Accounting System — The methods and records established to identify, assemble, analyze, classify, record, and report a government's transactions and to maintain accountability for the related assets and liabilities.

Accrual Basis of Accounting — The recording of financial effects on a government of transactions and other events and circumstances that have consequences for the government in the periods in which those transactions, events, and circumstances occur, rather than only in the periods in which cash is received or paid by the government.

Ad Valorem Tax — A tax based on value (such as a property tax).

Advance From Other Funds — An asset account used to record noncurrent portions of a long-term debt owed by one fund to another fund within the same reporting entity. (See Due to other Funds and Interfund Receivable/ Payable).

Agency Funds — A fund normally used to account for assets held by a government as an agent for individuals, private organizations or other governments and/or other funds.

Appropriation — A legal authorization granted by a legislative body to make expenditures and to incur obligations for specific purposes. An appropriation is usually limited in amount and time it may be expended.

Assigned Fund Balance — A portion of fund balance that includes amounts that are constrained by the government's intent to be used for specific purposes, but that are neither restricted nor committed.

Basis of Accounting — A term used to refer to when revenues, expenditures, expenses, and transfers, and related assets and liabilities are recognized in the accounts and reported in the financial statements. Specifically, it relates to the timing of the measurements made, regardless of the nature of the measurement. (See Accrual Basis of Accounting, Cash Basis of Accounting, and Modified Accrual Basis of Accounting).

Bond — A written promise to pay a specified sum of money (the face value or principal amount) at a specified date or dates in the future (the maturity dates[s]), together with periodic interest at a specified rate. Sometimes, however, all or a substantial part of the interest is included in the face value of the security. The difference between a note and bond is that the latter is issued for a longer period and requires greater legal formality.

Business Type Activities — Those activities of a government carried out primarily to provide specific services in exchange for a specific user charge.

Capital Grants — Grants restricted by the grantor for the acquisition and/or construction of (a) capital asset(s).

Capital Projects Fund — A fund used to account for and report financial resources that are restricted, committed, or assigned to expenditures for capital outlays, including the acquisition or construction of capital facilities and other capital assets. Capital project funds exclude those types of capital-related outflows financed by proprietary funds or for assets that will be held in trust for individuals, private organizations, or other governments.

Cash Basis of Accounting — A basis of accounting that requires the recognition of transactions only when cash is received or disbursed.

Committed Fund Balance — A portion of fund balance that includes amounts that can only be used for specific purposes pursuant to constraints imposed by formal action of the government's highest level of decision-making authority.

Consumption Method — The method of accounting that requires the recognition of an expenditure/expense as inventories are used.

Contributed Capital — Contributed capital is created when a general capital asset is transferred to a proprietary fund or when a grant is received that is externally restricted to capital acquisition or construction. Contributions restricted to capital acquisition and construction and capital assets received from developers are reported in the operating statement as a separate item after nonoperating revenues and expenses.

Debt Service Fund — A fund used to account for and report financial resources that are restricted, committed, or assigned to expenditure for principal and interest. Debt service funds should be used to report resources if legally mandated. Financial resources that are being accumulated for principal and interest maturing in future years should also be reported as debt service funds.

Deferred Revenue — Amounts for which asset recognition criteria (receivable) have been met, but for which revenue recognition criteria have not been met. Under the modified accrual basis of accounting, amounts that are measurable but not available are classified as deferred revenue. Cash received in advance of the period of applicability is also recorded as deferred revenue.

Deficit — (a) The excess of the liabilities of a fund over its assets. (b) The excess of expenditures over revenues during an accounting period, or in the case of proprietary funds, the excess of expenses over revenues during an accounting period.

Disbursement — A payment made in cash or by check. Expenses are only recognized at the time physical cash is disbursed.

Due From Other Funds — A current asset account used to indicate account reflecting amounts owed to a particular fund by another fund for goods sold or services rendered. This account includes only short-term obligations on open account, not interfund loans.

Due to Other Funds — A current liability account reflecting amounts owed by a particular fund to another fund for goods sold or services rendered. This account includes only short-term obligations on an open account, not interfund loans.

Fund Financial Statements — Each fund has its own set of self-balancing accounts and fund financial statements that focus on information about the government's governmental, proprietary, and fiduciary fund types.

Enabling Legislation — Legislation that authorizes a government to assess, levy, charge, or otherwise mandate payment of resources from external resource providers, and includes a legally enforceable requirement that those resources be used for the specific purposes stipulated in the legislation.

Encumbrances — Commitments related to unperformed (executory) contracts for goods or services. Used in budgeting, encumbrances are not GAAP expenditures or liabilities, but represent the estimated amount of expenditures ultimately to result if unperformed contracts in process are completed.

Enterprise Fund — A fund established to account for operations financed and operated in a manner similar to private business enterprises (such as gas, utilities, transit systems, and parking garages). Usually, the governing body intends that costs of providing goods or services to the general public be recovered primarily through user charges.

Expenditures — Decreases in net financial resources. Expenditures include current operating expenses requiring the present or future use of net current assets, debt service and capital outlays, intergovernmental grants, entitlements, and shared revenues.

Expenses — Outflows or other using up of assets or incurrences of liabilities, or a combination of both, from delivering or producing goods, rendering services, or carrying out other activities that constitute the entity's ongoing major or central operations.

Fund — A fiscal and accounting entity with a self-balancing set of accounts in which cash and other financial resources, all related liabilities and residual equities, or balances, and changes therein, are recorded and segregated to carry on specific activities or attain certain objectives in accordance with special regulations, restrictions, or limitations.

Fund Balance — The difference between fund assets and fund liabilities of the generic fund types within the governmental category of funds.

Fund Type — The 11 generic funds that all transactions of a government are recorded into. The 11 fund types are as follows: general, special revenue, debt service, capital projects, permanent, enterprise, internal service, private purpose trust, pension trust, investment trust, and agency.

GASB — The Governmental Accounting Standards Board (GASB) was organized in 1984 by the Financial Accounting Foundation (FAF) to establish standards of financial accounting and reporting for state and local governmental entities. Its standards guide the preparation of external financial reports of those entities.

General Fund — The fund within the governmental category used to account for all financial resources except those required to be accounted for in another governmental fund.

General-Purpose Governments — General-purpose governments are governmental entities that provide a range of services, such as states, cities, counties, towns, and villages.

Governmental Funds — Funds used to account for the acquisition, use, and balances of spendable financial resources and the related current liabilities, except those accounted for in proprietary funds and fiduciary funds. Essentially, these funds are accounting segregations of financial resources. Spendable assets are assigned to a particular government fund type according to the purposes for which they may or must be used. Current liabilities are assigned to the fund type from which they are to be paid. The difference between the assets and liabilities of governmental fund types is referred to as fund balance. The measurement focus in these funds types is on the determination of financial position and changes in financial position (sources, uses, and balances of financial resources) rather than on net income determination.

Government-Wide Financial Statements — The government-wide financial statements are highly aggregated financial statements that present financial information for all assets (including infrastructure capital assets), liabilities, and net assets of a primary government and its component units, except for fiduciary funds. The government-wide financial statements use the economic resources measurement focus and accrual basis of accounting.

Infrastructure Assets — Infrastructure assets are long-lived capital assets that normally are stationary in nature and normally can be preserved for a significantly greater number of years than most capital assets. Examples of infrastructure assets are roads, bridges, tunnels, drainage systems, water and sewer systems, dams, and lighting systems. Buildings, except those that are an ancillary part of a network of infrastructure assets, are not considered infrastructure assets.

Internal Service Fund — A generic fund type within the proprietary category used to account for the financing of goods or services provided by one department or agency to other departments or agencies of a government, or to other governments, on a cost-reimbursement basis.

Investment Trust Fund — A generic fund type within the fiduciary category used by a government in a fiduciary capacity, such as to maintain its cash and investment pool for other governments.

Major Funds — A government's general fund (or its equivalent), other individual governmental type, and enterprise funds that meet specific quantitative criteria, and any other governmental or enterprise fund that a government's officials believe is particularly important to financial statement users.

Management's Discussion and Analysis (MD&A) — MD&A is RSI that introduces the basic financial statements by presenting certain financial information as well as management's analytical insights on that information.

Measurement Focus — The accounting convention that determines (a) which assets and which liabilities are included on a government's balance sheet and where they are reported, and (b) whether an operating statement presents information on the flow of financial resources (revenues and expenditures) or information on the flow of economic resources (revenues and expenses).

Modified Accrual Basis of Accounting — The basis of accounting adapted to the governmental fund type measurement focus. Revenues and other financial resource increments are recognized when they become both measurable and available to finance expenditures of the current period. Available means collectible in the current period or soon enough thereafter to be used to pay liabilities of the current period. Expenditures are recognized when the fund liability is incurred and expected to be paid from current resources except for (a) inventories of materials and supplies that may be considered expenditures either when purchased or when used, and (b) prepaid insurance and similar items that may be considered expenditures either when paid for or when consumed. All governmental funds are accounted for using the modified accrual basis of accounting in fund financial statements.

Modified Approach — Rules that allow infrastructure assets that are part of a network or subsystem of a network not to be depreciated as long as certain requirements are met.

Nonspendable Fund Balance — The portion of fund valance that includes amounts that cannot be spent because they are either (a) not in spendable form, or (b) legally or contractually required to be maintained intact.

Pension Trust Fund — A trust fund used to account for a PERS. Pension trust funds use the accrual basis of accounting and the flow of economic resources measurement focus.

Permanent Fund — A generic fund type under the governmental category used to report resources that are legally restricted to the extent that only earnings, and not principal, may be used for purposes that support the reporting government's programs and, therefore, are for the benefit of the government or its citizenry. (Permanent funds do not include private-purpose trust funds, which should be used when the government is required to use the principal or earnings for the benefit of individuals, private organizations, or other governments).

Private Purpose Trust Fund — A general fund type under the fiduciary category used to report resources held and administered by the reporting government acting in a fiduciary capacity for individuals, other governments, or private organizations.

Proprietary Funds — The government category used to account for a government's ongoing organizations and activities that are similar to those often found in the private sector (these are enterprise and internal service funds). All assets, liabilities, equities, revenues, expenses, and transfers relating to the government's business and quasi-business activities are accounted for through proprietary funds. Proprietary funds should apply all applicable GASB pronouncements and those GAAP applicable to similar businesses in the private sector, unless those conflict with GASB pronouncements. These funds use the accrual basis of accounting in conjunction with the flow of economic resources measurement focus.

Purchases Method — The method under which inventories are recorded as expenditures when acquired.

Restricted Fund Balance — Portion of fund valance that reflects constraints placed on the use of resources (other than nonspendable items) that are either (a) externally imposed by creditor such as through debt covenants, grantors, contributors, or laws or regulations of other governments, or (b) imposed by law through constitutional provisions or enabling legislation.

Required Supplementary Information (RSI) — GAAP specify that certain information be presented as RSI.

Special-Purpose Governments — Special-purpose governments are legally separate entities that perform only one activity or only a few activities, such as cemetery districts, school districts, colleges and universities, utilities, hospitals and other health care organizations, and public employee retirement systems.

Special Revenue Fund — A fund that must have revenue or proceeds from specific revenue sources which are either restricted or committed for a specific purpose other than debt service or capital projects. This definition means that in order to be considered a special revenue fund, there must be one or more revenue sources upon which reporting the activity in a separate fund is predicated.

Transfers — All interfund transfers, such as legally authorized transfers from a fund receiving revenue to a fund through which the resources are to be expended, where there is no intent to repay. Interfund transfers are recorded on the operating statement.

Unassigned Fund Balance — Residual classification for the general fund. This classification represents fund balance that has not been assigned to other funds and that has not been restricted, committed, or assigned to specific purposes within the general fund. The general fund should be the only fund that reports a positive unassigned fund valance amount. In other funds, if expenditures incurred for specific purposes exceeded the amounts restricted, committed, or assigned to those purposes,

Unrestricted Fund Balance — The total of committed fund balance, assigned fund balance, and unassigned fund balance.

Charitable Lead Trust — A trust established in connection with a split-interest agreement, in which the not-for-profit organization receives distributions during the agreement's term. Upon termination of the trust, the remainder of the trust assets is paid to the donor or to third-party beneficiaries designated by the donor.

Charitable Remainder Trust — A trust established in connection with a split-interest agreement, in which the donor or a third-party beneficiary receives specified distributions during the agreement's term. Upon termination of the trust, a not-for-profit organization receives the assets remaining in the trust.

Collections — Works of art, historical treasures, or similar assets that are (a) held for public exhibition, education, or research in furtherance of public service rather than financial gain, (b) protected, kept unencumbered, cared for, and preserved, and (c) subject to an organizational policy that requires the proceeds of items that are sold to be used to acquire other items for collections.

Conditional Promise to Give — A promise to give that depends on the occurrence of a specified future and uncertain event to bind the promisor.

Contribution — An unconditional transfer of cash or other assets to an entity or a settlement or cancellation of its liabilities in a voluntary nonreciprocal transfer by another entity acting other than as an owner.

Costs of Joint Activities — Costs of joint activities are costs incurred for a joint activity. Costs of joint activities may include joint costs and costs other than joint costs. Costs other than joint costs are costs that are identifiable with a particular function, such as program, fundraising, management and general, and membership development costs.

Donor-Imposed Restriction — A donor stipulation that specifies a use for the contributed asset that is more specific than broad limits resulting from the nature of the organization, the environment in which it operates, and the purposes specified in its articles of incorporation or bylaws, or comparable documents for an unincorporated association. A restriction on an organization's use of the asset contributed may be temporary or permanent.

Functional Classification — A method of grouping expenses according to the purpose for which the costs are incurred. The primary functional classifications are program services and supporting activities.

Joint Activity — A joint activity is an activity that is part of the fundraising function and has elements of one or more other functions, such as programs, management and general, membership development, or any other functional category used by the entity.

Joint Costs — Joint costs are the costs of conducting joint activities that are not identifiable with a particular component of the activity.

Natural Expense Classification — A method of grouping expenses according to the kinds of economic benefits received in incurring those expenses. Examples of natural expense classifications include salaries and wages, employee benefits, supplies, rent, and utilities.

Permanently Restricted Net Assets — The part of the net assets of a not-for-profit organization resulting (a) from contributions and other inflows of assets whose use by the organization is limited by donor-imposed stipulations that neither expire by passage of time nor can be fulfilled or otherwise removed by actions of the organization, (b) from other asset enhancements and diminishments subject to the same kinds of stipulations, and (c) from reclassifications from (or to) other classes of net assets as a consequence of donor-imposed stipulations.

Promise to Give — A written or oral agreement to contribute cash or other assets to another entity. A promise to give may be either conditional or unconditional.

Temporarily Restricted Net Assets — The part of the net assets of a not-for-profit organization resulting (a) from contributions and other inflows of assets whose use by the organization is limited by donor-imposed stipulations that either expire by the passage of time or can be fulfilled and removed by actions of the organization pursuant to those stipulations, (b) from other asset enhancements and diminishments subject to the same kinds of stipulations, and (c) from reclassifications to (or from) other classes of net assets as a consequence of donor-imposed stipulations, their expiration by passage of time, or their fulfillment and removal by actions of the organization pursuant to those stipulations.

Unrestricted Net Assets — The part of net assets of a not-for-profit organization that is neither permanently restricted nor temporarily restricted by donor-imposed stipulations.

Attestation Engagements — Attestation engagements concern examining, reviewing, or performing agreed-upon procedures on a subject matter or an assertion about a subject matter and reporting on the results.

Compliance Supplement — A document issued annually in the Spring by the OMB to provide guidance to auditors.

Data Collection Form — A form submitted to the Federal Audit Clearinghouse which provides information about the auditor, the auditee and its federal programs, and the results of the audit.

Federal Financial Assistance — Assistance that non-federal entities receive or administer in the form of grants, loans, loan guarantees, property, cooperative agreements, interest subsidies, insurance, food commodities, direct appropriations, or other assistance, but does not include amounts received as reimbursement for services rendered to individuals in accordance with guidance issued by the Director.

Financial Audits — Financial audits are primarily concerned with providing reasonable assurance about whether financial statements are presented fairly, in all material respects, in conformity with generally accepted accounting principles (GAAP) or with a comprehensive basis of accounting other than GAAP.

GAGAS — Generally Accepted Government Auditing Standards issued by the GAO. They are also commonly known as the Yellow Book.

GAO — The United States Government Accountability Office. Among their responsibilities is the issuance of Generally Accepted Government Auditing Standards (a.k.a. the Yellow Book).

OMB — The Office of Management and Budget. OMB assists the President in the development and implementation of budget, program, management, and regulatory policies.

Pass-Through Entity — A non-federal entity that provides federal awards to a subrecipient to carry out a federal program.

Performance Audits — Performance audits entail an objective and systematic examination of evidence to provide an independent assessment of the performance and management of a program against objective criteria as well as assessments that provide a prospective focus or that synthesize information on best practices or cross-cutting issues.

Program-Specific Audit — An audit of one federal program.

Single Audit — An audit of a non-federal entity that includes the entity's financial statements and Federal awards.

Single Audit Guide — This AICPA Audit Guide formally titled Government Auditing Standards and Circular A-133 Audits (the Single Audit Guide) is the former Statement of Position (SOP) 98-3. The Single Audit Guide provides guidance on the auditor's responsibilities when conducting a single audit or program-specific audit in accordance with the Single Audit Act and Circular A-133.

Subrecipient — A non-federal entity that receives federal awards through another non-federal entity to carry out a federal program, but does not include an individual who receives financial assistance through such awards.