Accounting and Control The Controller of a Small Private College Is Complaining About

question 1

Essay

Accounting and Control
The controller of a small private college is complaining about the amount of work she is required to do at the beginning of each month.The president of the university requires the controller to submit a monthly report by the fifth day of the following month.The monthly report contains pages of financial data from operations.The controller was heard saying,"Why does the president need all this information? He probably doesn't read half of the report.He's an old English professor and probably doesn't know the difference between a cost and a revenue."
Required:
a.What is the probable role of the monthly report?
b.What is the controller's responsibility with respect to a president who doesn't know much accounting?

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Definitions:

Material Participation

A taxpayer's active and regular involvement in the operations of a business to qualify for certain tax benefits.

Passive Activity

An economic activity in which the investor does not materially participate and often includes rental activities or limited partnerships.

Limited Partner

An investor in a partnership who is not involved in daily business operations and whose liability is limited to the amount invested.

Passive Loss Rules

Tax regulations that limit the amount of passive activity losses (from investments in which the taxpayer does not materially participate) that can be deducted in a given year.