In the management discussion and analysis accompanying its 2015 financial statements, Tiber County reported that €˜€˜for the fifth consecutive year revenues exceeded expenditures.€™€™ However, a note included in required supplementary information disclosed the following:

The county has not been depreciating its infrastructure system but instead has been taking GASB Statement No. 34€™s modified approach.
1. What reservations might you have as to the significance of the county€™s excess of revenues over expenditures in 2015?
2. Suppose that you were the county€™s independent auditor. What reservation might you have as to the county€™s reporting practices?
3. Suppose that the county was required to switch from the modified approach to the standard approach. As of year-end 2015 the estimated initial cost of the roads was $100 million and their estimated useful life was 40 years.
a. How would the change from the modified approach to the standard approach affect the county€™s general fund excess of revenues over expenditures?
b. How would it affect the county€™s government-wide excess of revenues overexpenses?

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Counly Roads and IHighwaysComparison of Needed lo Actual Maintenance/Preservation Costs (in thousands) Actual Needed 2015 2014 2013 2012 2011 $3,400 $3,000 $2,900 $3,100 $2,800 $4,200 $4,000 $3,000 $3,100 $2,700