Statement of Revenues, Expenditures and Changes in Fund Balance
Introduction
This is a statement which is usually used to get measurement of the extent of success acquired over a given period. It is a major component of the state or local government annual financial reporting. This statement is usually very useful in ensuring that the expenditures over a given period are well covered by the revenue collected over the same period.
Basically, the state or local government accounts for various components in the annual financial reports. General fund is one of the components of the financial reporting in the statement of revenues, expenditures and changes in fund balance (Ruppel 2009). The general fund gives an account of the general operations and activities which are independent from the other forms of funds. The other component of the statement is the special revenue. This is the area where the funds which are designated by the law for a specific thing is accounted for. For example, the state and federal fuel tax revenues are accounted for under this category. The other part of the components is referred to as capital projects. This is the area where accounting for funds used in acquisition or building of fixed assets takes place. Things such as buildings, roads and equipment are accounted under this category of fund accounting. It is worth noting that the capital project fund is recognized up to the point where the project is completed. The other category of components in the statement of revenues, expenditures and change in fund balances is referred to as debt service. This category is used to account for the funds that have been used in payment of long-term debt related items. The debt service category accounts for the amount used in paying for the loan principal amount and the related interest rate. For example, the government bonds that are used in the financing of the government’s projects are accounted for in this area. It is worth noting that the bonds are usually paid back from the money that is collected from the tax revenue. The other category of components is referred as the special assessment. This category usually covers the accounting of funds used in financing public infrastructure improvements. These are the ones which are funded by the use of special levies from owners of various properties. For example, funds used in the repair of pedestrian sidewalks are accounted for under this category known as special assessment. In the statement of revenues, expenditures and changes in fund balances, a total is obtained for all components so that the final figure may be arrived at. This is able to give a simpler presentation of the statement (Weil, 2012).
| Budgeted Village of AIU Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the Year Ended 20X9 Fiscal year | |
| General Fund | |
| REVENUES: | |
| Property taxes | $130,000 |
| Interest and penalties | 21,500 |
| Licenses and permits | 39,250.00 |
| Intergovernmental grants | 15,000 |
| Investment revenue | 75,000 |
| Miscellaneous | 5,000 |
| Total revenues | 285,750 |
| EXPENDITURES: | |
| Current: | |
| General government | 80,000 |
| Public safety | 23,000 |
| Street sanitation | 50,000 |
| Health and welfare | 35,000 |
| Community Development | 12,000 |
| Parks and recreation | 25,000 |
| Total expenditures | 225,000 |
| Net change in fund balances | 50,000 |
| Fund balances – beginning | 75,000 |
| Fund balances – ending | $125,000 |
| Village of AIU Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the Year Ended 20X9 Fiscal year | |
| General Fund Total | |
| REVENUES: | |
| Property taxes | $5,000 |
| Interest and penalties | 1,500 |
| Licenses and permits | 4,250.00 |
| Intergovernmental grants | 13,750 |
| Investment revenue | 1,250 |
| Miscellaneous | 2,450 |
| Total revenues | 28,200 |
| EXPENDITURES: | |
| Current: | |
| General government | 8,750 |
| Public safety | 125 |
| Street sanitation | 1,750 |
| Health and welfare | 6,000 |
| Community Development | 1,600 |
| Parks and recreation | 2,500 |
| Total expenditures | 20,725 |
| Net change in fund balances | 7,475 |
| Fund balances – beginning | 75,000 |
| Fund balances – ending | $82,475 |
From the records of the AIU Village, the performance of the village went down than budgeted. From the budgeted statement of revenues, expenditures and changes in fund balances, the total revenues went down by $257,550. This is a very big difference between what was budgeted and what was received as revenue for the AIU village.
On the other hand, the expenditure was also less than what was budgeted. This shows that the expenditure was not able to reach the levels that the village had budgeted.
The encouraging thing is that the revenue was higher than the expenditure for the 20×9 fiscal year. This means that the AIU Village was able to cover its expenditures fully.
Conclusion
It is always important for the people responsible for preparing and managing the statement of revenues, expenditures and changes in fund balances monitor the progress of the trial balance items. This is because the continuous monitoring will be very useful in reducing the variances between the budgeted and the actual balances.
It is also important to ensure that all the components of the statement of revenues, expenditures and changes in fund balances are well understood (Schroeder, Clark & Cathey, 2011). This will be very useful in ensuring that the results obtained are reliable. Proper understanding of the components of the statement will ensure that each entry is done as per the requirements of the financial reporting standards.
References
Ruppel, W. (2009). Government Accounting made easy. John Wiley and Sons.
Schroeder, G., Clark, W. & Cathey, M. (2011). Financial Accounting Theory and Analysis: Text and Cases, John Wiley & Sons.
Weil, L. (2012). Financial Accounting: An Introduction to Concepts, Methods and Uses, 14th Ed., Cengage Learning.
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