Discussion Question 2: http://www.escambiaclerk.com/clerk/forms/cafr/CAFR_2010.p
ID: 2366324 • Letter: D
Question
Discussion Question 2: http://www.escambiaclerk.com/clerk/forms/cafr/CAFR_2010.pdf Please click on the website above and take a look around a real CAFR (Comprehensive Annual Financial Report). The Escambia County CAFR financial statements begin on page 20. To go along with this chapter, be sure to review closely the General Fund and Special Revenue fund. Now that you are vaguely familiar with all the different funds within governmental accounting, post on the discussion page your thoughts to the idea below. Is the individualExplanation / Answer
Multiple funds are needed because different fund types act with different functions. By using the different funds, the government can track spending based on these functions easier, and ensure revenues that have been earmarked for these projects are being spent only on the project, and not on other things. This is especially important if the government receives grants. Many of the grants are to be used for a specific purpose, and if the grant is used for any other purpose, the money must be returned to the grantor. For example, if Escambia received a Federal grant for park beautification, Escambia would not be able to spend those funds on a new bridge. If the grant monies were part of the General Fund, then by the nature of the General Fund, they could be spent on any operational need. By placing the monies in a special revenue fund, they've been segregated from operational money, and when it's time to report to the Federal government on how the money was spent, the government can use that fund as the basis of reporting the revenues received, and expenditures made. This will protect the government from having to return funds that were improperly spent.