Using the annual report obtained for Exercise 1–1, answer the following questions:
a. Look at the Statement of Fiduciary Net Assets. Which fund types are includ ed? Is the Statement prepared in a format in which Assets Liabilities – Net Assets? Are net assets shown as being held in trust for employee benefits and other purposes? Look at the Statement of Changes in Fiduciary Net Assets. Has the government refrained from including agency funds in that statement? Are increases and decreases shown as additions and deductions, rather than revenues and expenses? What are the main additions? What are the main deductions?
b. Are agency funds included in the Statement of Fiduciary Net Assets? If so, look to the notes or combining schedules and list the individual agency funds. Has the government limited itself to agency funds that are held for individuals, organizations, or other governments—not for other government funds? Do agency funds report only assets and liabilities, not net assets? Does the government report a Statement or Schedule of Changes in Assets and Liabilities for agency funds?
c. Does the government have private-purpose funds? If so, list them. Describe the purposes for which they exist. Can you tell if any of those funds are endowments, and have resources permanently restricted? How much income was generated by each of the private-purpose funds, and how much was released for use? Does the government report escheat property as private-purpose funds? If so, indicate the nature of the process by which property is released and for what purposes.
d. Does the government report investment trust funds? If so, describe the nature of the external investment pool. Which other governments are included? Has your government refrained from including its own investments in the investment trust funds?
e. List the pension funds included in the financial statements. From the notes, list the other pension plans that are available to employees of your governmental unit. Are those plans agent plans or cost-sharing plans? Defined contribution or defined benefit? Are required disclosures made in the notes for all pension plans, whether or not the plans are included as trust funds? Are the two RSI schedules included in your report (when defined benefit plans are reported)? Look at the actuarial status of the plans and comment about the potential impact of pensions on the financial condition of the government.
f. Look at the note disclosures regarding investments. Are investments reported at fair value? Do the notes disclose the realized gains or losses on investments? Do the notes categorize investments based on risk? When the government creates internal investment pools for management purposes, does the government report the individual investments and income from those investments in the funds that provided the resources?
Obtain a copy of a recent Comprehensive Annual Financial Report (CAFR). These may be obtained by writing the director of finance in a city or county of your choice. Your instructor may have one available for you, or you may obtain one from the GASB Web site: www.gasb.org. It would be best, but not absolutely necessary, to use a CAFR that has a Certificate of Excellence in Financial Reporting from the Government Finance Officers Association. You will be answering questions related to the CAFR in Chapters 1 through 9. Answer the following questions related to your CAFR.
a. What are the inclusive dates of the fiscal year?
b. Write the name and address of the independent auditor. Is the auditor’s opinion unqualified? If not, describe the qualification. Is the opinion limited to the basic financial statements, or does the opinion include combining and individual fund statements?
c. Is the report separated into the three distinct sections: introductory, financial, and statistical? Does the report have a “single audit” section at the end? (A few CAFRs include their single audit report in the CAFR—see Chapter 13 for more detail of the single audit requirements.)
d. Does the report contain an organization chart? A table of contents? A list of principal officials? A letter of transmittal? Is the letter of transmittal dated and signed by the chief financial officer? List the major items of discussion in the letter of transmittal.
e. Does the report include a Management’s Discussion and Analysis? List the major items of discussion. f. Does the report include the government-wide statements (Statement of Net Assets and Statement of Activities)?
g. Does the report reflect fund financial statements for governmental, proprietary, and fiduciary funds? List those statements. List the major governmental and proprietary funds (the funds which have separate columns in the governmental and proprietary fund statements).