Which of the following is not an objective of financial reporting by state and local governments?

• A. To assist users in assessing the adequacy of systems and controls
• B. To provide information that can be used to assess accountability
• C. To provide information about the government's financial position
• D. To assist in evaluating tax levy adequacy

Answer: (D)

At the heart of state and local government financial reporting is providing information that helps users judge accountability and understand the government’s financial position and changes in resources. This includes showing how resources were obtained and used, and giving insight into the reliability of the information through disclosures about internal controls and the overall governance environment.

Evaluating whether a tax levy is adequately set falls outside these reporting goals. Tax levy adequacy is a budgeting and policy question about whether revenues will meet planned expenditures, which is typically addressed in budgetary analysis and policy discussions rather than in the core financial statements. The financial reports concentrate on the amount of resources, the obligations outstanding, and how those resources were used, along with how well the information can be trusted, not on judging the sufficiency of the levy itself.

Thus, the objective that is not aligned with financial reporting is assessing the adequacy of the tax levy. The other items align with providing information about controls, accountability, and the government’s financial position.