How should governments report their capital projects and debt service activities in their government-wide statements?

Ch 6. Questions for Review and Discussion

6. How should governments report their capital projects and debt service activities in their government-wide statements?

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A local government has four federal grants

A local government has four federal grants. Expenditures amounted to $1,000,000 during the year that ended June 30, 2003, as follows:

Type A HHS grant, audited last year, no major findings $400,000
HHS grant, new this year and never audited 350,000
Type B Department of Transportation 205,000
FFA 45,000
Total all funds $1,000,000

a. Which grants would the auditor be required to audit, assuming the government is not found to be low risk?
b. Which grants would the auditor be required to audit, assuming the government is found to be low risk?

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A government opts to set aside $10 million of general fund resources to finance a new city hall

1. A government opts to set aside $10 million of general fund resources to finance a new city hall. Construction is expected to begin in several years, when the city has been able to accumulate additional resources.

2. A government should distinguish underwriting and other issue costs from bond premiums and discounts and should

3. When a government issues bonds at premiums or discounts and records the proceeds in a capital projects fund, it should

4. A city holds U.S. Treasury notes as an investment in a capital projects fund. During the year the market value of the notes increases by $50,000. Of this amount, $14,000 can be attributed to a decline in prevailing interest rates and $36,000 to interest that has been earned but not yet received. As of year-end, the city should recognize as revenue

5. Which of the following accounts is least likely to be shown on the balance sheet of a debt service fund?

6. Special assessment debt should be reported on the balance sheet of a city if the debt is to be paid from assessments on property owners and

7. In its fund statements a government should recognize revenue from special assessments

8. In the year it imposes a special assessment, a government should recognize in its government-wide statements

9. Under existing federal statutes, arbitrage as it applies to state and local governments

10. Bond refunding are most likely to result in an economic gain when


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The following information is available for the preparation of the government-wide financial statements for the city of Northern Pines for the year ended June 30, 2012

2-8. The following information is available for the preparation of the government-wide financial statements for the city of Northern Pines for the year ended June 30, 2012:

Expenses:
General government $10,300,000
Public safety 22,900,000
Public works 11,290,000
Health and sanitation 6,210,000
Culture and recreation 4,198,000
Interest on long-term debt, governmental type 621,000
Water and sewer system 11,550,000
Parking system 419,000
Revenues:
Charges for services, general government 1,110,000
Charges for services, public safety 210,000
Operation grant, public safety 698,000
Charges for services, health and sanitation 2,555,000
Operating grant, health and sanitation 1,210,000
Charges for services, culture and recreation 2,198,000
Charges for services, water and sewer 12,578,000
Charges for services, parking system 398,000
Property taxes 27,112,000
Sales taxes 20,698,000
Investment earnings, business-type 319,000
Special item – gain on sale of unused land,
Governmental type 1,250,000
Transfer from governmental activities to
Business-type activities 688,000
Net assets, July 1, 2011, governmental activities 11,222,000
Net assets, July 1, 2011, business-type activities 22,333,000

From the previous information, prepare, in good form, a Statement of Activities for the city of Northern Pines for the year ended June 30, 2012. Northern Pines has no component units.


Click here for the solution: The following information is available for the preparation of the government-wide financial statements for the city of Northern Pines for the year ended June 30, 2012

Cohen and Single, LLP, are auditing the ICFR and financial statements of Copley and Sons, a public company that sells supplies to government agencies

Problem 11-28 Cohen and Single, LLP, are auditing the ICFR and financial statements of Copley and Sons, a public company that sells supplies to government agencies. Copley and Sons has a 12/31 fiscal year end. Cohen and Single conclude that the financial statements for the current and prior year are fairly stated. However, they found a material weakness in ICFR. There is a lack of separation of duties because the companys’ CFO has the ability to change passwords on employee’s computer identification numbers and has unlimited access to a computer terminal through which any journal entry can be entered without approval and review. Management’s evaluation of ICFR is also as of 12/31, and management’s report states that ICFR is not effective due to the computer security problem causing the lack of separation of duties. Draft Cohen and Single’s combined audit report with opinions on the financial statements and ICFR as described.


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At what value would a government report bonds payable on its government-wide statements?

At what value would a government report bonds payable on its government-wide statements? Why might this value differ from the bonds' face value? Why might it differ from their market value?

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A government's interest expenditure as reported in its debt service fund differs significantly from its interest expense as reported in its government-wide statements

A government's interest expenditure as reported in its debt service fund differs significantly from its interest expense as reported in its government-wide statements. What is the most likely explanation for the difference?

Click here for the solution: A government's interest expenditure as reported in its debt service fund differs significantly from its interest expense as reported in its government-wide statements