Assignment 1: Financial Statement/Audit Report Review

Due Week 4 and worth 110 points

Use government CAFR https://www.columbiacountyga.gov/home/showdocument?id=16526 and review the financial statements and audit report for the county or municipality.

Compare

1. 1.https://assets.austintexas.gov/financeonline/downloads/cafr/cafr2014.pdf and https://www.columbiacountyga.gov/home/showdocument?id=16526 contrast the Comprehensive Annual Financial Report (CAFR) of the selected local government entity with the government entity identified in the Week 1 homework. In your comparison, include the following:
2. The publication method of the CAFR;
3. Audit and budget information in the CAFR;
4. The type of audit report issued; and
5. The existence or nonexistence of an internal audit function within the government entity.
6. Prepare the analysis for the selected local government entity, including information on the introduction, financial section, and statistical section prepared in the Continuing Problem CAFR from Chapter 2.
7. Analyze the methods used by the selected local government entity in comparing the budget-to-actual reports. Your analysis should include an evaluation of the basis of accounting used for the budget and financial statements.
8. Analyze the sources of revenue for the selected local government. Your analysis should include information on both governmental and business-type activities of the government. In your report, be sure to examine the following:
9. Property taxes and how they are accounted for;
10. Other sources identified as primary revenue for the entity;
11. Deferred revenue;
12. Year-to-year variations in the tax levels of income;
13. Various management discussion and analysis items of note; and
14. Information about the general fund.

Week 1

Review the Comprehensive Annual Financial Report (CAFR) that you obtained.

1. What are three main sections of the report? 2. Review the introductory section of the CAFR.

1) Introduction Section

2) Financial Section

3) Statistical Section

2. Review the introductory section of the CAFR

a.Was the entity's annual report of the previous year awarded a "certificate of achievement for excellence in "financial reporting" by the Government Finance Officers Association? What is the significance of this award?

Yes they received the Certificate of Achievement for excellence in Financial Reporting for the fiscal year ending September 30, 2010 .On order for the city of Austin to have received this award the report must be easy to read and organized and must follow GAAP and all other legal requirements.

b.What are the key issues addressed in the letter of transmittal?

The key issues addressed in the letter are as follows:

1) Reporting Entity, Austin's government, economy, and outlook, General Information, Local economy, Long-term financial planning, Budgetary Information, Financial Policies, Internal Controls, Budgetary Control, Major Initiatives, Acknowledgments

3. Review the "financial section.

a. Which, if any, independent audit firm performed an audit of the CAFR?

Yes, the city of Austin's financial statement was independently audited by Deloitte & Touch

b. Did the entity receive an "unqualified" audit opinion? If not, why not?

No, the entity received a qualified audit opinion. This is because the audit firm conducted the audit in accordance with auditing standards generally accepted by the United States. To be able ensure this Deloitte received independent information from outside sources and verified the management's discussion and analysis

c. Does the report contain management's discussion and analysis (MD&A)? If so, what are the key issues addressed?

Yes, and they are as follows:

1) Financial highlights

2) Overview of the financial statements

3) Financial analysis of the government-wide statements

4) Other information

d. Does the report provide a reconciliation between total governmental net position per the government-wide statement of net position and total governmental fund balances per the governmental funds balance sheet? If so, what are the main reconciling items?

Yes, and they are as follows:

1) Total fund balance

2) Amounts reported for government activities in the statement of net assets

3) Long-term liabilities are not payable in the current period & are not reported in the funds

e. What are the major governmental funds maintained by the entity? Does the entity's fund structure conform to its organizational structure?

1) General Fund, 2) Nonmajor governmental funds, 3) Special Revenue Funds, 4) Debt Service Funds, 5) Capital Projects Funds, 6) Permanent Funds, 7) Nonmajor Enterprise Funds, 8) Internal Service Funds, 9) Fiduciary Funds, a) Private-Purpose Trust Funds, b) Agency Funds,

Yes, it does conform to its organizational structure.

f. Does the report include "required supplementary information"? If so, what are the main areas addressed?

Yes, the report includes 'required supplementary information page.

The main areas are as follows:

1) General Fund - Schedule of revenue, expenditures &changes in fund balances - budget & actual-budget basis

2) Notes to required supplementary information

3) Retirement plans

4) Other post-employment benefits

g. Does the report include "combining statements"? If so, what is the nature of these statements? h. Does the report include other supplemental information? If so, what types of information are in this section of the report?

Yes, this report includes combined statements. The purpose of these combined statements is to combine the information within each of the funds. For example, debt services would combine all of their accounts and services to one report

h. Does the report include other supplemental information? If so, what types of information are in this section of the report?

Yes, there is other supplemental information included in this report. The other supplemental information is the supplemental schedules

4. Review the statistical section.

a. What is the population of the entity being reported on?

The population of the City of South Bend for 2014 was 101,168.

b. Who is the entity's major employer?

The City of South Bends major employer in 2014 was the University of Notre Dame.

c. What types of information are included in the statistical section?

The statistical section included quite a bit of information about the City including financial trend, revenue capacity, debt capacity, demographic and economic along with operating information. Below are some examples within each category:

1. Financial trend information- Includes information on net position by component and fund balances along with change over the last ten years.

2.Revenue Capacity Information- Includes various statistical information on revenue from several taxes including property taxes, CEDIT, LOIT, Gasoline tax and several others. Also includes information on the Principal Property Taxpayers.

3.Debt Capacity- Various debt information including Bond schedules

4.Demographic and Economic Information- Includes demographic statistics, employment information and Principal employers

Week 2

CONTINUING PROBLEMS

The city I used Columbia County Georgia

Source: https://www.columbiacountyga.gov/home/showdocument?id=16526

1. In which section of the Comprehensive Annual Financial Report (CAFR) are the budget-to-actual comparisons of the major funds? On Page 43 the Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual for the Fiscal Year Ended June 30, 2019

a. Which accounting basis did the City follow to prepare its annual operating budget?

Budgets are adopted on a basis consistent with accounting principles generally accepted.

b. Are the actual amounts on a GAAP or a budgetary basis? GAAP Basis

Do the statements include a reconciliation of any differences between GAAP and budgetary amounts? Yes

If so, what are the largest reconciled items? The largest reconciled items are Capital expenditures, depreciation expense, Net change in fund balances.

c. Are the reported variances based on the original budget or the year-end amended budget? Yes

2. Does the CAFR include budget-to-actual comparisons of nonmajor funds? If so, in what section? No

3. Does the government encumber goods or services that have been ordered but have not yet been received?NO How, if at all, are encumbrances reflected on the governmental fund balance sheet? Does not have any deferred outflows. How, if at all, are they reflected on the government-wide statement of net position?

4. Do encumbrances that remain outstanding at year-end lapse? That is, do the amounts that will be expended in the following year, when the goods or services are received, have to be rebudgeted in the following year? How can you tell?

Week 3

The city of Columbia County Georgia

Source: https://www.columbiacountyga.gov/home/showdocument?id=16526

Review the Comprehensive Annual Financial Report (CAFR) that you obtained.

1. What are the main sources of the government's revenues, including those from both governmental and business type activities?

Taxes continue as the main source of revenue for governmental activities of the Primary Government amounting to 82.2% of total governmental revenues for the year ended June 30, 2019.

Business-type activities increased the Government's net position by approximately $10.1 million, accounting for 28.8% of the total growth in the Government's net position. Key elements of this increase are as follows: The Water and Sewerage Fund and the The Storm Water Utility Fund

1. How are revenues from property taxes accounted for, i.e., as a single amount, or in multiple categories? Identify the various categories and indicate the

percentage breakdown (e.g., residential property taxes are 50 percent of the total property tax revenues).

Property taxes 59,396,566 ₌ 48% of $123,086,537

Sales/other taxes 63,689,971 = 52% of $123,086,537

1. Which of the entity's governmental functions or activities had the greatest amount of directly identifiable revenues?

Sales and Other Tax

1. Does the report discuss the accounting basis for recognizing revenues?

Accrual Basis

1. Does the government's governmentwide statement of net position or governmentalfund balance sheet report "deferred revenue" (or deferred inflows of resources)? If so, what is the most likely reason this amount has been deferred? No
2. What is the government's property tax rate?

To determine the amount of property taxes, several values are needed. These values are theFair Market Value (FMV),Assessed Value (ASV), and theMillage Rate. The Millage rate is determined by the proposed budget divided by the tax digest. The Millage Rate is defined as dollars per $1,000.00 of assessed value.

1. At what percentage of fair market value is real property assessed?

FMV x 40% assessed value

1. When are property taxes due? When do interest and penalties begin to accrue?

November 15^th, 60 days from date of postmark of the tax bill

1. By what percentage did each of the three largest sources of tax revenue increase over the last ten years?

Information not available

1. Did the government generate revenue from traffic fines? As best you can tell, are these revenues reported in the governmentwide statements as program revenues (e.g., associated with police or public safety) or as general revenues?

$78,719 reflected under Miscellaneous

1. What is the total fund balance in the general fund? Can this amount be appropriated and spent for any purpose? Explain.

The General Fund is the primary operating fund of the Government. At the end of the current fiscal year, total fund balance of the General Fund was $47.9 million, of which $40.4 million, or 84.2%, was unassigned. A portion of fund balance in the General Fund in the amount of $2.5 million, or 5.2%, is assigned to specific purposes, such as risk management, employee medical costs, and fleet replacement. As a measure of the General Fund's liquidity, comparing both unassigned and assigned fund balance to total fund expenditures may be useful. As of June 30, 2019, the total of unassigned and assigned fund balance represents 63.8% of total General Fund expenditures.

13. Were there any tax abatements disclosed for the year? If so, provide a brief description and the gross amount of taxes that were reduced during the reporting period.

The cumulative property tax not collected by the County due to incentive agreements was $69,390, and $16,731 was paid to the County through incentive agreements for the same period.