Using Multiple Bases of Accounting 
Purpose
You are required to account for some funds on a different basis of accounting than others. In addition, full accrual accounting must be performed for all funds to meet the requirements of GASB Statements 34 and 35. Certain types of postings are different under modified accrual accounting than are made for full accrual accounting. These postings can be captured against separate GL accounts, included or excluded in reporting as required, and carried forward to future fiscal years for reconciliation and reporting purposes.
Transactions can be posted and isolated in Financial Accounting (FI) through separate GL accounts, fund balance (retained earnings) accounts, and contra accounts to facilitate reporting and reconciliation of different accounting bases (full accrual compared to modified accrual) in FI.
Prerequisites
You must create GL accounts in FI specifically for full accrual use. You decide whether these accounts are reflected in Controlling (CO), Project System (PS), and Funds Management (FM), depending on your cost accounting and budgetary accounting needs. If you do not want to record them in CO / PS, do not create cost elements for these accounts. If you do not want to record them in FM, link the GL accounts to commitment items with a financial transaction 50.
You should create separate P&L statement account types in FI and link the related GL accounts to the separate fund balance (retained earnings) accounts for carryforward from year to year. The separate fund balance accounts should reflect those categories of timing or permanent differences that you are required to report.
To reconcile full accrual accounting to budgetary accounting, you can also create separate carryforward item categories in FM, linking the accrual-related GL accounts to statistical commitment items, and linking the statistical commitment item(s) to separate fund balance commitment items for carryforward from year to year.
For more information on the configuration and processing of GL accounts, commitment items, and balance carryforwards, see the Financial Accounting and Funds Management documentation.
Process Flow
You must comply with GASB Statement Number 34, requiring you to report on a modified accrual basis for your governmental funds and on a full accrual basis for your general governmental activities. This requires bond principal payments to be recorded as expenditure (under modified accrual accounting) and as a reduction of a liability (under full accrual accounting).
Modified Accrual:
G/L Account |
Account Descr. |
Debit Amount |
Credit Amount |
483100 |
Debt Principal Expense |
$1,000,000 |
|
110000 |
Cash |
|
$1,000,000 |
Adjustment to Full Accrual:
G/L Account |
Account Descr. |
Debit Amount |
Credit Amount |
483199 |
Debt Principal Expense - Contra |
|
$1,000,000 |
179000 |
Cash |
$1,000,000 |
|
You can map the debt principal expense and contra accounts to individual fund balance (retained earnings) accounts to segregate them as balance carryforwards from year to year.
G/L Account |
P&L Statement Account Type & Related Fund Balance Account |
483100 |
ED >> Fund Balance-Modified Accrual-Expend-Debt Principal |
483199 |
PC >> Net Assets-Full Accrual-GAAP-Debt Principal Contra |
You can post both entries in FI and track this as a permanent difference from year to year. You can report on the different bases of accounting by including or excluding the related GL accounts, as necessary.
Initial Year Results:
Fiscal Year |
Fund |
G/L Account |
Debit Amount |
Credit Amount |
XXXX |
DEBT |
483100 |
$1,000,000 |
|
XXXX |
DEBT |
483199 |
|
$1,000,000 |
Fiscal Year XXXX Fund Balance: DEBT Component FI (Modified Accrual) |
|
G/L Account 483100 |
$1,000,000 DR |
Total Ending Fund Balance |
$1,000,000 DR |
Fiscal Year XXXX Fund Balance: DEBT Component FI (Full Accrual) |
|
G/L Account 483100 |
$1,000,000 DR |
G/L Account 483199 |
$1,000,000 CR |
Total Ending Fund Balance |
$ - |
Subsequent Year Results:
Fiscal Year |
Fund |
G/L Account |
Debit Amount |
Credit Amount |
XXXX+1 |
DEBT |
483100 |
$500,000 |
|
XXXX+1 |
DEBT |
483199 |
|
$500,000 |
Fiscal Year XXXX+1 Fund Balance: DEBT Component FI (Modified Accrual) |
|
Beginning Fund Balance* |
$1,000,000 DR |
G/L Account 483100 |
$ 500,000 DR |
Total Ending Fund Balance |
$ 1,500,000 DR |
*Modified Accrual Expend-Debt Principal
Fiscal Year XXXX+1 Fund Balance: DEBT Component FI (Full Accrual) |
|
Beginning Fund Balance* |
$1,000,000 DR |
Net Assets – Full Accrual-GAAP Debt Principal Contra |
$1,000,000 CR |
Total Beginning Fund Bal. |
$ - |
G/L Account 483100 |
$ 500,000 DR |
G/L Account 483199 |
$ 500,000 CR |
Total Ending Fund Balance |
$ - |
*Modified Accrual Expend-Debt Principal