Search the Internet for the official website of your assigned state government (Michigan). Download the comprehensive annual financial reports (CAFR) for 2017, 2018, 2019, 2020, and 2021. Use the...

Search the Internet for the official website of your assigned state government (Michigan). Download the comprehensive annual financial reports (CAFR) for 2017, 2018, 2019, 2020, and 2021. Use the financial statements that you find to answer the following questions.

1. In your state, who is responsible for developing the budget? How is the budget voted on and implemented? Who was the auditor for your state? What audit opinion did the financial statements receive for 2019, 2020, and 2021? How does the audit opinion given to this city by its independent auditors differ from the audit opinion rendered on the financial statements for a for-profit business?

2. List one item of information from each of the following sections of the CAFR for fiscal year 2021. Briefly explain why each item you list is useful in evaluating the state’s financial health.
   
   Provide the page number on which the information appears.








1. Comptroller’s
   
   
   Letter




2. Management’s Discussion and Analysis
   
   
   Section




3. Government-wide Financial
   
   
   Statements




4. Governmental Funds Financial
   
   
   Statements




5. Notes to the Financial
   
   
   Statements




6. Required Supplementary Information other than
   
   
   MD&A




7. Statistical
   
   
   Section

3. Find the
   
   
   
   
   total assets
   
   
   ,
   
   
   
   
   total liabilities
   
   
   ,
   
   
   
   
   net assets
   
   
   , and
   
   
   
   
   unrestricted net position
   
   
   
   
   
   for the State from 2017 to 2021. Identify
   
   
   the primary reasons for any observed
   
   
   trends.

4. For the General Fund,
   
   
   
   
   which assets
   
   
   
   
   
   and
   
   
   
   
   what amounts
   
   
   
   
   
   are reported? Overall, did the size of the General Fund balance increase or decrease from 2017 to 2021? By how much?

5. Compute
   
   
   
   
   cash
   
   
   
   
   
   (sum of cash equity with state treasurer, cash & cash equivalents, and deposits held by the federal government);
   
   
   
   
   short-term liabilities
   
   
   
   
   
   (total liabilities minus long-term obligations due subsequent to one year);
   
   
   
   
   current ratio
   
   
   
   
   
   (cash divided by short-term liabilities); and
   
   
   
   
   long-term financial leverage
   
   
   
   
   
   (total liabilities divided by total assets) for the State from 2017 to 2021. Highlight the trends for the three measures, comment on the State’s ability to meet its short-term financial commitments and discuss the primary
   
   
   driver of the trend in the long-term financial leverage. Highlight the state’s 2021 performance on these measures relative to 2019 (pre-pandemic) and 2020 (height of the pandemic)?

6. Find the schedule in the Statistical Section of the CAFR that provides details of bonds and other long-term financial obligations. Comment on any changes in the State’s ability to repay its long-term debt from 2017 to 2021. Explain how total primary government debt
   
   
   per capita and as a percentage of personal income assist in reaching your
   
   
   conclusion.

7. A reconciliation should be presented to explain the difference between the net changes in fund balances for the governmental funds (fund-based financial statements) and the change in net assets for the governmental activities (government- wide financial statements). What were the three largest reasons for the difference from 2017 to 2021?

8. For the primary government, tabulate the
   
   
   
   
   total general revenues
   
   
   ,
   
   
   
   
   total expenses (net of program revenues)
   
   
   , and
   
   
   
   
   change in net position
   
   
   
   
   
   using the government-wide Statement of Activities from 2017 to 2021. List the two largest revenue sources and two largest expenses (net of
   
   
   program revenues) reported in the statement per year. Comment on where the State collects its revenues and where it spends its money. Are the State’s revenues sufficient to support its spending?

9. What was the
   
   
   
   
   total expenditures recorded by the General Fund only
   
   
   
   
   
   from 2017 to 2021? How were those expenditures classified? How much was specifically spent on public education, higher education, health, welfare, public safety, transportation, unemployment, and interest on debt? If these expenditures are missing on the primary financial statements are they in a separate set of financial statements?

10. Calculate the
    
    risk ratios
    
    
    (see below) from 2017 to 2021 and report your findings. Discuss the trends and use charts or graphs to illustrate.

11. Repeat steps 2-10 for Illinois. Here is the link to find the CAFRs:

Annual Comprehensive Financial Report - The Illinois Office of Comptroller (illinoiscomptroller.gov)

12. Using the
    
    memo format, write a comparative analysis of your state and Illinois incorporating your answers from 2-10. Discuss some of the pre-pandemic fiscal and operational challenges faced by the two states and how has the pandemic worsened the economic conditions for the two states. Support your argument with news stories.
    
    
    
    
    Memo should be limited to two pages, single-spaced with one-inch margins, using 12-point font.