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Financial Accounting for Local and State School Systems: 2014 Edition
NCES 2015347
April 2015


Exhibit D-5.  Sample Independent School District Reconciliation of the Governmental Funds of revenues, expenditures, and changes in fund balances with the district-wide statement of activities: For the year ended June 30, 20X2
 
Total net changes in fund balances—governmental funds   $17,481,572
 
Amounts reported for governmental activities in the statement of activities are different because:

Capital outlays to purchase or build capital assets are reported in governmental funds as expenditures. However, for governmental activities those costs are shown in the statement of net position and allocated over their estimated useful lives as annual depreciation expenses in the statement of activities. This is the amount by which depreciation exceeds capital outlays in the period.
     
Depreciation expense $(13,108,809)    
Capital Outlays 930,864   12,177,945
 
 
Some of the capital assets acquired this year were financed with capital leases. The amount financed by the leases is reported in the governmental funds as a source of financing. On the other hand, the capital leases are not revenues in the statement of activities, but rather constitute long-term liabilities in the statement of net position.     (692,245)
 
Because some property taxes will not be collected for several months after the District's fiscal year ends, they are not considered as "available" revenues in the governmental funds, and are instead counted as deferred tax revenues. They are, however, recorded as revenues in the statement of activities.     517,087
 
In the statement of activities, only the gain on the sale of the unimproved land is reported, whereas in the governmental funds, the entire proceeds from the sale increase financial resources. Thus, the change in net position differs from the change in fund balances by the cost of the land sold.     (1,234,567)
 
In the statement of activities, certain operating expenses—compensated absences (vacations) and special termination benefits (early retirement)—are measured by the amounts earned during the year. In the governmental funds, however, expenditures for these items are measured by the amount of financial resources used (essentially, the amounts actually paid). This year, special termination benefits paid ($10,300,426) exceeded the amounts earned ($7,906,074) by $2,394,352. Vacation used ($261,132) was less than the amounts earned ($327, 280) by $66,148. 2,328,204
Repayment of bond principal is an expenditure in the governmental funds, but it reduces long-term liabilities in the statement of net position and does not affect the statement of activities. 13,526,946
 
Interest on long-term debt in the statement of activities differs from the amount reported in the governmental funds because interest is recorded as an expenditure in the funds when it is due, and thus requires the use of current financial resources. In the statement of activities, however, interest expense is recognized as the interest accrues, regardless of when it is due. The additional interest reported in the statement of activities is the net result of two factors. First, accrued interest on bonds, leases, and contracts payable decreased by $43,380. Second, $1,601,500 of additional accumulated interest was accreted on the district's "capital appreciation" bonds.   (1,558,120)
 
An internal service fund is used by the District's management to charge the costs of the workers' compensation insurance program to the individual funds. The net revenue of the internal service fund is reported with governmental activities. 1,224,659
 
Change in net position of governmental activities $43,771,481