Question 1

The purpose of a financial audit includes all of the following EXCEPT:&#10;A) Assess legality of transactions&#10;B) Evaluate effectiveness of public resource use&#10;C) Test internal controls&#10;D) Examine completeness of financial records

Accepted Answer

The purpose of a financial audit is to assess the completeness and accuracy of financial records, test internal controls, and assess the legality of transactions. However, evaluating the effectiveness of public resource use is more closely related to performance audits, not financial audits.

Question 2

Agency X had an appropriation of $10 million in 2013 and of $11.5 million in 2014 an increase of $1.5 million or 15%). According to the incrementalist view, what is the 2014 budget base for the agency?

A) $10 million
B) $13 million $11.5 million plus $1.5 million)
C) $13.225 million $11.5 million plus 15%)
D) $11.5 million

$115 million

Accepted Answer

The 2014 budget base for the agency, according to the incrementalist view, would be the starting point for the 2014 budget discussions, which is the previous year's appropriation of $11.5 million. Incrementalism suggests that budgeting starts with the current base and adjusts upwards or downwards from that point.

Question 3

Which of the following is an accurate statement about the relative size of government purchases and government spending?&#10;A) Because spending is the same as purchasing, the measures must be the same.&#10;B) Purchases will be greater than spending because of deficit and surplus adjustments.&#10;C) Spending includes transfer payments like social security, but purchases do not.&#10;D) Neither includes provision of government services by contract with private firms.

Accepted Answer

Government purchases only refers to the goods and services that the government buys directly from the market, while government spending includes all spending by the government, including transfer payments like social security. Therefore, spending is typically larger than purchases. Option A is incorrect because while spending and purchasing are related, they are not identical measures. Option B is incorrect because deficit and surplus adjustments would not affect the relative size of purchases and spending. Option D is incorrect because both purchases and spending can include provision of government services through contracts with private firms.

Question 4

Use of modified accrual accounting:&#10;A) eliminates the need for keeping track of encumbrances during budget execution.&#10;B) records expenditures when contractual payments are made.&#10;C) records expenditures when materials are delivereD)&#10;D) requires immediate depreciation of all capital assets.

Accepted Answer

Modified accrual accounting records expenditures when goods or services are received (i.e., when the obligation is incurred), which aligns with option C, stating expenditures are recorded when materials are delivered. This method does not eliminate the need for tracking encumbrances, does not record expenditures solely based on payments, and does not require immediate depreciation of capital assets.

Question 5

Choose the best way to complete the statement: &#34;A budget is&#8230;&#34;&#10;A) a forecast for spending.&#10;B) a plan for how to deal with problems.&#10;C) a forecast for revenue collection.&#10;D) an excuse for a big legislative party.

Accepted Answer

The answer of Choose the best way to complete the...

Question 6

Place these stages in the budget cycle in the order in which they normally occur.&#10;A) Agency request, executive consideration, legislative consideration, audit, service delivery.&#10;B) Executive consideration, agency request, legislative consideration, service delivery, audit.&#10;C) Executive consideration, agency request, legislative consideration, audit, service delivery.&#10;D) Agency request, executive consideration, legislative consideration, service delivery, audit.

Accepted Answer

The answer of Place these stages in the budget cycle...

Question 7

Which of the following would not be a concern of a financial audit?&#10;A) Whether the Department of Environment Services actually spent the&#10;$150,000 its reports say it diD)&#10;B) Whether the 700 gallons of gasoline purchased by the Department were&#10;actually delivereD)&#10;C) Whether the 14 street cleaners employed by the Department could be&#10;replaced by a motorized sweeper to save $75,000 per year.&#10;D) Whether permit fees collected by the Department are remitted in their&#10;entirety to the city Treasurer.

Accepted Answer

The concern of a financial audit would mainly focus on the accuracy and completeness of financial statements, transactions, and records. Cost-saving measures or operational decisions like whether to replace street cleaners with a motorized sweeper would not be the focus of a financial audit. A financial audit would focus on ensuring that financial transactions are properly recorded and reported, including the collection of permit fees and their proper remittance to the city Treasurer. The delivery of gasoline, while important, would primarily fall under the responsibility of an operational or logistics audit rather than a financial audit.

Question 8

Ubiquitous strategies for supporting budget proposals include:&#10;A) arguing that the program in question pays for itself.&#10;B) linking the program to a crisis.&#10;C) proposing that politically popular programs be cut first.&#10;D) identifying and rallying a loyal clientele.

Accepted Answer

Identifying and rallying a loyal clientele is a highly effective strategy for supporting budget proposals as it involves building support from a group of individuals who feel connected to the program or service being proposed. This can include interest groups, advocacy organizations, and other community stakeholders who can help advocate for the program and build political support for its inclusion in the budget. Additionally, by building a loyal clientele, proponents of the program can demonstrate to policymakers that there is a clear demand and need for the proposed program, making it more difficult to cut or eliminate.

Deck 2: The Logic of the Budget Process