| Course | ACC-5070 Government and Not-for-Profit Organization Accounting |
|---|---|
| Module | Module 2 |
| Paper type | Written Assignment 2: how a township's annual report is built |
| Length | About 783 words, 5 pages |
| Format | APA 7 student paper |
| School | Thomas Edison State University |
| Program | Master of Science in Accounting |
| Updated | October 2026 |
Free sample paper for ACC 5070 Module 2
Two Pictures of One Township: Explaining the Government Financial Reporting Model to a New Council Member
Student Name
Master of Science in Accounting, Thomas Edison State University
ACC-5070: Government and Not-for-Profit Organization Accounting
Mentor Name
Month Day, Year
Two Pictures of One Township: Explaining the Government Financial Reporting Model to a New Council Member
Purpose
Lenape Hills Township's newest council member, a retired engineer, asked why the township's annual report shows a fund balance of $4.2 million in one place and net position of more than $25 million in another, and which number tells the truth. Both do. This paper explains the government reporting model so the council member can read the report with confidence.
The Annual Comprehensive Financial Report
Most larger governments publish an annual comprehensive financial report (ACFR) with three sections. The introductory section contains a transmittal letter, an organization chart and a list of officials. The financial section contains the auditor's report, management's discussion and analysis, the basic financial statements and notes, and required supplementary information such as budgetary comparisons and pension schedules. The statistical section presents ten-year trends in finances, revenue capacity, debt, demographics and operations. The basic financial statements, the heart of the report, come in two layers that the GASB established in Statement No. 34 (Governmental Accounting Standards Board [GASB], 1999).
Layer One: Government-Wide Statements
Two statements give the whole-township view, net position and activities, and each keeps tax-funded work such as police and road repair in one column and fee-funded operations such as the water system in another. They use the economic resources measurement focus and the accrual basis, the same approach businesses use. Capital assets appear and are depreciated, long-term debt and pension liabilities appear as liabilities and revenues are recognized when earned. The statement of activities shows each function's expenses, the program revenues that help pay for it and the net cost left for general revenues, mainly property taxes, to cover. For the council member, this layer answers whether the township is living within its means over the long run.
Layer Two: Fund Statements
Fund statements present the major funds individually. The township's governmental funds look only at spendable resources and keep modified accrual books: a revenue counts once it can be measured and will arrive in time to pay this year's bills, which for property taxes means cash in hand within 60 days of December 31, and a spending item counts once the township owes it and will pay it from this year's money. Capital assets and long-term debt do not appear; buying a fire truck is an expenditure, not an asset, and issuing bonds is an other financing source, not a liability. This layer answers a narrower question: does the township have enough spendable resources to meet this year's obligations and comply with its budget? Proprietary funds, by contrast, use full accrual in both layers.
| Feature | Government-wide statements | Governmental fund statements |
|---|---|---|
| Measurement focus | Economic resources | Current financial resources |
| Basis of accounting | Accrual | Modified accrual |
| Capital assets | Reported and depreciated | Purchases reported as expenditures |
| Long-term debt and pensions | Reported as liabilities | Not reported; bond proceeds are financing sources |
| Bottom line | Net position | Fund balance |
| Question answered | Is the government sustainable over time? | Can it pay this year's bills within its budget? |
The Reconciliation
Because the layers measure different things, the report includes a reconciliation of total governmental fund balances to the net position of governmental activities. It adds capital assets, subtracts long-term liabilities and adjusts for revenue that is earned but not yet available. The reconciliation is where a careful reader sees, for example, that a large net pension liability makes unrestricted net position negative even when fund balances look healthy. Research suggests the market values these disclosures: Baber and Gore (2008) found that municipal bonds issued by governments in states requiring GAAP-based reporting carried lower interest costs, consistent with investors trusting standardized reports.
Recent Changes to the Model
In 2024 the GASB issued Statement No. 103, which takes effect for fiscal years beginning after June 15, 2025 (GASB, 2024). It sharpens management's discussion and analysis so it explains changes rather than repeating the statements, requires separate presentation of unusual or infrequent items, defines operating and nonoperating revenues and expenses more clearly for proprietary funds, adds a subtotal for operating income in proprietary fund statements and requires budgetary comparison schedules to appear as required supplementary information. For Lenape Hills, the most visible change will be in the water utility's statement, where interest and capital contributions will be presented more consistently.
What the Council Member Should Watch
Three numbers deserve attention each year. Unassigned General Fund balance as a share of expenditures shows the township's cushion. Unrestricted net position of governmental activities, which may be negative because of pensions, shows long-term obligations not yet funded. And the water utility's operating income shows whether fees cover costs. Reading both layers together gives a far better picture than either alone (Reck et al., 2020).
References
Baber, W. R., & Gore, A. K. (2008). Consequences of GAAP disclosure regulation: Evidence from municipal debt issues. The Accounting Review, 83(3), 565-592. https://doi.org/10.2308/accr.2008.83.3.565
Governmental Accounting Standards Board. (1999). Basic financial statements and management's discussion and analysis for state and local governments (Statement No. 34).
Governmental Accounting Standards Board. (2024). Financial reporting model improvements (Statement No. 103).
Reck, J. L., Lowensohn, S. L., & Wilson, E. R. (2020). Accounting for governmental and nonprofit entities (19th ed.). McGraw-Hill Education.
What the ACC 5070 Module 2 instructions ask for
The reporting model for states and towns is the subject of Module 2, whose paper counts toward the 42 percent of ACC-5070 that rides on written work. Depending on the prompt, it may be a set of short answers or a brief paper of two to five pages; the syllabus leaves the length guidance to each assignment and asks that every part be addressed in organized, well-written form. Expect questions on the sections of the annual report, the two layers of basic financial statements, measurement focus and basis of accounting, the reconciliation between layers and required supplementary information. This sample is written as a brief paper addressed to an invented council member, which keeps the explanation practical.
How the ACC 5070 Module 2 example is put together
The paper opens with the question that motivates it, why two different bottom lines appear, and promises that both are right. It describes the three sections of the annual report, then explains each layer of the basic statements with the question that layer answers. A comparison table sets the two layers side by side on six features. The reconciliation section explains what joins them and cites research on how standardized reporting affects borrowing costs. A section on the 2024 reporting model changes keeps the paper current, and the closing section names three numbers a council member should track, which turns the explanation into practical guidance. The council member's own questions frame each section, so the explanation stays tied to decisions she will actually make.
Reading the ACC 5070 Module 2 grading rubric
The reporting model paper is marked on a 100-point scale and counts toward the 42 percent carried by written work. For a reporting model paper, mentors check that the sections of the report are described correctly, that measurement focus and basis of accounting are matched to the right statements, that the treatment of capital assets and long-term debt in each layer is accurate and that the reconciliation is explained. Awareness of recent standards, such as the 2024 reporting model improvements, shows current knowledge. Clear organization, plain explanations and correct citations meet the syllabus expectations for organized, well-written work. Confusing the two layers' bases is the error that costs the most.
ACC 5070 Module 2 help: mistakes that cost marks
Students most often reverse the measurement focus, assigning current financial resources to the government-wide statements, or say that governmental funds depreciate capital assets. Build a small comparison table before you write and check every statement against it. Explain why fund balance and net position differ instead of calling one of them wrong. If your prompt asks about required supplementary information, mention budgetary comparisons and pension schedules. Check whether your textbook edition predates the 2024 changes, and note them if it does. A free first sample of your own ACC-5070 Module 2 assignment is available on request.
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ACC 5070 Module 2 questions, answered
Where can I find a free ACC 5070 Module 2 sample paper?
The reporting model paper for a new township council member is shown above in full: the annual report's sections, both statement layers, the reconciliation and the 2024 changes.
What is the difference between government-wide and fund statements?
The whole-government statements count everything the township owns and owes on full accrual, while the governmental fund statements track only spendable resources on modified accrual.
What is modified accrual accounting?
A revenue is booked once its amount is known and the cash will come in time to settle this year's bills; a spending item is booked once owed and payable from this year's money.
What are the sections of an ACFR?
An introductory section, a financial section with the auditor's report, MD&A, basic statements, notes and required supplementary information, and a statistical section.
What does GASB Statement No. 103 change?
It improves MD&A, requires separate presentation of unusual or infrequent items, clarifies operating and nonoperating classifications in proprietary funds and places budgetary comparisons in required supplementary information.