format prior year data to obtain current year beginning balances (on both the modified accrual basis of accounting and the accrual basis of accounting) for each governmental fund, while the Initial Year Governmental Consolidation Trial Balance is used to adjust and format prior year data to obtain current year beginning balances for the total of all governmental funds (accrual basis of accounting), along with capital assets, long-term debt, internal service funds, and interfund eliminations and balances.
Both of these trial balances are designed to be used only for the initial year to restate beginning balances to reflect GASB 34 guidance applied to prior years and therefore all the entries to these two journals are to balance sheet or statement of net assets accounts. However, as this data is accumulated remember to gather the information at the level of detail needed for the subsequent year reversing entries.
One should calculate the change in beginning of year fund balances resulting from the implementation of GASB Interpretation 6, which deals with the recognition and measurement of certain liabilities and expenditures in certain governmental fund financial statements. For instance this interpretation addresses (but is not limited to) compensated absences. Interpretation 6 should be simultaneously implemented with Statement 34. For instance, this interpretation states that a governmental fund liability and expenditure for compensated absences should be recognized as payments come due each period upon the occurrence of relevant events such as employee resignations and retirements. While this interpretation does not change the total compensated absences liability, it does affect the amount recognized on the modified accrual basis. Any liability for governmental fund compensated absences that is not recognized on the modified accrual basis of accounting would be entered as an accrual adjustment on the Initial Year Governmental Fund Trial Balance to determine the appropriate amount and classification of net assets.
If not previously done, one should restate the beginning of year deferred revenue based on implementation of GASB Statement Nos. 33 and 36. While the restatements resulting from the two statements affect the analytical review and the balance sheet reconciliation, they should have already been implemented. However, revenues that were deferred because they were not available may not be deferred on the accrual basis. For such cases, an accrual adjustment is entered to reduce the deferred revenue and to increase the appropriate classification of net assets. Once again this is another area to consider the need for reversing entries.
Part of the annual conversion process is to convert expenditures to expenses. Accordingly, to report expenses one must use the consumption method for inventory and must report any material governmental prepaid expenses on the district-wide financial statements. These items may call for accrual adjustments on the initial year accrual adjustments, as the use of the purchases method is still permitted for the governmental fund financial statements.
One should also allocate non-capital debt items to the funds, while maintaining an activity account level of breakdown in order to reverse these items. Compensated absences and retirement and special termination benefits are examples of non-capital debt items. Once again, these are entered at the fund level for proper classification of net assets. While the statement of activities reports the total beginning net assets, the components are needed for management’s discussion and analysis. Again, don’t forget the need to accumulate sufficient information for reversing entries.
For the initial implementation of Statement 34, an Initial Year Governmental Fund Trial Balance should be entered for each governmental fund. The total of all initial year governmental fund trial balance’s restricted net assets column is the initial column of the Initial Year Governmental Consolidation Trial Balance. To identify the beginning of the year restricted net asset balances, the system combines individual initial year governmental fund trial balances.
To complete the Initial Year Governmental Consolidation Trial Balance, the general capital asset, general capital debt, and internal service fund data needs to be entered. The general capital asset and related debt should be entered using the accounts selected for the draft financial statements. For general capital assets, at a minimum one should maintain a breakdown between depreciable and non-depreciable capital assets, but ensuring data is available for the more detailed note disclosure. For the general capital debt, one should maintain a breakdown between balances due within one year and due in more than one year. This needs to include governmental activity debt issued to purchase proprietary assets and needs to account for unspent debt proceeds (which should be reported as part of the restricted net assets component which includes the unspent cash). Allocate internal service funds to the governmental activities if governmental funds were the predominant participants in the internal service funds. However, one may need to enter an internal balance if the internal service fund had significant participation by a business-type activity. The internal balance would be reported as part of unrestricted net assets.
Preparing Appropriate Ending Balances and Related Activity Accounts
This section explains what will be the annual process for the conversion from the records maintained on the cash basis of accounting (such as USAS) to the financial statements presented in accordance with the reporting requirements of GASB Statement No. 34. Accordingly, this process starts with the cash transactions for all funds and the cash transactions flow to the modified accrual trial balances, the restricted net assets trial balances, and the full accrual trial balances.
The cash journal is used to enter cash transactions which are used to generate the budgetary reports and to provide the starting point for the conversion to generally accepted accounting principles. The transactions entered in the cash journal are summarized on the budgetary worksheet.
There are four cash transaction types that affect the budgetary worksheet. The first is the cash upload (USAS). This transaction type is only used for the upload, and is not available as a selection to enter cash transactions in the cash journal. If the cash (USAS) upload is not available, the system allows the entry of manual cash transactions. Manual cash transactions should be entered to reflect the school’s actual cash basis records. Cash (USAS) upload and manual cash transactions are reflected in the first column (labeled “cash transactions”) in the budgetary worksheets. The amounts in this set of columns should tie back to the school’s cash basis records. Any adjustment to or reclassification within these amounts should either be entered in the cash journal as an adjustment or audit adjustment, as appropriate. The cash journal is the only journal that uses USAS accounts, rather than the GAAP accounts.
The system will generate a budgetary worksheet for each fund as consolidated or mapped within the fund setup structure. A budgetary consolidation worksheet is available to show the funds and/or fund – special cost centers that were mapped together. This maintains the audit trail from the cash records to the published budgetary statements or schedules.
Part of the new GASB 34 requirements include the need to incorporate original budget information for, at a minimum, the general fund and all major special revenue funds. Although original budget information is not required for other funds, it is optional. The variance between the final budget and actual is also optional. The budgetary reporting requirements allow the presentation of budgetary statements within the basic financial statement statements for the general fund and major special revenue funds or they may be presented as schedules as required supplementary information. Budgetary schedules may also be presented for other funds with legally adopted budgets as other supplementary information. The system will allow the user to pick statement or schedule for the report heading and to include the optional original budget information and/or the variance.
The budgetary worksheet will combine the results of the cash (USAS) upload, manual cash transactions, adjustments, and audit adjustments to provide the adjusted cash transactions, which will be used (along with end of year encumbrances) to generate the budgetary statements and/or schedules. The adjusted cash transactions will also be carried forward to the modified accrual trial balances, the restricted net assets trial balances, and the full accrual trial balances, as appropriate. It should be noted that while these cash transactions roll forward, entering a modified accrual adjustment, for example, that included an adjustment to equity in pooled cash would not affect the cash transaction column or the budgetary statements and/or schedules. It would rather affect the adjustment column in the modified accrual trial balance and therefore, the resulting balance sheet and statement of revenues, expenditures and changes in fund balance and would roll forward to the restricted net assets trial balance.
It should also be noted that the report of cash journal entries would include the USAS accounts rather than the GAAP accounts, while generating a report of cash transactions included in the modified accrual, restricted net assets, or full accrual trial balances would include the GAAP accounts rather than the USAS accounts.
Conversion Process for Governmental Funds/Activities
After completing the cash transactions one should enter modified accrual journal transactions to prepare a trial balance for each governmental fund as consolidated (mapped) by new combined fund structure using the account structure from the draft or prior year statements. The modified accrual trial balances are used to generate the fund financial statements for the governmental funds.
The system will get beginning balance information from the modified accrual total columns of the initial year governmental fund trials (if applicable), from the rollover from the prior year (if applicable), or will allow them to be entered.
The system will populate the cash transactions column of the modified accrual trial balances with the amounts reflected in the adjusted cash transactions in the budgetary worksheets.
The system will generate reversing entries for the modified accrual journal for its second year of use, based on the reverse flag being appropriately set in the prior year, or it will allow one to enter reversing entries in the modified accrual journal.
The system will close the change in fund balance to a fund balance account. The default account is determined by the governmental fund type. Theses default accounts are all reported under the heading, “Unreserved, Undesignated, Reported in:” and the accounts correspond to the fund type, General Fund, Special Revenue Funds, Debt Service Funds, Capital Projects Funds, or Permanent Funds, as appropriate. A different modified accrual close to account can be established for each fund and will be used in lieu of the default when it is entered in the fund set-up screen.
After completing the modified accrual trial balances, enter restricted net assets journal transactions to prepare a restricted net assets trial balance for each governmental fund as consolidated (mapped) by new combined fund structure using the account structure from the draft or prior year statements. The restricted net assets trial balance is used to convert to the accrual basis of accounting and to record program revenues to prepare the governmental activities portion of the entity-wide statements.
The system will get beginning balance information from the restricted net assets total columns of the initial year governmental fund trials (if applicable), from the rollover from the prior year (if applicable), or will allow them to be entered.
The system will populate the cash transactions column of the governmental restricted net assets trial balances with the amounts reflected in the adjusted cash transactions in the budgetary worksheets.
The system will also populate the modified accrual adjustments and modified accrual reversing entries columns with the amounts reflected in the modified accrual trial balances.
The system will generate reversing entries for the restricted net assets journal for its second year of use, based on the reverse flag being appropriately set in the prior year, or it will allow one to enter reversing entries in the restricted net assets journal.
The system will close the change in net assets to a net assets account. The default account is determined by the governmental fund type. Theses default accounts are all reported under the heading, “Net Assets:” and the accounts are determined by the fund type. The default accounts are “Unrestricted” for the general fund, “Restricted for Other Purposes” for the special revenue funds, Restricted for Debt Service” for the debt service funds, “Restricted for Capital Outlay” for the capital projects funds, and “Restricted – Nonexpendable for the permanent funds. A different restricted net asset (RNA) close to account can be established for each fund and will be used in lieu of the default when it is entered in the fund set-up screen.
Accepting the system default does not eliminate the need for professional judgment in evaluating the source or sources of the restrictions, if any, on the uses of a fund’s resources; in selecting the level of detail in reporting the purposes for which net assets are restricted; or in determining the nature of the year end resources in light of the school’s policy regarding whether to first apply restricted or unrestricted resources when an expense is incurred for purposes for which both restricted and unrestricted resources are available. Questions 7.139 through 7.150 in GASB’s Comprehensive Implementation Guide – 2003 provide guidance regarding restricted net assets.
After completing the restricted net assets trial balances one should enter the transactions in the governmental consolidation journal to prepare the governmental consolidation trial balance. The restricted net assets column will be populated by the totals of the governmental restricted net assets trial balances. To complete the governmental consolidation trial balance, the general capital asset worksheet and the general capital debt worksheet should be entered. Using the worksheets, rather than just entering all the required capital asset and related debt into one column on the consolidation trial respectively provides an audit trail that is much easier to follow. It makes it easy to see current year depreciation expense, additions with related eliminations of capital outlay, and deletions with related gains and/or losses. Similarly it provides ease in seeing the issue of debt with the elimination of the proceeds (other financing source), the debt payments with the elimination of the principal expenditure, the amortizations of premiums, discounts and deferred charges, and the accrual of interest expense.
The system will roll the results from the general capital assets worksheet in addition to the results from the general debt consolidation worksheet to the governmental consolidation trial. The ending assets, liabilities and net assets amounts along with the revenues, expenses, resulting changes in net assets and the beginning net assets will all roll forward to the governmental consolidation trial balance into the appropriate column for each worksheet.
While these journals and related trial balances are presented in steps to best illustrate the flow of the data within and through the system, one should not assume step one must be completed before moving on to step two which must be completed before moving on to step three, and so on. While completing the workingpaper sections and gathering information for fund level presentation for the revenue journal entries, one should prepare full receivable amounts based on GASB 33/36, and then determine the amount received in the available period for the modified accrual revenue amount. This allows one to create and enter modified and accrual entries at the time of completion of the workingpaper sections keeping the accrual entries as the net change. Similarly, while preparing expenditure/expense journal entries, one should keep in mind that one must report prepaid items on an accrual basis and must report inventory through the consumption method. If one chooses to use the purchases method for reporting inventories in the governmental fund financial statements, one could easily develop and enter the restricted net assets adjustments that would be needed to report governmental activities on the entity-wide statements using the consumption method at the same time the modified accrual entries are developed and entered.
Bear in mind while entering modified accrual reversing and adjusting journal entries for the modified accrual fund trial balances that the system will direct both modified and accrual reversing and adjusting journal entries to the restricted net assets trial fund balances. Understanding the process and the resulting data flow will allow one to develop and enter appropriate accrual entries for the restricted net assets trial balance.
Accordingly, one may want to prepare and enter program revenue journal entries while completing the conversion process for the relevant work paper section. To do so, identify significant revenue transaction types of program and general revenues. This breakdown would be between exchange and exchange-like transactions and non-exchange transactions. Non-exchange transactions are further divided between derived tax revenues, imposed non-exchange revenues, government-mandated non-exchange transactions, and voluntary non-exchange transactions. Entering program revenue entries will involve not only selecting the relevant program revenue type, but also the program to which the program revenue is assigned. One may also want to prepare and enter reclassification journal entries for the revenues that are not being directed to a general revenue account by the system. (These are discussed in the following paragraph.) Certain efficiencies could be realized by completing all the required revenue journal entries at one time.
The governmental revenue accounts being directed to general revenue accounts by the system currently include income taxes (to income taxes), intergovernmental (any balance remaining after program revenue entries to grants and entitlements not restricted to specific programs), interest and change in fair value accounts (to investment earnings), gifts and donations (to gifts and donations), and miscellaneous (to miscellaneous). Additionally, transfers in and transfers out are being directed to transfers.
The system will direct the internal service fund assets, liabilities, ending net assets, revenues and expenses, change in net assets and beginning net assets to the governmental consolidation trial balance for the internal service funds column, unless the internal service fund is designated as a business-type activity. The governmental consolidation journal is also used to eliminate the doubling up effect of internal service fund activity and to provide for the “look back” adjustment to eliminate the gain or loss resulting from internal transactions.
The governmental consolidation journal is also used to eliminate other (i.e., not resulting from internal service activity) interfund activity and balances. For example, one would want to eliminate transfers in and related transfers out that are completely contained within governmental activities as well as similar interfund receivables and payables. The change in any internal balance resulting from business-type activity participation would also be recorded as part of the elimination adjustment.
Conversion Process for Proprietary Funds
After completing the cash transactions one should enter full accrual journal transactions to prepare a trial balance for each proprietary fund as consolidated (mapped) by new combined fund structure using the account structure from the draft or prior year statements. The full accrual trial balance is used to generate the fund financial statements for the proprietary funds, as well as to generate the business-type activities portion of the entity-wide statements.
The system will get beginning balance information from the rollover from the prior year (if applicable), or will allow them to be entered.
The system will populate the cash transactions column of the full accrual trial balances with the amounts reflected in the adjusted cash transactions in the budgetary worksheets.
The system will generate reversing entries for the full accrual journal for its second year of use, based on the reverse flag being appropriately set in the prior year, or it will allow one to enter reversing entries in the full accrual journal.
The system will close the change in net assets to a net assets account. The default account is “Unrestricted” for the proprietary funds. A different full accrual close to account can be established for each fund and will be used in lieu of the default when it is entered in the fund set-up screen.
The system will permit the entering of amounts to be reflected in the Statement of Cash Flows for the proprietary funds. This process is basically one of filling in the blanks. While similar in some ways to entering journal entries, this process differs because one enters positive or negative amounts and not debits and credits.
The system will default business-type activity revenue accounts to the entity-wide statement of activities. For example, charges for services and sales will default to the charges for services program revenue column, federal and state subsidies will default to the operating grants program revenue column, capital contributions will default to capital grants and contributions, and interest revenue will default to the investment income general revenue account. Most of the time, the default will be the appropriate reporting of those transactions. However exceptions may arise and we need a way to deal with those exceptions.
For example, assume that the interest income in the food service fund includes interest earnings from capital grant proceeds that carry the requirement that any related interest earning must be used for an authorized grant purpose. Given this external purpose restriction this portion of the interest income should be reported as program revenue, rather than as general revenue. Since we do not want this to affect the reporting within the enterprise fund financial statements, but only the entity-wide statements, we need to enter a reclassification entry in the full accrual journal, selecting the food service fund. The entry would be to debit interest income (3.03.002) and to credit capital grants and contributions (2.01.003) for the appropriate amount of interest income.
Our goal is to have the internal service fund(s) that are classified as business-type activity (BTA) roll into the internal service funds column in the enterprise funds full accrual trial balances in a manner that is similar to the way the system rolls the governmental activity internal service funds to the governmental consolidation trial balance but with user defined proportion allocations to allocate a portion of each internal service fund to each enterprise based on ratios entered in the fund set-up screen. Until this is available, we need to enter these allocations by journal entry. One is not likely to encounter this situation in a school district. To see the process see the help screen for internal service funds that are classified as business-type activities which was drafted to provide guidance to cities and counties. While the illustration accounts are not school accounts, the process would be similar.
Conversion Process for Fiduciary Funds
After completing the cash transactions one should enter full accrual journal transactions to prepare a trial balance for each fiduciary fund as consolidated (mapped) using the account structure from the draft or prior year statements. The full accrual trial balance is used to generate the fund financial statements for the fiduciary funds. Since fiduciary funds are only reported in the fund financial statements, limit the full accrual transaction types to those reflected in the fund financial statements. For example, do not enter a reclassification entry.
The system will get beginning balance information from the rollover from the prior year (if applicable), or will allow it to be entered.
The system will populate the cash transactions column of the full accrual trial balances with the amounts reflected in the adjusted cash transactions in the budgetary worksheets.
The system will provide reversing entries for the full accrual journal for its second year of use, based on the reverse flag being appropriately set in the prior year, or it will allow one to enter reversing entries in the full journal.
The system will close the change in net assets to a net assets account. The default account will vary for the fiduciary funds, depending on fund type. The close to accounts selected as the default accounts are “Held in Trust for Pension Benefits” for pension trust funds, “Held in Trust for Pool Participants” for investment trust funds, “Held in Trust for Scholarships” for private-purpose trust funds, and ‘Undistributed Monies” for agency funds. A different full accrual close to account can be established for each fund and will be used in lieu of the default when it is entered in the fund set-up screen.
Other Setup Issues
The GAAP Setup menu allows a user to edit his profile (address, phone number, etc.) and to change his password.
As part of the process of filing the annual general purpose external financial statements, one must attach the MD&A and the notes to the financial statements. This is simply a matter of directing the system to the word file that contains the MD&A and to the word file containing the notes to the financial statements. The Upload Fiscal Year’s MD&A and Upload Fiscal Year’s Notes process are found in the GAAP Setup menu. If one needs to revise either the MD&A or the notes to the financial statements after they have been uploaded, one uploads the new (revised) word file, which will replace the old file.
The GAAP Setup menu also contains the process to flag the entity’s fiscal year as completed.
The process for Upload USAS Cash Data works like the upload for the MD&A and the upload for the notes to the financial statements. USAS will email a tab delimited file to the address specified. That file should be saved on the c: drive and then direct the system (provide the path) to that file using the process contained in the GAAP Setup menu.
Rollover from prior year and rollover from old GAAP will also be initiated through the Open a New Fiscal Year process in the GAAP Setup menu. For the second year on the system, the first year ending balances would be moved forward as the beginning balances. For the first year on the system, old GAAP will provide the beginning balances that are available from the old GAAP system. See "Upload from Old GAAP" for further guidance.