You are the Chief Financial Officer for Ellison City. You have been in a meeting with the mayor who is concerned about the decrease in the general fund for the current year (see the fund financial statements on the following pages). He has a meeting with the City Council next week. The Council tends to focus on the general fund balance since they consider it to be a measure of the financial health of the city. The mayor is especially concerned because this is the second year in a row that expenditures have exceeded revenues. He wonders if you can find a way to make the change in fund balance be positive or at least closer to zero. He tells you he has been looking over the Balance Sheets and the Statements of Revenues, Expenditures, and Changes in Fund Balance for Governmental Funds and, although he is not an accountant, he has a couple of ideas. He suggests selling some of the investments in the Capital Projects Fund and the Debt Service Fund and then transferring the proceeds to the General Fund. In addition, he has noticed the deferred inflows on the Balance Sheet. He asks you to explain what that number represents and if perhaps that account balance could be used to eliminate the negative change. The mayor is really concerned. He has not been getting along well with the City Council, and he is up for reelection next year. He thinks that his chance of getting reelected will be much greater if you can help find a way to eliminate the negative change. He wants just enough of a change to cause the change in fund balance for the general fund to be slightly positive. You tell the mayor that you will look over the financial statements and get back with him.

 

Required

 

 

Write a memo to the mayor explaining your conclusions. Be sure to evaluate both of his suggestions and perhaps find other alternatives. Be sure to consider each fund's balance and its classification. Your memo should describe the facts, identify the issue, state your conclusions, and explain the reasons for your conclusions. 50% of your grade will be based on content, and 50% will be based on writing skills. Use professional language and avoid slang. I recommend that you upload your memo to Grammarly for evaluation before turning it in. Submit your memo as an attachment to the assignment. Your file must be a Word file.