Question 1

In the basic financial statements, separate sets of fund financial statements should be presented for

Accepted Answer

A)   Each fund.
B)   Each major fund
C)   Each fund type.
D)   Each fund category. D

Question 2

Listed below are various statements, schedules, notes, and other elements that appear in a Comprehensive Annual Financial Report CAFR.
A. Demographic and Economic Information
B. Organization Chart
C. Table of Contents
D. Statement of Net Position
E. Schedule of Revenues, Expenditures, and Change in Fund Balance - Budget-to-Actual
1. Identify the major section of the CAFR in which each element is found.
a. Introductory
b. Financial
c. Statistical
2. Identify the major subsection of the CAFR in which each element is found.
a. Introductory
b. Required Supplementary Information
c. Basic Financial Statements
d. Notes to the Financial Statements
e. Other Required Supplementary Information
f. Supplementary or Other Information
g. Statistical Section
3. List each element in the proper order that they are found in the CAFR.
A. Demographic and Economic Information
B. Organization Chart
C. Table of Contents
D. Statement of Net Position
E. Schedule of Revenues, Expenditures, and Change in Fund Balance - Budget-to-Actual
F. Proprietary Fund Statement of Cash Flows
G. Summary of Significant Accounting Policies
H. Letter of Transmittal
I. Governmental Funds Balance Sheet
J. Capital Asset note disclosure
K. Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities
L. Management's Discussion and Analysis
M. Statement of Net Position - Component Units
N. GFOA Certificate of Achievement for Excellence in Financial Reporting
O. Schedule of Employer Contributions
P. Statement of Fiduciary Net Position
Q. Parks and Recreation Special Revenue Fund Balance Sheet
R. Changes in Net Position, Last 10 Years
S. Statement of Activities
T. Auditor's Report

Accepted Answer

1. Major sections of the CAFR.
a. Introductory - B, C, H, N,
b. Financial - D, E, F, G, I, J, K, L, M, O, P, Q, S, T
c. Statistical - A, R
2. Identify the major subsection of the CAFR in which each element is found.
a. Introductory - B, C, H, N
b. Required Supplementary Information - L
c. Basic Financial Statements - D, F, I, K, M, P, S
d. Notes to the Financial Statements - G, J
e. Other Required Supplementary Information - E, O
f. Supplementary or Other Information -Q
g. Statistical Section - A, R
The Auditor's Report is in the Financial Section but stands alone - it is not part of any subsection.
3. List each element in the proper order that they are found in the CAFR.
C, H, N B, T, L, D, S, I, K, F, P, M, G, J, E, O, Q, R, A

Question 3

Management's Discussion and Analysis is

Accepted Answer

A)   Part of the basic financial statements.
B)   Included in the introductory section of a CAFR.
C)   Required supplementary information.
D)   Optional in a CAFR. C

Question 4

Which fund type would be reported in the Statement of Revenues, Expenditures, and Changes in Fund Balance?

Accepted Answer

A)   Enterprise Funds.
B)   Internal Service Funds.
C)   Permanent Funds.
D)   Pension trust funds.

Question 5

The introductory section of a CAFR typically includes all of the following except

Accepted Answer

A)   The letter of transmittal.
B)   An organizational chart.
C)   The independent auditor's opinion.
D)   The table of contents.

Question 6

Substantively the same governing body means that

Accepted Answer

A)   Virtually the entire governing body of the primary government serves, in an ex officio capacity, as virtually the entire governing body of a component unit.
B)   A voting majority of the component unit governing body is made up of a voting majority of the primary government governing body.
C)   A voting majority of the primary government governing body serves on the component unit governing body.
D)   A voting majority of the component unit governing body also serves on the primary government governing body.

Question 7

When there are more than two funds of the relevant fund type, combining financial statements would not be required in the CAFR for which types of funds?

Accepted Answer

A)   Nonmajor governmental funds.
B)   Major Enterprise Funds.
C)   Internal Service Funds.
D)   Agency Funds.

Question 8

If a governmental entity has a blended component unit, the note disclosures should include all of the following except

Accepted Answer

A)   How the component unit met the blending criteria.
B)   A statement that identifies the component units as a being blended.
C)   How to access separately issued external financial statements.
D)   The number of component unit governing board members.

Question 9

In which of the following situations would a component unit be required to prepare a CAFR, not just the basic financial statements?

Accepted Answer

A)   The primary government prepares a CAFR.
B)   The component unit will be issuing general obligation bonds in the coming year.
C)   The component unit has prepared a CAFR in the past.
D)   There are no situations in GAAP where any entity is required to prepare a CAFR.

Question 10

An entity is a component unit of another entity if

Accepted Answer

A)   A voting majority of its governing body is appointed by the other entity.
B)   It is fiscally dependent on the other entity and a benefit or burden relationship exists with the other entity.
C)   It has a financial benefit or burden relationship with the other entity.
D)   The other entity is obligated in some manner on its debt.

Question 11

The independent auditor's opinion covers, at a minimum, the

Accepted Answer

A)   Basic financial statements.
B)   CAFR.
C)   Financial section of the CAFR.
D)   Primary government.

Question 12

Assume that a blended component unit of the town has its own General Fund, Special Revenue Fund, and Capital Projects Fund. All funds meet the major fund criteria. The primary government has a General Fund, three Special Revenue Funds, one Permanent Fund, one Debt Service Fund, and three Capital Projects Funds. All but the Permanent Fund and two Special Revenue Funds of the primary government are major funds. How many fund columns would be presented on the governmental funds' balance sheet?

Accepted Answer

A)   4.
B)   5.
C)   9.
D)   12.

Question 13

Which of the following statements is false?

Accepted Answer

A)   Governments that do not prepare a CAFR are not required to prepare a Management's Discussion and Analysis.
B)   The Governmental Accounting Standards Board has established requirements for the statistical section of a CAFR.
C)   Governments have some latitude in selecting major funds to be reported in the CAFR.
D)   Governments are allowed to have additional information in their statistical section that is not required information.

Question 14

Which of the following criteria is not required to be met for a government to be considered fiscally independent?

Accepted Answer

A)   Has separate legal standing.
B)   Has the authority to adopt its own budget without the substantive approval of any other entity.
C)   Has the authority to issue bonded debt without the substantive approval of any other entity.
D)   Has the authority to set its own fees and charges without substantive approval of any other entity.

Question 15

Which of the following potential component units would not be reported as blended component unit of the county?

Accepted Answer

A)   A hospital which is the primary health care provider for the county residents and whose board is appointed by the county.
B)   A recreation district where the governing board of the county serves as its governing board and the management of the country operates the recreation district.
C)   A financing authority that exclusively serves the county.
D)   A school district whose debt will be repaid by the county.

Question 16

Footnote information that duplicates information in financial statements included in the CAFR

Accepted Answer

A)   May be eliminated.
B)   May be eliminated if the government does not issue its basic financial statements separately.
C)   May be eliminated if the government does issue its basic financial statements.
D)   Is common and must be presented despite the duplication.

Question 17

Wakefield Village and Wakefield County were partners in the development of the Wakefield Water Authority, which is a separate legal entity. Neither the village nor the county will share in any profits of the Authority. Both, however, are obligated to fund any deficits or debt defaults that may occur, though this scenario is considered to be highly unlikely. Both the village and the county appoint three of the seven Water Authority board members. The seventh is appointed by another village in the county. Both the Wakefield Village and Wakefield County should report the Authority as

Accepted Answer

A)   A related organization.
B)   A jointly governed organization.
C)   A joint venture.
D)   A discretely presented component unit.

Question 18

GAAP do not require

Accepted Answer

A)   A management's discussion and analysis.
B)   Governments to prepare a CAFR.
C)   A statistical section to be included within a CAFR.
D)   Discretely presented component units to be included in the government-wide financial statements.

Question 19

In reviewing their governmental funds, a local municipality determines that three of the funds including the General Fund are considered major funds and the remaining six governmental funds are nonmajor. However, management prefers to report all of its governmental funds as major funds. What is the maximum number of fund columns that could be presented on the governmental fund balance sheet?

Accepted Answer

A)   3.
B)   4.
C)   6.
D)   9.

Question 20

What is the maximum number of columns that could appear on the statement of fiduciary net position in the fund financial statements presented as part of the basic financial statements?

Accepted Answer

A)   1.
B)   2.
C)   3.
D)   4.

Exam 15: Financial Reportingthe Comprehensive Annual Financial Report and the Financial Reporting Entity