prepare a memo to your client summarizing the results of your research be sure to ad 641540

Using the Modified Approach or Depreciation. You are an auditor in a regional public accounting firm that does a large volume of governmental audits and consulting engagements. A large metropolitan city has asked you for assistance in determining whether it should use the modified approach or depreciate its infrastructure assets. The city is particularly interested in which accounting approach other large metropolitan cities have chosen.

Required

a. Examine several comprehensive annual financial reports (CAFRs) of large cities prepared following GASBS 34. (Note: The GASB provides a list of GASBS 34 implementers classified by type of government with links to the governments’ CAFRs, if available, at its Web site, www.gasb.org.) Create a table that lists the cities and the methods they have chosen to report their general infrastructure assets.

b. Prepare a memo to your client summarizing the results of your research. Be sure to address the city’s specific concern about what other large cities are doing with respect to reporting of infrastructure assets.

c. Your client has heard that the Government Finance Officers Association (GFOA) may still award a Certificate of Achievement for Excellence in Financial Reporting if a government decides that the costs of capitalizing and depreciating (or of using the modified approach for) infrastructure assets outweighs the benefits, assuming that all other criteria are met. What other consequences can you point out to your client if it decides not to capitalize and report infrastructure assets.