accounting analize
ACCT 438 Data Analytics on Governmental Financial Statements Using the most recent CAFR of the city assigned, check the Managers’ Discussion and Analysis section, find the city’s Condensed Statement of Net Position and Statement of Activities and transfer them into excel worksheets. 1. Perform Horizontal analysis and Vertical Analysis for the two financial elements for both the current and past year. 2. Using the Basic financial statements, your analysis results, MD&A, trend tables in Statistical session, and any other pertinent information, analyze and write a research report to address the following questions. a. Analysis of revenues and revenue sources. 1) Is the city’s revenue base well diversified, or does the city rely heavily on one or two major revenue sources, such as property taxes? 2) Has the city been relying on intergovernmental revenues for an excessive portion of its operating expenditures? 3) How stable and flexible are the city's revenue sources in the event of Covid-19 for both governmental and business type revenues? Has the city got any federal or state funding to cooper with the pandemic? If so, how had the city expended the funding? 4) What percentage of total expenses of governmental activities is covered by program revenues? By general revenues? 5) Do any extraordinary or special items gains or losses reported in the statement of activities deserve attention? b. Analysis of expenditures and expenses 1) Do any components of expenditures and, at the governmental-wide level, expenses exhibit sharp growth in the past? 2) How flexible are expenditures? That is, are there large percentages of relatively nondiscretionary expenditures, such as or interest and public safety? 3) How does the growth pattern of operating expenditures and expenses over the past 10 years compare with that of revenues? 4) Has Covid-19 significantly impacted the expenditure of the city in the reporting period? c. Analysis of financial reserves. 1) Do total governmental fund revenues exceed total governmental fund expenditures? Do General Fund revenues exceed General Fund expenditures? What has been the trend in the ratio of revenues to expenditures? 2) What are the major business type activities for the city? Do total business type revenues exceed total business expenditures? Do business type activities have transfer in or transfer out to governmental activities? 3) Are the levels of financial reserves (i.e., unrestricted, assigned, committed, and restricted fund balances, contingency funds, and unrestricted net position) adequate to meet unforeseen operational requirements or catastrophic events? 4) Is an adequate amount of cash and securities on hand, or could the city borrow quickly to cover short-term obligations? d. Analysis of debt issues. 1) What has been the 10-year trend in general obligation long-term debt relative to trends in population and revenue capacity? 2) Are significant debts of other governments (e.g., a school district, a county) supported by the same taxable properties? What has been the trend for this “overlapping” debt? 3) Are there significant levels of short-term operating debt? If so, has the amount of this debt grown over time? 4) Are there any significant debts (e.g., lease obligations, unfunded pension liabilities, accrued employee benefits) or contingent abilities? e. Socioeconomic factors. What have been the trends in demographic and economic indicators, such as real estate values, building permits, retail sales, population, income per capita, percent of population below the poverty level, average age, average educational level, employment level? (Note: Many of these items and other potentially useful information can be obtained from the Census Bureau’s website www.census.gov,). Note: Potential “red flags” and warnings signs can be found on page 437 of the book, item f.