Robinson County has a recreational facility where many patrons as well as tourists come for basketball tournaments from all over the world. Previously, the recreational facility sustained itself from its profits, which led to the creation of an enterprise fund. As a result, accounting for the basketball courts was moved from the General Fund to the new enterprise fund. Lately, the courts usage has diminished causing the costs to increase. This year the court lost a half million, which had to be covered by the General Fund. In the upcoming fiscal year, the county projects the shortfall to be more than a million.
- Evaluate whether Robinson County should include the recreational facility in their Parks and Recreation department or if it should be funded by fees charged to the users.
- Is there justification for accounting for the recreational facility as an enterprise fund? If so, how does this affect reporting as an enterprise fund activity instead of a General Fund activity?
- How would you handle the recreational facility dilemma?
- What questions, if any, should you address for the following situations: Robinson County continues accounting for the recreational facility as in the past; An outside management company operates a portion or the entire facility. Several options are presented under this option including the county maintains control of the basketball operations but outsources the basketball shops, concession stands, and court maintenance. The county leases the recreational facility to a private operator in exchange for lease income to the municipality. Under this option, capital investments in facility improvements, minimum standards of maintenance, and courts fee restrictions exist; the county sales the recreational facility and removes from their books.
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