For each of the following grants and awards, indicate whether the recipient government should recognize revenues and expenditures. In a sentence or two, justify your response.
1. As the result of damaging floods, the state of New York receives disaster assistance relief that it must distribute in predetermined amounts to specified cities and towns. The governor had appealed to the president to declare the affected areas as being in a “state of emergency,” but the state has no responsibility for monitoring how the funds are spent by the localities.
2. Cleveland receives money from the state to distribute to private health and welfare organizations within the city. The organizations applied for the funds directly to the state, but Cleveland is responsible for ensuring that the approved programs are audited by independent CPAs.
3. Santa Fe serves as a representative of the state in administering the federal food stamp program. State governments, which participate in the program, receive stamps from the federal government in the form of a credit to their account. The federal government establishes eligibility requirements and the scale of benefits. The states, however, are responsible for selecting the recipients and distributing the stamps.
Some states involve both local governments and private institutions, such as banks and check-cashing outlets, in the administrative process. Under a contract with the state, Santa Fe, for example, checks the eligibility of food stamp applicants. It serves all stamp applicants and recipients who come to its offices, irrespective of whether they are residents of the city. It receives an annual fee for its administrative services. Food stamp Recipients are provided with a debit-like card which they present to the merchant, from whom they purchase their food. When they do so, their remaining food stamp balance is decreased and simultaneously so is the state’s balance with the federal government.
4. Arlington Township is responsible for all costs of operating its volunteer fire department, with one exception. Its volunteer firefighters receive medical insurance through a state program. The state pays 80 percent of their insurance premiums and the firefighters them-selves pay the rest. The township has no legal responsibility for providing insurance benefits to its firefighters. The insurance program was adopted by the state mainly to encourage citizens to join the volunteer departments.