The major issue relating agency finds is when they should be established. Consider each of the following situations. Indicate whether (and why or why not) you think that the government should account for the transactions and resources in an agency fund, a governmental fund or some other type of fiduciary fund. Not a the situations have been explicitly addressed in the next. Therefore, you may have to generalize from those that have been discussed. A city extended sewer and water lines to a recently annexed community. Per agreement with the community. the improvements are to be paid for entirely by local residents. To finance the improvements, the city issued 10-year notes on behalf of the residents. It assessed the residents for the amount of the debt, plus interest. The city guaranteed the notes and agreed to collect the assessments from the residents and make appropriate payments to the note holders. However, the city's role is primarily one of an intermediary. The residents, not the city are expected to service the debt. A state receives a federal law-enforcement grant intended to assist local communities in hiring additional police officers. The federal granting agency selects the cities and counties that are to receive the awards and determines the amounts they are to receive. The federal government, not the state, is responsible for monitoring grant compliance. The state's only responsibility is to write the checks to the cities and counties A state receives a federal educational grant intended to assist local school districts in hiring additional teachers. The federal granting agency establishes the criteria that the state is to use in determining the school districts to receive the awards and the amounts they are to receive The district has no discretion in selecting recipients other than to apply the specified criteria. A county collects sales taxes that it distributes among itself and the towns within its jurisdiction. The taxes are levied by the county and are divided among the recipient governments in accordance with a formula set forth in the legislation that authorized the tax