Finance and Budgeting Flashcards

A parks department is considering issuing revenue bonds to finance a new golf course. Which condition is most critical for this financing method to be viable?

Answer: The projected revenues from the golf course must be sufficient to cover debt service

Revenue bonds are repaid from the revenues generated by the specific facility or project they finance, so the facility must produce adequate cash flow to service the debt.

Under GASB Statement No. 34, parks and recreation agencies must report infrastructure assets using the:

Answer: Depreciation method or the modified approach in government-wide statements

GASB 34 requires infrastructure assets to be reported at historical cost and either depreciated or accounted for using the modified approach in government-wide financial statements.

A recreation director must reduce the department's operating budget by 8% mid-year due to a revenue shortfall. Which strategy best preserves core program delivery?

Answer: Prioritize cuts to administrative overhead and non-essential programs first

Targeting administrative and non-essential costs first protects direct service delivery, which is the agency's primary mission.

Which of the following is a characteristic of a Tax Increment Financing (TIF) district that a parks director should understand when seeking park improvement funds?

Answer: TIF captures incremental property tax growth within a defined district for reinvestment

TIF districts capture the increase in property tax revenues above a baseline level and redirect those funds to improvements within the district, which can include parks.

A parks agency's auditors identify a material weakness in internal controls related to cash handling at recreation centers. The MOST appropriate immediate corrective action is:

Answer: Implement segregation of duties so no single employee controls all steps of cash receipting

Segregation of duties—ensuring different staff collect, record, and reconcile cash—is the standard control to prevent and detect errors or fraud in cash handling.

A park agency calculates its cost recovery ratio for an aquatics program at 65%. This means:

Answer: User fee revenues cover 65% of the program's total direct and indirect costs

A 65% cost recovery ratio means that program revenues offset 65 cents of every dollar of program cost, with the remaining 35% subsidized by tax support.

A recreation agency is preparing its Comprehensive Annual Financial Report (CAFR) and must reconcile the governmental funds balance sheet to the government-wide Statement of Net Position. A primary reconciling item is:

Answer: Adding capital assets net of accumulated depreciation, which are not reported in governmental funds

Governmental fund statements use modified accrual and exclude long-term assets; the reconciliation adds capital assets (net of depreciation) to convert to the full accrual government-wide basis.