Assignment

Review problem 1: Balancing the Budget the Easy Way on pg. 742 of the Government and Not-for-Profit Accounting: Concepts and Practicestextbook.

Discuss the following with your team members:

• What are the relevant facts?
• Who is affected? Greg
• Who are the major parties in this case?
• What are the ethical conflicts in this case? Greg
• What is the possible cause of action available to the auditor?
• What are the consequences of those actions?

Problem 2: Balancing the Budget the Easy Way

State law requires that school district budgets be balanced. After having worked for weeks to reduce expenditures to the minimum that would be educationally acceptable and politically feasible, the school board and the superintendent found the budget still $3 million short of balance. Facing the deadline as to when the budget must be approved, the superintendent (with the school board president at his side) said to Henry Wilson, business officer, "You know, I just took another look at those attendance estimates and I now believe that they were a bit too conservative. Go ahead and increase the estimates by another 600 students and that should just about give us the $3 million additional state aid that we need to get that budget in balance." State aid is based on actual, not estimated, student attendance. Wilson, who has to prepare the budget, is unaware of any evidence that would support a modification of the estimates he had been working with for the past several weeks.