Assignment 1: Financial Statement / Audit Report

Dawna Berry

ACC410 Government and Not-For-Profit

Professor Dr. M. Austin Zekeri

January 27, 2013

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1. Analyze the method of accounting used for the general fund and all other funds in

existence by the government. Evaluate the reasoning for the use of the method of

accounting for each of the funds as required by GAASB.

The government-wide financial statements can be found following this section of the report for

the Atlanta, Georgia County.

A Fund financial statement is a combination of related accounts that is used to maintain direct

control over resources that have been segregated for specific activities or objectives. The City,

like other state and local governments, uses fund accounting to make sure and demonstrate

compliance with finance-related legal requirements. All of the City funds can be divided into

three groups: governmental funds, proprietary funds, and fiduciary funds.

Governmental funds are used to account for basically the same functions reported on the

governmental activities in the government-wide financial statements. Unlike the government-

wide financial statements, governmental fund financial statements center on the near-term

inflows and outflows of spendable resources, as well as on balances of spendable resources

available at the end of the fiscal year. Such information may be helpful in evaluating the

government’s near-term financing requirements.

The focus of the City’s governmental funds is to provide information on near-term inflows,

outflows, and balances of spendable resources. Such information is useful in calculating the

City’s financing requirements. In particular, the unassigned fund balance may serve as a

functional measure of a government’s net resources available for spending at the end of each

fiscal year.

The City of Atlanta maintains two different types of proprietary funds. Enterprise funds which

are also nonmajor proprietary funds and they are used to report the similar functions presented as

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business-type activities in the government-wide financial statements. The City uses enterprise

funds to report for the business-type activities of the Hartsfield-Jackson Atlanta International

Airport, Water and Wastewater System, Parks and Recreational Facilities, Solid Waste Services,

Underground Atlanta, Parking Deck and the Civic Center. An internal service fund is an

accounting device used to accrue and allocate costs internally among the City’s various

functions. The City uses internal service funds to report for the maintenance and operation of its

fleet of vehicles and its group insurance fund for employees and retirees. These services benefit

both governmental and business-type functions, the net assets and change in net assets has to be

paid between governmental activities and business type activities in the government-wide

financial statements.

Proprietary funds provide the same type of information as the government-wide financial

statements. The proprietary fund financial statements offer separate information for the

Department of Aviation, and the Department of Watershed Management, which are well

considered to be major funds of the City. Conversely, both internal service funds are combined

into a single, aggregated presentation in the proprietary fund financial statements. Individual

fund data for the internal service funds is provided in the form of combining statements

elsewhere in the report. The proprietary funds financial statements follow the governmental

funds statements. Proprietary funds provide the same type of information as business-type

activities in the government-wide financial statements, but in more detail. Factors concerning the

finances of these funds were previously addressed in the discussion of the City’s business-type

activities.

Fiduciary funds that are used to account for resources held for the benefit of parties outside the

government. Fiduciary funds are not reflected in the government-wide financial statement

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because the resources of those funds are not offered to support the City’s own programs. The

accounting used for fiduciary funds is much like that used for proprietary funds. The fiduciary

funds financial statements follow the proprietary funds statements.

2. Assess the application and compliance of GASB Statement 34, Basic Financial

Statements and Management Decisions and Analysis for State and Local

Governments to each of the funds.

If this questions is asking whether or not the Basic Financial Statements and Management

Decisions and Analysis for State and Local Governments to each of the funds are the same or if

they are complying with GASB Statement 34 the answer would be yes. Anything else it is asking

I have no idea what the question is.

3. Evaluate management’s discussion and analysis (MD&A). In your evaluation,

analyze the significant information in the MD&A and how the information

contributed to the clarity of the financial statements. From your analysis of

financial statements, identify and analyze information that should be included in

the statements.

I saw nothing wrong with the MD&A statement. I understood what it meant and what they were

trying to convey in their statement. If I wanted anything else in this statement I would say

nothing needs to change unless you want the whole financial statement added but then you can

look at it from the whole report if it is necessary.

4. Determine whether the entity’s financial position improved or deteriorated during

the reporting period. Speculate on the causes from your review of the financial

statements.

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It seems what you are asking is whether or not the money they get from wherever went up or

down determining if they get more money for the following year and the answer is yes it has

increased. The causes are in all areas of what I viewed from the financial records. It seems to me

that if you raise the cost in one department and a few in others then it won’t look too

conspicuous to anyone else who looks at the financial records that way the city or county gets the

money they are asking for when it could be to just line their own pockets with the money.

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References:

Summary of Statement No. 34; Basic Financial Statements—and Management's Discussion

and Analysis—for State and Local Governments (Issued 6/99); retrieved 1-27-12 at

http://www.gasb.org/st/summary/gstsm34.html

Atlanta, Ga.; Governments, Departments, Finance, Budget & Fiscal Policy; May 2012; retrieved

1-27-12 at http://www.atlantaga.gov/index.aspx?page=790

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