State Local Governments

FAR — State & Local Government Accounting (GASB) Exam: CPA — FAR (Financial Accounting & Reporting) Last Updated: June 2026 --- ## Overview: GASB vs. FASB State and local governments follow GASB (Governmental Accounting Standards Board), not FASB. Key differences from for-profit: - No profit motive — focus on service delivery and fiscal accountability - Fund accounting — resources segregated by purpose into separate accounting entities - Dual reporting — government-wide statements + fund statements > Exam Tip: FAR tests GASB heavily. When you see "state" or "city" or "municipality," switch to GASB rules immediately. Do not apply FASB rules. --- ## Fund Types ### Three Categories of Funds #### 1. Governmental Funds (Modified Accrual) Focus on current financial resources. | Fund | Purpose | |---|---| | General Fund | Primary operating fund; all activities not in other funds | | Special Revenue Fund | Specific revenue sources restricted for particular purposes | | Capital Projects Fund | Acquisition or construction of major capital assets | | Debt Service Fund | Payment of long-term debt principal and interest | | Permanent Fund | Resources legally restricted — only earnings can be spent | #### 2. Proprietary Funds (Full Accrual — like for-profit) Focus on cost recovery and economic resources. | Fund | Purpose | |---|---| | Enterprise Fund | Activities that charge fees to external users (utilities, airports, transit) | | Internal Service Fund | Activities providing services to other departments (motor pool, IT) | #### 3. Fiduciary Funds (Full Accrual) Resources held for benefit of external parties. Not included in government-wide statements. | Fund | Purpose | |---|---| | Pension/OPEB Trust Funds | Employee retirement plans | |…