ACIS+4124+5124+Chapter+9+Solutions - Chapter 09 - Financial...

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Unformatted text preview: Chapter 09 - Financial Reporting of State and Local Governments CHAPTER 9: FINANCIAL REPORTING OF STATE AND LOCAL GOVERNMENTAL UNITS Answers to Questions 9-1. According to the Bureau of Census a special district is a special purpose government, other than a school district, that is separate from the general purpose government. A special district has considerable administrative and fiscal independence from the general purpose government. Special districts are frequently created to allow for financing of general purpose government activities, which cannot be financed by the general purpose government due to constitutional or statutory limits on revenue generation. 9-2. A note to the financial statements is an integral part of the financial statements. It is used to provide information that is essential to the readers understanding of information recognized in the financial statements. Although required supplementary information is considered to provide information that is essential to the reader, it does not exist to help explain information recognized in the financial statements. Rather, required supplementary information is used to help place the financial statements and the related notes into the correct context. 9-3. Disagree. Administrators need periodic reports in order to make day-to-day operating and management decisions. Government council members should expect at least monthly financial information so that they can provide oversight of the managers. Interim reports are especially helpful in evaluating whether budgets and cash needs are being met. 9-4. According to GASB a financial reporting entity is a primary government, organizations for which the primary government is financially accountable and other organizations for which the nature and significance of their relationship with the primary government are such that exclusion would make the reporting entitys basic financial statements misleading. Organizations making up a financial reporting entity are the primary government and its component units. The primary government is a state, local general- purpose government, or special-purpose government. Component units are the entities for which the primary government is financially accountable. 9.5. A primary government has a separately elected governing body, is legally separate, and is financially independent. A component unit , however, is not financially independent of the primary government. Additionally, an entity is considered a component unit if the primary government appoints a majority of the voting members of the entitys board or if the primary government can impose its will on the entity. As a result of its relationship with the primary government, the component unit is reported as a part of the primary government....
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This note was uploaded on 03/28/2012 for the course ACIS 4124 taught by Professor Dr.easterwood during the Spring '12 term at Virginia Tech.

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ACIS+4124+5124+Chapter+9+Solutions - Chapter 09 - Financial...

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