Question

Prepare a written report of approximately 2-3 pages summarizing the audited financial statements, the accounting classification and GAAP treatment in the CAFR of a selected government.

The question is what is meant by accounting classification and GAAP treatment?

Please give examples.

Answer 1

GAAP TREATMENT IN CAFR:

First and foremost- align to GAAP

a) A brief discussion of the basic financial statements, including the relationships of the statements to each other, and the significant differences in the information they provide. This discussion should include analyses that assist readers in understanding why measurements and results reported in fund financial statements either reinforce information in government wide statements or provide additional information

b) Condensed financial information derived from government wide financial statements comparing the current year to the prior year.

c) An analysis of the governments overall financial position and results of operations to assist users in assessing whether financial position has improved or deteriorated as a result of the year’s operations. The analysis should address both governmental and business type activities as reported in the government wide financial statements and should include reasons for significant changes from the prior year, not simply the amounts or percentages of change. In addition important economic factors, such as changes in the tax or employment bases, that significantly affected operating results for the year should be discussed

Audited Financial Statements:

a) Present the net position and results of operations of the reporting government. Includes all governmental and proprietary assets, liabilities , and activities of the primary government displayed in separate columns with a total column. Presented in separate columns will be the net position and activities of discretely presented component units

b) A total column for all data presented is optional, as is prior year data. Total column and prior year data may be problematical due to space limitations

c) Both government wide statements are to be prepared upon the total economic resources measurement focus and the accrual basis of accounting

d) Assets and liabilities are presented in order of liquidity or how soon an asset may be converted to cash or when a liability require cash for liquidation. The well accepted rule to distinguish between short and long term liabilities those due within one year and those beyond that period applies here.