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

For each of the following independent cases state whether or not the entity described should be included in the financial statements of the primary government and if so, how? Be concise but adequately defend your answer using GASB criteria. a) The Planning and Development Authority is a separate legal entity with a five-member board appointed as follows: one member appointed by the school district, one member appointed by the city, one member appointed by the county, and two members elected by the three appointed members. The Planning and Development Authority received a $50,000 grant from the state. The money was used to make loans to businesses agreeing to relocate to the immediate area. Repayments of the principal and interest by borrowers are available for lending to new entities. b) The state created a Public Building Authority, a separate legal entity. The governor appoints a voting majority of the authority's board. The authority issues bonds, backed by the buildings financed with the proceeds. The authority leases the buildings to the state and uses the proceeds of those leases to service the debt on the bonds. c) Boxer County Hospital is built on land donated to the hospital by the US Bureau of Land Management (a federal agency). The hospital board members elect replacements to the board without outside nominations. The hospital is a separate legal entity and is entirely supported by revenues generated by the hospital. The county commission must approve the budget each year, but has never questioned any item in the budget. d) Members of State University's board of trustees are elected in a statewide general election. The state provides approximately one-half of the operating revenues necessary to finance the university's programs. The university is a separate legal entity and state laws apply to the conduct of its business.

Public colleges and universities must adhere to the same GASB pronouncements as other types of governments.

The data below were taken from the CAFRs of two cities. REQUIRED: Based on this limited information a. Which city has the greater resources? b. Which city imposes a greater tax burden on its citizens based on -Per capita total general fund revenues? -Per capital property taxes? -Property taxes as a percentage of property values? c. Which city receives more assistance from other governments?

The county created a legally separate county hospital authority. Members of the board of the county hospital are elected in county-wide elections. The county must approve the budget of the hospital, but 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)

Which of the following is necessary for a special-purpose local government to be considered a primary government?

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

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

For a government that depreciates infrastructure, RSI likely would not include which of the following?

The State has a legally separate State Building Authority which has a board appointed by the Governor. The authority issues debt in its own name, holds title to buildings in its own name, and leases its building exclusively to the State. The authority would be considered a(n)

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

The State University Foundation is a legally separate, tax-exempt 501(c)(3) entity organized for the purpose of raising funds to provide scholarships only to academically qualified students at the State University. The existing university foundation board members elect new members of the board. The foundation provides scholarships to students of the State University, but the foundation receives no financial support from the university. The Foundation is an example of:

Fund financial statements include which of the following for a governmental fund?

The Hospital Foundation is a legally separate, tax-exempt 501(c)(3) entity organized for the purpose of raising funds to provide scholarships only to academically qualified students at the Hospital Medical School. Members of the board of the Hospital Foundation are elected by the existing board of trustees. The foundation provides scholarships to students of the Hospital Medical School, but the foundation receives no financial support from the Hospital. In what manner would the Hospital include the foundation in its financial statements?

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. In what manner would the hospital be included in the county's basic financial statements?

The city created a legally separate port authority. Members of the board of the port authority are elected in general city elections. The port authority receives no tax dollars; it is supported entirely by user fees. The port authority determines its budget, sets user fees, and has the power to issue bonded debt. The authority would be considered a(n)

When a component unit is blended into the financial statements of a primary government, the resulting fund financial statements will include two general funds.

The Friends of the City Public Library Foundation is a legally separate, tax-exempt 501(c)(3) entity organized for the purpose of raising funds to provide financial assistance to the library. Members of the board of the foundation are elected by the existing foundation board members. The foundation provides financial assistance to the library, but the foundation receives no financial support from the library. If dissolved, all of the foundation assets would revert to the library. In what manner should the foundation be presented in the financial statements of the library?

A county commission appoints a voting majority of the members of the board of a particular organization. The county commission cannot impose its will upon the organization. There is no potential for the organization to provide any financial benefit to the county nor is there any potential for the organization to impose any financial burden on the county. The organization is an example of a(n):

Required supplementary information (RSI) is considered part of the basic financial statements.

Of the following powers possessed by Government A, which is an indication that Government A can impose its will on Government B? Government A: