Budget Administration & Financial Oversight Flashcards
7 cards from real MMC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Budget Administration & Financial Oversight flashcards as text
A municipality is considering issuing Tax Anticipation Notes (TANs). What is the primary purpose of this borrowing instrument?
Answer: To bridge cash flow gaps while awaiting property tax collections
TANs are short-term borrowings used to manage cash flow between the start of the fiscal year and when property tax revenues are collected.
A city's fund balance policy requires maintaining a minimum of 15% of general fund expenditures in the unassigned fund balance. If expenditures are $10 million, the minimum reserve is:
Answer: $1.5 million
15% of $10 million in expenditures equals $1.5 million, which is the minimum unassigned fund balance required by this policy.
What distinguishes an 'assigned' fund balance from a 'committed' fund balance under GASB 54?
Answer: Committed balances require formal governing body action; assigned balances can be set by management or the governing body
GASB 54 requires that committed fund balances be established by the highest level of decision-making authority (governing body) through formal action, while assigned balances can be designated by management.
A municipal clerk is reviewing the Comprehensive Annual Financial Report (CAFR). Which section contains the auditor's opinion on the financial statements?
Answer: Financial section
The financial section of the CAFR contains the independent auditor's report, management's discussion and analysis, and the basic financial statements.
When comparing a municipality's budget to actual results, an unfavorable variance in revenues means:
Answer: Actual revenues fell short of budgeted revenues
An unfavorable revenue variance means actual collections were less than projected, potentially requiring expenditure reductions or use of reserves.
Which type of municipal bond is backed solely by the revenue generated by a specific project or enterprise, rather than the government's taxing power?
Answer: Revenue bond
Revenue bonds are repaid from the income produced by the funded project (e.g., water fees, toll revenues) and do not pledge the full faith and credit of the municipality.
A municipality's internal auditor reports directly to the city manager. From a governance perspective, what concern does this raise?
Answer: Independence may be compromised since the auditor reports to the chief executive being audited
Internal audit independence is strengthened when auditors report to the governing body or audit committee rather than management, to avoid conflicts of interest.