Budget Administration & Financial Oversight Flashcards

A city council adopts a budget with a $300,000 contingency appropriation. Mid-year, the city manager recommends using $150,000 for emergency road repairs. What is the proper procedure?

Answer: Council must adopt a formal resolution transferring funds from contingency to the appropriate account

Expenditures from contingency funds require governing body approval through a formal resolution to maintain legislative control over appropriations.

What is the primary purpose of a Single Audit under the Uniform Guidance (2 CFR Part 200)?

Answer: To provide a comprehensive audit of federal awards expended to detect waste and non-compliance

The Single Audit examines federal awards expended above the $750,000 threshold to ensure compliance with federal requirements and detect material weaknesses.

In municipal finance, 'PAYGO' financing for capital projects refers to:

Answer: Paying for capital projects from current revenues without borrowing

PAYGO (pay-as-you-go) means financing capital expenditures from current-year revenues or fund balances rather than issuing debt.

A clerk notices that the adopted budget document omits a legally required public hearing on the tax rate. What is the most serious risk of this omission?

Answer: Taxpayers may challenge the tax levy as procedurally invalid

Failure to hold a legally required public hearing on the tax rate can expose the levy to legal challenge and potential invalidation by courts.

Which financial indicator is most useful for assessing whether a municipality is living within its means over a multi-year period?

Answer: Operating surplus or deficit trend over 5+ years

A multi-year trend of operating surpluses or deficits reveals whether a municipality is structurally balancing its budget or relying on one-time resources.

When a municipality issues a Request for Proposal (RFP) for audit services, what conflict of interest concern must the city clerk be vigilant about?

Answer: Auditors who have previously performed consulting work for the city

Auditors who have provided management consulting or non-audit services may lack independence, which is a fundamental requirement for external audit engagements.

Under GASB standards, infrastructure assets reported using the 'modified approach' do NOT require:

Answer: Annual depreciation expense recognition

The GASB modified approach allows governments to expense infrastructure maintenance rather than depreciate the asset, provided condition is maintained at a documented level.