WARREN RUPPEL, CPA, is the author of four Wiley accounting publications, including Wiley GAAP for Governments. He is a partner in the Nonprofit and Government Services Group of Marks Paneth & Shron LLP in New York. He began his career at KPMG in 1979 and joined Deloitte & Touche in 1989 to specialize in audits of not-for-profit organizations and governments. Mr. Ruppel has served as the chief financial officer of an international not-for-profit organization and as the Assistant Comptroller for Accounting of The City of New York, where he was responsible for all aspects of the City’s accounting and financial reporting.

• Preface ixChapter 1 Introduction and Background 1What Are Generally Accepted Accounting Principles? 1Who Sets Generally Accepted Accounting Principles for Governments? 5Do Governments Need to Comply with Generally Accepted Accounting Principles? 9Why Is Governmental Accounting and Financial Reporting Different from Commercial and Not-for-Profit Accounting and Financial Reporting? 10To What Entities Do Governmental Generally Accepted Accounting Principles Apply? 15Chapter 2 Basic Governmental Accounting Concepts 19Understanding the Different Bases of Accounting 20Understanding What Measurement Focuses Are Used by Governments 26Defining and Understanding the Nature of Assets 29Defining and Understanding the Nature of Liabilities 43Defining and Understanding the Nature of Net Assets 49Chapter 3 Understanding Fund Accounting 55Fund Fundamentals 56Governmental Funds 58Proprietary Funds 75Fiduciary Funds 82Chapter 4 Basics of Governmental Financial Statements 89General-Purpose Financial Statements 90Management’s Discussion and Analysis 90The Basic Financial Statements 94Required Supplementary Information 137Comprehensive Annual Financial Report 139Chapter 5 Understanding the Reporting Entity 147Background 148Accountability Focus 149Financial Reporting Entity Defined 150Display of Component Units 161Chapter 6 Revenues from Nonexchange Transactions 169Classes of Nonexchange Transactions 170Accounting Requirements 172Property Taxes 175Income and Sales Taxes, and Other Derived Tax Revenues 177Adjustments for the Accrual Basis of Accounting 180Grants and Other Financial Assistance 182Chapter 7 Capital Assets 187Where Are Capital Assets Recorded in the Financial Statements? 188Recording and Valuing Capital Assets 189Understanding Depreciation 193Using the Modified Approach in Lieu of Depreciating Infrastructure Assets 197The Basics of Capitalized Interest 200Capital Assets Resulting from Capital Lease Transactions 206Intangible Assets 215Impairments of Capital Assets 217Chapter 8 Accounting for Pensions and Other Postemployment Benefits 225Requirements for Defined Benefit Pension and OPEB Plans 229Calculation of the ARC 232Parameters for Actuarial Calculations, Including the ARC 233Net Pension or OPEB Obligation 242Recording Pension- and OPEB-Related Assets, Liabilities, and Expenditures/Expenses 243Pension and OPEB Disclosures 245Employers with Defined Contribution Plans 246Chapter 9 Sundry Accounting Topics 249Accounting for Investments 249Reporting Unrealized Gains or Losses 252Investment and Deposit Disclosures 253Compensated Absence Accruals 255Landfill Closure and Postclosure Care Costs 262Derivatives, Including Interest Rate Swaps 269Securities Lending Transactions 281Chapter 10 Upcoming Developments in Governmental Accounting 287Pension (and OPEB) Accounting—Revisited 288Index 293

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WARREN RUPPEL, CPA, is the author of four Wiley accounting publications, including Wiley GAAP for Governments. He is a partner in the Nonprofit and Government Services Group of Marks Paneth & Shron LLP in New York. He began his career at KPMG in 1979 and joined Deloitte & Touche in 1989 to specialize in audits of not-for-profit organizations and governments. Mr. Ruppel has served as the chief financial officer of an international not-for-profit organization and as the Assistant Comptroller for Accounting of The City of New York, where he was responsible for all aspects of the City’s accounting and financial reporting.

• Preface ixChapter 1 Introduction and Background 1What Are Generally Accepted Accounting Principles? 1Who Sets Generally Accepted Accounting Principles for Governments? 5Do Governments Need to Comply with Generally Accepted Accounting Principles? 9Why Is Governmental Accounting and Financial Reporting Different from Commercial and Not-for-Profit Accounting and Financial Reporting? 10To What Entities Do Governmental Generally Accepted Accounting Principles Apply? 15Chapter 2 Basic Governmental Accounting Concepts 19Understanding the Different Bases of Accounting 20Understanding What Measurement Focuses Are Used by Governments 26Defining and Understanding the Nature of Assets 29Defining and Understanding the Nature of Liabilities 43Defining and Understanding the Nature of Net Assets 49Chapter 3 Understanding Fund Accounting 55Fund Fundamentals 56Governmental Funds 58Proprietary Funds 75Fiduciary Funds 82Chapter 4 Basics of Governmental Financial Statements 89General-Purpose Financial Statements 90Management’s Discussion and Analysis 90The Basic Financial Statements 94Required Supplementary Information 137Comprehensive Annual Financial Report 139Chapter 5 Understanding the Reporting Entity 147Background 148Accountability Focus 149Financial Reporting Entity Defined 150Display of Component Units 161Chapter 6 Revenues from Nonexchange Transactions 169Classes of Nonexchange Transactions 170Accounting Requirements 172Property Taxes 175Income and Sales Taxes, and Other Derived Tax Revenues 177Adjustments for the Accrual Basis of Accounting 180Grants and Other Financial Assistance 182Chapter 7 Capital Assets 187Where Are Capital Assets Recorded in the Financial Statements? 188Recording and Valuing Capital Assets 189Understanding Depreciation 193Using the Modified Approach in Lieu of Depreciating Infrastructure Assets 197The Basics of Capitalized Interest 200Capital Assets Resulting from Capital Lease Transactions 206Intangible Assets 215Impairments of Capital Assets 217Chapter 8 Accounting for Pensions and Other Postemployment Benefits 225Requirements for Defined Benefit Pension and OPEB Plans 229Calculation of the ARC 232Parameters for Actuarial Calculations, Including the ARC 233Net Pension or OPEB Obligation 242Recording Pension- and OPEB-Related Assets, Liabilities, and Expenditures/Expenses 243Pension and OPEB Disclosures 245Employers with Defined Contribution Plans 246Chapter 9 Sundry Accounting Topics 249Accounting for Investments 249Reporting Unrealized Gains or Losses 252Investment and Deposit Disclosures 253Compensated Absence Accruals 255Landfill Closure and Postclosure Care Costs 262Derivatives, Including Interest Rate Swaps 269Securities Lending Transactions 281Chapter 10 Upcoming Developments in Governmental Accounting 287Pension (and OPEB) Accounting—Revisited 288Index 293

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WARREN RUPPEL, CPA, is the author of four Wiley accounting publications, including Wiley GAAP for Governments. He is a partner in the Nonprofit and Government Services Group of Marks Paneth & Shron LLP in New York. He began his career at KPMG in 1979 and joined Deloitte & Touche in 1989 to specialize in audits of not-for-profit organizations and governments. Mr. Ruppel has served as the chief financial officer of an international not-for-profit organization and as the Assistant Comptroller for Accounting of The City of New York, where he was responsible for all aspects of the City’s accounting and financial reporting.

• Preface ixChapter 1 Introduction and Background 1What Are Generally Accepted Accounting Principles? 1Who Sets Generally Accepted Accounting Principles for Governments? 5Do Governments Need to Comply with Generally Accepted Accounting Principles? 9Why Is Governmental Accounting and Financial Reporting Different from Commercial and Not-for-Profit Accounting and Financial Reporting? 10To What Entities Do Governmental Generally Accepted Accounting Principles Apply? 15Chapter 2 Basic Governmental Accounting Concepts 19Understanding the Different Bases of Accounting 20Understanding What Measurement Focuses Are Used by Governments 26Defining and Understanding the Nature of Assets 29Defining and Understanding the Nature of Liabilities 43Defining and Understanding the Nature of Net Assets 49Chapter 3 Understanding Fund Accounting 55Fund Fundamentals 56Governmental Funds 58Proprietary Funds 75Fiduciary Funds 82Chapter 4 Basics of Governmental Financial Statements 89General-Purpose Financial Statements 90Management’s Discussion and Analysis 90The Basic Financial Statements 94Required Supplementary Information 137Comprehensive Annual Financial Report 139Chapter 5 Understanding the Reporting Entity 147Background 148Accountability Focus 149Financial Reporting Entity Defined 150Display of Component Units 161Chapter 6 Revenues from Nonexchange Transactions 169Classes of Nonexchange Transactions 170Accounting Requirements 172Property Taxes 175Income and Sales Taxes, and Other Derived Tax Revenues 177Adjustments for the Accrual Basis of Accounting 180Grants and Other Financial Assistance 182Chapter 7 Capital Assets 187Where Are Capital Assets Recorded in the Financial Statements? 188Recording and Valuing Capital Assets 189Understanding Depreciation 193Using the Modified Approach in Lieu of Depreciating Infrastructure Assets 197The Basics of Capitalized Interest 200Capital Assets Resulting from Capital Lease Transactions 206Intangible Assets 215Impairments of Capital Assets 217Chapter 8 Accounting for Pensions and Other Postemployment Benefits 225Requirements for Defined Benefit Pension and OPEB Plans 229Calculation of the ARC 232Parameters for Actuarial Calculations, Including the ARC 233Net Pension or OPEB Obligation 242Recording Pension- and OPEB-Related Assets, Liabilities, and Expenditures/Expenses 243Pension and OPEB Disclosures 245Employers with Defined Contribution Plans 246Chapter 9 Sundry Accounting Topics 249Accounting for Investments 249Reporting Unrealized Gains or Losses 252Investment and Deposit Disclosures 253Compensated Absence Accruals 255Landfill Closure and Postclosure Care Costs 262Derivatives, Including Interest Rate Swaps 269Securities Lending Transactions 281Chapter 10 Upcoming Developments in Governmental Accounting 287Pension (and OPEB) Accounting—Revisited 288Index 293

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