.ppt - 343 kb
Transcript of .ppt - 343 kb
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ANATOMY OF A CAFRComprehensive Annual Financial Report
Karen Tenace CPA, CMA
City of Tucson
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Objectives
Learn what is mandated by GAAP versus is what is encouraged by GAAP
Understand the components of the CAFR and the order in which they should be presented
Discover additional resources that can help your jurisdiction prepare a great CAFR
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Do we have to do a CAFR?
Need 3 things to comply with GAAP:
1. Management Discussion and Analysis (MD&A)
2. Basic Financial Statements
3. Required Supplementary Information (RSI)
GAAP, however, encourages the production of the broader presentation in the format of CAFR.
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CAFRComprehensive Annual Financial Report
3 Major Sections
Introductory Section
Financial Section
Statistical Section
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Order of Presentation
I. Table of ContentsII. Introductory Section
A. Letter of TransmittalB. Organizational ChartC. GFOA’s Certificate of Achievement
III. Financial SectionA. Auditor’s OpinionB. Management Discussion and Analysis (MD&A)C. Basic Financial StatementsD. NotesE. Required Supplementary Information (Other than MD&A)F. Other Information (Combining & Individual Statements)
IV. Statistical SectionV. Optional Sections
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Title Page-Specific Requirements
Comprehensive Annual Financial Report (not “Annual Report”)
Name of primary government State where government is located Fiscal period covered Department responsible for preparing
the report
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Introductory Section-Purpose?
Provides background and context of CAFR
NOT included in scope of audit
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Introductory Section-Contents
1. Certificate of Achievement for Excellence in Financial Reporting-Prior Year
2. List of Principal Officials
3. Letter of Transmittal
4. Organizational Chart
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Letter of Transmittal-4 Sections
1. Formal transmittal of the CAFR
2. Profile of the government
3. Economic Condition (Subjective Element)
4. Awards & Acknowledgements
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Letter of Transmittal-Other Details
Minimum-Signed by CFO Dated on the date the CAFR is first
made available to the public (AFTER the auditor’s report)
NOT audited Should be on letterhead Should be addressed to the citizens Concise with charts and graphs
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Financial Section-Purpose?
Provides critical information regarding the financial condition of the government through the presentation of financial statements and schedules, note disclosures and narratives (MD&A)
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Finance Section-Contents
1. Independent Auditor’s Report
2. Management Discussion and Analysis (MD&A)
3. Basic Financial Statements
4. Required Supplementary Information (Other than MD&A)
5. Combining and Individual Fund Presentations & Supplementary Info
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Basic Financial Statements
A Quick Detour to Review Basic Terminology & Concepts…
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Review-Unique Characteristics of Governmental Accounting
1. Use of Fund Accounting
2. Measurement Focus and Basis of Accounting or MFBA
Full Accrual AND Modified Accrual
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Review-What’s a Fund?
Fund: A self contained accounting entity with its own asset, liability, revenue, expenditure or expense and fund balance or other equity accounts.
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Review-Measurement Focus & Basis of Accounting (MFBA)
Measurement Focus tells you WHAT to recognize
Basis of Accounting tells you WHEN to recognize it
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Review-Two Types of MFBA’s in Governmental Accounting #1
Economic Resources Measurement Focus and Accrual Basis of Accounting
WHAT: Economic resource measurement focus considers ALL inflows, outflows and balances affecting or reflecting on an entity’s net assets.
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Full Accrual Basis Cont.
WHEN: Accrual basis of accounting recognizes the financial effect of transactions, events, and interfund activities when they occur, regardless of the timing of related cash flows.
Review-Two Types of MFBA’s in Governmental Accounting #1
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Current Financial Resources Measurement Focus and Modified Accrual Basis of Accounting
WHAT: Current financial resource measurement focus only considers SHORT-TERM or CURRENT inflows, outflows and balances of expendable financial resources.
Review-Two Types of MFBA’s in Governmental Accounting #2
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How can you tell MFBA by looking at a financial statement?
Modified Short-term View Expenditures (Capital
Outlay and Principal Payments)
Assets-Liabilities=Fund Balance
Only Current Assets and Current Liabilities Shown
No Long-term Assets means no Depreciation Expense
Full Accrual Long-term View Expenses Assets-Liabilities=Net
Assets Current AND Long-Term
Assets and Liabilities Shown
Depreciation Expense Included in Operating
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Review-Fund Types
GOVERNMENTAL FUNDS(Current Resources/Modified)
1. General Fund2. Special Revenue Fund3. Capital Project Fund4. Debt Service Fund5. Permanent Fund
PROPRIETARY FUNDS(Economic Resources/Full Accrual)
1. Enterprise Funds2. Internal Service Funds
FIDUCIARY FUNDS(Economic Resources/Full Accrual)
1. Agency Funds2. Pension Funds3. Investment Trust Funds4. Private Purpose Trust Funds
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Review-GASB Statement No. 34The “New” Model (2002)
PRE-GASB 34: General Purpose F/S Emphasis on FUND
TYPE Governmental Fund
Financial Statements were ONLY presented using modified accrual accounting basis
POST-GASB 34: Basic F/S Emphasis on MAJOR
Fund vs. NONMAJOR Fund
Governmental Fund Financial Statements presented in BOTH modified and full accrual accounting basis (Gov’t-wide Statements)
END OF DETOUR…BACK TO BASIC FINANCIAL STATEMENTS.....
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Basic Financial Statements-Order of Presentation
1. Government-wide Financial Statements
2. Fund Financial Statements
3. Required Supplementary Information
4. Combining and Individual Fund Statements and Schedules
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Government-wide Financial Statements-Major Points
Includes all governmental activity and business-type activity
Includes discretely presented component units
Excludes fiduciary activities MFBA=Economic Resources, Full
Accrual Accounting Gov’t Activity + Business Type Activity =
Primary Government
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Government-wide Statements
1. Statement of Net Assets
2. Statement of Activities
All financial statements should refer to Notes!
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Gov’t-wide Statement of Net Assets-Major Points
Assets & Liabilities- present in order of liquidity or split between current and noncurrent (classified approach)
Capital assets being depreciated must be shown separately from assets that are not being depreciated
Assets – Liabilities = Net Assets
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Gov’t-wide Statement of Net Assets-Major Points Cont.
Net Assets is broken into 3 categories:
1. Invested in Capital Assets Net of Related Debt
2. Restricted (Narrower than purpose of reporting unit)
3. Unrestricted
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Gov’t Wide Statement of Activities-Major PointsPurpose is to show the extent of how each
governmental function supports itself, before general tax dollars kick in
Order of Presentation:
1. Expenses
2. Program Revenues
3. Net (Expense) Revenue
4. General Revenues
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Gov’t Wide Statement of Activities-Expenses
Direct expenses – by function Depreciation – by function Indirect expenses – General
Government or allocate in separate column
Interest Expense – not associated with a function, separate line
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Gov’t Wide Statement of Activities-Program Revenues
Reported by Function & Shown in 3 Columns:
1. Charges for Services
2. Operating Grants and Contributions
3. Capital Grants and Contributions
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Gov’t Wide Statement of Activities-Net Expenses
What you would expect, in theory…
Governmental activities carry net expenses and depend on tax revenues
Business-type activities either break even or carry net revenues
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Gov’t Wide Statement of Activities-General Revenues & Other Line Items
Tax revenues are reported by type of tax Material gains on sale of capital assets for
governmental activities Immaterial gains on governmental assets can
be an adjustment to depreciation Gains on assets in enterprise activities should
be shown under functional expense Impairments to assets, program expense or
special/extraordinary item
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Gov’t Wide Statement of Activities-General Revenues & Other Line Items
Endowment and Permanent Fund Contributions- reported after General Revenues
Special Items – significant, subject to management’s control, and either unusual OR infrequent (Sale of Land)
Extraordinary Items – significant, unusual AND infrequent (Earthquake)
Transfers
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Charges Business
for Operating Capital Governmental Type Component
PRIMARY GOVERNMENT Expenses Services Grants Grants Activities Activities Total Units
Governmental Activities:General Government 86,900$ (86,900)$ -$ (86,900)$ -$ Public Safety 467,000$ 38,000$ 120,000$ (309,000)$ -$ (309,000)$ -$ Highways & Streets 377,700$ 2,066,000$ 1,688,300$ -$ 1,688,300$ -$ Health & Sanitation 53,400$ 89,000$ 35,600$ -$ 35,600$ -$ Other 21,600$ (21,600)$ -$ (21,600)$ -$ Interest & Fiscal Agent Fees 108,600$ (108,600)$ -$ (108,600)$ -$
Total Governmental Activities 1,115,200$ 127,000$ 120,000$ 2,066,000$ 1,197,800$ -$ 1,197,800$ -$
Business Type Activities:Golf 565,000$ 700,000$ -$ 135,000$ 135,000$
TOTAL PRIMARY GOVERNMENT 1,197,800$ 135,000$ 1,332,800$
COMPONENT UNITS 400,000$ 350,000$ 200,000$ -$ -$ -$ -$ 150,000$
General Revenues: Taxes 980,800$ -$ 980,800$ -$ Unrestricted Grants 105,000$ -$ 105,000$ -$ Investment Income 52,500$ -$ 52,500$ -$ Gain on Sale of Capital Assets 10,000$ -$ 10,000$ -$ Other Revenues 2,000$ -$ 2,000$ -$ Transfers 18,000$ (18,000)$ -$ -$ Total General Revenues & Transfers 1,168,300$ (18,000)$ 1,150,300$ -$ Change in Net Assets 2,366,100$ 117,000$ 2,483,100$ 150,000$ Net Assets Beginning 905,514$ 765,000$ 1,670,514$ 300,000$ Net Assets Ending 3,271,614$ 882,000$ 4,153,614$ 450,000$
Program Revenues Net (Expense) Revenues
XYZ CITY EXAMPLE
STATEMENT OF ACTIVITIES
FOR THE PERIOD ENDING JUNE 30, 2007
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Fund Financial Statements
GOVERNMENTAL FUNDS(Current Resources/Modified)
1. Balance Sheet2. Statement of Revenues,
Expenditures and Changes in Fund Balance
3. Reconciliation to Government-wide Statements
PROPRIETARY FUNDS(Economic Resources/Full Accrual)
1. Statement of Net Assets2. Statement of Revenues,
Expenses and Changes in Fund Net Assets
3. Statement of Cash Flows
FIDUCIARY FUNDS(Economic Resources/Full Accrual)
1. Statement of Fiduciary Net Assets
2. Statement of Changes in Fiduciary Net Assets
All financial statements should refer to Notes!
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Governmental Fund Financial Statements-Major Points
Separates funds – Major vs. Nonmajor MFBA=Current Resources, Modified
Accrual Accounting Includes reconciliation back to
governmental activities for both financial statements
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Basic Financial StatementsMajor Fund Test
Total assets, liabilities, revenues, or expenditures/expenses of that individual governmental or enterprise fund constitute 10% of the governmental or enterprise activity
AND Total assets, liabilities, revenues, or
expenditures/expenses are 5% of the total governmental and enterprise category combined
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Major Fund Test ExampleExample - Major Fund Test Assets %G/E Pass 10%? % T Pass 5% Major Fund?
Governmental Funds:General Fund 200,000 82% * 67% * YesLibrary 10,000 4% No 3% No NoPublic Safety Fund 35,000 14% Yes 12% Yes Yes
Subtotal Governmental Funds 245,000 100%
Enterprise Funds:Golf 42,000 81% Yes 14% Yes YesZoo 10,000 19% Yes 3% No No
Subtotal Enterprise Funds 52,000 100%
Total Gov't and Enterprise Funds 297,000 100%
* Irrelevant - General Fund is ALWAYS a Major Fund
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Financial Section - Notes
Summary of Significant Accounting Policies
Budgetary Information Cash Deposits w/
Financial Institutions Investments Derivatives Contingent Liabilities Encumbrances
Subsequent Events Defined benefit
pensions and post employment benefit plans
Capital Assets and Long-term Liabilities
Significant Commitments
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Financial Section – Notes Cont.
Fund Balances Interfund Activity Component Units Endowments Risk Financing Fiscal Year
Inconsistencies Landfill Closure &
Post closure
Property Taxes Segment
Information Related Party
Transactions Joint Ventures Fund Balances Prior Period
Adjustments
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RSI-Other than MD&A
1. Budgetary Comparisons (General Fund & Major Special Revenue Funds)
2. Infrastructure Condition and Maintenance (Modified Approach)
3. Pension/Other Post Employment Benefits
4. Revenue & Claims Development Trend Data (Public Entity Risk Pools)
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Combining Statements & Individual Schedules- Detail of Aggregate Data
1. Nonmajor governmental funds
2. Nonmajor enterprise funds
3. Internal Service Funds & Fiduciary Funds
4. Nonmajor discretely presented component units
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The End-Financial Section
Whew!
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Statistical SectionGASB 44 – 10 Yr Trending
1. Financial Trends
2. Revenue Capacity
3. Debt Capacity
4. Demographics and Economy
5. Operating Information
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Optional Sections to the CAFRCommon Examples
1. Investment Section (Pension Plans or Investment Pools)
2. Actuarial Section (Pension Plans)
3. Single Audit (Federal Awards)
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Financial Disclosure
GFOA has formally recognized that the CAFR format meets the SEC Rule 15c2-12 (financial statement disclosure to investors)
Place on website Checklist is at:
http://www.gfoa.org/downloads/GENERALPURPOSECHECKLIST.pdf
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Questions?