Sample Questions
Question 1
Easy
What is the purpose of a fiduciary fund?
Solution
C is correct.
Fiduciary funds are used to report resources held by a government in a trustee or custodial capacity for external parties. These resources cannot be used for the government's own programs or operations. Examples include pension trust funds, investment trust funds, private-purpose trust funds, and custodial funds. This fund classification is established by GASB standards.
Fiduciary funds are used to report resources held by a government in a trustee or custodial capacity for external parties. These resources cannot be used for the government's own programs or operations. Examples include pension trust funds, investment trust funds, private-purpose trust funds, and custodial funds. This fund classification is established by GASB standards.
Question 2
Medium
Where may a government present budgetary comparison information?
Solution
GASB Statement No. 34 provides governments with two options for presenting budgetary comparison information: (1) as required supplementary information (RSI) following the notes to the financial statements, or (2) as an additional basic governmental fund financial statement. Either presentation satisfies the requirement, though the RSI approach is more commonly used in practice.
Question 3
Hard
A state presents its budgetary comparison schedule as required supplementary information. What disclosure is required in the notes to that schedule?
Solution
C is correct.
One required disclosure is an explanation of any excess of expenditures (or expenses) over appropriations at the legal level of budgetary control. Governments must disclose the nature of any excesses and explain how they occurred, as this represents a potential violation of budgetary law. This disclosure helps users understand whether the government maintained appropriate fiscal discipline and complied with legal requirements. Other required disclosures include an explanation of the budgetary basis if it differs from GAAP and identification of the legally adopted budget level. GASB Statement No. 34 requires specific disclosures in the notes to RSI accompanying budgetary comparison schedules.
One required disclosure is an explanation of any excess of expenditures (or expenses) over appropriations at the legal level of budgetary control. Governments must disclose the nature of any excesses and explain how they occurred, as this represents a potential violation of budgetary law. This disclosure helps users understand whether the government maintained appropriate fiscal discipline and complied with legal requirements. Other required disclosures include an explanation of the budgetary basis if it differs from GAAP and identification of the legally adopted budget level. GASB Statement No. 34 requires specific disclosures in the notes to RSI accompanying budgetary comparison schedules.
