Using the annual financial report obtained for Exercise 1–1, answer the
following questions:
a. Find the Statement of Net Assets for the proprietary funds. Is the Net
Asset or the Balance Sheet format used? List the major enterprise funds from that statement. Is the statement classified between current and noncurrent
assets and liabilities? Are net assets broken down into the three
classifications shown in your text? Is a separate column shown for internal
service funds?
b. Find the Statement of Revenues, Expenses, and Changes in Net Assets
for the proprietary funds. Is the “all-inclusive” format used? Are revenues
reported by source? Are expenses (not expenditures) reported by function
or by object classification? Is depreciation reported separately? Is operating
income, or a similar title, displayed? Are nonoperating revenues and
expenses shown separately after operating income? Are capital contributions,
extraordinary and special items, and transfers shown separately?
List any extraordinary and special items.
c. Find the Statement of Cash Flows for the proprietary funds. List the four
categories of cash flows. Are they the same as shown in the text? Are
interest receipts reported as cash flows from investing activities? Are interest
payments shown as financing activities? Is the direct method used?
Is a reconciliation shown from operating income to net cash provided by
operations? Are capital assets acquired from financing activities shown as
decreases in cash flows from financing activities? Does the ending cash
balance agree with the cash balance shown in the Statement of Net Assets
(note that restricted assets may be included)?
d. If your government has a CAFR, look to any combining statements and
list the nonmajor enterprise funds. List the internal service funds.
e. Look at the financial statements from the point of view of a financial
analyst. Write down the unrestricted net asset balances for each of the
major enterprise funds, and (if you have a CAFR) the nonmajor enterprise
funds and internal service funds. Look at the long-term debt of
major enterprise funds. Can you tell from the statements or the notes
whether the debt is general obligation or revenue in nature? Write down
the income before contributions, extraordinary items, special items, and
transfers for each of the funds. Compare these numbers with prior years,
if the information is provided in your financial statements. Look at the
transfers. Can you tell if the general government is subsidizing or is subsidized
by enterprise funds?