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P15-1 (Notes to the Financial Statements) Obtain a recent CAFR or the Basic Financial Statements of...

P15-1

(Notes to the Financial Statements) Obtain a recent CAFR or the Basic Financial Statements of a state or local government (SLG).

Required

Study the Basic Financial Statements and related notes, make a copy of or prepare a table of contents to the notes, and answer the following questions from a note disclosure perspective:

1.What information can one learn about the state or local government from the notes that is not apparent from the face of the financial statements?

2.Pretend there were no notes. To what extent would the Basic Financial Statements be less useful? Why?

3.Which notes did you find the most interesting and useful? Why?

4.Which notes did you consider less useful? Why?

Solutions

Expert Solution

I have taken the CAFR of City of New York for the year ended June, 2017.

1) One can learn about the basis of accounting, the basis to value the assets, inventories, investments, long term liabilities etc. Such information is not apparent from the face of financial statements.

2) Without any notes, we would not have been able to know about the basis of accounting, the basis to value the assets, inventories, investments, long term liabilities. We could not know about the Discretely Presented Component Units. We could not know about the changes in net position.

3) The notes on "Real Estate Tax" was most interesting and useful. This is because it details out how much tax was collected from whom, how much tax was uncollected, how much discount was offered on the full amount of a taxpayer’s yearly property tax if the entire amount shown on their bill is paid by the July due date (or grace period due date), a 0.25% discount on the last three quarters if the taxpayer waits until the October due date to pay the entire amount due, or a 0.125% discount on the last six months of taxes when the taxpayer pays the balance by the January due date for both Fiscal Years 2017 and 2016. This was quite interesting.

4) The note on "Subsidies" was less useful. This is because the details that how much subsidies is given to which organisation or any other details is not given. Only given note is "The City makes various payments to subsidize a number of organizations which provide services to City residents including but not limited to Art and Cultural institutions. These payments are recorded as expenditures in the fiscal year paid." This note is just information and not quite useful.


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