Question

You are on your first audit of a local government and part of your job is to evaluate financial ratios. The partner on the job told you that analysis of financial ratios alone is not sufficient for assessing the economic condition of the government entity. Identify at least five other factors that you think should be considered in assessing the entity’s economic condition and why they are important.

Answer 1

Firstly the government entity means that which is closely affiliated generally by government ownership or control with state local government.All financial transactions must be assigned to a specific business entity.entities cannot mox their accounting records,bank accounts etc..The economic entity principle applies to all financial entities. The factors that should be consideconsidered in assessing the entity's economic conditions are public opinion, economic conditions, New scientific discoveries, Technological change,Economic, social agend etc.... These are very important because public opinion make entity easy for their financial purposes economic conditions should they see and new scientific discoveries make countries proud and leads to development...so these are important