Reference no: EM131704016

Question: Mayor Meier served for many years as the chief executive officer of a city. During that time he used his red pencil liberally when reviewing the draft of the introductory section of the CAFR, prepared by finance director Ted Gee. For example, when Ted made reference to large amounts of accumulating leave and unsettled claims that might affect future General Fund expenditures, Meier struck it out. When Ted discussed the implications of the city's recent issuance of large amounts of general obligation debt, with debt service payments scheduled to begin 10 years after the bonds were issued, Meier crossed it out.

When Ted mentioned in the introductory section that the city had been neglecting to maintain its capital assets, Meier struck that out also. Ted never even bothered to mention that the city's credit rating had been gradually reduced during Meier's tenure, knowing that the mayor would surely delete it. Last year, the city implemented the requirements of GASB Statement No. 34. Ted Gee read its requirements carefully. He made the necessary accruals when he prepared the government-wide financial statements. He also concluded that many of the deleted comments he had made in previous years' drafts of the introductory section and other comments that he hadn't made should now be made in the MD&A. Ted made all the comments he felt were needed to comply with the MD&A requirements of GASB Statement No. 34 and gave his draft of the MD&A to the mayor. The mayor applied his red pencil in the usual manner and dumped the draft on Ted's desk. What should Ted do?