The Comprehensive Annual Financial Report (CAFR) is a thorough and detailed presentation of the state’s financial condition.
The report gives an account of the state’s activities and equalization’s for the fiscal year. The first being the Introductory section which includes a transmittal letter. The next section is the Financial section that incorporates auditors report, management analysis, supplementary data, and notes to budgetary explanations. The last section which is the Statistical section includes additional financial, economic and demographic information.In the paper, I will compare and contrast the City of Raleigh, Nc and the City of Austin, Texas’s Comprehensive Annual Financial Report for 2015.
Assessment of the CAFR of both cities will uncover if the reports are in accordance with the Governmental Accounting Standards Board requirements. As I reviewed the first section of each city’s CAFR, I have observed some similarities to what the government entity reported in this section. The city of Raleigh’s Introduction section incorporated the list of principal officials for the city, an organization chart, a letter of transmittal, lastly the section included a Certificate of Achievement for excellence in financial reporting. The city of Austin’s Introduction section included a letter of transmittal, City’s organization chart and lastly the Certificate of Achievement.
The financial segment for both government entities showed similar data; the wording is only somewhat unique. As far as the statistical section of the of the entities report there were additional comparable data given. Both entities were audited by independent auditing companies.
The city of Raleigh’s audit was conducted by Cherry Bekaert. They audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining information for the city of Raleigh, North Carolina. The City of Austin was audited by Deloitte & Touche LLP. They audited the entities financial statements of governmental activities, the business-type activities; the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information for the city of Austin, Texas.
In analyzing the city of Raleigh’s CAFR the entity’s previous report was awarded a Certificate of Achievement for excellence in financial reporting. This award shows that the report achieved the highest standards in government accounting and financial reporting. The key issues addressed in the letter of transmittal are the explanation of why the Comprehensive Annual reports are done. It also addressed the independent auditor’s information and displayed if the city is following the required accounting principles and standards.
The letter of transmittal is mainly designed to complement the Management’s Discussion and Analysis. The City of Raleigh received an independent audit report from Cherry Bekaert. The entity did not receive an unqualified report because their financial statements were free of misstated information and they were successful in reporting qualified information. The city of Raleigh’s CAFR does contain a Management’s Discussion and Analysis section which highlights the financial position of the entity. The city maintains its strong financial position for both its general government and business-type funds. The MD also gives an overview of the financial statement which provides long-term and short-term information about the city’s financial status. The city’s financial section displayed activities divided between governmental and business-type the support comes from taxes and grants. The major governmental funds reported are Enterprise funds which consist of things like Mass Transit funds and Parking facilities funds etc.
The CAFR for Raleigh does include the supplementary information section which addresses: The schedule of funding processThe schedule of employee contributions Local government employee’s retirement system- (Liability & Contributions)The statistical section of the report contains measurable schedules that give the projection on planning for the city. It contains data about the income limits, budgetary patterns, economic data, obligations capacity. It gives a comprehension of the sources of income and expenses inside the city. The financial statement provided by the government agency of North Carolina provides revelations and additionally required supplementary data about the city’s financial health. Raleigh utilizes a variance analysis to examine budget-to-actual reports. The expenditures of the city costs and in this way the income raised much equivalent to the expenses. In any case, the financial plan for the next year must increase higher than the previous year because of the developing needs of the city.
The variance analysis gives a financial plan versus actual bases on the historical numbers. It is significant to understand the budgets predicted revenue and expenses in a given period in the future. Property taxes are a source of revenue that is collected from owners of property within the city.
Property taxes are listed and assessed as of January 1, and the collections are first budgeted for the fiscal year beginning the next July 1 (CAFR CITATION). The City rate is completely applicable to general government and not divided among other components. There is a State statutory tax rated limit of 1.
50 per hundred dollars valuation for operating expenses, but no limitation on the rate of tax which may be levied for debt service. In addition to property taxes, the city of Raleigh has other sources of revenue. Other significant sources include water and sewer charges that account for millions of dollars; there are other taxes that are charged as well as fees, interest and miscellaneous charges that includes a lot of money. As an agency for the federal government, the city receives both state and federal grants that equal Million’s as well as intergovernmental money. The city has debt and program reserves that also contributes to the budget.
There are sources of income that are an obligation as opposed to an asset. In the city of Raleigh, they are represented in the profits and loss statement under the Proprietary record. The city has distinctive sources of deferred revenue that incorporate unamortized bond discounting charges, commitments to a pension plan, collected decrease in the fair value of hedging derivatives. Taxes are the primary source of revenue for the city of Raleigh, and along these lines, the city is particular with its level yearly. The city has income statements that uncover the year-to-year varieties in the tax levels of earnings.
Besides, under the statistical section, there is a variation in the tax level of earnings.General fund revenues perceived positive spending variances during 2014-15 with good outcomes coming in at $13.6 million above definite budgets. Revenue was positively affected by proceeded improvement in both property tax also, sales tax, two of the City’s essential revenue streams.
General fund expenditures came in well beneath budget, which brought about a favorable variance of $52.3 million. All use capacities and departments reported positive budget variances, which is a consequence of traditionalist budget practices and also the City’s cost management efforts.