The accompanying statements of the parks, recreations, and municipal capital improvement bond fund (a capital projects fund) were drawn from an annual report (dates changed) of Boulder, Colorado. According to a note in the report (the only one pertaining to the fund), the fund is maintained €˜€˜to account for bond proceeds to be utilized for the construction and refurbishment of parks and recreation facilities and the refurbishment of other municipal facilities.€
1. The variances in expenditures between budget and actual are substantial. What is the most likely explanation?
2. A schedule of long-term debt payable (in the statistical section of the report) indicates that only $7 million, of parks, recreation, and municipal capital improvement bonds were authorized and issued. How do you reconcile that amount with the proceeds from bonds payable reported in the statement of revenues, expenditures, and changes in fund balance?
3. Another schedule of transfers between funds (in the same section) indicates that $131 thousand was transferred to the general fund. What conclusions can you draw as to whether interest on fund investments must be used either to repay the capital improvement bonds or to construct and refurbish city facilities?
4. How much of fund resources did the government spend during the year on capital improvements?
5. How do you explain the absence in the balance sheet of €œconstruction in process€?
6. Why is the entire fund balance€œcommitted€?

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Parks, Recreation, and Municipal Capital Improvement Bond Fund Statement of Revenues, Expenditures, and Changes in Fund Balance-Budget and Actual Yean Ended December 31, 2015 (in thousands) Budget Actual Revenues Interest earnings $ 75 131 Capital outlay General government-faty , Culture and 425 5,500 1,177 $ 7052 1,602 S(6,977) $(1,471 recreation- facility Total expenditures Deficiency of revenues over Otherfinancing sources (uses) Proceeds from honds payable$ Nonreciprocal transfers ourt Total other financing sources 7,052 $7,052 (75 131 (uses) $ 6,977 6,921 Excess of revennes and other sources over expenditures and other nses $ 05,450 Fund balance, beginning of year Fund balance, end of year $ 5,450