Government Financial Statements - Essay Example

?DISCUSSION Government Financial ments" Please respond to the following: Go to the White House’s Website to read the article d “OMB Circular A-123—Management’s Responsibility for Internal Control,” dated December 21, 2004, located at http://www.whitehouse.gov/omb/circulars_a123_rev. Be prepared to discuss.   Go to Accounting Today’s Website to read the article titled “ GAO Sees Problems in Government’s Financial Management,” dated December 27, 2010, located at http://www.accountingtoday.com/news/GAO-Sees-Problems-Government-Financial-Management-56749-1.html. Be prepared to discuss. From the first e-Activity, note that the GAO could not issue an opinion on the financial statements of the US government. Evaluate how this could occur considering the requirements of OMB Circular A-123. What steps would you take to alleviate the internal control problems? Differentiate between the requirements for internal controls in government agencies and those in public companies.    As per the requirement of OMB Circular A-123, we can understand the changes took places created much vulnerability in financial reporting system. This emphasized more on the term on “Internal Control” from the term “Management Control”. This may exclude many facts which should have reported earlier with obligations. In new requirements “Defines materiality for the purposes of assessing and documenting internal control over financial reporting”, this option can create loop for many important facts and figure than clearly presenting it in the financial reporting. It has created ambiguity for three different processes, they are: a) security across the government, b) improper payments and c) tax collection activities. To alleviate the internal control, the expense item I would prefer the bring in clear consideration withdrawing the category as reportable status. Clarification on money outflow has to have precisely documented while audited and clearly noted to uplift the fairness of the internal control. There are differences between government agencies and public limited companies. As the objective of report is to assess the clarification being involved in direct transactions, whereas the agencies are the external parties to report have differences in revealing the accuracy asset management revelation. DISCUSSION 2: "Expenditures" Please respond to the following: Under pressure to balance their budgets, governments at all levels have resorted to fiscal gimmicks, such as delaying the wages and salary of government employees from the last day of the month to the first day of the following month. In the year of the change, they thereby had one fewer period to pay.  Determine how such a change would affect the reported expenditures of a governmental fund under GAAP. Provide specific examples to support your response. Evaluate the impact of GASB Interpretation No.6, Recognition and Measurement of Certain Liabilities and Expenditures in Governmental Fund Financial Statements on the accrual and payment of the salaries. This expenditure would be accrual for the immediate period of time and then next year upon payment the accrual payable would be reported. This report will be more accumulate big accrual means there is irregularities of payments and the liabilities will move high showing lesser efficiency in the transaction handling. A government allowed accruing or additional fund liability and expenditure provided any financial resources or debt services for payment of liabilities that will be mature in following year. This indicates under GASB rule is that the time provided is limited and the term early in the following year refers to a short time period –usually one to several days and not more than one month. Liabilities for compensation and claims of salary are generally expected to be liquidated by the available financial sources. If delay it should recognize as governmental fund liabilities against mature payment for each financial period. Unmatured liabilities like compensated absent do not constitute an outflow of current financial resources or result in the recognition of an additional governmental fund liability or expenditure. Discussion 3: "Government Bankruptcy" Please respond to the following: Go to the US News Website to read the article titled “Alabama County Bankruptcy No National Bellwether,” dated November 10, 2011, located at   http://www.usnews.com/news/articles/2011/11/10/alabama-county-bankruptcy-no-national-bellwether. Be prepared to discuss. Go to the GASB Website to read “Summary of Statement No. 58 Accounting and Financial Reporting for Chapter 9 Bankruptcies,” dated December, 2009, located at http://www.gasb.org/st/summary/gstsm58.html. Be prepared to discuss.  From the first two e-Activities, analyze the impact GASB Statement No. 58, Accounting and Financial Reporting for Chapter 9 Bankruptcies, will have on the government-wide financial statement of these governments.  Assess whether or not a government should file bankruptcy or raise revenue through additional taxes and fees to pay liabilities. Explain your rationale. As per summary GASB Statement No. 58, bankruptcies regulation does not influence the financial statements or reporting rather it decides by the court about new payment plan. The principle objective is to provide accounting and financial reporting guidance for government that the petitioned for protection from creditors by filing for bankruptcy, under United States Code. It requires government to remeasure liabilities that are adjusted in bankruptcy. Filling bankruptcy is not a easy subject, where a huge amount of bills op be paid which is due to many institutions and individuals as a cost of their services and products. On the other hand, imposing higher tax to generate revenue can be double pressure on the public on top of the bills which government already incurred as liability to pay. In such extent the inefficiency of government can be doubled by depriving the public being in debt with them also ruling them by extra amount of money. Comparing this phenomena, I would recommend the option to file for the bankruptcy than raising taxes for revue generation on the average salary and wage earner. Before they file for bankruptcy, observing the taxation for luxury can be tries to settle the dues partially which can allow time and effort to receive any other source f financing to payback the bills for giverment.  Discussion 4: "Proprietary and Internal Service Funds" Please respond to the following: Go to the CPA Journal Website to read “GASB Statement No. 34: THE DAWN of a New Governmental Financial Reporting,” located at: http://www.nysscpa.org/cpajournal/1999/1299/f141299a.html. Be prepared to discuss. From the e-Activity, speculate as to why GASB Statement No. 34 changed the reporting requirements for internal service funds. Do you agree or disagree? Explain. Compare and contrast proprietary fund reporting under GASB No.34 with GAAP financial reporting for non-governmental entities. Examine why GASB requires the direct method for cash flow statements in the proprietary funds instead of allowing the direct or indirect method. The fund financial statements retain their traditional focus which includes Proprietary and Internal Services Funds. Under new reporting model eliminates the combined presentation of the accounts. For Propriety Fund statements, requires government to state clearly the assets, liabilities, and net assets of the proprietary funds classification between current and long term utilizing net asset or the conventional balance sheet format. Instead, propriety fund net asset are reported consistent with the classifications in the government-wide statement of net assets. Internal service funds occupy a unique position in governmental accounting in that they are classified as propriety, yet client funds that are predominantly governmental nature. Current practice of separately reporting treatment for these funds internal services fund information will appear in the General Purpose of Financial Statements , there can be double count of the financial fact where client fund expenditure and service fund expenses will be overlapped. In this change in model brought internal service fund activity will be reported in government statement of revenue, expenditure with the adjusted changes in balance. In such extent it is disagreeable while double counting problem exists. Under this change government will be able to distinguish between proprietary operating and non-operating revenues and expenses generally in terms of how the underlying transaction would be categorized at cash flow statement. Generally, there is no requirement to reconcile from the proprietary fund financial statements to the government-wide financial statements due to, a) in both case similar method has been used and b) internal services are reported in a way which reduces significantly the reconciliation need. SO as per statement 34 requires that the statement of cash flow be prepared using the direct method. Cash flow statements also must include a reconciliation of operating cash flow and income. Discussion 5: "Fraud in Nonprofits" Please respond to the following: Go to the Bloomberg Website to read the article titled “ JPMorgan Chase Sued by Ellis Institute over Money Transfers by President,’ dated August 9, 2011, located at http://www.bloomberg.com/news/print/2011-08-09/jpmorgan-chase-sued-by-ellis-institute-over-money-transfers.html. Be prepared to discuss. From the e-Activity, analyze the steps you would you take to prevent a similar fraud or embezzlement in a nonprofit as a member of the board of directors or as the independent auditor.  Also from the e-Activity, assess the responsibilities of the board of directors for the fraud and whether or not they or the independent auditor should be liable as well as J.P. Morgan Chase. Explain your rationale.     As an independent Auditor the account relating to money transfer receipt or payment has to strictly check by the date of transaction and relevant document and amount inquiry is important to identify or keep a watch on the money transfer. Most of the expenses and receivables are previously could be traced from cash registrar and bank statement. Monthly observation and checking can keep the transaction deter the fraud amount in much efficiency. Board of directors are the first in the queue for the responsibility of fraudulent as they approve most of the transaction inward and outward, while the accountant are directed and leaded by the board to execute the transaction and performance. It is crucial for the Board of Directors who set the activities for the regular money receives and outflow strictly for the smooth operation of the company. With dynamic leadership of transparency only people can establish and assist the independent auditor to handle the entire activity. Discussion 6: "Health Care Revenue Recognition" Please respond to the following: Go to Journal of Accountancy Website to read the article titled “Presentation of Patient Service Revenue Changed for Health Care Entities,” dated August 1, 2011, located at   http://www.journalofaccountancy.com/Web/20114405. Be prepared to discuss. Go to the FASB Website to read the article titled “Presentation and Disclosure of Patient Service Revenue, Provision for Bad Debts, and the Allowance for Doubtful Accounts for Certain Health Care Entities a consensus of the FASB Emerging Issues Task Force,” dated July, 2011, located at  http://www.fasb.org/cs/BlobServer?blobcol=urldata&blobtable=MungoBlobs&blobkey=id&blobwhere=1175822797036&blobheader=application/pdf. Be prepared to discuss. From the two e-Activities, differentiate between the accounting provisions for revenue recognition for patient revenue and bad debts for financial statements prior to December 31, 2011 and the provisions effective for financial statements filed after December 31, 2011.  Evaluate the potential impact of these changes on the transparency of health care financial statements and whether or not the same information is truly represented.  Explain your rationale. The differential point among this provision for revenue is the reporting classification has been changed under different subcategory to facilitate the recognition of the revenue. This change will bring the bad debt and disclosure in much clear stage of reporting after December 31, 2011. These changes will bring little clarification in case of discloser, but in reporting differentiation it may not affect significant transparency as it expected. In some case information relating to bad debt may not be precisely reported. Still the bill amount whether purely public or stakeholder related need to be clarified in the procedure with the attachment of precise identification and rule of conduct. DISCUSSION 7: "Apple, Inc" Please respond to the following:  Explain whether the accounting requirements per the FASB was an improvement over the ASC 985-605 requirement and state your rationale. Explain how you would have advised Apple to adopt the new requirements, prospectively or retrospectively. Discuss whether or not Apple fairly presented this information in their financial statement and footnote disclosures, and state your rationale. From these changes we can understand that FASB has promulgated the law to improve the presentation and disclosure clarification in the reporting practices. In this improvement the corporate accounting would be much subject to the transparency and clarification before. With the regular operation of the accounting information and practice, this new method should be adopted carefully. So that the principles and adjustment does not face double counting or other lacking for the corporate information presentation. When apple will present their information much fairly and professionally, reliability in the financial statements will be increased and the investors will bring much trust to invest in APPLE. This detailed notes and disclosure improve the transparency and the better environment where better talent can come up for the efficiency in the operation. Discussion 8: "Federal Bureau of Investigation, 2009 Crime Report" Please respond to the following: View the 2009 Financial Crimes Report compiled by the Federal Bureau of Investigation here. Discuss how the economic crisis of 2008 impacted the findings in the 2009 Crime Report. Given the significant increase in mortgage fraud, discuss ways this can be deterred in the future.  What financial areas do you will think will emerge with significant activity on future Crime Reports? Why?   This problem causes when the rating agency increased the unreliability for the mortgage fraud, this made the entire system invested in wrongly backup financial instrument. Some rating with high mark information creates defect into the system. Mortgage fraud deterred program has been handling in many different ways which ensure the law in different structures, with mortgage fully receivable, or value differentiation is the core procedural differences among the mortgages to be differentiated. Bond rating agencies other than mortgages contribute significantly, along with interest rate with the amount for money borrowed or invested. These financial areas will emerge with significantly improved by clear financial accounting practice in the company and presetting can bring success.    Discussion 9: "Beazer Homes, U.S.A." Please respond to the following: Explain which is more serious – the allegations against Beazer Homes for possible mortgage fraud or the allegations against Mr. Rand for possible accounting fraud. Support your rationale. In this case, in accounting record stating the mortgage is very important to record to avoid any sort of fraudulent in mortgage. Recording the mortgage and relating transaction is a big responsibility to record and update the information. This mortgage fraud can be seriously associated by the accounting fraud. When the mortgaged asset are not precisely priced and recorded with no proper interest and income schedule it causes this level of problem. In my rational, I can support the idea of allegation against Mr Rand for possible accounting fraud. This accounting fraud is strongly correlated to create problem in other sector including the Mortgage estimation and valuation process. Ultimately it gives wrong rating to invest too. Discussion 10: "General Growth Properties" Please respond to the following: Many analysts expected GGP equity holders to lose most or all of their financial interests in GGP. The joint bankruptcy filing of GGP and most of its SPEs has apparently allowed GGP to successfully reorganize much of its debt and repay all of its obligations, while retaining substantial value for its equity holders.  Explain whether you agree or disagree with the court’s decision to allow GGP’s SPEs to enter bankruptcy protection.  Discuss the implications of the GGP bankruptcy for the securitization markets. As per the analyst, General Growth Property’s equity holder is losing the interest on the property. It is also correct when they are repaying its entire obligation. In such cash I am agree with the decision to allow GGP’s SPEs to enter bankruptcy protection. In this protection re estimation of liability will be precisely estimated and new payment plan will be agreed to pay back the obligations, instead closing and charging them to jail keeping inactive for the action. GGP bankruptcy for the securitization market is protective option to give the chance for the re activation and planning to create the value for the economic transaction to see the remaining way to compete the options of payment. On the other hand, it will remain unsolved and many financial obligations stagnant if they are not protected by bankruptcy and securitization market will be disturbed by the activity hold. Read More