Exam 11: Issues of Reporting, Disclosure, and Financial Analysis

The typical audit is designed to cover all information included in the CAFR.

Governments must combine their blended component units into both the fund and government-wide statements.

Which of the following is generally considered to be a positive fiscal characteristic for a city?

Which of the following would generally be considered an indication of future economic concern for a city?

The governor of the state appoints the members of the Game and Fish Commission.The members of the commission serve ten-year terms and can be removed only for cause.State law prohibits the reappointment of a commissioner.The commission receives no tax dollars.It is supported entirely by licenses and fees paid by hunters and anglers.The only bonds that can legally be issued by the commission are revenue bonds backed by the licenses and fees paid by the sportsmen.The Game and Fish Commission is not a 501(c)(3)organization and does not have separate legal status.The Game and Fish Commission is an example of a:

Internal service funds are presented in a single column in the proprietary fund financial statements, even if one or more of them is a major fund.

The city created a legally separate housing authority to provide low-income housing to residents of the city.The city issues debt for the housing authority in the name of the city, but the housing authority is responsible for repayment of the debt.The housing authority is governed by a board composed of all five members of the city council.The authority can take action based on the affirmative vote of a simple majority of the board.In what manner would the authority be included in the city's basic financial statements?

The comprehensive annual financial report (CAFR)is divided into three main sections: the table of contents section, the auditors' report section, and the financial section.

Two cities entered into a contractual agreement to operate a landfill.The cities each contributed the necessary assets to operate the landfill in proportion to their populations.Each city has the ability to appoint two members of the governing body of the landfill.The assets contributed by First City were primarily in the form of property and equipment that had been used in general government activities.In what manner would the landfill be included in First City's fund financial statements?

Governments must combine their discretely presented component units into both the fund and the government-wide statements.

GASB reporting standards require that legally separate component units be included on the face of the financial statements of the primary government.Small City created a legally separate City Utility Service.The Small City council appoints the utility board members, authorizes the bonds of the utility, and approves its budget.Small City's general fund revenues are $58 million; the revenues of the utility are $100 million (the utility owns a generating plant and sells its excess power to other communities).Discuss the appropriate reporting for the City Utility Service.Do you think that this presentation is meaningful? Why or why not?

A primary government can impose its will on a potential component unit if it has the authority to modify or approve the unit's budget.

A related organization is a contractual arrangement whereby two or more participants agree to carry out a common activity and share its risks and rewards.

Which of the following is a necessary characteristic of a component unit?

The city created a legally separate housing authority to provide low-income housing to residents of the city.The city issues debt for the housing authority in the name of the city, but the housing authority is responsible for repayment of the debt.The housing authority is governed by a board composed of all five members of the city council.Actions can be taken by the authority upon receiving an affirmative vote by a simple majority of the board.The housing authority would be considered a(n):

The city created a legally separate entity to operate a county hospital.The city council appoints a voting majority of the board of the hospital.The city cannot impose its will on the hospital and there is no potential for a financial benefit or financial burden to the city.In what manner would the hospital be included in the city's basic financial statements?

Government-wide financial statements include which of the following?

The county created a legally separate county hospital authority.Members of the board of the county hospital are elected in county-wide elections.The hospital receives no financial support from the county, except that the county pays the hospital bills for county indigents.All revenues of the hospital are user fees.The county hospital would be considered a(n)

A comprehensive annual financial report (CAFR)includes a statistical section.What kinds of information are found in the statistical section? To what use would a reader put the information found in the statistical section? In your opinion, is the statistical section worth the effort put into its preparation?

The Marigold School District, a legally separate school district that has a separately elected governing body, cannot enter into any debt agreements without the approval of the county commission.Marigold School District would be considered a(n):