NORTHCENTRAL UNIVERSITY
ASSIGNMENT COVER SHEET
Student: Bayo E Cary
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| AC7020-8 |
John Halstead |
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| Nonprofit and Government Accounting |
Assignment 2 |
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I enjoyed the assignment. I will try to improve, my quality and quantity of work, every week. Thank you. I am submitting the CAFR by email to you, I could not figure out, how to attach it, to my final homework, assignment. I will send the CAFR to you, by NCU email.
Faculty Use Only
<Faculty comments here>
<Faculty Name> <Grade Earned> <Date Graded>
July 24, 2016
Northcentral University (NCU) Doctoral Studies:
Business Administration, Specialization: Advanced Accounting
Assignment 2: Non Profit Organizations: Comprehensive Annual Financial Report (C.A.F.R.): City of Washington, DC Year 2015- Financial Accounts Audit Exercise
PhD Candidate Student: Miss. Bayo Elizabeth Cary, AA, BA, MLIS
Current Location: Homeless in United States 6 years now
West Palm Beach, FL
Hostage and Political Prisoner in the United State
Applicant for Political Asylum in Europe
Current Email: bayoelizabeth.cary@yandex.com
Telephone: 352-219-1872
Assignment Directions:
A Comprehensive Annual Financial Report (CAFR) is a government’s complete accounting of: “net worth.” The CAFR, was established as a public accounting record, and is mandatory by Federal requirements, for all local governmental entities, within the United States.
Obtain a CAFR from a city or county governmental entity-these are usually available as a .pdf download from the entity’s web site. Using the questions in exercises and problems 2-1 in Chapter 2, evaluate the CAFR, according to the criteria presented. Attach a copy of the report as an appendix to your paper, when you submit your assignment, and upload it online.
Exercises and Problems 2-1 Examine the C.A.F.R.:
Examine the financial statements included in the financial section and answer the following questions, as they pertain to, the city of: Washington, DC, US, based on information made available to the general public online, in the most recent CAFR available-2015.
Comprehensive Annual Financial Report Office of Financial Management:
Last year, in 2015, when I initially completed this assignment, I chose the City of Gainesville, FL US, for my: CAFR, audit accounts student exercise. I grew up, in Gainesville, FL US, and, I attended and graduated from, the University of Florida, research and developmental high school, as well as, Santa Fe Community College-which is now just: Santa Fe College, as well as: The University of Florida-itself.
My impetus, for auditing the accounts, of the City of Gainesville, FL US, was, a continued lack of employment, in my hometown of Gainesville, FL, although, presumably, I still had friends, in town working, who, quite possibly knew me well, knew that I was homeless, and quite capable academically, and of employment. Because, I am under the impression, if people care about you, and they are aware of the fact that you are in need, and you can help yourself-with even a little assistance from the outside, such as: employment, etc.-that, family or friends, should they exists anywhere-would, because they do care, that you should live-offer you some sort of employment, that, you very well qualify for.
My first Master’s Degree, from: Florida State University, is in the area, of: Library and Information Science, with a specialization, in information science. Therefore, the first employment positions, that I applied for, in Gainesville, FL, were positions, in the field, of library sciences, at both: the public libraries, and, the private university libraries. When-after several weeks, I received no response, to my applications for work, at the local libraries, it was at that time, that I began to apply, for employment positions, in other fields-not even closely related, to library studies.
I still was qualified for the employment positions, for which I applied-however, I was soo qualified for the position, that I was: “overqualified.” I had some choices, in Gainesville, FL, in regards to where to apply for work, and then again, it was not until-even after my request for employment as a janitor, was rejected, that I then decided, to perform and independent audit, of the accounting books, of the entire city, of: Gainesville, FL, US. What I discovered, in my independent analysis, of the accounting records, for the city of: Gainesville, FL, US, was not positive information. Gainesville, FL, has been-as of the 2015 CAFR: “cooking the books,” and engaging in many forms, of illegal accounts management, for at least 10 years.
I was illegally, and immediately, then, shipped off by my adopted family-who have completely abandoned me, to a mental hospital, in the Gainesville, FL area: Shands At Vista, for many reasons-none of them pertaining to mental health problems, as defined by the: DMS IV. In large part, my immediate hospitalization, for mental health problems, that were none existent-again, was a response to, the: “A” grade that I received, on my assignment-this very same one, that was-instead of being focused, on: Washington, DC, US-focused, on: Gainesville, FL US. I am now, because of continued torture, abuse, neglect, and complete abandonment, by my adopted family, in the United States, an applicant for political asylum, in Europe.
At present, I am located, in: West Palm Beach, FL-so, I will not decide, to audit the accounts, of the city of West Palm Beach, FL. However, because of my, pending applications, for political asylum, in Europe, I will be flying, from West Palm Beach, FL, to, Washington, DC-to speak to various embassies there, including the: Russian Embassy-in about, 2 weeks-long after this Northcentral University doctoral studies homework assignment, has been emailed, to all of my International contacts-who are assisting me, with my political asylum application process, and, posted online, at several of my blog spots, for interesting reading, and important information about the International state of affairs, as it relates, to: terrorism, America, and the Obama Administration-that I happily share, as a freelance reporter.
What is in the CAFR?
There are basic guidelines, for the presentation of information, with in the yearly required: CAFR presentation, of information, about an American city’s: financial accounts, and money management. However, due to the fact, that there is some flexibility, in the presentation requirements, for the information, presented in a: CAFR, when I am communicating information, on: “the CAFR,” I am specifically, only referring to, the: Washington, DC, CAFR-at this point, and only the one, that has been made available online, in PDF format-as required, from the year: 2015.
Although, the city, of Washington, DC, received, in 2015, a good review, by what is reported as, an independent auditor, of their, 2014 financial accounting, that in no way means, that all the information, required to be in the city’s CAFR-is present. A good review, by an independent auditor, of a city’s financial management and accounting, does not mean, that the city did anything correct-at all. In 2015, I, as a student still, and working towards my PhD, in business administration, with a focus, on: advanced accounting, did this exact same exercise, however, at that time, my focus, was: the city of Gainesville, FL US-instead of Washington, DC, US.
The city of Gainesville, FL, US, in: 2015, had received, a total, of at least 9 years, of unqualified, positive reviews, with complete approbation, for the accounting standards, and techniques, that are applied to all financial matters, through the city of Gainesville, FL, US. However, when I, as a doctoral student, of: advanced accounting, looked closely at the accounting records, provided by, the city of Gainesville, FL, in their: 2014 CAFR, I found-after reading closely in my university text books, regarding what financial management techniques, are: approved, allowed, legal, and functional, etc. , within the United States: “Red Flags’-everywhere!
Too often, people are fooled, by outside appearances-they see a White lab coat, and they think, the person wearing that lab coat, must be a well-qualified medical doctor. Or, people see a police officer in a uniform, and a person might think, this man or woman, in the city’s finest uniform, must be a professional, working to keep me safe, and-unfortunately, that is not always the case either.
Then too, with a: CAFR, from any city in the United States.one might read, a positive review, from what is supposed to be, an unqualified, independent from the city-auditor’s comments, in regards to the published report, and the auditor, presumably qualified for their employment position, may write about how wonderful the city is, and how no financial accounting or management problems, or issues exist, and, the auditor’s commentary-may all be, complete: lies and nonsense-i.e., the: city of Gainesville, FL US example, and the: CAFR, from: 2014.
The Washington, DC CAFR, from: 2015, is presented under three major headings, which divide the report, into three sections. The three major subheadings, are listed above, a number of sub-headings-introductory, financial, and statistical:
- Introductory section:
- Letter of Transmittal
- Organizational Chart
- Principal Officials
- GFOA Certificate of Achievement.
- Financial section:
- Independent Accountant Report
- Management’s Discussion and Analysis
- Basic Financial Statements
- Index to The Notes to The Basic Financial Statements
- Required Supplementary Information
- Other Supplementary Information General Fund
- Non-major Governmental Funds
- Fiduciary Funds
- Supporting Schedules.
- Statistical section:
- Financial Trends
- Revenue Capacity
- Debt Capacity
- Demographic and Economic Information
- Operating Information. (Alexander, C., Omisore, D, & Slack, B. 2015, p. Table of Contents)
What Are C.A.F.R.s?
A CAFR, is a financial accounting report, that is mandated by the United States government, for all US government entities, that can be considered, a separate and supportive operating body, such as, a city. CAFR, have a tradition, they were initially created, in order to monitor and record, the, influx, and out-flux, of money, within a stated: “City,” circumference, in order to have a hard copy document to review, to track, how public money, from the US government, had been spent, in the previous fiscal year.
A CAFR, serves the above mentioned, specific service, for helping the United States government, to have some accountability, on how, US tax payer’s money, is spent, in the public arena. A CAFR, like other United States government creations, serves the purpose, that it is intended to serve, and, then too, there are more contemporary members, of the US financial community, who would improve upon the services, that a standardized: CAFR provides, by, in some ways, altering, how the information is: collected and processed, and how the financial information is stored and how often it is shared, as well as, how much flexibility, a chief financial officer has (CFO)-in contributing information, to the CAFR-in general (N.A., Jul 2016, p.3).
IMPROVED REPORTING THROUGH:
- Transferring the burden of manual work from employees to the
system, which frees staff time for more valuable tasks such as
analyzing the data;
- Creating new reports that present key financial information in clear,
useful formats for all stakeholders, including citizens and the media;
- Responding to requests for ad hoc reports the CFO can use in
advising decisions made by government leaders;
- Keeping up with new reporting requirements and frequencies;
- Centralizing and consolidating reporting tools in the cloud for a
streamlined user environment and reduced IT management. (N.A., Jul 2016, p.5)
FASTER REPORTING THROUGH:
- Automating the tasks of collecting and calculating data,
as well as compiling and formatting reports;
- Streamlining activity for reviewing the content of data
sets, draft documents and presentation slides;
- Defining processes so they become sustainable year
after year, even with staff changes;
- Taking advantage of mobile technologies
to simplify report production tasks
and review activity. (N.A., Jul 2016, p. 5)
Only time will tell, if the United States government, will support a push, for a new and revised standardized, computer software system, that, can essentially create CAFR’s, for a city, instead of the current, high reliance, on a city’s CFO, and then too, many contributions, from other departments at a city, that handle government money.
Common problems in manual processes:
- Extensive use of MS-Word and MS-Excel, shared via unsecure e-mail;
- Collaboration is difficult;
- Manual process is repeated each reporting period.
Significant risks of such manual processes:
- Errors in unstructured data collection from multiple locations;
- Lack of accuracy from re-keying data and information into multiple reports;
- Low productivity because of linear workflow with multiple bottlenecks;
- Little or no version control;
- Visibility into report status difficult;
- Long reporting cycle times prevent value-added analysis;
- Report data integrity and confidence issues;
- Last-minute changes are not easily incorporated. (Datt, S., O’Brien, D., Sagnip, S. M. 2012, p. 3)
I think that ideally, a computer program, to do most of the work for you, like a calculator-for almost every math problem, may seem like an attractive improvement. However, realistically, due to the always present slew, of ethical issues, pertaining to money: how much is spent, who spends the money, what the money was spent on, who benefits from the expenditure, and whether or not any money went missing, or, if the books are balanced correctly-that, it is preferable, that the CFO, continues to handle, the majority of the burden, of compiling, an annual CAFR, for any give US city.
When you remove, the person in charge, of any given accounting: aggregate accounting and reporting task, you remove, the responsibility, assigned to an individual, such as a CFO, for ensuring, that the entire process, of managing city money, and recording revenues, and expenditure, has been done accurately and responsibly. Without, a managing person, to account responsibly, for the financial and managerial accounting task at hand, then, if something goes terribly wrong-no one is responsible, for any of the many mistakes, that can, and do occur. And, that, is too ironic, because it, in turn, obviates the reasons, and need, for the development, of the accounting records-the CAFR-in the first place.
*Chapter questions continue, with, CAFR specific queries, regarding the: Washington, DC, 2015, CAFR:
*Government-wide Statements:
- What are the titles, of the 2 government-wide statements?
(Alexander, C., Omisore, D, & Slack, B. 2015, p. 25)
BASIC FINANCIAL STATEMENTS:
The Two Government-wide Financial Statements:
- 1) Statement of Net Position;
- 2) Statement of Activities. (Alexander, C., Omisore, D, & Slack, B. 2015, p. 25)
- Are total assets larger for governmental activities or business-type activities?
The financial report, from the city of Washington, DC, is much more difficult to read, than the one, from Gainesville, FL. There is a great deal of text, and conversation, and the data, is presented, in very small, and blurry images, that are too difficult to read-for the most part. The Washington, DC 2015, CAFR-is presented, more like a book, and less like a financial analysis, and record of the financial activities of the city, for the past 10 years. Even if the information, is correct, I find that the presentation of the information, is too user unfriendly.
(Alexander, C., Omisore, D, & Slack, B. 2015, p. 30)
Business-Type Activities:
Although, the city of Washington, DC reports, and increase, in revenues, from business-type activities, from the year: 2014, to the year; 2015, the overall earnings, of the business-type activities, on the pie chart, of general fund revenues, is only: 20% (Alexander, C., Omisore, D, & Slack, B. 2015, p. 30).
General Fund:
General fund expenditures include, the following divisions, or, area-fund accounts:
- Economic development and regulation;
- Public safety and justice;
- Public works; Public transportation. (Alexander, C., Omisore, D, & Slack, B. 2015, p. 30).
As long as the city of Washington, DC, is able to legally cover all expenses, with revenues earned, from general fund accounts, then, the pithy amount of money earned, by the city’s business-type accounts, is not a concern-really.
However, the problem that the city of Gainesville, FL, US ran into, was that, the only real revenue that was being earned by the city, was through, the business-type government fund accounts. Instead of increasing business-type activities, to cover mounting expenses, the city of Gainesville, FL: “cooked the books.” By spending money, that should have been maintained in savings funds, for emergency situations, participated in risky investments, and, borrowed too much money, over, and over again, to cover expenses-again, instead of looking for other legal ways, to cover the high amounts of debt.
Attmore, & Ives (Spring 2015), talk about the new requirements, of the GASB, and they state, that there is too much flexibility, in how an auditor, can review, how financial fund information, for a city, is presented. Attmore and Ives, state, that because a city’s financial information, can be presented, and favorably reviewed, in several ways, the final presentation, of a city’s CAFR, can appear, as though the city is experiencing no fiscal difficulties at all-whereas, money may be, in actuality, far too lacking, for more than one of the major funds, and, for many of the other funds-as well (p. 3).
- Which function or program has the highest net cost?
City of Washington, DC, C.A.F.R., 2015 p. 28
The highest expenses are Human Support Services:
Expenses: Public safety 4,484, 943.00
- What kinds of general revenues are available to cover the net cost of governmental
activities?
City of Washington, DC, C.A.F.R., 2015 p.28
Revenues:
Program Revenues:
- Charges for services;
- Operating grants and contributions;
- Capital grants and contributions.
General Revenues:
- Property Taxes;
- Sales and use taxes;
- Income and franchise taxes;
- Other taxes;
- Non tax revenues.
- Were business-type activities “profitable”?
City of Washington, DC, C.A.F.R., 2015 p.30
The city of Washington, DC, reports an increase, in funds earned by business-type activities, of: $ 51,996.00. The increase is listed, as a: %19.62 increase. Although, the almost 20% increase, in money earned, by Washington, DC, from business-type activities, when comparing: 2015 CAFR, to the year before, the overall contribution, of monies earned by business-type funds, in comparison to general government fund earning, is not that significant, at, only: 20%-total.
City of Washington, DC, C.A.F.R., 2015 p.35
Below, are two charts, that are presented in the Washington, DC CAFR, 2015, that give a visual summary, of how much money was earned, by business-type activities.
(Alexander, C., Omisore, D., & Slack, B. 2015, p. 35)
- Are there any component units that are discreetly presented as a column on the government-wide financial statements?
There are several component units listed on the Washington, Dc, CAFR, 2015 p. 44:
- Health Benefit Exchange;
- Convention Center;
- Not-for-profit Hospital Corporation;
- Housing finance.
*General Fund Questions:
- What title is given to the fund that functions as the General Fund?
(Alexander, C., Omisore, D, & Slack, B. 2015, p. 33).
General Fund
The general fund, in the Washington, DC, CAFR, 2015, is called just that-the general fund, however, there are several sub-categories:
Revenues and other Sources:
- Taxes;
- Taxes and licenses and permits;
- Fines and forfeits;
- Charges for services;
- Miscellaneous;
- Other sources;
- Bond proceeds;
- Fund balance released from restrictions;
- Inter-fund transfer from lottery and games;
- Inter-fund transfer-others. (Alexander, C., Omisore, D, & Slack, B. 2015, p. 39).
Total Revenue and Other Sources:
- Governmental direction and support;
- Economic development and regulation;
- Public safety and justice;
- Public education system;
- Human support services;
- Public works;
- Public transportation. (Alexander, C., Omisore, D, & Slack, B. 2015, p. 39)
All of the above listed, funds, in aggregation, are the composite general fund (Alexander, C., Omisore, D, & Slack, B. 2015, p. 39).
- Does the report state the basis of accounting used for General Fund?
I was not able to specifically identify the method of accounting, utilized, by the city of Washington, DC, for their 2015, CAFR. However, I am aware of the fact, that modified, actuarial accounting, is generally, utilized, for government accounting. Although, I found this particular CAFR, to be more verbose, and less data table intensive, the data sets, that I did view, were similar to those that were presented, as modified accrual accounting, by the city of Gainesville, FL, in the 2014 CAFR.
Read more: http://www.ehow.com/info_8636987_modified-accrual-accounting-necessary.html
The City of Gainesville, FL, uses modified accrual accounting, on all government, fund budgets.
- What types of assets are included on the governmental funds balance sheet?
City of Washington, DC, C.A.F.R., 2015, Exhibit 2-a
Balance Sheet Assets:
- Cash and cash equivalents;
- Due from Federal government;
- Accounts receivable, net;
- Due from component units;
- Cash and cash equivalents restricted;
- Other long term assets. (Alexander, C., Omisore, D, & Slack, B. 2015, p. Exhibit 2-a).
- Do current and noncurrent liabilities appear on the balance sheet?
Only current liabilities are listed, on the general funds balance sheet.
(Alexander, C., Omisore, D, & Slack, B. 2015, p. Exhibit 2-a)
Current and none current liabilities, are listed on the statement, of net position.
(Alexander, C., Omisore, D, & Slack, B. 2015, p. Exhibit 3-a)
- Is this reporting consistent with the basis of accounting being followed?
BusinessDictionary.com
Modified Accrual Basis Accounting:
Method under which revenues are recognized in the period they become available and measurable, and expenditures are recognized in the period associated liability is incurred. Most government accounting follows this method. Also called modified cash basis accounting. (Para.1)
The City of Gainesville, FL C.A.F.R., is based on the accounting principles of: general accepted accounting principles, and, the modified accrual basis accounting. p.117 (82)
*Other Governmental Fund Types:
- List the names of governmental funds other than the General Fund that are included as major funds in the fund financial statements.
The Washington, DC, CAFR, 2015, lists the following major funds, as part of, the governmental funds-reported:
- General Fund;
- Federal and private resources fund;
- Housing production trust fund;
- General capital improvements fund. (Alexander, C., Omisore, D, & Slack, B. 2015, p. Note 1: Basis of Presentation)
- Identify which of the major funds, if applicable, are special revenue fund, debt service fund, capital project fund, and permanent fund?
(Alexander, C., Omisore, D, & Slack, B. 2015, p. Note 1: Basis of Presentation)
The Federal and Private resources fund, is used for: “specified/special fund,” expenditures (Alexander, C., Omisore, D, & Slack, B. 2015, p. Note 1: Basis of Presentation). There is no information provided, in regards to, what the specifc, :special funding” projects are, that receive monies, from, the city of Washington, DC, Federal and Private resources fund.
*Proprietary Funds:
- List the names of the fiduciary funds included in the fund financial statements.
(Alexander, C., Omisore, D, & Slack, B. 2015, p. Note 1: Summary of Significant Accounting Policies)
- Identify whether each of these is an agency fund, investment trust fund, pension trust fund, or private-purpose trust fund?
Both of the fiduciary funds are listed as, revenue earning business-type accounts. The money earned by both: the lottery fund, and the unemployment compensation fund, are investment trust funds. The money earned by the lottery, is reinvested, back into supporting, continued lottery operations. The revenue earned by the unemployment compensation fund, is reinvested back into the work force, after an employee quits, after a certain length of service, working, for any given employer.
- Do the financial statements provide evidence as to what basis of accounting these funds use?
Yes, they look to be the result, of modified accrual accounting, for United States
government.
*Notes to the Financial Statements:
- What significant accounting policies are discussed in the first note?
The entire CAFR report, is re-discussed, in much more details, with lengthy explanations, in the notes.
- Does the note describe the entities that are included as component units?
(Alexander, C., Omisore, D, & Slack, B. 2015, p. Note 1: Summary of Significant Accounting Policies)
The city of Washington, DC, has five component units, that are listed, on the District of Columbia, CAFR, balance sheets:
- Health Benefit Exchange Authority;
- Not-for-profit Hospital Corporation;
- University of the District of Columbia;
- Washington Convention and Sports Authority. (Alexander, C., Omisore, D, & Slack, B. 2015, p. Note 1: Summary of Significant Accounting Policies)
- Does it list entities that are not considered component units?
(Alexander, C., Omisore, D, & Slack, B. 2015, p. Note 1: Summary of Significant Accounting Policies)
Yes, The District of Columbia Tobacco Settlement Financing Corporation, it is technically, a blended component unit, as opposed, to the simpler, just plain, component unit.
- Are there any notes that disclose (1) any material violations of legal provisions (2) deficit fund balances or net assets, or (3) significant commitments or contingencies?
No budgetary violations, are specifically stated, in the notes, following the CAFR. However, the existence, of budgetary restraints-as controls, and, the existence, of: “encumbrances,” are briefly discussed. The fact, that the city, of Washington, DC, recognizes, the need to have policy in place, to prevent waste of: United States-state and Federal monies, indicates, that, unnecessary spending, and over-spending, does occur, from time to time (Alexander, C., Omisore, D, & Slack, B. 2015, p. Note 1: Summary of Significant Accounting Policies).
Works Cited
Alexander, C., Omisore, D., & Slack, B. (2015). City of Washington, DC CARF 2015 and Data
Sets [Data file]. Retrieved from http://cfo.dc.gov/page/annual-financial-report-cafr
Attmore, R. H., Ives, Martin (Spring 2015). GASB’s Governmental Fund Reporting Model Is
Seriously Flawed. Journal of Government Financial Management. vol. 64 (issue 1). Retrieved from http://eds.a.ebscohost.com.proxy1.ncu.edu/eds/pdfviewer/pdfviewer?vid=1&sid=7b7413a0-83b2-44ee-bae9-ed01e9951cfc%40sessionmgr4010&hid=4102
Datt, S., O’Brien, D., & Sagnip, S. M. (2012). The Last Mile. Journal of Government Financial
Management. vol. 61 (issue 1). Retrieved from http://eds.a.ebscohost.com.proxy1.ncu.edu/eds/pdfviewer/pdfviewer?vid=1&sid=7b7413a0-83b2-44ee-bae9-ed01e9951cfc%40sessionmgr4010&hid=4102
Kattelus, Susan C., Reck, Jacqueline L., & Wilson, Earl R. (2010). Accounting for Governmental
& Nonprofit Entities. Boston: McGraw-Hill Irwin.
Modified Accrual Basis Accounting. (n.d.). In BusinessDictionary.com. Retrieved from
http://www.businessdictionary.com/definition/modified-accrual-basis-accounting.html
No Author. (Jul 2016). 5 Trends Creating New Demands on Government Reporting.
Governing, vol.29 (issue 10). Retrieved from http://eds.b.ebscohost.com.proxy1.ncu.edu/eds/pdfviewer/pdfviewer?vid=1&sid=b873d37f-c7a9-4cf2-83b3-dc9db1306a63%40sessionmgr106&hid=120
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