In: Accounting
Utilizing the CAFR obtained for City of Jackson in MS, review the governmental fund financial statements and related data and government-wide financial statements. Note particularly these items:
Are charts, graphs, or tables included in the statistical section of the CAFR that show the changes over time in reliance on each revenue source? What have been the trends in revenue sources over time?
Are charts, tables, or graphs presented in the statistical section of the CAFR to show the trend of General Fund expenditures, by category, for a period of 10 years? What has been the trend in expenditure categories? How does the trend in expenditures compare to the trend in revenues? Is expenditure data related to nonfinancial measures such as population of the government or workload statistics (e.g., tons of solid waste removed or number of miles of street constructed)?
Comprehensive Annual Financial Report (CAFR): Comprehensive Annual Financial Report (CAFR) is the set of financial statement of U Country. It consists of the financial statements of municipal, state, or the governmental entity. Government Accounting Standards Board (GA SB): Government accounting standards board (GASB) is an independent board that establishes reporting standards for the local and state government. This standard board mainly follows generally accepted accounting principles (GAAP).
a)
Determine whether the government prepared statements in compliance with the GASB financial reporting model: The entire statement of City L in Country U is prepared as per the compliance with the Government accounting standards board (GASB) model. As a result, it assists to accomplish the objective of accountability and consistent for reasonably informed user.
Determine whether the statement of activities appear on one page or two pages: City L of Country U's statement of activities comprise of one page. This statement of activities is prepared instead of income statement that is used by a for-profit business entity. It indicates the entire expenses, revenues, and extraordinary items. Determine the most costly governmental function or program operated by the government:
In the L City of U country, the most expensive governmental function is protection of persons and property. Here, the cost incurred for the protection of persons and property is $2,872,296. This service from the L City of U country is most costly compared to other services provided by them.
Determine the amount of cost on the governmental activities borne by taxpayers in the form of general revenues: The L City of U country has $ 3,587,105 amount of cost on the governmental activities. This cost is borne by the taxpayers of U Country. It is a source of general revenue for the L City of U country.
Determine whether the entity increase or decrease its governmental activities unrestricted net position:
The L City of U country has an increase in the change in net position. Here, the change in net position is $267,874 as per the change in net position statement for the year.
b)
1) Following are the system of classification of revenues used in the governmental funds financial statements:
The system of classification of revenues used in the governmental funds financial statements is based on the functions or program revenues of the L City in U country organization. Here, the entire governmental revenues are categorized based on business type activities and governmental activities.
Following are the three important sources of General Fund revenues:
• Property taxes
• Business taxes
• Utility user's taxes
Following are sources of revenue for each major governmental fund:
• Transportation
• Cultural and recreational services
• Protection of persons and property
• Community development Determine whether the reporting entity depend on any single source for as much as one-third of its general fund revenues:
The L City of U Country mainly depends on general revenue as a single source of revenue. Here, the L City generates the one-third of its revenue from this single source of revenue. Moreover, the special revenue and debt service sources generate very less revenues as compared to the general revenue source.
Following is the proportion of revenues is derived from property taxes: The property taxes indicate around $1,611,605 (in thousands) as per the statement of revenues, expenditures, and changes in fund balances of the L City of U country. Here, the total revenue incurred by the governmental organization is $5,007,288 (in thousands). Therefore, the (proportion of revenue generated from property taxes is 32.19 percent $1'611'605 × 100 $5,007,288
Determine whether the notes clearly indicate recognition criteria for primary revenue sources:
The main primary sources of revenues are indicated in the notes to the basic financial statements. Here, the entire funds generating components (like recveiables) are clearly specified in the L City of U Country notes to financial statements.
Determine whether the charts, graphs, or tables included in the statistical section of CAFR (Comprehensive Annual Financial Report): Charts or tables are indicated in the statistical section of Comprehensive Annual Financial Report. This graphical presentation assists to make data easier to understand and comparison purposes. Therefore, tables or graphical presentation is used in statistical section.
2)
Following is the level of classification of expenditures used in the governmental fund financial statement:
The expenditures in the governmental fund financial statement use activity-based level of classification. Here, the entire expenditures incurred by each activity are indicated in the statement of revenues, expenditures, and changes in funds balance.
Following are the largest categories of general fund expenditures:
• Current general government expenditure
• Protection of persons and property
• Health and sanitation general fund expenditure Following are the largest category of expenditure of each major governmental fund:
• Transportation
• Cultural and Recreational Services
• Pension and Retirement Contributions
Determine whether the graphical representation included in the statistical section of CAFR (Comprehensive Annual Financial Report):
The graphical representation specifies the trends of general funds expenditures. It even indicates facts of 10 years based on certain facts.
Determine whether the expenditures data are related to nonfinancial measures: The expenditure presented in the statistical section is based on the nonfinancial measures. Some of the nonfinancial measures expressed in the expenditure data are as follows:
• Estimated population for the last 10 years
• Wastage of resources for the last 10 years
3)
Determine whether a separate section of statement of revenues, expenditures, and changes in funds balance is provided for other financing sources and uses reported: A separate section is provided for a summary of revenues, expenditures, and other financing sources and uses. This statement specifies both revenues and expenditures incurred from other financing sources. Therefore, a separate statement is represented to express on other financing sources and uses.
Determine whether the line items indicate the nature of each financing source or use: The line items specifies each nature of each of financing sources and uses presented in the statement of revenues, expenditures, and changes in funds balance. Here, the revenues section indicates the source from the particular revenue is generated for the corresponding year.
c)
Determine whether the government presents budgetary comparisons as a basic governmental fund financial statement:
The budgetary comparisons are expressed in the required supplementary information. It is indicate brief facts on each category of revenues and expenditures. This denoted in the financial section of L City in the comprehensive annual financial report. Determine whether the budgetary comparison title a schedule rather than a statements: The combining budgetary comparison title is a schedule. It is because the entire revenues and expenditures denoted in this schedule are reported as per budget basis. Determine whether the budgetary comparison presents the original budget and the final amended budget: Both the original budget and the final amended budget are not indicated in the budgetary comparison presented in the required supplementary information sections.
Determine whether the government presents one or more variance column: The government represents only one variance column in the budget comparison schedule. This column specifies variance amount of the final budget analysis. It even indicates on the variance sign that is whether the variance budgeted is positive or negative in nature.
Determine whether the Comprehensive Annual Financial Report (CAFR) specifies budgetary reporting practices will vary from (GAAP) General Accepted Accounting Principles reporting practices: The budgetary reporting practices will be different from the General Accepted Accounting Principles reporting practices. It is mainly because the actual results of operations on a budgetary basis are compared to the appropriations made by L City council. Moreover, Comprehensive Annual Financial Report (CAFR) does not provide a brief indication on the reasons behind the difference in reporting practices.