Question 1

Which of the following statements is false?

Accepted Answer

All governments, regardless of whether they prepare a CAFR or not, are required to prepare a Management's Discussion and Analysis.

Question 2

In the statistical section, the required demographic and economic information includes all of the following except

Accepted Answer

The required demographic and economic information includes the unemployment rate, total personal income, and population. However, debt per capita is not a commonly used indicator and may not be relevant to the analysis at hand.

Question 3

Which of the following financial statements would not be reported anywhere in the fund financial statements presented as part of the basic financial statements?

Accepted Answer

D

Question 4

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

Accepted Answer

The introductory section of a CAFR typically includes the letter of transmittal, an organizational chart, and the table of contents. However, the independent auditor's opinion is usually located in the financial section of the CAFR.

Question 5

Which fund types report the results of operations using a Statement of Revenues, Expenditures, and Changes in Fund Balances?

Accepted Answer

The Statement of Revenues, Expenditures, and Changes in Fund Balances is used by governmental funds, which include the General Fund, Special Revenue Funds, Debt Service Funds, Capital Projects Funds, and Permanent Funds.

Question 6

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

Under GASB (Governmental Accounting Standards Board) standards, a government can report more funds as major than the minimum required if it chooses to do so. Therefore, the municipality can report all nine of its governmental funds as major funds on the balance sheet.

Question 7

All of the following statistical tables should include ten individual years of trend information except

Accepted Answer

The other three options all involve demographic or economic data that can be reasonably tracked over a period of ten years, but information about principal revenue payers may change significantly from year to year depending on various factors such as changes in tax laws or economic conditions.

Question 8

Which of the following must be included to meet the minimum requirements for general purpose external financial reporting?

Accepted Answer

Basic financial statements, notes to the financial statements, management's discussion and analysis, and other required supplementary information are all necessary to meet the minimum requirements for general purpose external financial reporting. Narrative explanations and combining statements are not specifically required, although some entities may choose to include them for additional clarity or detail.

Question 9

Assume that a government has three nonmajor Enterprise Funds. Which of the following statements regarding the reporting requirements in a CAFR is false?

Accepted Answer

Nonmajor funds are indeed reported on an Enterprise Fund statement of cash flows, but they are aggregated rather than reported individually. The statement that they are not reported is false.

Question 10

Management's Discussion and Analysis is

Accepted Answer

Management's Discussion and Analysis (MD&A) is considered required supplementary information (RSI) according to accounting standards. It is not part of the basic financial statements themselves, nor is it included in the introductory section of a Comprehensive Annual Financial Report (CAFR), and it is not optional.

Question 11

Requirements:
1. Describe discrete presentation in the context of the government-wide statements. Assume that a government has five major discretely presented component units. Include the reporting and disclosures required for each of the major component units.
2. Describe blending. When is it required? Is it permitted under other circumstances-i.e., when is it not required?

Accepted Answer

The answer of Requirements:
1. Describe discrete presentation in the context...

Question 12

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

Accepted Answer

The answer of Footnote information that duplicates information in financial...

Question 13

Which of the following is not part of the financial section of a comprehensive annual financial report?

Accepted Answer

The transmittal letter is typically included at the beginning of the comprehensive annual financial report, but it is not part of the financial section. The financial section includes the management's discussion and analysis, required supplementary information, and notes to the financial statements, which are all financial and accounting-related components.

Question 14

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

The answer of Listed below are various statements, schedules, notes,...

Question 15

Statistical tables are

Accepted Answer

Statistical tables are not required in the basic financial statements but are required in the CAFR as per GASB standards.

Question 16

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

Accepted Answer

The independent auditor's opinion is specifically aimed at the basic financial statements, ensuring they present fairly, in all material respects, the financial position and results of operations in accordance with the applicable financial reporting framework.

Question 17

A "dual opinion" audit is one where

Accepted Answer

A dual opinion audit refers to the situation where auditors provide opinions on both the basic financial statements and the combining and individual fund financial statements. This approach ensures a comprehensive evaluation of an entity's financial status across different levels of financial reporting.

Question 18

A city has three related entities. Its finance and accounting staff is trying to determine which, if any, of those entities must be included in the city reporting entity. Also, for the entities that are included the staff must determine whether they are to be blended or discretely presented. Explain how each of the related entities should be treated and why.
Situations:
1. The first entity is the city school district. The district has a separately elected board and is legally separate from the city. The school board can establish its own budget except that its property tax levy must be approved by the city council. The city does not guarantee the debt of the schools or have any other authority over the school district.
2. The second entity is the municipal gas utility. The city appoints the seven members of the utility governing board and can remove them at will. The city must approve the budget and the rate structure of the utility. The utility cannot issue bonded debt without the city council's prior approval. The city is entitled to, and regularly receives, the operating surpluses of the utility.
3. The third entity is the City Library Commission. According to the commission's charter, the commission board consists of the city mayor, the city finance director, and the superintendent of the city schools, and two other members of city council besides the mayor. City council consists of the mayor and four other council members. The library commission budget must be approved by the city council, and all long-term debt issued by the Library Commission is to be repaid by the city.

Accepted Answer

The answer of A city has three related entities. Its...

Question 19

GAAP do not require

Accepted Answer

The answer of GAAP do not require
...

Question 20

The independent auditor's report is normally included within

Accepted Answer

The independent auditor's report is a part of the financial section of a Comprehensive Annual Financial Report (CAFR). It is generally included after the basic financial statements and before the notes to the financial statements.

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