Audit Report Review

Due Week 4 and worth 110 points

Select one local government in your state or area and review the financial statements and audit report for the county or municipality. The financial statements of the government you selected should have at least three funds. Refer to the Continuing Problem homework for Weeks 1 through 3 for this assignment.

Write a three- to five-page paper in which you do the following:

1. Compare and contrast the Comprehensive Annual Financial Report (CAFR) of the selected local government entity with the government entity identified in the Week 1 homework. In your comparison, include the following:
   1. The publication method of the CAFR;
   2. Audit and budget information in the CAFR;
   3. The type of audit report issued; and
   4. The existence or nonexistence of an internal audit function within the government entity.
2. Prepare the analysis for the selected local government entity, including information on the introduction, financial section, and statistical section prepared in the Continuing Problem CAFR from Chapter 2.
3. Analyze the methods used by the selected local government entity in comparing the budget-to-actual reports. Your analysis should include an evaluation of the basis of accounting used for the budget and financial statements.
4. Analyze the sources of revenue for the selected local government. Your analysis should include information on both governmental and business-type activities of the government. In your report, be sure to examine the following:
   1. Property taxes and how they are accounted for;
   2. Other sources identified as primary revenue for the entity;
   3. Deferred revenue;
   4. Year-to-year variations in the tax levels of income;
   5. Various management discussion and analysis items of note; and
   6. Information about the general fund.

Your assignment must follow these formatting requirements:

• Be typed, double-spaced, using Times New Roman font (size 12), with 1-inch margins on all sides; citations and references must follow school-specific format. Check with your professor for any additional instructions.
• Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.

The specific course learning outcomes associated with this assignment are as follows:

• Analyze the financial reporting of a local government, including information on governmental and business-type activities related to sources of revenue.

Resource

https://assets.austintexas.gov/financeonline/downloads/cafr/cafr2017.pdf

Chapter 1 Continuing Problem

Chapter 2 Continuing Problem

Continuing Problems:

1. Introduction, Financial Section and Statistical Section (Unaudited)
2. A. Yes, the city of Austin received the certificate of achievement for excellence in financial reporting on their annual report for the year 2016. Austin has met the Government Finance Officers Association program standards, they produced an easily readable and organized CAFR and which it also comply with the GAAP and legal requirements.
3. Austin’s Government and the Reporting Entity- General Information, Reporting Entity;

The Economic Outlook and Major Incentives- Local Economy, Major Incentives, Imagine Austin, Strategic Plan; Financial Information- Internal Controls, Financial Policies, Long-Term Financial Planning, Budgetary Control, Budgetary Information, Awards, Acknowledgments

3. A. The independent audit firm that performed the audit of the CAFR was Deloitte & Touche LLP.
4. No they did not receive an unqualified audit opinion, Deloitte & Touche LLP performed the audit on the auditing standards generally accepted in the United States of America they worked along with management with acquiring all information needed to do the audit as well as Austin Bergstorm Landhost Enterprises who conducted an audit on other matters.
5. Yes, the report contains the Management’s Discussions and Analysis and the main issues addressed are the (Government-Wide Financial Statements, Fund Financial Statements and Notes to the Financial Statements) Financial Highlights, Overview of the Financial Statements, Financial Analysis of the Government-Wide Statements, Financial Analysis of the Government’s Fund level Statements, Other Information
6. Government-Wide and Fund Level Financial Statements
7. General Fund, Special Revenue Funds, Debt Service Funds, Capital Projects Funds, and Permanent Funds
8. Yes, General Fund- Schedule of Revenues, Expenditures, and Changes in Fund Balances- Budget and Actual-Budget Basis; Notes to Required Supplementary Information (RSI-1)- Budget Basis Reporting; Retirement Plans- Trend Information; Other Postemployment Benefits- Trend Information
9. Yes, the CAFR includes combined statements the main areas addressed are the different types of funds that combine the Assets, Expenditures, Balance Sheets, Changes in Fund Balances, etc.
10. Yes, other supplemental information is included in the CAFR which is Supplemental Schedules this includes Budgetary General Fund- Supplementary Schedule of Revenues, Expenditures, and Changes in Fund Balances—Budget and Actual- Budget Basis; Enterprise Related Grants- Combining Balance Sheet; Enterprise Related Grants- Combining Schedule of Expenditures; Schedule of General Obligation Bonds Authorized and Unissued; Schedule of Revenue Bonds Authorized, Deauthorized and Unissued
11. A. 946,080
12. State Government: Texas Workforce Commission
13. Financial Trends, Revenue Capacity, Debt Capacity, Demographic and Economic Information, and Operating Information

Chapter 3 Continuing Problem

Continuing Problem:

1. It’s in the Financial Section under the RSI- Required Supplementary Information.
2. The city followed a modified accrual basis to prepare its annual operating budget.
3. The actual amounts are on a budgetary basis, there was reconciliation of differences between the GAAP and the budgetary amounts. The largest reconciliation items is reporting of the encumbrances and the reporting of certain transfers. The general fund accrued payroll was recorded on the GAAP basis and the expenditure in the general city responsibilities activity was done on a budget basis.
4. The reported variances were based on the year-end amended budget.
5. No, the CAFR includes the budget-to-actual comparisons of nonmajor funds that I could see.
6. Yes, it’s found in the budgetary general fund balance sheet and it’s not found in the government-wide statement of net position.
7. Yes, the encumbrances get re-budgeted for the following year you can see that in previous years that it consist of adjustments to the expenditures for the year 2017 encumbrances and payments against the prior year encumbrances.

Chapter 4 Continuing Problems

Continuing Problems

1. For both governmental and business-type activities they share the program revenues which include charges for services, operating grants and contribution, and capital grants and contribution.
2. Single Family Property: $56,088,650- 45%

Multi-Family Property: $21,991,357- 17%

Land: $2,005,473- 1%

Commercial Property: $35,465,401- 28%

Personal Property: $10,227,269- 8%

Total Assessed Taxable Value: $125,778,150

3. The greatest amount of directly identifiable revenue is the Urban Growth Management
4. “The basis of accounting recognizes revenues in the accounting period in which they become susceptible to accrual (i.e. both measurable and available). Revenues, other than grants, are considered available when they are collectible within the current period or soon enough thereafter to liquidate liabilities of the current period (defined by the City as collected within 60 days of the end of the fiscal year). Revenues billed under a contractual agreement with another governmental entity, including federal and state grants, are recognized when billed or when all eligibility requirements of the provider have been met, and they are considered to be available if expected to be collected within one year.” (Heart/Thomas,2018)
5. They both have the deferred inflows of resources the CAFR mentioned that it represent an acquisition of net position that is applicable to a future reporting period. The deferred inflow is from Unavailable Revenue, Property Taxes and Interest, Accounts and Other Taxes Receivable, Deferred Gain on Service Concession Agreement, Pensions.
6. The government property tax rate is 0.4418 per $100
7. Tax margin for general governmental purposes of $0.6601 per $100 assessed valuation
8. Taxes are due by January 31 following the October 1 levy date, it does not talk about interest or penalties for property tax.
9. Property Tax: 99.51%

Licenses, Permits and Inspections: 153.21%

Property Owners’ Participation and Contributions: 107.49%

10. No they didn’t generate revenue from traffic fines.
11. The total fund balance is $171,814 that it is the general fund.
12. Yes, the city had four agreements that fell under the tax abatements about 13.3 million.