Review the CAFR you selected inWeek 1. Based on your review, answer the following questions:
Tasks:
- In which section of the CAFR can the budget-to-actual comparisons of the major funds be found?
- 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 reconciling items?
- Does the government encumber goods or services that have been ordered but not yet received? How, if at all, are these goods or services reflected in the governmental fund balance sheet?
- What other sections of the CAFR typically present budgetary information?
- Do you think the budgetary disclosures in the report fully address the needs of all the relevant stakeholder groups? Explain your response.
Submission Details:
- Submit your answers in a 5- to 7-page Microsoft Word document. Name your document, using APA style.
1. Brief overview: The city of Austin is one of the fastest growing cities in the USA and is the capital city of the U.S. State of Texas. The city was established in 1840 and there are 10 council members in the city who are elected by geographical district these 10 members select a Mayor who heads the city of Austin. The terms of members are defined for four years and further can be extended for a maximum of another four years. The city is having 11th place in terms of population and 4th place in terms of the most populous city in the USA. The population of the state capital has reached 964,177 in 2021. The staff of the city are having a long-term vision for the creation of such a work culture which will enhance the growth and innovation of the city. The city has also received a certificate of excellence in terms of financial reporting and publication of CAFR from GFOA. The administration structure of the city of Austin is as below (Arapis, T., & Grady, D. 2015): Analysis of the three sections of the CAFR The comprehensive annual financial report is having three primary sections which include the introductory section, the financial section, and the statistical section. The analysis of the components of each section is discussed below: · Introduction section: It can be defined as the introductory part of the report. This section of the report consists of the table of content of the different sections of the report and transmittal letters of an executive of an organization. The letter consists of the profile of the local government, an economic update of the local government, and the main initiatives undertaken by the local government. · The financial section: This section of the report consists of the financial report of the entity which includes an explanation of the financial information, health, and auditor report of the entity. In this section firstly auditor report is presented which is followed by the financial statement of the local and state government. · Statistical section: This section of the report represents the financial trends, limit of borrowings of the organization, information about the demography and the earning capacity of the entity, and the schedules related to the operating information of the entity. The regular annual report of the entity differs from the CAFR in various aspects such as the corporate annual report showing the only basic financial statement of the government. On the other hand, a comprehensive annual report shows a wide variety of information which are the intention of assisting the users in understanding the basic statements (Kinnersley, R. L. 2011). Management Discussion and Analysis (MD&A) The MD&A is a section of the report in which executives analyze the financial performance of the entity. This section of the report consists of a discussion of the compliance of the organization, risks, and plans of the government such as goals and new projects. It helps in summarizing the financial statement and relays the insight of the management into the performance of the entity. It helps the analyst in analyzing the key information provided in the financial performance of the government. It is different from the corporate annual report as it shows the only basic financial statement of the government. In the given case, the assets and postponed outage are greater than the obligations and postponed income in the present year. Further, there is a deficit from the operations of the government and the major percentage consists of the investment in the capex i.e. 112.3% of the total resources of the administration. The net position of the operations of the government has declined and on the other hand, there is an increase in the position of the business activity. Governmental and proprietary funds maintained by the government The major fund reported by the City consists of the following: · Internal service and enterprise funds These internal service funds are used by the government for setting the outlays of the capex investment administration and the emergency announcement point, welfare of employees, upkeep of the convoy, IT software and system, obligation reserve, radio message, and reimbursement given to discrete funds. In addition to this, the main enterprise funds stated by the state consist of Austin energy for the recording of the electronic efficacy, Austin Water for the actions about the water and utility of wastewater, and the Airport which is used for the procedures of the Global Airfield. · Fiduciary Funds The fiduciary funds are used by the government for recording the funds which are apprehended for the assistance of the parties which is external to the administration of the state. In this scenario, the money or funds of the fiduciary funds are not present or in other words, it is not in support of the program initiated by the city and thus they are not presented in the financial statements of various governments. The accounting rule of this fund is quite at par with that of proprietary funds. In addition to this, the debt service fund is shown by the government as a minor administrative fund and it is reported and accumulated as the financial assets which are to be apportioned for the expenditure in connection with the principal and interest of the long-term borrowings and section 108 loans. Recommendation and conclusion The detailed analysis shows that the financial performance of the city is good, and the financial statements are prepared truly and fairly. It is recommended that the management should make improvements in the financial performance, and it should concentrate on the wellbeing of the personnel, community and enhance the assets which will make the financial status stronger and more attractive. The city has reported various funds such as specialized funds, common usage funds, debt service funds, and various other funds for the operations of the administration. The total position and financial performance are good, and it is having a lot of scope for growth in the future. References: Comprehensive Annual Financial Report 2021. City of Austin Texas. Retrieved from https://assets.austintexas.gov/financeonline/downloads/annual_comprehensive_financial_report/annual_comprehensive_financial_report_2021.pdf Austin Texas, United States. Encyclopedia Britannica. Retrieved from https://www.britannica.com/place/Austin-Texas Kinnersley, R. L. (2011). Improving the usefulness of comparative budgetary information in the CAFR. Government Finance Review, 4. Arapis, T., & Grady, D. (2015). State Financial Reporting Evolution:What If CAFRs Could Talk? Journal of Government Financial Management, 64(2), 24–29.