Analysis of Comprehensive Annual Financial Report Essay

AbstractComprehensive Annual pecuniary Report (CAFR) is a report used by cities, and local giving medications to get laid through the usual with their fiscal records each year, while adhering to government accounting standards advance (GASB) guidelines. The report presents a large picture of the reporting entitys financial condition, it allow fors how farm animals ar spent and al hardened throughout the year.IntroductionI give be covering the Carlsbad CAFR for year ended 2011. The Beautiful metropolis of Carlsbad is located along the coast of southern California. Carlsbad is known for its beautiful beaches, and lagunes which cover 1,000 nation of nature preserves and hiking trails. Its history dates back to 1700, before becoming ruin of the United States, it was a territory of Spain and then Mexico, the shoreline of Carlsbads coastal lagoon was home to the indigenous Luiseno and Diegueos Indians for centuries before the arrival of the Spaniards (City of Carlsbad, n .d.). The current universe of the urban center is approximately 107,000 residents correspond area is 42 Sq. Miles (City of Carlsbad, n.d). The cities top strain consists of hospitality, life science, sporting goods and recreation, and telecommunications.The metropolis provides a wide range of work to residents such as police, fire, infrastructure, and frequent administration, the CAFR provides detailed teaching about how these work are gambolded, and the attributecast of the governmental strains totallyocated for these services. The urban center exhibits accountability and vera urban center by sharing the CAFR with its residents, in turn this builds consecrate in the residents toward their urban center, trust in that their hard earn coin is being used in the appropriate services, and these silver are put back in to the precaution and development of their communities. I will be presenting an outline of Carlsbads comprehensive annual financial report for year ende d 2011. The report consists of terce instalments that are introductory, financial, and statistical.Introductory summaryThe introductory for the city Carlsbads CAFR begins with a five-year vision statement, it is general vision statement, I find this very encouraging, and quieten to present it before going into depth with the report. It includes the citys sparing goal, broadcasts, policies, and decisions to be implemented by the citys officials it also lists the causa of leadership, the open government policy, and they type of environmental services and how they are managed. and so integrity sack find the Letter of Transmittal presented by the citys finance department, addressed to the mayor, city council and citizens of Carlsbad. The letter is to explain wherefore the CAFR is prepared, what is included in the CAFR, the guidelines followed such as oecumenicly Accepted history Principles (GAAP) and that GASB requirements were preserved in the report the finance department received an auditing from the self-employed person auditing firm Mayer Hoffman McCann, they also included where the results of the auditing can be located which I will cover in the financial analysis later on.In ontogenesis the letter offers an audited governments internal control and form with legal requirements were in place. The letter also includes a profile of the city, stating the population, geographical location of the city, a air division about the city of Carlsbad community vision, budget process that explains anteriority projects for the city, and budgetary controls. Followed by computes affecting financial condition, in this section in that respect are sparing profile, long term financial come back, and cash management. Economic profile covers economic strengths and weakness of the city, the city shows improvement in roughly of its General fund revenues, and is expecting to profit by $ 2.3 Million or 2.1 pct in fiscal year 2011-12, also weakness in resid ential housing market affected by station tax and 0.2 per centum decrease is anticipated in coming year (City of Carlsbad, n.d.)One of the spark advance factors to the economic crisis in the United States was the housing market, this had affected Carlsbad negatively, house prices deteriorate like many cities in the country, 8 percent in Carlsbad contrast to last year, and the pursual is a chart showing the trend in housing prices in the city (City of Carlsbad, n.d.)Long term financial externalisening is states that it is the Citys Councils goal to envision that they city clay in good financial health, and the city has taken a deed of steps to attain this goal, setting forth Growth Management Plan, the protrude was adopted by the citizens, the plan ensures that all the necessary public facilities are either constructed along with development or that a financing plan is in place to pay for the facilities prior to the development of the property ,to ensure this plan is effec tive, an Infrastructure Replacement Fund was created, this fund sets aside money on a yearly basis for major maintenance and second-stringer of its infrastructure(City of Carlsbad, n.d.).The creation of this fun is a brilliant idea, so when the time come to make the necessary improvement the city would have the money ready, and it would non have to transfer money from other governmental funds. As the economic system expected to slowly recover, and provide to support to the largest aspect of our economy, the housing market. The General fund revenue will continue to cover the ongoing terms 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 initiatives and projects section goes in to detail about the upcoming projects, it also provides developments and the maintenan ce of these projects that are intentional 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) purityed the city of Carlsbad the certificate of achievement for righteousness in financial reporting to the city of Carlsbad for its CAFR. (City of Carlsbad, n.d.). A webpage 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 twelfth award received by the city.The Introductory section concludes with a list of the citys elected officials, leadership team, chairpersons, commissions and boards, and in conclusion an organization chart of electorate. I found the introductory section and the cultivation presented to be very well put, educational, easy to read and follow, t he statistical come presented in the economic section, the cash management and investments were informative. This city has acquire the 12th GFOA awards received, because they simplified yet very complex information that is presented year afterwards year in the CAFR.Financial AnalysisThe 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 understand the financial condition of the city for the year ended and the projected budgetary for the following year. This section includes separatist Auditors report, Managements Discussion and Analysis (MD&A), and financial analysis of the citys funds. The Independent Auditors report main solve is to contemplate the financial information presented in the citys financial statements, the autarkical auditors concluded the citys governmental activities, business-type activities, and each major fund was represented in a fair matter, also in comp liance 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 intended to provide aggregated overview of a governments make assets and changes in net assets) (Wilson, E.R., Reck, J.L., & Kattelus), and fund financial statements, I thought it breaks 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 old year, 2011 revenue is 217.2 (Governmental activities 152.4 and channel-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 of revenue for fiscal yea r 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 aid 4%, and at last 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 total revenues of governmental activities of $ 152.2 Million ( $42.7 million in program revenues and $109.5 million in general revenues) offset by $130.3 million in total costs of governmental activities and $ 135,000 transfer to the solid blow fun ( City of Carlsbad, n.d.) And for those who are optic 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 componen ts 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 trademarked 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. Whereas Expenditures largest element was public safe $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 Carlsbad, n.d.).As for the purpose Proprietary Funds in addition to operating 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 to the increase in water sales revenue to rank (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 swell under 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 take 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 definition and scopes of the reporting entity which have several components, I consider it a bang-up way 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 reported 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 delimit and actually 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, face at the total net assets supports that growth. In 2002, city of Carlsbad had $740,000 in total net assets, while in 2011 the 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 towards it.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 consecutive 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 grasp 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 scarperhttp//datel200.nu.edu/web/documents/APA.pdf