Response to the following problem:
Using the annual financial report obtained for Exercise , answer the following questions:
a. Look at the General Fund column of the Balance Sheet for governmental funds. What are the major assets? Liabilities? What reserves have been established for fund balance? Are any designations shown? Are taxes receivable offset by Deferred Revenues? Are the amounts the same? (If so, this would indicate cash accounting for property taxes.)
b. Look at the General Fund column of the governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balances. Prepare a schedule showing percentages of revenues by source. Prepare a schedule showing percentages of expenditures by function. Does your government have significant transfers in or out? Can you identify the fund that provides or receives these resources? Does your government have any other financing sources or uses? Special and/or extraordinary items?
c. Does your government report any special revenue funds as major funds in the governmental fund statements? What are they? What are the major revenue sources? Expenditure functions?
d. Review the notes to the financial statements to determine the measurement focus and basis of accounting used to prepare the governmental fund financial statements. Do the notes describe modified accrual accounting in a manner consistent with this book? Which revenue sources are subject to accrual? Are expenditures generally recognized when goods and services are received? Which specific modifications to accrual accounting are mentioned in the notes?
e. Look at the General Fund column of the governmental fund statements from the point of view of a financial analyst. Is the Fund Balance as of the balance sheet date larger or smaller than at the beginning of the year? Are reasons for the change apparent from the statements? Compute a ratio of fund balance/general fund revenues and compare it with your class members'.
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: www.gasb.org. 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).