Using the annual financial report obtained for Exercise 1–1, answer the following
questions:
a. Find the reconciliation between the governmental fund balances and the
governmental-type activities net assets. This might be on the governmental
fund Balance Sheet or in a separate schedule in the basic financial
statements. List the major differences. What is the amount shown
for capital assets? How much is due to the incorporation of internal service
funds? Was an adjustment made for deferred property taxes or any
other revenue? What is the adjustment due to the inclusion of long-term
liabilities? What other adjustments are made?
b. Find the reconciliation between the governmental fund changes in fund
balances and the governmental-type activities changes in net assets. This
might be on the governmental Statement of Revenues, Expenditures,
and Changes in Fund Balances or in a separate schedule. List the major
differences. How much is due to the difference between depreciation
reported on the Statement of Activities and the reported expenditures
for capital outlays on the Statement of Revenues, Expenditures, and
Changes in Fund Balances? How much is due to differences in reporting
expenditures versus expenses for debt service? How much is due to the
incorporation of internal service funds? How much is due to differences
in reporting proceeds versus gains on sale of capital assets? How much
is due to additional revenue accruals? How much is due to additional
expense accruals? What other items are listed? 

c. Look at the Statement of Net Assets, especially the net asset section. Attempt
to prove the Net Assets Invested in Capital Assets, Net of Related
Debt figure from the information in the statement or the notes. List the
individual items of net assets that are restricted; this might require examination
of the notes to the financial statements.
d. Look at the Statement of Activities. List the net expenses (revenues) for
governmental activities, business-type activities, and component units.
List the change in net assets for governmental activities, business-type
activities, and component units. Attempt to find from the notes the component
units that are discretely presented.
e. Look throughout the annual report for disclosures related to capital assets.
This would include the notes to the financial statements, any schedules,
and information in the Management’s Discussion and Analysis
(MD&A). Summarize what is included. What depreciation method is
used? Are lives of major classes of capital assets disclosed?
f. Look throughout the annual report for disclosures related to long-term
debt. This would include the notes to the financial statements, any schedules
in the financial and statistical sections, and the MD&A. Summarize
what is included. Are the schedules listed in this chapter included? What
is the debt limit and margin? What is the direct debt per capita? The
direct and overlapping debt per capita?