Directions for CAFR Analysis:
Both the CAFR Analysis and the Not-for-Profit analysis paper will demonstrate your comprehension of the course subject matter and your ability to communicate effectively in writing. You are to analyze and evaluate the effectiveness of (1) a governmental entity and (2) a not-for-profit organization of your choosing. You will need to identify that organization’s mission statement and then describe the extent to which the mission was accomplished. You will need to identify criteria for evaluation of the mission statement, measure achievement, and offer a conclusion on the evidence presented.
Each paper should be about three pages long, single-spaced, double space between paragraphs, in 12-point font. References must be included, but will not be counted as part of minimum page count. The paper should be submitted in the Assignments section of WebTycho.
Your paper will be graded as a deliverable designed to show your mastery of the presentation of ideas, references (APA in text citation and properly presented “Works Cited”), and appropriate style and grammar. The use of headings will add value to your paper and guide the reader to topics related to our class and your analysis.
Each paper, the CAFR and the NFP, will also require a brief PowerPoint presentation to be posted in the conference for discussion with other students. We will discuss, prior to the PowerPoint presentation posting date, in the conference, presentation methods and the concept of creating a six-slide maximum PowerPoint presentation. Title page and final page do not count toward six slide maximum. As an alternative to the Power Point you may wish to create a Citizen Centric Report.
CAFR Analysis
During the semester, we will be working on a continuing project focusing on the comprehensive annual financial report (CAFR) of a local government. You will need to obtain a CAFR from a local government and use it in answering questions pertaining to the various chapters. The purpose of this project is to make you familiar with a government’s financial statements and see how the information in the text is translated into and presented in the financial statements.
Here is the site for the government entity I choose:
http://www.talbotcountymd.gov/uploads/File/finance/2011%20Talbot%20County%20CAFR.pdf
The following are questions throughout the chapters to help with guidance with the report. I believe a little from each chapter should at least be covered.
Chapter 2 – page 76, Continuing Problem, Questions 1-4
1. What are three main sections of the report?
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?
b. What are the key issues addressed in the letter of transmittal?
3. Review the financial section.
a. Did the entity receive an ‘‘unqualified’’ audit opinion? If not, why not?
b. Does the report contain management’s discussion and analysis (MD&A)? If so, what are the key issues addressed?
c. Does the report provide a reconciliation between total governmental net assets per the government- wide statement of net assets and total governmental fund balances per the governmental funds balance sheet? If so, what are the main reconciling items?
d. What are the major governmental funds maintained by the entity? Does the entity’s fund structure conform to its organizational structure?
e. Does the report include ‘‘required supplementary information?’’ If so, what are the main areas addressed?
f. Does the report include ‘‘combining statements?’’ If so, what is the nature of these statements?
g. Does the report include other supplemental information? If so, what types of information are in this section of the report?
4. Review the statistical section.
a. What is the population of the entity being reported on?
b. Who is the entity’s major employer?
c. What types of information are included in the statistical section?
Chapter 11 – page 497, Continuing Problem, Questions 1-6
1. Do the notes to the financial statements indicate the component units and other related entities that are included within the reporting entity? Do they indicate any units that are not included? Do they explain why these units are included or excluded?
2. How are the component units presented in the government-wide financial statements?
3. How are they presented in the fund statements?
4. Has the government entered into any joint ventures? If so, how are they reported?
5. What schedules or other information does the government report as ‘‘required supplementary information’’ (RSI)?
6. Does the report contain all of the statistical information presented in Table 11–3?
Chapter 3 (page 120 – Continuing Problem #1-4)
1. In which section of the Comprehensive Annual Financial Report (CAFR) are the budget-to-actual comparisons of the major funds?
a. Are the actual amounts on a GAAP or a budgetary basis? Do the statements include a reconciliation of any differences between GAAP and budgetary amounts? If so, what are the largest reconciled items?
b. Are the reported variances based on the original budget or the year-end amended budget?
2. Does the CAFR include budget-to-actual comparisons of non-major funds? If so, in what section?
3. Does the government encumber goods or services that have been ordered but have not yet been received? How, if at all, are encumbrances reflected on the governmental fund balance sheet? How, if at all, are they reflected on the government-wide statement of net assets?
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?
Chapter 4 (page 169 – Continuing Problem # 1-9)
1. What are the main sources of the government’s revenues, including those from both governmental and business-type activities?
2. Which of the entity’s governmental functions or activities had the greatest amount of directly identifiable revenues?
3. Does the report discuss the accounting basis for recognizing revenues?
4. Does the government’s government-wide statement of net assets or governmental-fund balance sheet report ‘‘deferred revenue?’’ If so, what is the most likely reason this revenue has been deferred?
5. What is the government’s property tax rate?
6. At what percentage of fair market value is real property assessed?
7. When are property taxes due? When do interest and penalties begin to accrue?
8. By what percentage did each of the three largest sources of tax revenue increase over the last ten years?
9. Did the government generate revenue from traffic fines? As best you can tell, are these revenues reported in the government-wide statements as program revenues (e.g., associated with police or public safety) or as general revenues?
Chp 5 – Continuing Problem #1-7, page 214
1. How does the government classify its governmental expenditures, by function or by ‘‘object’’? Are the classifications approximately the same in both the government-wide and the fund statements?
2. What are the major differences in expenditures/expenses (i.e., reconciling items) as they are reported in the government-wide and the governmental fund statements?
3. On what basis does the government account for its inventories (purchases or consumption)? Does it maintain a reserve for inventories (if it has not yet implemented GASB Statement No. 54)?
4. On what basis does it account for insurance or other prepaid items in its governmental funds? How can you tell?
5. To and from which funds or component units have there been general fund transfers?
6. Explain the nature of any governmental-fund balance sheet reserves (or classifications) related to expenditures.
7. Does the entity report depreciation as an expense in its government-wide statements? If not, why not?
Chp 6 – Continuing Problem #1-5, page 256
1. How many capital projects funds does the government maintain? How can you tell? Are any of these major funds? If so, for what purposes are they maintained?
2. How many debt service funds does the government maintain? How can you tell? Are any of these major funds? If so, for what types of obligations are they maintained?
3. Are the capital projects and debt service funds reported upon in the government-wide statement of net assets? If so, how?
4. Select one of the more recently established (and larger) capital projects funds (a major fund, if there is one).
a. From where did the fund receive most of its resources?
b. Did the city acquire or construct new capital as- sets using resources of this fund? If so, in what amount?
c. Does this fund have any long-term debts associated with it? If so, does the government maintain a debt service fund to account for the resources to service the debt?
5. Did the government issue additional long-term debt to support governmental activities during the year? Did it repay any long-term debt used to support govern- mental activities? Did it engage in any in-substance defeasances?
Chapter 7 – page 297, #1-6
1. What was the total amount of capital assets used in governmental activities added during the year? What was the amount retired? Where in the CAFR is this information provided?
2. How much depreciation did the government charge in its government-wide statements on capital assets used in governmental activities?
3. Did the government capitalize infrastructure assets acquired during the year? Did it capitalize such assets acquired in prior years?
4. Did the government capitalize collections of art or historical treasures? Did it depreciate such collections?
5. Judging from the disclosures pertaining to investments, does the entity have any investments that appear to be especially risky? In your judgment, to which risk (e.g., credit risk, interest rate risk, foreign currency risk) is the exposure of the entity the greatest?
6. Does the government own any ‘‘unusual’’ securities such as derivatives? Has it entered into repurchase agreements? If so, does the report contain an explanation of these transactions?
Chapter 8 – page 337, #1-6
1. Per the city’s schedule of long-term obligations, what is the total long-term obligation for both governmental and business-type activities? Does this amount reconcile with the long-term liabilities as reported on the government wide statement of net assets?
2. What is the percentage of total net bonded debt to assessed value of property? What is the amount of net debt per capita?
3. What is the city’s legal debt margin?
4. Does the city have any lease obligations outstanding? Are these accounted for as operating or capital leases?
5. What is the amount of any overlapping debt?
6. Does the city have outstanding any conduit debt?
Chapter 9 – page 388, #1-6
1. Indicate the activities accounted for in both internal service funds and major enterprise funds. Comment on whether any of these activities could also have been accounted for in a general or other governmental fund.
2. How are the internal service fund activities reported in the government-wide statement of net assets? How are they reported in the proprietary funds statement of net assets?
3. Did any of the internal service funds report significant operating surpluses or deficits for the year? Were any accumulated significant net asset balances over the years not invested in capital assets?
4. Were any of the government’s enterprise funds ‘‘profitable’’ during the year? If so, what has the government done with the ‘‘earnings’’? Has it transferred them to the general fund?
5. Does the government have revenue bonds outstanding that are related to business-type activities? If so, for what activities?
6. Do the financial statements include a statement of cash flows for proprietary funds? In how many categories are the cash flows presented? Is the statement on a direct or an indirect basis?
Chapter 10 – page 446, #1-8.
1. Does the government maintain any permanent funds? If so, for what purposes?
2. Does the government maintain any fiduciary funds? If so, for what purposes?
3. Does the government contribute to one or more pension plans? Are they defined benefit or defined contribution plans? If they are defined benefit plans, are they single employer (maintained by the government itself) or multiple employer?
4. Does the government report pension expenses or expenditures? If so, in which fund or funds?
5. Does the government report pension liabilities? If so, in which fund or funds?
6. Does the CAFR indicate the actuarial value of plan assets and liabilities? Are the plans over- or underfunded?
7. Does the CAFR contain the financial statements of the pension plans? Does it indicate that the pension plans issue their own reports and that these are publicly available?
8. Does the CAFR indicate that the government provides other postemployment benefits? If so, what is the nature of these benefits? How are they reported?
