Problem
An ACFR provides taxpayers with information about the government's financial position for the previous fiscal year. In the budget cycle, these reports are published during the audit/assessment phase, and they provide historical information about how monies were spent. An ACFR is divided into 4 sections:
1) Introductory
2) Financial
3) Statistical
4) Other Reporting
5) Using the most recent financial report (ACFR) for Walden Heights, analyze the following elements:
a) What were the major industries or sectors of the economy, as presented in the Introductory section?
b) Was an independent audit conducted, and in the auditor's opinion, were the financial statements presented fairly?
c) Note two interesting things you learned from the MD&A section about the financial condition of the city. Did anything surprise you?
d) Review the Statement of Net Position, and consider the following:
i) What percentage of the assets was liquid (cash) and what percent was capital?
ii) What percentage of the total liabilities was pension-related?
iii) What was their Unrestricted Net Position?
(1) If this number is negative, this may, or may not, indicate financial distress, and should be examined further.
(2) Use both ratios provided to assess the city's solvency.
(a) The Liabilities-to-Assets Ratio: Divide total liabilities by total assets.
(b) The Liabilities-to-Net-Position Ratio: Divide total liabilities by net position.
(3) Review the Statement of Activities and consider each of the functions/programs as a percentage of the total government spending.