GENERALLY ACCEPTED AUDITING STANDARDS (GAAS):
Standards established by the AICPA for the conduct
and reporting of financial audits. There are 10 basic
GAAS, classed into three broad categories: general
standards, standards of field work and standards of
reporting. The Auditing Standards Board of the AICPA
publishes SAS to comment and expand upon these
basic standards. These SAS, together with the 10 basic
standards, constitutes GAAS. These GAAS set forth the
objectives of the audit and establish measures that can
be applied to judge the quality of its performance.
GENERAL PURPOSE FINANCIAL STATEMENTS (GPFS):
Five combined financial statements that, together with
the accompanying notes, constitute the minimum
financial reporting needed for fair presentation in
conformity with GAAP. These five combined financial
statements, with their accompanying notes, make up
the first of the financial reporting pyramid’s three
reporting levels containing financial statements.
Known as the combined statements—overview, these
statements include (1) combined balance sheet—all
fund types and account groups, (2) combined
statement of revenues, expenditures and changes in
fund balances—all governmental fund types, (3)
combined statement of revenues, expenditures and
changes in fund balances— budget and actual—general
and special revenue fund types (and similar
governmental fund types for which annual budgets
have been legal adopted), (4) combined statement of
revenues, expenses and changes in retained earnings
(or equity)—all proprietary fund types and (5)
combined statement of changes in financial position—
all proprietary fund types. Trust fund operations may be
reported in (2), (4) and (5) above, as appropriate, or
separately. The combined statements—overview also
are referred to as the “liftable” GPFS.
GOVERNMENTAL ACCOUNTING STANDARDS BOARD
(GASB): The authoritative accounting and financial
reporting standard- setting body for government
entities.
GROSS BONDED DEBT: The total amount of direct debt
of a government, represented by out- standing bonds
before deduction of any assets available and
earmarked for their retirement.
INTERNAL AUDITING: An independent appraisal of
the diverse operations and controls within a
government entity to determine whether acceptable
policies and procedures are followed, established
standards are met, resources are used efficiently and
economically and the organization’s objectives are
being achieved. The term covers all forms of appraisal
of activities undertaken by auditors working for and within an
organization.
INTERNAL CONTROL STRUCTURE: Policies and procedures
established to provide reasonable assurance that specific
government objectives will be achieved.
INVENTORY: (1) A detailed list showing qualities, descriptions
and values of property and, frequently, units of measure and
unit prices. (2) An asset account reflecting the cost of goods
held for resale or for use in operations.
LEVY: (1) (Verb) To impose taxes, special assessments or
service charges for the support of government activities. (2)
(Noun) The total amount of taxes, special assessments or
service charges imposed by a government.
LIABILITIES: Probable future sacrifices of economic benefits,
arising from present obligations of a particular entity to
transfer assets or provide services to other entities in the
future as a result of past transactions or events.
MEASUREMENT FOCUS: The accounting convention that
determines (1) which assets and which liabilities are included
on a government’s balance sheet and where they are
reported there, and (2) whether an operating statement
presents information on the flow of financial resources
(revenues and expenditures) or information on the flow of
economic resources (revenues and expenses).
MODIFIED ACCRUAL BASIS: The accrual basis of accounting
adapted to the governmental fund-type measurement focus.
Under it, revenues and other financial resource increments
(e.g., bond issue proceeds) are recognized when they become
susceptible to accrual that is when they become both
“measurable” and “available to finance expenditures of the
current period.” “Available” means collectible in the current
period or soon enough thereafter to be used to pay liabilities
of the current period. Expenditures are recognized when the
fund liability is incurred except for (1) inventories of materials
and supplies that may be considered expenditures either
when purchased or when used, and (2) prepaid insurance and
similar items that may be considered expenditures either
when paid for or when consumed. All governmental funds,
expendable trust funds and agency funds are accounted for
using the modified accrual basis of accounting.
NET INCOME: Proprietary fund excess of operating revenues,
nonoperating revenues and operating transfers in over
operating expenses, nonoperating expenses and operating
transfers out.
OBJECT: As used in expenditure classification, applies to the
article purchased or the service obtained, rather than to the