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Question: A village needs resources to finance its operations for the remainder of 2013. Poor internal control procedures under the previous administration created a serious funding problem for the new administration. The new mayor feels that if he can get through the current year, he can develop a new budget and control future expenditures to create a surplus. After reviewing the village's financial statements, the mayor wants to borrow from restricted assets in an Enterprise Fund (resources set aside, pursuant to a bond agreement, to ensure payment of debt service). The mayor is certain that future surpluses from the village's operating budget will allow him to replace the borrowed funds in 3 to 5 years. How would you respond to the mayor?
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