Comprehensive Annual Financial Report Briefing Paper
Comprehensive Annual Financial Report Briefing:
Each year the State of Nevada issues the Comprehensive Annual Financial Report (CAFR). The most recent being the 2011 report that was issued by Kim R. Wallin, the State Controller, for the fiscal year ending June 30, 2011. In recent elections, there have been some additions to the Nevada elected board members. The purpose of this paper is to provide an overview of government accounting and reporting, and to introduce the Nevada CAFR to the newly elected board members. Also contained is an evaluation of the Management Discussion & Analysis (MD&A) section contained in the 2011 report.
Governmental Accounting and Reporting
Budgeting and accounting are particularly important for a government …show more content…
entity. Any individual with the capacity to make decisions concerning the governing body should possess the fundamental knowledge of budgeting and accounting. The Governmental Accounting Standards Board (GASB) sets the accounting and financial reporting standards for state and local governments, whereas the Financial Accounting Standards Board (FASB) sets these standards in for-profit business (Granof&Wardlow, 2011).
Governmental objectives and missions are different than those in for-profit business.
For-profit business is highly measured by increasing profits and shareholder value. Financial metrics are based specifically on revenue and net income targets, whereas these measures would not be of much significance to governmental reporting. Government focus cannot always be measured in dollars and cents and tends to bebased more so on service efforts and accomplishments. In addition, the actual budget holds more significance in government than in regular business. The budget is technically what governs the government, whereas in business, the marketplace and competition is the driving force (Granof&Wardlow, 2011). Furthermore, annual financial reports are more important in for-profit business than the associated …show more content…
budget.
State of Nevada CAFR
The State of Nevada issues the CAFR in accordance with the Nevada Revised Statutes (NRS) and the State Accounting Procedures Law. The reports objective is to provide a clear picture of the State of Nevada government as a unified, single entity and to provide fund-based financial statements.
The State of Nevada CAFR is divided up into four sections. A brief outline of the contents of each section is shown below. • Introductory Section – This section includes the letter of transmittal that summarizes the governments profile, financial information, the economic outlook, major initiatives and awards and acknowledgements for the state. Also included are the constitutional officers and an organizational chart. • Financial Section – This section is the bulk of the report. It includes the independent auditor’s report, management discussion and analysis, government and fund financial statements, supplementary information, and statements and schedules for multiple funds associated with the State of Nevada. • Statistical Section – The section includes statistical information that aid in supporting the financial section. Analysis on trends for government assets, fund balances,sales tax, debt ratios and margins, demographic and economic statistics, state employees, and operating indicators. • Compliance Section – Include in the section is a letter from the independent auditor thatacknowledges the overall presentation of the financial statements and the effectiveness of internal controls over financial reporting.
The State of Nevada was admitted to the Union in 1864. The majority of land contained in Nevada is owned and operated by the federal government, 80% respectively. Nearly 88% of the entire population of Nevada is located in one of two population centers, Washoe County and Clark County. Nevada does not collect a personal income tax as the economy and tax base is reliant on gaming, tourism, federal activities, and the mining industry (Wallin, 2011). The State of Nevada reporting entity prepared the associated financial statements in conformity with Generally Accepted Accounting Principles (GAAP) as applied to government units, in the United States of America. The financial statements conform to the requirements of GASB, the accepted standard setting body for government accounting and financial reporting. The accounting and reporting principles are based on the theory that publicly elected officials are accountable to their residents throughout the state (Wallin,
2011).
Management Discussion & Analysis Evaluation
The analysis of the basic financial statements of the State of Nevada is broken up into separate sections: (1) government-wide financial statements, (2) fund level financial statements, and (3) the notes to the financial statements. In additionto the analysis of the basic financial statements, the analysis of other supplementary information is included.
The government-wide financial statements provide an overview of all revenues and expenses for the fiscal year. The statement of net assets and the statement of activities provide users with a year over year picture of whether the overall financial position of the state is improving. Each statement is reported in either government or business-type activities. Government activities would be primarily supported by states taxes whereas the business activities are intended to be self-sufficient. The State of Nevada’s financial position improved slightly from 2010 to 2011 as net assets increased by $50 million (Wallin, 2011).
Government-wide revenues increased from 2010. This increase was primarily due to increased revenues from sales taxes, gaming taxes, mining taxes, and lodging taxes. All of these increased revenues are key indicators on the economic progress of the state. More people are spending more money which is a positive indicator of stability. Governmental activities realized a net increase in assets of $266 million which was partially offset by the business activities net assets decrease of $216 million. Expenses exceeded revenues for both government and business-type activities in 2011, resulting in the use of $4 billion in general revenues (Wallin, 2011).
The governmental funds for the State of Nevada decreased from 2010 by $120 million to $1.46 billion. These funds are made up of the general fund, which is the chief operating fund of the state, the state highway fund, the municipal bond fund, and the consolidated bond interest redemption fund. Proprietary funds of the state consist of enterprise funds and internal service funds. Enterprise funds are allocated to programs outside of the state whereas internal services are allocated to state agencies. Total ending balances for enterprise and internal service funds is negative $52 million and $58 million, respectively.
Slight budget variations on both general fund sources and expenditures arose primarily from reduced intergovernmental revenues and timing differences. Capital assets at the end of the fiscal year hold a net book value of $5.5 billion. Capital assets for the state consist of land, buildings, equipment, software, infrastructure, and construction in progress. In addition, long-term liabilities increased $84 million during the fiscal year. This increase was primarily due to the issuance of general obligation bonds.
References
Copley, P. A. (2011). Essentials of Accounting for Governmental and Not-for-Profit Organizations (10th ed.). Retrieved from The University of Phoenix eBook Collection database
Granof, M. H., &Wardlow, P. S. (2011). Core Concepts of Government and Not-for-Profit Accounting (2nd ed.). Retrieved from The University eBook Collection database.
Wallin, K. R. (2011). State of Nevada Comprehensive Annual Financial Report. Retrieved from http://controller.nv.gov/FinancialReports/CAFR_pdf_files/FY11All.pdf
Each year the State of Nevada issues the Comprehensive Annual Financial Report (CAFR). The most recent being the 2011 report that was issued by Kim R. Wallin, the State Controller, for the fiscal year ending June 30, 2011. In recent elections, there have been some additions to the Nevada elected board members. The purpose of this paper is to provide an overview of government accounting and reporting, and to introduce the Nevada CAFR to the newly elected board members. Also contained is an evaluation of the Management Discussion & Analysis (MD&A) section contained in the 2011 report.
Governmental Accounting and Reporting
Budgeting and accounting are particularly important for a government …show more content…
entity. Any individual with the capacity to make decisions concerning the governing body should possess the fundamental knowledge of budgeting and accounting. The Governmental Accounting Standards Board (GASB) sets the accounting and financial reporting standards for state and local governments, whereas the Financial Accounting Standards Board (FASB) sets these standards in for-profit business (Granof&Wardlow, 2011).
Governmental objectives and missions are different than those in for-profit business.
For-profit business is highly measured by increasing profits and shareholder value. Financial metrics are based specifically on revenue and net income targets, whereas these measures would not be of much significance to governmental reporting. Government focus cannot always be measured in dollars and cents and tends to bebased more so on service efforts and accomplishments. In addition, the actual budget holds more significance in government than in regular business. The budget is technically what governs the government, whereas in business, the marketplace and competition is the driving force (Granof&Wardlow, 2011). Furthermore, annual financial reports are more important in for-profit business than the associated …show more content…
budget.
State of Nevada CAFR
The State of Nevada issues the CAFR in accordance with the Nevada Revised Statutes (NRS) and the State Accounting Procedures Law. The reports objective is to provide a clear picture of the State of Nevada government as a unified, single entity and to provide fund-based financial statements.
The State of Nevada CAFR is divided up into four sections. A brief outline of the contents of each section is shown below. • Introductory Section – This section includes the letter of transmittal that summarizes the governments profile, financial information, the economic outlook, major initiatives and awards and acknowledgements for the state. Also included are the constitutional officers and an organizational chart. • Financial Section – This section is the bulk of the report. It includes the independent auditor’s report, management discussion and analysis, government and fund financial statements, supplementary information, and statements and schedules for multiple funds associated with the State of Nevada. • Statistical Section – The section includes statistical information that aid in supporting the financial section. Analysis on trends for government assets, fund balances,sales tax, debt ratios and margins, demographic and economic statistics, state employees, and operating indicators. • Compliance Section – Include in the section is a letter from the independent auditor thatacknowledges the overall presentation of the financial statements and the effectiveness of internal controls over financial reporting.
The State of Nevada was admitted to the Union in 1864. The majority of land contained in Nevada is owned and operated by the federal government, 80% respectively. Nearly 88% of the entire population of Nevada is located in one of two population centers, Washoe County and Clark County. Nevada does not collect a personal income tax as the economy and tax base is reliant on gaming, tourism, federal activities, and the mining industry (Wallin, 2011). The State of Nevada reporting entity prepared the associated financial statements in conformity with Generally Accepted Accounting Principles (GAAP) as applied to government units, in the United States of America. The financial statements conform to the requirements of GASB, the accepted standard setting body for government accounting and financial reporting. The accounting and reporting principles are based on the theory that publicly elected officials are accountable to their residents throughout the state (Wallin,
2011).
Management Discussion & Analysis Evaluation
The analysis of the basic financial statements of the State of Nevada is broken up into separate sections: (1) government-wide financial statements, (2) fund level financial statements, and (3) the notes to the financial statements. In additionto the analysis of the basic financial statements, the analysis of other supplementary information is included.
The government-wide financial statements provide an overview of all revenues and expenses for the fiscal year. The statement of net assets and the statement of activities provide users with a year over year picture of whether the overall financial position of the state is improving. Each statement is reported in either government or business-type activities. Government activities would be primarily supported by states taxes whereas the business activities are intended to be self-sufficient. The State of Nevada’s financial position improved slightly from 2010 to 2011 as net assets increased by $50 million (Wallin, 2011).
Government-wide revenues increased from 2010. This increase was primarily due to increased revenues from sales taxes, gaming taxes, mining taxes, and lodging taxes. All of these increased revenues are key indicators on the economic progress of the state. More people are spending more money which is a positive indicator of stability. Governmental activities realized a net increase in assets of $266 million which was partially offset by the business activities net assets decrease of $216 million. Expenses exceeded revenues for both government and business-type activities in 2011, resulting in the use of $4 billion in general revenues (Wallin, 2011).
The governmental funds for the State of Nevada decreased from 2010 by $120 million to $1.46 billion. These funds are made up of the general fund, which is the chief operating fund of the state, the state highway fund, the municipal bond fund, and the consolidated bond interest redemption fund. Proprietary funds of the state consist of enterprise funds and internal service funds. Enterprise funds are allocated to programs outside of the state whereas internal services are allocated to state agencies. Total ending balances for enterprise and internal service funds is negative $52 million and $58 million, respectively.
Slight budget variations on both general fund sources and expenditures arose primarily from reduced intergovernmental revenues and timing differences. Capital assets at the end of the fiscal year hold a net book value of $5.5 billion. Capital assets for the state consist of land, buildings, equipment, software, infrastructure, and construction in progress. In addition, long-term liabilities increased $84 million during the fiscal year. This increase was primarily due to the issuance of general obligation bonds.
References
Copley, P. A. (2011). Essentials of Accounting for Governmental and Not-for-Profit Organizations (10th ed.). Retrieved from The University of Phoenix eBook Collection database
Granof, M. H., &Wardlow, P. S. (2011). Core Concepts of Government and Not-for-Profit Accounting (2nd ed.). Retrieved from The University eBook Collection database.
Wallin, K. R. (2011). State of Nevada Comprehensive Annual Financial Report. Retrieved from http://controller.nv.gov/FinancialReports/CAFR_pdf_files/FY11All.pdf