In: Accounting
1) What are the reporting requirements for documenting the management and preservation of infrastructure assets when the “modified approach” is used?
Select one:
A. Documentation must be presented in required supplementary information documenting that the infrastructure assets are being preserved.
B. There is no reporting requirement regarding the “modified approach,” but the independent auditor must take appropriate audit steps regarding that issue when attesting to the financial statements.
C. A statement must be included in the notes to the financial statements to the effect that the infrastructure assets are being preserved.
D. Management must attest in the MD&A to the fact that is has an asset management system and that its assets are being preserved at an established condition level
The amounts reported for assets and liabilities in the total column for the combining balance sheet for nonmajor governmental funds are also reported in the other governmental funds column of the governmental funds balance sheet.
Select one:
True
False
Answer : The Government of a country utilize public fund to develop a place which will facilitate the people of that place to have a common facility which will be utilized by them for fulfilling their basic needs such as
All the above systems built and continuously maintained on a time interval are called infrastructure assets. Any assets built are always have a wear and tear due its usage as well as age. In accounting statement for recording this wear and tear a percentage (%) of the total investment cost are charged which is called depreciation. Hence, while reporting, depreciation charged on that also are required to be reported i.e. depreciated value to be indicated. However, when modified approach is adopted the infrastructures assets are not required to be depreciated but some conditions are required to be fulfilled mostly for keeping proper documentation and updation of that document. The following are required to be fulfilled and reported accordingly so that people of the country whose fund are being utilized by Government for building up such facilities for them are become well aware of the same and it becomes a natural right for the people of the country and also to bring about a transparency in the management of that infrastructural assets.
A. Documentation must be presented in required supplementary information documenting that the infrastructure assets are being preserved. - True
As explained above it is prerequisite for maintenance of the documentation for informing the people about their utilization of their fund and required when modified approach adopted for reporting purpose.
B. There is no reporting requirement regarding the “modified approach,” but the independent auditor must take appropriate audit steps regarding that issue when attesting to the financial statements. – False.
As explained above reporting requirement is must since in modified approach the infrastructure assets are not required to be depreciated. However, details of the assets and its annual maintenance cost for preserving the same also required to be documented.
C. A statement must be included in the notes to the financial statements to the effect that the infrastructure assets are being preserved. – True
As explained above that the assets are required to be preserved and details of this are required to be documented.
D. Management must attest in the MD&A to the fact that is has an asset management system and that its assets are being preserved at an established condition level. – True
As explained above in modified approach an proper asset management system should be established with proper reporting about the assets, its maintenance annual or in an regular interval or in case of emergent situation and it should be signed by Government for its authenticity and to ensure that the infrastructures are preserved properly.
The amounts reported for assets and liabilities in the total column for the combining balance sheet for non major governmental funds are also reported in the other governmental funds column of the governmental funds balance sheet. – True
In Governmental funds balance sheet total position of funds including non major governmental funds are required to be reported.