Daiga 16
ANALYSIS OF A GOVERNMENTAL ENTITY’S FINANCIAL STATEMENTS
City Of Gaithersburg, MD
FY 2012
For The Fiscal Year Ended June 30, 2012
By
Kahmandin W. Daiga
University Of MD – Eastern Shore
ACCT 405
May 2, 2013
Title of Contents
1. Transmittal letter…………………………………………………Page
3
2. Executive Summary………………………………………………Page
5
3. General Information………………………………………….......Page
5
4. Governmental Entity’s Funds............................................................Page
7
5. Evaluation of Financial Conditions...................................................Page
8
6. Illustrations/References/Other material.........................................Page
13
7. Governmental-wide financial statements........................................Page
14
8. General Fund financial statements...................................................Page
16
May 2, 2013
To the Mayor and the City Council
To the Residents of the City of Gaithersburg, Maryland;
Our state law requires that, within four months of the close of each fiscal year, all general purpose local governments publish a complete set of financial statements presented in conformity with generally accepted accounting principles (GAAP). Also it should be audited in accordance with generally accepted auditing standards by a firm of licensed certified public accountants. Adhering to the requirements, we hereby issue the Comprehensive Annual Financial Report (CAFR) for the city of Gaithersburg, Maryland, for June 30, 2012.
Management assumes full responsibility for the completeness and reliability of all the information presented in this report. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects.
McGladrey LLP, a firm of licensed certified public accountants, audited the City of Gaithersburg’s financial statements. The goal of the independent audit was to provide reasonable assurance that the basic financial statements are free of material misstatement. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion that the City of Gaithersburg financial statements for the fiscal year that ended June 30, 2012 are fairly presented in conformity with GAAP.
REPORTING ENTITY
The City’s financial statements include Casey Community Center operations, Aquatic Facility operations, Senior Center operations, and all departments and funds operated by the City of Gaithersburg. Additionally, the Employees’ Retirement Plan is included as a component unit of the reporting entity.
The financial activities of the Montgomery County Board of Education and the Washington Suburban Sanitary Commission are not considered part of the City’s reporting entity.
ECONOMIC CONDITION AND OUTLOOK
Gaithersburg is centrally located in the heart of Montgomery County. It occupies approximately 10.33 square miles, with population of 62,848 as of July 2012. In 2012, CNN/.
Daiga 16ANALYSIS OF A GOVERNMENTAL ENTITY’S FINANCIAL STATEMEN.docx
1. Daiga 16
ANALYSIS OF A GOVERNMENTAL ENTITY’S FINANCIAL
STATEMENTS
City Of Gaithersburg, MD
FY 2012
For The Fiscal Year Ended June 30, 2012
By
Kahmandin W. Daiga
University Of MD – Eastern Shore
ACCT 405
May 2, 2013
Title of Contents
1. Transmittal
letter…………………………………………………Page
3
2. Executive
Summary………………………………………………Page
5
3. General
Information………………………………………….......Page
5
4. Governmental Entity’s
Funds............................................................Page
7
2. 5. Evaluation of Financial
Conditions...................................................Page
8
6. Illustrations/References/Other
material.........................................Page
13
7. Governmental-wide financial
statements........................................Page
14
8. General Fund financial
statements...................................................Page
16
May 2, 2013
To the Mayor and the City Council
To the Residents of the City of Gaithersburg, Maryland;
Our state law requires that, within four months of the close of
each fiscal year, all general purpose local governments publish
a complete set of financial statements presented in conformity
with generally accepted accounting principles (GAAP). Also it
should be audited in accordance with generally accepted
auditing standards by a firm of licensed certified public
accountants. Adhering to the requirements, we hereby issue the
Comprehensive Annual Financial Report (CAFR) for the city of
Gaithersburg, Maryland, for June 30, 2012.
Management assumes full responsibility for the completeness
and reliability of all the information presented in this report. As
management, we assert that, to the best of our knowledge and
belief, this financial report is complete and reliable in all
material respects.
McGladrey LLP, a firm of licensed certified public accountants,
audited the City of Gaithersburg’s financial statements. The
goal of the independent audit was to provide reasonable
3. assurance that the basic financial statements are free of material
misstatement. The independent auditor concluded, based upon
the audit, that there was a reasonable basis for rendering an
unqualified opinion that the City of Gaithersburg financial
statements for the fiscal year that ended June 30, 2012 are fairly
presented in conformity with GAAP.
REPORTING ENTITY
The City’s financial statements include Casey Community
Center operations, Aquatic Facility operations, Senior Center
operations, and all departments and funds operated by the City
of Gaithersburg. Additionally, the Employees’ Retirement Plan
is included as a component unit of the reporting entity.
The financial activities of the Montgomery County Board of
Education and the Washington Suburban Sanitary Commission
are not considered part of the City’s reporting entity.
ECONOMIC CONDITION AND OUTLOOK
Gaithersburg is centrally located in the heart of Montgomery
County. It occupies approximately 10.33 square miles, with
population of 62,848 as of July 2012. In 2012, CNN/Money
Magazine ranked Gaithersburg #23 on a national list of Best
Places to Live. The current economic condition of the City is
excellent, and we are confident that this can be maintained.
MedImmune, one of 10 largest pharmaceutical companies in the
world, is headquartered in Gaithersburg. Some other
firms/companies include Digene, GenVec, Antex, Gene Logic,
IBM and Lockheed Martin. We were recently involved that
Adventist HealthCare will move its corporate headquarters to
Gaithersburg, and Novavax will be relocating to the City as
well.
Expansion Management magazine concludes that Gaithersburg
possesses many attributes these technology firms seek,
4. including a superior work force, good transportation
infrastructure, a pro=business government, competitive
operating costs, and quality of life.
Due to the current economy, real property tax revenue posted a
moderate increase, resulting in an overall increase to total
revenues for fiscal year 2012.
MAJOR INITIATIVES
Through a strategic planning process, the City of Gaithersburg
identified several major programs needed to meet resident
requirements, in conformity with applicable federal and state
standards. Some of these programs include, naming a few: -
Implementing traffic and transportation management strategies
to improve the safety, structure and function of streets, transit,
bikeways and sidewalks within the City. - Implementing the
Master Plan for Parks, Recreation, cultural, and Leisure
Activities. - Maintaining support of neighborhood Community
Policing Programs. – Actively pursue the Olde Towne Blue
print.
The largest capital projects are Technology Projects, one of
which is Planning, Code Enforcement and Inspection package
($700k); the renovation of the Water Park at Bohrer Park at
Summit Hall Farm ($1.4mm); major street reconstructions
projects and street resurfacing projects ($1.3mm). The figures
in parenthesis represent FY 2012 appropriations.
CERTIFICATE OF ACHIEVEMENT FOR EXCELLENCE IN
FINANCIAL REPORTING AND DISTINGUISED BUDGET
PRESENTATION
A Certificate of Achievement for Excellence in Financial
Reporting was awarded to the City of Gaithersburg by the
Government Finance Officers Association of United States and
Canada (GFOA) for its CAFR for the year that ended June 30,
2011. This certificate is a prestigious national award
5. recognizing conformance with the highest standards for
preparation of state and local government financial reports.
Gaithersburg has received the certificate for 34 consecutive
years (1978-2011). A certificate is only valid for a period of
one year only.
An award of Distinguished Presentation for its annual budget
for the fiscal year beginning July 1, 2011 was presented to the
City of Gaithersburg by GFOA. Gaithersburg is proud to be the
recipient of the award for the ninth consecutive year (FY 2003-
2011).
ACKNOWLEDGEMENTS
Preparing this report in a timely manner could not have been
accomplished without the professional, efficient, and dedicated
services of the entire staff of the Department of Finance and
Administration, along with the various City staff that
contributed to its preparation. We also acknowledge the
cooperation and help of the City’s departments throughout the
year. Finally, we would like to thank the Mayor and the
members of the City Council for their interest and support.
Respectfully Submitted,
Kahmandin W. Daiga, CGFM
Director of Finance and Administration
EXECUTIVE SUMMARY
During the accounting cycle, Gaithersburg’s government-wide
net assets increased by 5.5 million. The General Fund reported
an excess of revenues over expenditures and other financing
sources and uses of $8.9 million after making $5.4 million
transfer to the Capital Projects Fund. The city’s financial
position improved over the past year: total governmental funds’
fund balance increased by 11% to $80.8 million. Interest income
decreased from $91K to $54K, as a result of financial market
6. conditions.
The City of Gaithersburg seems to be in a strong financial
condition, with great financial strengths and just a few red flags
and financial strains, based on my interpretations of the ratios
calculated in Illustration 10-3, Illustration 10-4, and Illustration
10-7.
I compared my performance measures with another
governmental entity - The City of Annapolis, Maryland which
was computed by Mr. Spencer Harris. Unfortunately for my
city, the Comprehensive Annual Financial Report (CAFR) did
not provide me with as much information on its financial
statements to help me compute all the ratios. I only computed
11 out of 18 ratios and Annapolis’s CAFR gave Spencer enough
information to compute 16 out of 18 ratios. That alone portrays
how different the two cities are; how detailed or less detailed
they can be on the CAFR; and how differently they choose to
operate their cities.
GENERAL INFORMATION
The Introductory section of the City of Gaithersburg’s
Comprehensive Annual Financial Report was very well
structured. Most importantly it was written in a manner where
anybody who understands the basic English can read and
comprehend. It provided background and context of the CAFR
which were not included in the scope audit. The contents of the
introductory sections was; the Certificate of Achievement for
Excellence in financial Reporting for the prior years; List of
Principal Officials; Letter of Transmittal; and an Organizational
Chart. The transmittal letter went into great detail of four pages
in length.
From the introductory, it is safe to conclude that the City of
Gaithersburg deserves the great recognition it gets, especially
the fact that it was ranked #23 on a national list of Best Places
to Live. Gaithersburg is my hometown, so I am very proud of it
7. and can attest to its recognized attributes such as family
purchasing power, median home price sales, student test scores,
hob growth, air quality, commute crimes, and great access to
arts and leisure activities. I too believe that the City of
Gaithersburg’s consistent strategy to attract biotechnology firms
continues to reap substantial benefits! I hope they continue
winning certificates from GFOA!
The City’s Financial Section comprised of and Independent
Auditors’ Report, Management’s Discussion and Analysis
(MD&A), Basic Financial Statements, Required Supplementary
Information (other than MD&A), and Notes to Financial
Statements. Apparently the MD&A is best understood if read in
conjunction with the transmittal letter and the City’s basic
financial statements. I never understood that logic until I read
the three sections back and forth…and it made perfect sense and
made it easier to understand Gaithersburg’s CAFR.
The Independent Auditors’ Report, which was McGladrey LLP,
provided its opinion on the fair presentation of the basic
financial statements. The MD&A provided a narrative
introduction, overview, and analysis. The Government-Wide
Financial Statements provided information on governmental and
business type activities of Gaithersburg. The Fund Financial
Statements provided information on the financial position of
specific funds of the City of Gaithersburg. Then Notes to
Financial Statements gave a summary of significant accounting
policies and related disclosures, i.e. Encumbrances,
Investments, Inventory, Receivables etc.
During the accounting cycle, Gaithersburg’s government-wide
net assets increased by 5.5 million. The General Fund reported
an excess of revenues over expenditures and other financing
sources and uses of $8.9 million after making $5.4 million
transfer to the Capital Projects Fund. The city’s financial
position improved over the past year: total governmental funds’
8. fund balance increased by 11% to $80.8 million. Interest income
decreased from $91K to $54K, as a result of financial market
conditions.
The city’s assets exceeded its liabilities at the close of FY 2012
by $171.6 million. Its total revenues were $53.3 million. Local
property taxes funding amounted to $24.6 million;
intergovernmental funding, $10 million; charges for services,
$13.1 million; operating grants and contributions, $.8 million;
and capital grants and contributions, $1.3 million. The
remaining $3.5 million primarily came from admission and
amusements and hotel and motel taxes, and franchise fees.
The City of Gaithersburg is a strong proponent of the “pay-as-
you-go” methodology, and proud of the fact that the city has no
outstanding debt obligations. The City’s debt consists only of
compensated absences payable and other post-employment
benefits liabilities.
The Statistical Section of the City outlined information in great
detail to help for understanding what the information in the
financial statements, note disclosures, and required
supplementary information said about Gaithersburg’s overall
financial health or well-being. This section demonstrated the
City’s Financial Trends, Revenue Capacity, Debt Capacity,
Economic and Demographic Information, and Operating
Information.
The financial trend contained trend information to help me
understand how the City’s financial performance and well-being
have changed over time.The revenue capacity helped me assess
the City’s most significant local revenue sources, the property
tax and the room tax. The debt capacity presented information
to help analyze the affordability of the City’s current levels of
outstanding debt and its ability to issue additional debt in the
future. Economic and demographic information showed
economic and demographic indicators to understand the
environment within which the City’s financial activities take
9. place. The operating information contained service and
infrastructure data to help me understand how the information
in the Gaithersburg’s financial report relates to the services the
City provides and the activities it performs.
Amount of Full-Time City Government employees in
Gaithersburg in 2012 was 366.2. The number increased by four
from 2011, but it has actually decreased a lot as compared to
other previous years. In 2012, Most of the City’s residents are
employed at the National Institute of Standards and Technology
(.42%). Real Property tax rates increased from 1.208 in 2011 to
1.270 in 2012. It seems that a great chunk of Gaithersburg’s
source of tax revenue throughout the years is from Property
taxes.
GOVERNMENTAL ENTITY’S FUND
Governmental Funds: Governmental fund reporting focuses on
the sources, uses, and balances of current financial resources.
The City of Gaithersburg maintains only two governmental
funds.
The General Fundis the general operating fund of the City.
Many of the more important activities of the City, including
operation of the City’s general service departments, street and
highway maintenance, public safety, parks and recreation
programs are accounted for in this fund. The general fund had
less expenditure than revenues in 2012, thereby increasing total
fund balance to $52.1 million. It is important to note that the
net change in fund balance is $8.9 million. This figure is
calculated on the modified accrual basis and is slightly different
from the $8.2 million budgetary basis surplus. This difference is
due to the treatment of prior and current year encumbrances.
The largest revenue source for the General Fund is City
property tax.
The Capital Projects Fund is used to account for financial
resources to be used for the acquisition or construction of
capital facilities. CPF showed a $0.9 million decrease in fund
balance. The CPF’s total fund balance of $28.6 million
represents authorized and funded projects that are not complete.
10. The General Fund made a $5.4 million transfer to the Capital
Projects Fund. Capital Projects Fund expenditures of $6.3
million included the Senior Center renovation and equipment
replacement, acquisition and renovation of the historical Budd
Carr into museum space, City wide emergency efficiency
upgrades, water park expansion, public safety cameras installed
in Olde Towne and storm water management projects, street
reconstruction and resurfacing.
Fiduciary Funds: They are statements that provide information
about the financial relationships where the City acts solely as a
trustee or agent for the benefit of others.
The Agency Funds is like a clearing mechanism for cash
resources, which are collected, held as such for a brief period,
and then disbursed to authorized recipients. Gaithersburg’s
Forest Conservation Fund is included as such and accounts for
monies held on behalf of developers for reforestation. On the
statement of fiduciary net assets, AF amounted to deposits of
$153,341.
Gaithersburg’s Pension Trust Fund accounts for the
contributions made by the City and its employees to finance
future pension payments. Net assets held in trust for pension
benefits under PTF summed up to $44,672,453. The pension
plan is maintained as a PTF.
The City of Gaithersburg’s Retiree Benefit Trust Fund accounts
for contributions made by the City and its employees to finance
future other postemployment benefit payments. The plan was
and is normally administered by a committee appointed by the
City. The total RBTF for Gaithersburg was $3,537,105.
It is observed that Private-Purpose Trust Funds are used in the
City to report all other trust arrangements under which principal
and income benefit individuals, private organizations, or other
governments. PPTF’s certificate of deposit equals $13,552, but
its total asset is $15,552 because $2000 was due from other
funds. The City’s Sam and Claire Rosen Trust Fund is included
too and accounts for recreational sports scholarships financed
11. by the interest earnings of the fund.
EVALUATION OF FINANCIAL CONDITIONS
ILLUSTRATION 10-3:
City of Gaithersburg
Governmental Funds Financial Ratios
Indicator
Calculation
(see Ill. 10-3 for definition of ratios)
2012
1. Revenues Per Capita:
53,304,767
848.15
62,848
2. One-time revenues:
751,938 + 1,312,834 + 5,437,130
0.14
53,304,767
3. Expenditures per capita:
39,709,150
631.83
13. 10,737,220
0.0012
9,198,377,481
9. Postemployment benefits:
8,618,050
23533.7
366.2
10. Capital Outlay:
4,347,937
0.11
39,709,150
ILLUSTRATION 10-4:
City of Gaithersburg
Government-wide Financial Performance Measures
Performance Measures
Calculation
(see Ill. 10-4 for definition of ratios)
2012
($ or % or number of times)
1
Unrestricted net position:
72,126,415
53,304,767
14. 135%
2
General Fund budgetary
fund balance:
11,081,062 + 40,627,029
53,943,944 - 5,437,130
107%
3
Debt to assets:
17,204,164
188,787,473
9%
4
Current ratio:
89,330,579
6,466,944
13.81
times
5
Quick ratio:
89,330,579 - 350,595 - 65,972
6,466,944
13.75
times
6
Change in net position:
171,583,309 - 166,074,871
$5,508,438
7
Interperiod equity:
38,169,652 + 13,070,343 + 751,938 + 1,312,834
15. 47,796,329
1.12
times
8
Sales tax growth:
36,450,228 - 35,344,265
35,344,265
0.03
times
9
Revenue dispersion:
13,070,343 + 751,938 + 1,312,834 + 9,986,624 + 54,191
38,169,652 + 13,070,343 + 751,938 + 1,312,834
30%
10
Bonded debt per capita:
0
62,848
$0.00
11
Property taxes per capita:
24,575,499*
62,848
$391.03
* Actual property tax levy information was not provided;
property tax revenue was used instead.
ILLUSTRATION 10-7:The Performeter® analysis for 2012 is as
follows:
City of Gaithersburg, Maryland - Performeter® Analysis – 2012
Performance Measures
2012
Computation
Rating
Weight
16. Score
Financial Position:
1
Unrestricted net position
135%
10
3
30
2
GF budgetary fund balance
107%
10
2
20
3
Debt to assets
9%
10
1
10
4
Current ratio
13.81
10
3
30
5
Quick ratio
13.75
10
2
20
17. Financial Position Score
10
Financial Performance:
6
Change in net position
5.50%
8
3
24
7
Interperiod equity
112%
10
2
20
8
Sales tax growth
3%
3
2
6
Financial Performance Score
19. 4.67
Total suggested weight
and score for items 1-11
21
174
Overall Financial Performance Score
7.27
INTERPRETATIONS OF CALCULATIONS
The City of Gaithersburg seems to be in a strong financial
condition, with great financial strengths and just a few red flags
and financial strains, based on the following interpretations of
the ratios calculated in Illustration 10-3, Illustration 10-4, and
Illustration 10-7:
· Gaithersburg’s unrestricted net position (assets) of 135%
proofs that it has a high level of reserves that it may draw from,
if it needs to, to meet future needs. Its budgetary carryover
position looks excellent with a percentage above 100. The debt
to assets ratio of 9% shows that the degree to which the City’s
total assets have been funded with debt in FY 2012 is extremely
low. Which is a very good thing because it means it is not
funded by borrowed assets. The current and quick ratios
indicate that the City is very liquid and can pay its current
liabilities with ease.
20. · The change in net position (assets) ratio portrays that the City
of Gaithersburg’s overall financial condition improved by 5.5%
or $5,508,438 from the previous years, rather than declining or
being stagnant. Interperiod equity was 112% proves that the
City has lived within its means for the fiscal year. Basically,
Gaithersburg’s current revenues paid for its cost of operating
the City. It did not rely on past or future revenues. The sales tax
growth of 3% shows the state of the City’s local economy. The
ratio was not an exemplary percentage. The sales tax growth
poses a red flag for the City and it should be monitored. As a
side note, neither state law nor the City Charter mandates a
limit on the amount of municipal debt that may be issued
· Looking at the computations, the City of Gaithersburg’s
revenue dispersion was 30%. The ratio falls a lot below the
acceptable percentage, therefore it poses a second red flag for
the City. It implies that only 30% of Gaithersburg’s revenue is
beyond its direct control. As far as calculating the bonded debt
per capita, keep in mind that All bonds are used to fund the
acquisition, construction, and equipping of an assisted living
facility at Asbury Methodist Village ,a specific third party that
is not part of the City’s financial reporting entity. An agreement
was executed between Asbury Methodist Village, Incorporated
and the City concurrently with the issuance of the bonds. The
full faith and credit of the City have not been pledged in
support of the bonds, and in the event of default, the City
cannot be held liable. Hence, the reason I used $0.00 for general
bonded debt (bond payable). So with a bonded debt per capita of
$0.00, Gaithersburg has no long-term general obligation debt
burden on its taxpayers. Property taxes per capita came up to
$391, which indicates the City’s property tax burden on its tax
payers. It is not a good number at all; in fact it is extremely
high.
· Looking specifically at Illustration 10-7: The Gaithersburg’s
2012 overall performance of 7.27 appears to be a little above
acceptable, considering that a score of 5 is deemed acceptable.
21. Its financial position is very strong and it is at its maximum of
10, with individual scores at the highest rates. It is a perfect
score and a perfect rate! Financial performance is 7.14, which is
above acceptable. What really brought down the financial
performance score was the sales tax growth score. Financial
capability was the weakest with 4.67, scoring below the mid-
point/acceptable point of 5.
Lawton will need to remain vigilant in the forthcoming years if
it wants to stay at an acceptable capability level:
· It needs to increase its revenue dispersion by increasing its
non-tax revenue sources.
· Secondly, it needs to decrease its property taxes per capita by
about $344 in order to become at least acceptable with a score
of 5.5. It can do that by decreasing the property tax levy or the
only other way is to increase its population (population increase
is a little unrealistic and a little beyond its control).
Additionally an increase in sales tax growth will bring
Gaithersburg’s financial performance close to the highest score
of 10.
· The solution is to decrease its change in sales and use tax
revenue. That is the difference between the current and prior
year. There are no major signs of fiscal stress yet.
Comparison: City of Gaithersburg vs. City of Annapolis
I compared my performance measures with another
governmental entity - The City of Annapolis, Maryland which
was computed by Mr. Spencer Harris. Unfortunately for my
city, the Comprehensive Annual Financial Report (CAFR) did
not provide me with as much information on its financial
statements to help me compute all the ratios. I only computed
11 out of 18 ratios and Annapolis’s CAFR gave Spencer enough
information to compute 16 out of 18 ratios. That alone portrays
22. how different the two cities are; how detailed or less detailed
they can be on the CAFR; and how differently they choose to
operate their cities.
Ultimately, the City of Gaithersburg’s overall financial
performance (7.27) was slightly above Annapolis’s (5.7) by
1.57. Gaithersburg’s financial position (10) was higher than
Annapolis’s (6.7) by 3.3. However Gaithersburg lacked the
computations for capital asset condition and pension plan
funding, so maybe its score would have been a little lower if I
had found calculated them. Annapolis’s financial performance
was 6.3, which is less than mine by just .84. Gaithersburg does
not operate using business-type activities (BTA), but Annapolis
does. So maybe my score would have been affected negatively
because BTA affected Annapolis negatively. Lastly,
Gaithersburg’s financial capability was 4.67 and Annapolis’ was
3.9.
In conclusion, Gaithersburg seems to be at a better financial
position than Annapolis. Again, I will put in perspective that
both cities operate very differently and that ultimately affected
the differences between our scores. It appears that both cities
are straining when it comes to Property taxes per capita.
Although we both have a score of 1, Annapolis is straining more
with $566 more than Gaithersburg. Gaithersburg could use a
little advice from Annapolis on how to get a good score on
Revenue dispersion.
Illustrations/References/Other materials
Illustration 10-
3…………………………………………………..Page
8
Illustration 10-
4…………………………………………………..Page
9
23. Illustration 10-
5…………………………………………………..Page
10
Statement of Net
Assets…………………………………………....Page
14
Statement of
Activities…………………………………………….Page
15
Balance Sheet - Governmental
Funds…………………………….Page
16
REFERENCES
The Department of Finance and Administration, Harold Belton,
Director. (October 26, 2012). Www.gaithersburgmd.gov. In
Gaithersburg, Maryland. Retrieved March 28, 2013,
http://www.gaithersburgmd.gov/Documents/finance/12_Gaithers
burg_CAFR_Final.pdf .
Jacqueline L. Reck, Suzanne L. Lowensohn, Earl R. Wilson.
(January 6, 2012). Accounting for
Governmental and Nonprofit Entities . In McGraw-Hill.
Analysis of a Governmental Entity's Financial Statement City of
Annapolis For Fiscal Year Ended
June 30, 201, by Spencer Harris.
City Of Gaithersburg, Maryland
Statement of Net Assets
June 30, 2012
29. 2,109,392
Due to other governments
56,423
Accrued liabilities
789,551
Deposits
2,317,519
30. Unearned revenue
1,194,059
Non-current liabilities:
Due within one year:
Accumulated unused compensated absences
590,410
Due in more than one year:
Accumulated unused compensated absences
1,528,760
Other postemployment benefit liability
32. $ 171,583,309
City of Gaithersburg, MD
Statement of Activities
Year Ended June 30, 2012
Net (Expense)
Revenue And
Changes In
Net Assets
Program Revenues
Functions/Programs
Expenses
Charges For
Services
Operating
Grants And Contributions
Capital
Grants And Contributions
33. Primary
Government Governmental Activities
Governmental activities:
General government $ 16,369,822
$ 2,731,495 $ 59,662 $ 345,774 $
(13,232,891)
Public safety 10,538,639
4,295,957 377,729 168,888
(5,696,065)
Public works 13,138,836
2,630,871 - 480,693
(10,027,272)
Parks and recreation 5,659,702
3,412,020 108,000 -
(2,139,682)
Community services and development 2,089,330
- 206,547 317,479
(1,565,304)
Total governmental activities $ 47,796,329
$ 13,070,343 $ 751,938 $ 1,312,834 $
(32,661,214)
General revenues:
Property tax
24,575,499
Franchise fees
689,385
34. Admissions, amusement, and hotel taxes
2,395,490
Intergovernmental not restricted to specific programs
9,986,624
Investment earnings
54,191
Miscellaneous revenues
468,463
Total general revenues
38,169,652
Change in net assets
5,508,438
Net assets:
Beginning
166,074,871
Ending
$ 171,583,309
City Of Gaithersburg, Maryland
Balance Sheet – Governmental Funds
June 30, 2012
General
Fund
Capital Projects
Fund
Total
Governmental
35. Funds
Assets
Cash $ 605,288
$ - $ 605,288
Investments 84,114,469
- 84,114,469
prepaid 350,595
- 350,595
Inventory 65,972
- 65,972
Due from other funds -
29,256,130 29,256,130
Due from other governments 3,621,172
- 3,621,172
Other receivables 573,083
- 573,083
Total assets
$ 89,330,579 $ 29,256,130 $
118,586,709
Liabilities And Fund Balances
Liabilities:
Accounts payable $ 1,069,795
$ 485,342 $ 1,555,137
Accrued liabilities 662,427
127,124 789,551
36. Deposits 2,317,519
- 2,317,519
Deferred revenue 3,289,372
- 3,289,372
Due to other governments 56,423
- 56,423
Due to other funds 29,810,385
- 29,810,385
Total Liabilities:
37,205,921 612,466
37,818,387
Fund balances:
Non-spendable 416,567
- 416,567
Committed -
3,266,162 3,266,162
Assigned 11,081,062
25,377,502 36,458,564
Unassigned 40,627,029
- 40,627,029
Total fund balances
52,124,658 28,643,664
80,768,322
Total liabilities and
fund balances
$ 89,330,579 $ 29,256,130 $
118,586,709
37. ACCT405
Guidelines for Term Project:
Analysis of a Governmental Entity’s Financial Statements
1. The purposes of this project include:
- An in-depth look at how a governmental entity conducts its
business.
- Understanding the accounting system for governmental
entities and the operation of various funds and accounting
groups.
- An evaluation of the entity’s strengths and weaknesses of its
financial conditions such as revenues, expenditures, debt
services and unfunded liabilities.
- Providing the interested parties (e.g., city council, state
representatives, citizens and county residents) with useful
information concerning the entity’s operational performance and
financial position.
2. In this project, each individual student would:
- choose a governmental entity (State, County or City): by
February 28, 2013
- obtain Comprehensive Annual Financial Report (CAFR) for
the year ended June 30, 2012.
- study and analyze the CAFR.
- prepare a progress report by March 28, 2013.
- prepare final report and submit by April 30, 2013.
3. Final report should be arranged in the following order with
38. binding and should not exceed 15 pages, excluding exhibits and
appendices.
(1) Cover page: Title of the project
(2) Overall Outline
- Title of Contents
- Transmittal letter
- Executive summary
(3) General Information
(4) Governmental Entity’s Funds
(5) Evaluation of Financial Conditions
(6) Exhibits/Appendices/References/Other materials
(7) Government-wide financial statements & Fund (at least GF)
financial statements from CAFR.
4. General Information
- Discuss CAFR and all related components for the
governmental entity.
39. - Your discussion should include the three sections of CAFR
(Introductory, Financial and Statistical section)
5. Governmental Entity’s Funds
- Identify all the funds used in the governmental entity (e.g.,
GF, SRF, DSF etc.)
- Analyze each fund.
6. Evaluation of Financial Conditions
- Use the financial measures in Chapter 10 of the textbook
(Illustrations 10-3 & 10-4).
- Calculate these measures using all the information from
CAFR.
- Measures should be compared with benchmarks and checked
against applicable red flag levels.
- Provide brief interpretation for each financial measure as well
as overall conclusions.
- Conclusions should include potential causes or sources for
financial strains/strengths, and predictions on financial
conditions in the forthcoming years (short-term and long-term).
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