Final answer:
The statement is true; financial reporting for a special-purpose local government varies based on the type of activities it conducts—governmental, business, or fiduciary.
Step-by-step explanation:
True, financial reporting for a special-purpose local government does indeed depend on whether that government is engaged in governmental-type, business-type, or fiduciary-type activities. Each type of activity has different accounting and reporting requirements. For example, governmental-type activities typically operate under fund accounting principles, where funds are earmarked for specific purposes. Business-type activities, on the other hand, resemble private sector businesses and therefore use accrual accounting to reflect their commercial operations. Fiduciary activities involve the management of assets on behalf of others, such as pension and investment funds, and require a unique set of financial reporting that ensures transparency and accountability.