Yorba Linda Essay

Words: 3063
Pages: 13

Question 1 (a): Does the city of Yorba Linda’s current budgeting process meet the goals set of it?

No, the city of Yorba Linda’s current budgeting process does not meet the goals set of it. As mentioned, Mr. Simonian had three basic goals for the city's budgeting process which are intended to provide a forum for discussion that lead to the establishment of good city policies and priorities.

First, he wanted the budget to be easy for City Council members to understand. As stated in the case, Yorba Linda council members had little or no formal training in public administration or policy. This shows that they do not have proper background to do administration as well as basic accounting understanding to perform finance related matter.
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In other words, fund accounting creates a clear separation between operating and capital transactions and helps to ensure that the restrictions placed on revenues were adhered to. For instance, fund use only for parks, traffic safety or library improvement. Furthermore, through this system, it is more important to keep record on how the money was spent instead of how it is earned.

A part from that, fund accounting helps in budgeting in term of offering valuable insights into the patterns of how an organization uses money. This helps to determine future financial needs and provides details about how those funds should be disbursed.

Question 2 (b): What are its strengths and weaknesses as compared to standards accrual accounting for use in municipality such as Yorba Linda?
In your response, consider the following question: Did the City of Yorba Linda expect to have a good year in fiscal year 1991 – 92? How do you judge?

In fund accounting system, it measures the incoming and outgoing funds meanwhile in standard accrual accounting system, it measures the product, division and company performance by profit and loss. But, fund accounting helps in meeting various social and legal responsibilities which the later cannot.

Not only that, in fund accounting systems, it tracks and reports accounting records separately for different funding sources or programs,