terminate one employee in April to help keep the budget in balance. The chief of public works says: “I have a better idea. You know that state grant the finance commissioner put into a Special Revenue Fund because it could be used only for planting trees along the highways? Why don’t I just tell one of my boys to fill out his timesheets so that the time he spends changing street light bulbs is charged against the Special Revenue Fund? Neither our finance commissioner nor the state will ever know the difference.” How should the village manager respond?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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The county of Edgerton is facing a General Fund deficit in 2018 because actual tax collections are lagging behind estimates. At a staff meeting, the village manager tells the chief of public works that the chief will need to terminate one employee in April to help keep the budget in balance. The chief of public works says: “I have a better idea. You know that state grant the finance commissioner put into a Special Revenue Fund because it could be used only for planting trees along the highways? Why don’t I just tell one of my boys to fill out his timesheets so that the time he spends changing street light bulbs is charged against the Special Revenue Fund? Neither our finance commissioner nor the state will ever know the difference.”

How should the village manager respond?

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