Realizing the need for public transportation, the government of KSA has established a legally separate public benefit corporation named Metro City Transport. In the law establishing Metro City Transport, it was authorized to appoint Metro’s entire governing body. When Metro City Transport went to prepare its financial statements, two questions were raised. Was Metro City Transport a government? And if it were a government, how should it prepare its Cash flow statement?
Required:
a. Discuss whether Metro City Transport is or is not a governmental entity. What are the specific factors in this situation that cause Metro to be one or the other? What are the other activities that any government does for its country?
b.Discuss the Standard Setters that Metro City Transport uses to prepare its Cash flow statement and what are the three standard setters that government organizations should follow in preparing its financial statements.