Using the annual report obtained for Exercise 1–1, answer the following questions:
a. Examine the Statement of Fiduciary Net Position. Which fund types are included? Look at the Statement of Changes in Fiduciary Net Position. Has the government refrained from including agency funds in that statement? Are increases and decreases shown as additions and deductions, rather than revenues and expenses? What are the main additions? What are the main deductions?
b. Are custodial funds included in the Statement of Fiduciary Net Position? If so, look to the notes or combining schedules and list the individual agency funds. Has the government limited itself to agency funds that are held for individuals, organizations, or other governments—not for other government funds? Does the government report a Statement or Schedule of Changes in Assets and Liabilities for agency funds?
c. Does the government have private-purpose funds? If so, list them. Describe the purposes for which they exist. Can you tell if any of those funds are endowments, and have resources permanently restricted? How much income was generated by each of the private-purpose funds, and how much was released for use? Does the government report escheat property as private-purpose funds? If so, indicate the nature of the process by which property is released and for what purposes.
d. Does the government report investment trust funds? If so, describe the nature of the external investment pool. Which other governments are included? Has your government refrained from including its own investments in the investment trust funds?
e. List the pension funds included in the financial statements. From the notes, list the other pension plans that are available to employees of your governmental unit. Are those plans multiemployer plans? If so are they agent plans or cost-sharing plans? Defined contribution or defined benefit? Are required disclosures made in the notes for all pension plans, whether or not the plans are included as trust funds? Look at the actuarial status of the plans and comment about the potential impact of pensions on the financial condition of the government.
f. Review the note disclosures regarding investments. Are investments reported at fair value? Do the notes disclose the realized gains or losses on investments? Do the notes categorize investments based on risk? When the government creates internal investment pools for management purposes, does the government report the individual investments and income from those investments in the funds that provided the resources?
