Accounting and Reporting Principles. For more than 100 years, the financial statements of the Town of Brookfield have consisted of a statement of cash receipts and a statement of cash disbursements prepared by the town treasurer for each of its three funds: the General Fund, the Road Tax Fund, and the Sewer Fund. As required by state law, the town submits its financial statements to the Office of the State Auditor; however, its financial statements have never been audited by an independent auditor. Because of its growing population (nearing 2,000) and increasing financial complexity, the town has hired Emily Eager, who recently obtained her CPA certificate, to supervise all accounting and financial reporting operations. Having worked two years for a CPA firm in a nearby town, Ms. Eager gained limited experience auditing not-for-profit organizations, as well as compiling financial statements for small businesses. Although she has little knowledge of governmental accounting, she is confident that her foundation in business and not-for-profit accounting will enable her to handle the job.

For the year ended December 31, 2014, Ms. Eager has prepared the following unaudited financial statements for the Town of Brookfield. Study these financial statements and answer the questions that follow.

a. Assume that you are the CPA Ms. Eager has contacted about the possibility of performing an audit of the Town of Brookfield