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Included in the materials for this discussion is a budgetary comparison statement showing a governments original adopted budget, and actual results on the budgetary basis

Included in the materials for this discussion is a budgetary comparison statement showing a governments original adopted budget, and actual results on the budgetary basis of accounting ($ in thousands). Assume the amount originally budgeted for sales tax revenues was based on the expectation that taxable sales would increase by 6 % over the previous year.

  • Review the provided budgetary comparison statement. Consider the adequacy of the budget provisions and whether they should have been revised. What does the statement tell you about the financial management of the government?
  • Go to the GFOA website at www.gfoa.org. select Best Practices, then Financial Policies, then Fund Balance Guidelines for the General Fund. Consider this in your evaluation.

Answer these questions:

  1. Describe at least 3 areas of concern you have about the adequacy of the governments financial management as evidenced by the statement. (Note: I can identify 5. The lack of variances is not one of thembut you may want to consider those variances in identifying problems).
  2. It is not very useful to report the original budget and the final budget (as shown in the statement) as only the final budget is used to compute variances. Do you agree or disagree with the statement and why?
  3. A political official boasts that the year-end excess of revenues over expenditures was significantly greater than was budgeted. Are favorable budget variances necessarily a sign of efficient and effective governmental management? Explain.

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