Select an annual comprehensive financial report (ACFR) (it can be the same you used for DQ1). You may want to use the two government-wide statements (statement of activities and the statement of net position) and the two governmental funds statements (statement of revenues, expenditures, and changes in fund balances and balance sheet).

The county administrator presented the financial statements at the last county commission meeting. Unfortunately, she opted not to take a government accounting course in college, and when the commission started questioning her about why the "bottom line" numbers on the two sets of financial statements were so different, she was unable to answer their questions. She has asked you, as finance director, to prepare her for the next meeting by explaining the purposes for which each operating statement is intended and how and why the operating statement results are so different. Also needed is an explanation of how and why the numbers on the statement of net position and balance sheet are so different.

Required.

a. Examine the two operating statements (the statement of activities and the statement of revenues, expenditures, and changes in fund balances) and the reconciliation statement to develop a list of reasons for why the "bottom line" number for net change in governmental fund balances is not the same as the number for the change in governmental activities net position.

b. Examine the statement of net position and the balance sheet, along with the reconciliation statement, to develop a list of reasons for why the "bottom line" number for total govermental fund balances is not the same as the number for governmental activities net position.

c. Provide a simple and concise explanation for the differences in the "bottom lines".