Question

Short Exam

Q1. In the preparation of fund financial statements why the notes to financial statements are interesting?(2.5 marks)

Q2. Describe briefly the role of the following agencies:(4.5 marks)

• Office of Management and Budget (OMB)
• Treasury
• General Accountability Office (GAO)

Q3. What is the difference between earmarked funds and nonearmarked funds

Answer 1

Q1. In the preparation of fund financial statements why the notes to financial statements are interesting?

It is very important for analysts and investors to read the footnotes to the financial statements included in a company's periodic reports. These notes contain important information on such things as the accounting methodologies used for recording and reporting transactions, pension plan details and stock option compensation information — all of which can have material effects on the bottom-line return that a shareholder can expect from an investment in a company. Footnotes also explain in detail why any irregularities such as a one-time charge has occurred and what its impact may be on future profitability. These are also sometimes called explanatory notes

Q2. Describe briefly the role of the following agencies:(4.5 marks)

A) Office of Management and Budget (OMB):

1. Budget development and execution is a prominent government-wide process managed from the Executive Office of the President (EOP) and a device by which a president implements his policies, priorities, and actions in everything from the Department of Defense to NASA.

2.OMB manages other agencies' financials, paperwork, and IT

B) Treasury:  In its overall sense Treasury covers cash management, corporate finance and financial risk management.

Although the role of the Treasury function is constantly evolving, it can be broken down into 6 broad but interlinked categories

Planning and Operations
Cash and Liquidity Management
Funding and Capital markets
Financial Risk Managment
Coeporate Governance
Stakeholder relations

C) General Accountability Office (GAO) roles;
1) Auditing agency operations to determine whether federal funds are being spent efficiently and effectively.
2) Investigating allegations of illegal and improper activities.
3) Reporting on how well government programs and policies are meeting objectives.
4) Performing policy analyses and outline options for congressional consideration.
5) Issuing legal decisions and opinions, such as bid protest rulings and reports on agency rules

Q3. What is the difference between earmarked funds and nonearmarked funds?

Earmarking refers to the act of setting aside funds for special purposes or specific projects. Companies and governments earmark funds frequently

Non-earmarked grants can be spent as if they were the receiving sub-national government's own (non-earmarked) tax revenues. Mandatory grants (entitlements) are legal, rules-based obligations for the government that issues the grant.