Government Wide Financial Statements. Statement of Net position & Statements of Activities. CPA Exam

Описание: In this video, I explain government wide financial statements include statement oof net position and statement of activities.
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0:00 Introduction
This video explains the government-wide financial statements found in an Annual Comprehensive Financial Report (ACFR), focusing on two key statements:

Statement of Net Position: This is the government's equivalent of a private business's balance sheet (0:16). It uses the full accrual basis of accounting (0:28), including both short-term and long-term assets and liabilities (3:19, 4:11). The statement shows assets, deferred outflows of resources, liabilities, deferred inflows of resources, and ultimately, net position, which is categorized into net investment in capital assets, restricted net position, and unrestricted net position (4:38).

Statement of Activities: This is the government's equivalent of a private business's income statement (0:20, 5:28). It also uses the full accrual basis. Unlike a typical income statement, it uses a program approach, starting with expenses for various government functions (5:56, 6:01). These expenses are then offset by "program revenues" like charges for services, operating grants, and capital grants, leading to a net expense or net revenue for each program (7:57). Below program activities, it lists "general revenues" such as property taxes that aren't tied to specific programs (10:22). The statement concludes with the change in net position, which reconciles to the net position on the Statement of Net Position (11:15, 12:27).

The video uses the City of Philadelphia's ACFR as an example to illustrate these concepts.





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A government-wide financial statement is a comprehensive financial report prepared by governments to provide information about the financial position and activities of the government as a whole. It differs from fund financial statements, which are used to report more detailed information about the government's most significant funds. Key aspects of government-wide financial statements include:

Statement of Net Position: This statement provides a snapshot of the government's financial position at a specific point in time. It details the government's assets, liabilities, and the resulting net position. Net position is categorized into net investment in capital assets, restricted, and unrestricted.

Statement of Activities: This statement reports the government's financial activities over a fiscal year. It shows how these activities have affected the net position of the government. Revenues and expenses are categorized by program or function, such as public safety, education, and general administration.

Accrual Basis of Accounting: Government-wide financial statements are prepared using the accrual basis of accounting. This means revenues are recognized when earned, and expenses are recognized when incurred, regardless of when the cash is actually received or paid.

Consolidation of Government Entities: These statements consolidate the financial information of all government entities and activities, including governmental and business-type activities. This gives a complete picture of the government's overall financial health.

Component Units: The government-wide financial statement may also include information on component units, which are legally separate entities for which the primary government is financially accountable.

These statements are important for assessing a government's fiscal health, making policy decisions, and for transparency and accountability to the public and stakeholders. They are typically included in the Comprehensive Annual Financial Report (CAFR) of a government.


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