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Chapter 3: Financial Audit DEPARTMENT OF HEALTH STATE OF HAWAII Reconciliation of the Governmental potx

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Amounts reported for governmental activities in the statement of net assets are different because: Capital assets used in governmental activities are not financial resources and Accrued

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Amounts reported for governmental activities in the statement of net assets are

different because:

Capital assets used in governmental activities are not financial resources and

Accrued vacation reported in the statement of net assets do not require

the use of current financial resources and therefore are not reported

Workers’ compensation liability reported in the statement of net assets does not

require the use of current financial resources and therefore is not reported

See accompanying notes to basic financial statements

June 30, 2003

STATE OF HAWAII

Reconciliation of the Governmental Fund Balances to the

Statement of Net Assets

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Other Total Tobacco Governmental Governmental General Settlement Funds Funds

Revenues:

State general fund allotments, net $ 311,743,598 $ — $ 5,741,737 $ 317,485,335

Nonimposed employee fringe benefits (Note 1) 30,535,685 — — 30,535,685

Total revenues 342,279,283 44,393,423 108,201,842 494,874,548 Expenditures:

Total expenditures 365,214,127 32,207,043 101,486,666 498,907,836 Excess (deficiency) of revenues

over expenditures (22,934,844) 12,186,380 6,715,176 (4,033,288) Other financing sources (uses):

Total other financing uses — (18,722,949) (3,116,830) (21,839,779) Net change in fund balances (22,934,844) (6,536,569) 3,598,346 (25,873,067) Fund balances at July 1, 2002 58,352,503 33,813,621 38,034,525 130,200,649 Fund balances at June 30, 2003 $ 35,417,659 $ 27,277,052 $ 41,632,871 $ 104,327,582 See accompanying notes to basic financial statements.

Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds

Year Ended June 30, 2003

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Net change in fund balances – total governmental funds $ (25,873,067) Amounts reported for governmental activities in the statement of activities

are different because:

Governmental funds report capital outlays as expenditures However, in the

statement of activities the cost of those assets is allocated over their

estimated useful lives and reported as depreciation expense This is the amount

by which depreciation exceeded capital outlays for the year (3,693,038) Accrued vacation reported in the statement of activities do not require the use

of current financial resources and therefore are not reported as expenditures

in the governmental funds until due and payable (651,566) Workers’ compensation liability reported in the statement of activities do not

require the use of current financial resources and therefore are not reported

as expenditures in the governmental funds until due and payable (634,373) Change in net assets of governmental activities $ (30,852,044) See accompanying notes to basic financial statements

to the Statement of Activities Year Ended June 30, 2003

STATE OF HAWAII

Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds

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Water Pollution Drinking Water Control Treatment

Current assets:

Cash and cash equivalents in state treasury $ 89,528,990 $ 10,673,735 $ 100,202,725

Current portion of loans receivable (Note 3) 10,659,371 573,652 11,233,023

Loans receivable, net of current portion (Note 3) 151,795,915 10,650,538 162,446,453

Liabilities:

Current liabilities:

Net assets:

See accompanying notes to basic financial statements

Assets (Restricted)

Liabilities and Net Assets

Statement of Net Assets – Proprietary Funds

June 30, 2003

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Water Pollution Drinking Water Control Treatment Revolving Revolving

Operating revenues:

Interest income from loans $ 3,956,751 $ 158,727 $ 4,115,478 Administration loan fees 1,451,773 371,478 1,823,251

Total operating revenues 5,408,524 530,205 5,938,729 Operating expenses:

Total operating expenses 1,202,434 826,241 2,028,675 Operating income (loss) 4,206,090 (296,036) 3,910,054 Nonoperating revenues:

Interest income from investments 2,535,929 239,321 2,775,250 Federal contribution 4,428,893 3,105,208 7,534,101

Total nonoperating revenues 6,965,507 3,344,849 10,310,356 Income before transfers in 11,171,597 3,048,813 14,220,410 Transfers in (Note 8) 2,094,000 1,551,000 3,645,000

Change in fund net assets 13,265,597 4,599,813 17,865,410 Net assets at July 1, 2002 241,252,665 18,574,797 259,827,462 Net assets at June 30, 2003 $ 254,518,262 $ 23,174,610 $ 277,692,872 See accompanying notes to basic financial statements

STATE OF HAWAII

Statement of Revenues, Expenses, and Changes in Fund Net Assets –

Year Ended June 30, 2003 Proprietary Funds

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Water Pollution Drinking Water Control Treatment Revolving Revolving

Cash flows from operating activities:

Interest income from loans $ 3,865,871 $ 143,010 $ 4,008,881 Administrative loan fees 1,387,937 309,791 1,697,728 Principal repayments on loans 9,687,830 473,601 10,161,431 Disbursement of loan proceeds (11,279,754) (2,202,868) (13,482,622) Payments to employees (837,081) (228,813) (1,065,894) Payments to vendors (345,779) (535,179) (880,958)

Net cash flows provided by (used in) operating activities 2,479,024 (2,040,458) 438,566 Cash flows from noncapital financing activities:

Federal contributions 4,028,817 3,182,157 7,210,974 State contributions 2,094,000 1,551,000 3,645,000 Payments to others — (255,013) (255,013)

Net cash flows provided by noncapital financing activities 6,122,817 4,478,144 10,600,961 Cash flows used in capital and related financing activities:

Purchase of equipment (26,002) (153,741) (179,743) Cash flows provided by investing activities:

Interest from investments 3,016,363 285,281 3,301,644

Net increase in cash and cash equivalents 11,592,202 2,569,226 14,161,428 Cash and cash equivalents at July 1, 2002 77,936,788 8,104,509 86,041,297 Cash and cash equivalents at June 30, 2003 $ 89,528,990 $ 10,673,735 $ 100,202,725 Reconciliation of operating income (loss) to net cash

provided by (used in) operating activities:

Operating income (loss) $ 4,206,090 $ (296,036) $ 3,910,054 Adjustments to reconcile operating income (loss)

to net cash provided by (used in) operating activities:

Depreciation expense 11,294 62,140 73,434 Change in assets and liabilities:

Loans receivable (1,591,924) (1,729,267) (3,321,191) Accrued interest on loans receivable (90,880) (15,716) (106,596) Loan fees receivable (63,836) (61,688) (125,524) Accrued wages and other 8,280 109 8,389 Net cash provided by (used in)

operating activities $ 2,479,024 $ (2,040,458) $ 438,566

See accompanying notes to basic financial statements.

Statement of Cash Flows – Proprietary Funds

Year Ended June 30, 2003

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Agency Fund

Cash and cash equivalents – on deposit with banks and on hand (Note 1) $ 311,900

See accompanying notes to basic financial statements

Liabilities

June 30, 2003

STATE OF HAWAII

Statement of Fiduciary Net Assets – Fiduciary Funds

Assets

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Actual Amounts (Budgetary Basis)

Revenues:

Expenditures:

Behavioral health services administration 185,308,130 157,162,375 146,092,801

Excess of revenues over

See accompanying independent auditors’ report and note to the budgetary comparison schedules

Year Ended June 30, 2003

Budgeted Amounts

Budgetary Comparison Schedule – General Fund Required Supplementary Information (Unaudited)

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Actual Amounts (Budgetary Basis)

Revenues:

Expenditures:

Excess of revenues over

See accompanying independent auditors’ report and note to the budgetary comparison schedules

Year Ended June 30, 2003

Budgeted Amounts

STATE OF HAWAII

Budgetary Comparison Schedule – Tobacco Settlement Fund Required Supplementary Information (Unaudited)

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(1) Budget to GAAP Reconciliation

Tobacco General Settlement

Excess of revenues over expenditures – actual

Expenditures for liquidation of prior year’s encumbrances (64,765,923) (11,768,087)

Excess (deficiency) of revenues over

The following reconciles the excess of revenues over expenditures presented on a budgetary basis to the excess (deficiency) of revenues over expenditures presented in conformity with GAAP for the general

and tobacco settlement funds

Year Ended June 30, 2003 Note to the Budgetary Comparison Schedules

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