Internal Service Fund For Accounting Samples †MyAssignmenthelp.com

Question: Discuss about the Internal Service Fund For Accounting. Answer: Introduction Internal service fund is the fund used for governmental accounting for tracking the services or goods transferred among the departments on the basis of cost reimbursement. For instance, the maintenance of department that offers the services related to equipment maintenance to the other departments. On the other hand, nonexpendable funds are invested for procuring income. Internal service fund The 1st question here is regarding the internal services and multiple activities that are used for accounting purposes. The internal service funds are the governmental funds used for the governmental departments or units that deliver the services and goods from one government department to other department, to other fund, other agencies in same unit of government or sometimes to the units of other government on cost reimbursement or user charged basis (Freeman et al. 2017). The internal service funds are the proprietary funds and may include supply inventories, central stores, legal services, auditing and accounting services, operations related to motor pool services, insurance and data pool services. As per GASB (Governmental Accounting Standard Series) 34 it is not required by the government to account the activities under separate internal service fund and it shall be used if only the reporting government is predominant participant of the activity. The funds under the internal ser vices follow FASB model and use the business type accounting approaches. Apart from that it explains that the funds under internal services shall be reported under separate column in the financial statement for proprietary fund (Number, 2017). Further, to remain transparent the government shall not record the expenses related to the internal service fund under the general fund. Nonexpendable endowment funds Permanent funds are required to be used for the account of nonexpendable resources that are beneficial to the government itself and not to the outside parties. In the accounting system for the nonexpendable endowments it will be better to apply full accrual method rather than modified method for ensuring that the funds are presented more accurately and the funds are not being misused (Dyachkova, 2016). Apart from that it ensures that the assets from endowment fund are not dissolved inappropriately with the allocation on the basis of accrual cash flows rather than the economic earnings for all the dividends, interest. Further, the endowment funds majorly consist of the investment in bonds, stocks and various other same kinds of securities. It is done for maintaining consistency with the accounting and endowment funds that are also accounted on accrual basis. When the depreciation is calculated on assets from the endowment the reduction in the value of asset and the charges against the incomes are accounted for (Larkin DiTommaso, 2014). This practice is followed as it preserves the expectations and principles of the donor and government will not possess the asset of the value and will rather have value for various other assets like cash. Conclusion From the above it is concluded that the internal service fund shall be recorded under separate column and shall not be recorded under the general fund. On the other hand, the depreciation is charged on the long-term assets as it maintains the transparency and preserve the principles of the donor. References Dyachkova, E. (2016). Managing endowment fund income in universities. , (1 (eng)). Freeman, R. J., Shoulders, C. D., McSwain, D. N., Scott, R. B. (2017).Governmental and nonprofit accounting. Pearson. Larkin, R. F., DiTommaso, M. Fund Accounting.Not-for-Profit GAAP 2014: Interpretation and Application of Generally accepted accounting principles for Not-for-Profit Organizations, 79-93. Number, T. (2017). Internal Revenue Service.