Internet Case—Revenue and Expense/Expenditure Classification. Locate a comprehensive annual financial report (CAFR) using a city’s Web site, or one from the “Project Pages/Statement 34” link of the GASB’s Web site, w-gasb.org. Examine the city’s government-wide statement of activities and statement of revenues, expenditures, and changes in fund balances—governmental funds and prepare a brief report responding to the following questions.
a. Referring to the government-wide statement of activities, explain how the program revenues and expenses are classified. Are expenses and program revenues reported using a function or program classification? Do any function or program categories show net revenues, or do they all show net expenses? Is the fact that most, if not all, functions or programs show a net expense a problem? Why or why not?
b. Explain how revenues are classified and reported on the statement of revenues, expenditures, and changes in fund balances. Compare the amount reported for property taxes in this statement to the amount reported as general revenue on the statement of activities. Do the two amounts agree? If not, can you think of a reasonable explanation for the difference?
c. Explain how expenditures are classified and reported on the statement of revenues, expenditures, and changes in fund balances. Compare these amounts to the amounts reported as expenses for the same functions or programs on the statement of activities. Do the amounts agree? If not, can you think of a reasonable explanation for the differences?