Concept explainers
When is a Capital Projects Fund used by a governmental entity? In what situations would a Capital Projects Fund not be used for reporting in accordance with generally accepted accounting principles (GAAP)? Explain.
State the condition in which the capital projects fund must be used by governmental entity. Identify the situation in which a capital projects fund cannot be used for reporting in accordance with generally accepted accounting principles.
Explanation of Solution
State the condition in which the capital projects fund must be used by governmental entity. Identify the situation in which a capital projects fund cannot be used for reporting in accordance with generally accepted accounting principles.
- “A Capital Projects Fund must be used for “general government” capital projects and other capital outlay on the condition that it must aid in controlling and accounting for contractor activities or signifying stewardship for restricted resources and/or is legally or contractually needed”.
- “Even though not a particular GAAP requirement, Capital Projects Funds are most regularly used for main “general government” projects, often spanning more than one financial period, that are being financed by most important borrowings, chief intergovernmental grants, or other types of particular financing arrangements”.
- “Capital Projects Funds are not used for the reporting purposes of GAAP, for proprietary funds (i.e., Internal Service Funds and Enterprise Funds) or fiduciary funds (For example, Private-Purpose Trust Fund)”.
- “Capital projects related with those funds are directly accounted in such funds. Furthermore, several routine “general government” capital acquisitions, in addition to those financed with capital lease arrangements are directly accounted in the General Fund or Special Revenue Funds”.
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