Compare and contrast the methods used to control expenditures in the General Fund and in Debt Service Funds. Please explain the reason for any differences.

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Karen P.L. Hardison | College Teacher | eNotes Employee

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A public sector general fund is the vehicle that accounts for all funds not assigned to special funds. This general fund facilitates the day-to-day operation of the public entity and accounts for all assets and liabilities. It comprises an entry on the public entity's Funds Balance Sheet.

A public sector debt service fund is a more restrictive sort of fund. It is the fund that is used for making payments on obligations due as interest and principal payments on long- and short-term debts held by the public entity. The debt service fund is often calculated on an annual basis instead of on a shorter range basis, for example, instead of on a quarterly basis.

Contrast the debt service fund (DSF) to the general fund (GF) where the DSF is calculated as a long-range fund, while the GF is calculated for general operational needs and where the DSF is an accounting of interest and principal payments, while the GF is an accounting of operational assets and liabilities, of all money and transactions not assigned to special funds.

One of many control methods applicable to both the GF and the DSF is access control which restricts who has authorized access to the accounts. A control method specifically pertinent to the DSF is the authorization and approval procedure, since the DSF pays out interest and principal on short- and long-term debt. A control method specifically pertinent to the GF is reconciling and comparing assets with accounting records to ensure balanced accounts of assets and liabilities. A control environment that encompasses integrity, ethics, competence and governance is a control method integral to the operation of both kinds of funds ("Financial Accounting," National Center for Educational Statistics).

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