Response to the following :
Using the annual financial report obtained for Exercise, answer the following questions:
a. Find the Statement of Net Assets for the proprietary funds. Is the Net Asset or the Balance Sheet format used? List the major enterprise funds from that statement. Is the statement classified between current and noncurrent assets and liabilities? Are net assets broken down into the three classifications shown in your text? Is a separate column shown for internal service funds?
b. Find the Statement of Revenues, Expenses, and Changes in Net Assets for the proprietary funds. Is the "all-inclusive" format used? Are revenues reported by source? Are expenses (not expenditures) reported by function or by object classification? Is depreciation reported separately? Is operating income, or a similar title, displayed? Are nonoperating revenues and expenses shown separately after operating income? Are capital contributions, extraordinary and special items, and transfers shown separately? List any extraordinary and special items.
c. Find the Statement of Cash Flows for the proprietary funds. List the four categories of cash flows. Are they the same as shown in the text? Are interest receipts reported as cash flows from investing activities? Are interest payments shown as financing activities? Is the direct method used? Is a reconciliation shown from operating income to net cash provided by operations? Are capital assets acquired from financing activities shown as decreases in cash flows from financing activities? Does the ending cash balance agree with the cash balance shown in the Statement of Net Assets (note that restricted assets may be included)?
d. If your government has a CAFR, look to any combining statements and list the nonmajor enterprise funds. List the internal service funds.
e. Look at the financial statements from the point of view of a financial analyst. Write down the unrestricted net asset balances for each of the major enterprise funds, and (if you have a CAFR) the nonmajor enterprise funds and internal service funds. Look at the long-term debt of major enterprise funds. Can you tell from the statements or the notes whether the debt is general obligation or revenue in nature? Write down the income before contributions, extraordinary items, special items, and transfers for each of the funds. Compare these numbers with prior years, if the information is provided in your financial statements. Look at the transfers. Can you tell if the general government is subsidizing or is subsidized by enterprise funds?
Exercise:
Obtain a copy of a recent Comprehensive Annual Financial Report (CAFR). These may be obtained by writing the director of finance in a city or county of your choice. Your instructor may have one available for you, or you may obtain one from the GASB Web site. It would be best, but not absolutely necessary, to use a CAFR that has a Certificate of Excellence in Financial Reporting from the Government Finance Officers Association.
You will be answering questions related to the CAFR . Answer the following questions related to your CAFR.
a. What are the inclusive dates of the fiscal year?
b. Write the name and address of the independent auditor. Is the auditor's opinion unqualified? If not, describe the qualification. Is the opinion limited to the basic financial statements, or does the opinion include combining and individual fund statements?
c. Is the report separated into the three distinct sections: introductory, financial, and statistical? Does the report have a "single audit" section at the end? (A few CAFRs include their single audit report in the CAFR-see Chapter 13 for more detail of the single audit requirements.)
d. Does the report contain an organization chart? A table of contents? A list of principal officials? A letter of transmittal? Is the letter of transmittal dated and signed by the chief financial officer? List the major items of discussion in the letter of transmittal.
e. Does the report include a Management's Discussion and Analysis? List the major items of discussion. f. Does the report include the government-wide statements (Statement of Net Assets and Statement of Activities)?
g. Does the report reflect fund financial statements for governmental, proprietary, and fiduciary funds? List those statements. List the major governmental and proprietary funds (the funds which have separate columns in the governmental and proprietary fund statements).