Analysis of Comprehensive Annual Financial Report Essay

lineationComprehensive Annual Financial Report (CAFR) is a enunciate use by cities, and local governments to provide the public with their mo crystalliseary records severally yr, mend adhering to government accounting standards board (GASB) guidelines. The report presents a comprehensive de terminaline of the account entitys fiscal condition, it provides how cash in mitt are spent and everyocated passim the year.IntroductionI will be covering the Carlsbad CAFR for year cease 2011. The Beautiful metropolis of Carlsbad is located along the coast of southern California. Carlsbad is know for its beautiful beaches, and lagoons which cover 1,000 Acres of nature preserves and hiking trails. Its history dates adventure to 1700, originally be approach part of the United States, it was a territory of Spain and wherefore Mexico, the shoreline of Carlsbads coastal lagoon was home to the indigenous Luiseno and Diegueos Indians for centuries before the arrival ofthe Spaniards ( met ropolis of Carlsbad, n.d.). The current population of the urban center is approximately 107,000 residents positive eye socket is 42 Sq. Miles (City of Carlsbad, n.d). The cities top business consists of hospitality, life science, sporting goods and recreation, and telecommunications.The urban center provides a wide range of services to residents such(prenominal) as police, fire, infrastructure, and world-wide administration, the CAFR provides detailed data or so how these services are funded, and the type of the governmental funds allocated for these services. The metropolis exhibits accountability and hvirtuososty by sharing the CAFR with its residents, in human activity this builds trust in the residents toward their metropolis, trust in that their hard earn bullion is being used in the appropriate services, and these funds are clothe back in to the primary(prenominal)tenance and development of their communities. I will be presenting an analysis of Carlsbads comprehe nsive annual financial report for year ended 2011. The report consists of three sections that are preceding, financial, and statistical.Introductory analysisThe introductory for the city Carlsbads CAFR generates with a five-year vision debate, it is general vision statement, I take note this very encouraging, and reassuring to present it before going into information with the report. It includes the citys economic name and address, programs, policies, and decisions to be implemented by the citys officials it as well as lists the type of leadership, the open government policy, and they type of environmental services and how they are managed. Then one ordure find the garner of Transmittal presented by the citys finance department, addressed to the mayor, city council and citizens of Carlsbad. The garner is to explain wherefore the CAFR is prepared, what is included in the CAFR, the guidelines followed such as Generally Accepted Accounting Principles (GAAP) and that GASB r equirements were preserved in the report the finance department standard an auditing from the independent auditing firm Mayer Hoffman McCann, they similarly included where the results of the auditing can be located which I will cover in the financial analysis later on.In addition the letter offers an audited governments internal conceal and compliance with legal requirements were in place. The letter in any case includes a indite of the city, stating the population, geo graphical location of the city, a section slightly the city ofCarlsbad club vision, budget process that explains precedentity projects for the city, and budgetary controls. Followed by factors affecting financial condition, in this section there are Economic profile, long term financial planning, and cash solicitude. Economic profile covers economic strengths and weakness of the city, the city shows improvement in most of its General fund revenues, and is expecting to affix by $ 2.3 Million or 2.1 percent i n fiscal year 2011-12, also weakness in residential caparison market affected by property tax and 0.2 percent decrease is anticipated in coming year (City of Carlsbad, n.d.)One of the leading factors to the economic crisis in the United States was the housing market, this had affected Carlsbad negatively, house prices fell like many cities in the country, 8 percent in Carlsbad compare to last year, and the future(a) is a map showing the trend in housing prices in the city (City of Carlsbad, n.d.) immense term financial planning is states that it is the Citys Councils goal to ensure that they city remains in good financial health, and the city has taken a number of steps to attain this goal, setting forwards Growth Management Plan, the plan was adopted by the citizens, the plan ensures that all the necessary public facilities are either constructed along with development or that a support plan is in place to pay for the facilities prior to the development of the property ,to en sure this plan is effective, an Infrastructure Replacement parentage was created, this fund sets aside money on a yearly al-Qaida for study maintenance and replacement of its infrastructure(City of Carlsbad, n.d.).The creation of this fun is a brilliant idea, so when the cartridge holder come to make the necessary improvement the city would have the money ready, and it would not have to transfer money from separate governmental funds. As the economy expected to slowly recover, and provide to shop at to the largest aspect of our economy, the housing market. The General fund revenue will take place to cover the ongoing cost as seen in the following graph (City of Carlsbad, n.d).The last part of the letter was informative about cash management, major initiatives and projects. The cash management section covers the investment programs, its procedures as well as its objectives. The major initiativesand projects section goes in to detail about the upcoming projects, it also provid es developments and the maintenance of these projects that are designed to strengthen and improve the community. Followed by the letter of transmittal are the Awards and acknowledgments, the government finance officers association of the United States and Canada (GFOA) awarded the city of Carlsbad the certificate of achievement for excellence in financial reporting to the city of Carlsbad for its CAFR. (City of Carlsbad, n.d.). A network rapscallion called Carlsbadistan which is dedicated to new, events, and all things Carlsbad, stated that city of Carlsbad had been awarded for the 11th time the GFOA during 2009, with this CAFR dating June, 30 2011, this award would be the 12th award received by the city.The Introductory section concludes with a list of the citys elected officials, leadership team, chairpersons, commissions and boards, and finally an organization chart of electorate. I lay out the introductory section and the information presented to be very well put, educational, lax to read and follow, the statistical numbers presented in the economic section, the cash management and investments were informative. This city has earned the 12th GFOA awards received, because they simplified yet very mixed information that is presented year after year in the CAFR.Financial compendiumThe financial section of the CAFR for the city of Carlsbad lists and analyzes the components of financial information for the city, which helps the reader learn the financial condition of the city for the year ended and the projected budgetary for the following year. This section includes Independent Auditors report, Managements Discussion and Analysis (MD&A), and financial analysis of the citys funds. The Independent Auditors report main blueprint is to examine the financial information presented in the citys financial statements, the independent auditors concluded the citys governmental activities, business-type activities, and each major fund was represented in a fair matter , also in compliance with generally accepted accounting principles as of June 30, 2011. MD&A part includes an overview of financial statements, with a chart of the statements, it is informative about the type of financial statements such as Government-Wide financial statements (which are intend to provideaggregated overview of a governments net assets and changes in net assets) (Wilson, E.R., Reck, J.L., & Kattelus), and fund financial statements, I thought it fragmentises down and simplifies the purpose of these statements in financial reporting.Particularly in the Changes in net assets, this has general overview revenues and expenses from 2010-2011, with 11.5% decline from previous year, 2011 revenue is 217.2 (governmental activities 152.4 and business organization-type activities), while expenses 26.1 had an increase of 1.4 %( Governmental activities 21.8 and Business activities 4.3). The chart for sources of revenue can be found in this section, the following are the sources o f revenue for fiscal year 2010-2011 amounted to $217.2 Million, the breakdown was as followed Contributions from property owners 11%, property taxes 26%, income from property & investments 5%, other taxes 4%, sales taxes 4% federal concern 4%, and finally the biggest contributor to revenue was charges for services 31%(City of Carlsbad, n.d.)The following is an overview of the Governmental and Business- type activities on page 25. Governmental activities had an increase in net assets of $21.8 Million, the increase was generated by resume revenues of governmental activities of $ 152.2 Million ( $42.7 zillion in program revenues and $109.5 million in general revenues) offset by $130.3 million in match costs of governmental activities and $ 135,000 transfer to the unassailable waste fun ( City of Carlsbad, n.d.) And for those who are visual learner like me, here is the visual aid to show the breakdown of the Governmental activities program revenues and expenses (City of Carlsbad, n.d.)Business-type Activities components are water, golf course, wastewater, and solid waste, for these program revenues totaled $56.5 million for the year, and functional expenses $60.8 million(City of Carlsbad, n.d.). Financial Analysis of the citys funds provides information regarding Governmental funds and Proprietary funds. Governmental funds are near-term, inflows, outflows and balances of spendable resources that are essential for assessing the citys financing requirements. Under the Governmental funds one can find the General fund statement of revenue, expenditures, and changes in fund balance, the citys revenue and expenditure for 2011 were as followed Revenues saw an increase of 2.6% from previous year, total $111.6 Million, largest element of the revenue was taxes at $95.5 Million. WhereasExpenditures largest element was public safety $44.2 Million, total expenses were 102.1 an there was an increase 1.0%. Ending fund balance in the statement was $130.4Million (City of Car lsbad, n.d.).As for the purpose Proprietary Funds in addition to operate revenues and expenses, is to provide short and long term financial information about the citys Business-type activities, the operating revenues were $35.1 Million which exceeded operating expenses that were $747,000, this increase was due(p) to the increase in water sales revenue to rates (City of Carlsbad, n.d.). This increase has a bitter sweet side to it, in one hand in revenue is a sign that the city is doing great down the stairs light of this depressive economy, on the other hand citizens of this could use a break from these increasing rates. Before moving on to the statements the city listed the contact information for the citys financial management for questions about CAFR.Notes to financial Statements begin on page 59 of the report, it includes when the city was incorporated, a description and scopes of the reporting entity which have several components, I consider it a great track of presenting a conclusion for the report, it presents some of the information presents earlier in the report, such as Governmental wide and fund financial statements, the notes states why they inform and how they were reported. Also lists the type of the governmental funds included in the report such as general funds, and redevelopment debt service funds, as a reader I appreciated how each of these funds were defined and truly listed. In addition a list of the enterprise fund were introduced in this section, describing what they are for example Carlsbad municipal water district, golf course, waste water, and so on, and where are those funds allocated.Financial StandingOverview of the citys financing over the past 10 fiscal years shows that the city has been doing great, and is experiencing a growth considering the tough economic situation the country has been facing, looking at the total net assets supports that growth. In 2002, city of Carlsbad had $740,000 in total net assets, while in 2011 th e total net assets were $17Million (Carlsbad CAFR 2011, 120) I think one of the main reasons the economy in this city is holding up relatively well, is due to the housing market, the city location is the main factor why a lot of home buyers gravitate towardsit.ConclusionThe CAFR for the city of Carlsbad was exceptionally interesting, informative, and easy to read and follow. Now wonder this city has earned the GFOA for neat 12 years. The introductory, financial and statistical sections had graphs and charts to explain and show how funds for this city was spent, which more so help the visual learners in the public to keep the complicated accounting components of the report.References1- The city of Carlsbad CAFR webpagehttp//www.carlsbadca.gov/services/departments/finance/Documents/2011%20CAFR.pdf 2- Carlsbadistan web pagehttp//www.carlsbadistan.com/?p=56233- Accounting for Governmental and Nonprofit Entities(15th edition) 4- APA Reference Guidehttp//datel200.nu.edu/web/documents/A PA.pdf