1-2 paragraphs per discussion with 1-2 references each one 

DI

Comment to FG

Based on the recipients of information the criteria for accounting principles and financial statements vary. A government agency is required to report its activities to the government, while a non-profit organization is required to report to its members, donors and funding agencies. In the US, GAAP governs all non-profit organizations and government agencies. The government meets the GASB requirements in this context and non-profit organizations obey the FASB provisions.

The budget is a very important element under the GASB requirements for government entities. In 1999 the GASB issued a statement allowing these institutions to present a comparative financial statement showing the entity’s performance in relation to the approved budgets. “GASB Statement No. 34 will henceforth allow governments to choose to present mandated budgetary comparisons either as part of the basic audited financial statements.” (Government Finance Officers Association, 2000)

For its part, the budget of a non-profit organization is based on a activities plan for which donors and members make their contributions. However, the dilemma for nonprofit organizations’ budgets is that donors have the right to allocate their funds according to their interests. According to (Klotz, 2020) “… it’s all about being clear what you are asking for and being clear what the donor intends.” I think this is an important feature that contrasts a budget of a non-profit entity versus a budget of government entity. The latter has the funds in advance and a board that theoretically represents the taxpayers approves this budget.

References:

Comment to SJ

In order for a government to function “Congress must create and pass numerous funding bills each fiscal year to keep the federal government open.” (USA GOV, Budget of the US Government, 2010). Governmental budgets that are passed each fiscal year begin October 1st and end on the last day of September before starting the new fiscal year. The government makes money by collecting taxes and burrowing capital in return for saving bonds. When the government burrows they must pay the interest on the debt which is normally less then 10% of the budget. Majority of the budget goes towards “Funding for Social Security, Medicare, veterans benefits, and other spending required by law. This is called mandatory spending and typically uses over half of all funding.” (USA GOV, Budget of the US Government, 2010). When creating the budget plan for the government it is very important to consider the mandatory spending and the discretionary spending which is a third of the budget. If the bill created by senate and house is not signed by the president to make it a law then national parks may shut down, taxpayers will not receive a tax refund, and grants will be suspended.

Not for profit business budgets are created completely different from governmental budgets. For example, the staff in the not for profit organization is responsible for creating the budget. After a draft is prepared, executive committees and finance committees “often review the proposed budget and the full board usually adopts the budget at a full board meeting.” ( National Council of Nonprofits, Budgeting For Nonprofits). Not for profit budgets are not in written in stone, the budget is like an Accounting Standard Code. For example the budget is there to provide guidance to organizations financial decisions just like Accounting Standard Codes. The reason for not writting budgets in stone is because operational activity may not not perform how the budget plan predicted. Therefore adjustments are made when evaluating the organization’s financial stand point same way Accounting Standard updates provide updates to its guidelines. The National Council of Nonprofits state “A budget is a guide that can help a nonprofit plan for the future as well as assess its current financial health. It is quite common to periodically review the budget as well as compare it to the actual cash flow and expenses, to determine whether they are playing out as expected during the course of the year. It may be necessary to amend the budget during the year.”  (National Council of Nonprofits, Budgeting For Nonprofits).

D2

Comment to FG

The Statement 92. Omnibus 2020, in which I will develop my research, states some requirements for institutions within scope of GASB provisions. The specific topics addresses in this statement are followings: “leases, intra-entity transfers of assets, postemployment benefits, government acquisitions, risk financing and insurance-related activities of public entity risk pools, fair value measurements, and derivative instruments.” (GASB, 2020) In this sense, there are several prior statements that are being amended.

          For example, in the Statement 48 as amended, the intra-entity transfer of assets between a governmental employer and benefit pension plan within the same financial reporting entity have to adjust any difference between the amount paid by the pension plan and the amount transferred as per books. These differences should be reported as employer contribution to pension plan.

          According to provisions of Statement 69, in acquisitions carry out by a governmental entity, it has to measure the liabilities and assets (if any) related to acquired entity’s asset retirement obligations, using the accounting and financial requirements of Statement 83 (if applicable), which rules the standards of accounting and reporting for certain Asset Retirement Obligations (ARO). An ARO is defined by (GASB, 2016) as “a legally enforceable liability associated with the retirement of a tangible capital asset (that is, the tangible capital asset is permanently removed from service).”

Comment to SJ

My topic is on the amendments pertaining to Internal Revenue Code 457. The approval of these amendments may be delayed due to the virus that is spreading. Comments on this matter was to be submitted by April 10th and “Board has not scheduled a public hearing on these issues addressed in this Exposure Draft.” ( GASB, Internal Revenue Code 457, 2020). The purpose behind the revisions to Internal Revenue Code 457 is to “increase consistency and comparability related to the reporting of fiduciary component units… to mitigate costs associated with reporting certain defined contribution pension plans… to enhance the relevance, consistency, and comparability of accounting and financial reporting for Internal Revenue Code Section 457 deferred compensation plans (Section 457 plans) that meet the definition of a pension plan.” (GASB, Internal Revenue Code 457, 2020). The anticipated effective date for the exposure draft is June 15, 2021. The changes in this proposed statement would improve the usefulness and relevancy of the information provided to users . Also determine if the governing board needs to play a bigger role in determining component and pension plans due accuracy of financial reporting