P$.11-9$

Qualitative factors may be as important as quantitative factors in assessing a government's fiscal health.

You are a CPA in charge of auditing a midsize school district. You recognize that the risk of financial failure is dependent as

much on factors not reported in the basic financial statements as on factors that are reported. Accordingly, you conduct a

comprehensive analysis of the district. Some of your findings are summarized here. For each, indicate how it might affect the

ability of the district to service its outstanding debt and provide the services that its constituents expect.

Owing to an influx of new high$-$tech firms into a nearby community $($which is not within the jurisdiction of the school

district$),$ the population within the district is increasing by approximately $8$ percent per year. Most of the new arrivals are

young engineers and other professionals.

A developer is constructing a senior citizens' retirement village within the jurisdiction of the school district. The village is

expected to increase both the district's population and its land value by approximately $4$ percent.

During the year, the district changed the pay date of its employees. Previously employees were paid on the last day of

the month; now they will be paid on the first day of the following month.

The district's largest taxpayer, representing $10$ percent of its property tax revenues, manufactures blue jeans and other

clothing made of denim.

The district's superintendent recently resigned in the wake of charges that he falsified student scores on state$-$wide

achievement tests.

School district elections are hotly contested. The present school board is composed of three members who are

committed to "traditional" educational methods and four who are considered "progressives." Board meetings are almost

always contentious.

Voters of the county in which the school district is located recently approved the largest general obligation bond issue in

the county's history.

One of two candidates for governor of the state in which the school district is located is a strong advocate of a school

voucher plan. The plan would provide financial assistance to students who elect to attend private schools.