FGFOA SCHOOL OF GOVERNMENTAL FINANCE

What are your financial statements telling you?

Jason E. Brown, CGFO

OMB Director, Indian River County

What are your financial statements telling you?

• Annual financial reportsCAFRFinancial reporting modelExamples

• Monthly reportsInternalExternalExamples

What are your financial statements telling you?

• Financial Reporting Model• GASB Statement No. 34• Key Components

Management’s Discussion & Analysis MD&A

Government-wide financial statementsIndividual fund statements

(governmental, proprietary, fiduciary)Required supplementary information

Governmental Financial Reporting Model (Minimum

Requirements)

Government-wide

Financial Statements

Fund financial statements

Govt’l. Funds

Proprietary Funds

Fiduciary Funds

Notes to Financial Statements

MD&A

Other Required Supplementary Info.

RSI

Audited Basic

Financial Statements

RSI

Comprehensive Annual Financial Report (CAFR)

CA

FR

Introductory Section Introductory Section

Basic F

inancial Statem

ents &

RS

I

Financial Section

MD&A

Government-wide Statements

(Major) Fund Financial Statements

Notes to Financial Statements

RSI other than MD&A

Info. on nonmajor funds & other supplementary info.

not required

Statistical Section Statistical Section

Introductory Section

• Required section for CAFR

• Provides background information and context for users of reportListing of principal officialsOrganizational chartLetter of transmittal

• Profile of government• Budget

– Economic condition (focus on future; local economy, long-term planning, major initiatives)

Introductory Section - Examples

• Add examples…..

Introductory Section - Examples

• Add examples…..

Management’s Discussion & Analysis (MD&A)

• Provides narrative introduction and overview• Analysis of key data presented in financial

statementsSignificant changes in revenues & expensesAmendments to budgetAnalysis of overall financial position (net assets)Fund balance changesConditions known as of close of audit field work

that could impact financial positionNot audited

MD&A - Examples

MD&A - Examples

Government-Wide Financial Statements

• Statement of Net AssetsReports assets and liabilities“Balance Sheet”

• Statement of ActivitiesReports changes in net assets“Income” or Operating Statement

• Consolidation of fund information

• Measurement focus and basis of accounting

Statement of Net Assets

• Reports assets and liabilities

• Includes current assets and non-current assets

• Presented in order of liquidity

• Includes capital assets (infrastructure, such as roads, drainage systems, utility systems, etc.)

• Assets – Liabilities = Net Assets

Statement of Net Assets

Statement of Net Assets

Statement of Net Assets

Statement of Net Assets

• Assets – Liabilities = Net Assets

• Net Assets classified in three categories:

• Net assets invested in capital assets, net of related debt

• Restricted net assets

• Unrestricted net assets

Net Asset Categories

• Restricted Net Assets

• Restrictions imposed on government by outside entities

• Other governments

• Grantors

• Creditors

• Self-imposed restrictions are not included (except Constitutional restrictions)

Restricted Net Assets

• Various Categories

Restricted for:

Capital projects $29,157,343

Debt service/bond covenants $3,375,447

Road projects $86,454,268

Other special revenues$34,918,682

Economic incentives $8,000,000

Long term advances to other funds $1,213,345

Total Restricted Net Assets $163,119,085

Unrestricted Net Assets

Total net assets

Less: Invested in capital, net of debt

Less: Restricted net assets

Equals Unrestricted net assets

Unrestricted Net Assets

Total net assets $663,741,836

Less: invested in capital ($445,541,175)

Less: restricted net assets ($163,119,085)

Unrestricted net assets $55,081,576

Current Assets & Liabilities

• Current Assets vs. Current Liabilities

• Private Sector analysis

• Current ratio = Current Assets ÷ Current Liabilities

= $247,792,905 ÷ $26,341,976 = 9.41

• Over 1.0 means positive “working capital”

• Shows ability to meet short-term obligations

•Higher ratio typically points to better short-term financial health (XOM = 1.47, GM @ 12/08 = 0.56)

Current Assets & Liabilities

• Analysis conducted for Governmental Funds Only

• Florida City A (pop. ~160,000)

Current Assets $499,893,146

Current Liabilities $229,382,597

Current Ratio = 2.18• Florida City B (pop. ~4,000)

Current Assets $1,967,760

Current Liabilities $330,008

Current ratio = 5.96

Statement of Activities

• Operating Statement

• Uses net cost format to highlight how functional expenses are funded

• Measurement focus on economic resources (rather than financial)

• Focus on expense rather than expenditure

• Depreciation expense for governmental assets included

Statement of Activities

• Expenses presented before revenues• Governmental and business-type activities

reported separately • Direct expenses in first column• Indirect expenses• Program revenues in next column(s)• Net (Expense) Revenue and changes in

net assets on right• General revenues follow total net expense