Comprehensive Annual Financial Report Breifing

Category: Accounting
Last Updated: 06 Jul 2020
Essay type: Report
Pages: 4 Views: 115

It is very important to comprehend how government accounting works in comparison to for profit accounting. Government accounting’s foundation is fund accounting, where the government has different funds, which are mostly mandated by federal and state laws, in order to trace the flow of capital used on a day to day basis (Copley, P. A. 2011). Every fund generally has a required budget that it must work within the limits of. This capital is then detailed on comprehensive annual financial report also known as the CAFR which describes the whole government entity.

One of the major differences between government and for-profit accounting is how the accumulate revenue and expenses (Copley, P. A. 2011). With for-profit accounting they make a profit from the sale of products and services. For-profit accounting utilizes what is called the matching concept when it comes to documenting and computing profitability. The use of this type of concept identifies capital when it is made and spent when it happens. The use of fund accounting, as a government entity calculates the flow of present profitability.

Income is the inflow and expenses are the outflows of the government’s present state of economic resources. This type of accounting is known as the modified-accrual basis of accounting (Copley, P. A. 2011). The CAFR is the official annual report of the city of Chicago which is a government agency. Taking a look at the management discussion and analysis also known as the MD&A we will explore all the different things that could be found in the CAFR and how they are generally reported.

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Looking at the MD&A city of Chicago has government funds that come from different types of income and business activities that are the result of services provided to the community. Revenue that the city of Chicago reports fall into two categories one being programs revenue and the other general. Under the program category they have, Licenses, Permits, Fines and charges for services, operating grants and contributions, and capital grants and contributions.

In the general revenue category you will find, property tax, and other taxes, non restricted grants and contributions and other (Ahmad, Emanual, & Scott, 2010). To offset these revenues they have expenses such as; general government, public safety, streets and sanitation, transportation, health, cultural and recreational, interest and long term debt, water, sewer, midway international airport, Chicago O’Hare international airport, and Chicago skyway (Ahmad, Emanual, & Scott, 2010).

Government-Wide Financial Statements are set up on the accrual basis, where they calculate the flow of all of the city of Chicago’s financial income as a whole on both a long term and a short term basis (Ahmad, Emanual, & Scott, 2010). The services that fall under governmental activities are all the things listed under the city’s revenue and expense. Majority of the cities incomes comes from taxes, the grants they city receives differ each year depending on the amount of spending can be done in the program. Public safety was the biggest expense which increased due to the increase in wages and benefits.

As of 2010 the city was governmental activity deficit was at about 3300 million dollars (Ahmad, Emanual, & Scott, 2010). The services that fall under proprietary funds also known as enterprise activities are, water, sewer, midway international airport, Chicago O’Hare international airport, and Chicago skyway. The proprietary funds unlike government funds are funds supported by charges paid by users based on the amount of the service they use. This also uses an accrual basis to report that provided the same type of information but in better detail.

These funds created an increase for the city of Chicago of about 250 million dollars because of the price increase of services and rent. According to the cities CAFR they use their general fund income and expenses at the end of 2010 had a balance of about 81 million in unreserved which happen to be an increase of about 78 million from prior year (Ahmad, Emanual, & Scott, 2010). Once more, each fund is independently accountable for its budget of income and expenses and the CAFR reports this accountability.

According to GASB the financial reporting objective’s public accountability is believe to be the foundation that all other financial reporting objectives are built upon. In the MD&A we were able to view the management’s opinion of all the information and different aspect of the entity provided in the comprehensive annual financial report. With this we were provided great detail about the city of Chicago and how they budget, what they find important, where their resources come from, and where the fall in reporting. REFERENCES Ahmad, A. Emanual, R. , & Scott, L. ( 2010). City of Chicago Comprehensive Annual Financial Report. Chicago: http://www. cityofchicago. org/content/dam/city/depts/fin/supp_info/CAFR/2010/CAFR2010. pdf. Copley, P. A. (2011). Overview of Financial for State and Local Government. In Essentials of Accounting for Governmental and Not-For-Profit Organizations, 10e https://ecampus. phoenix. edu/content/eBookLibrary2/content/DownloadList. aspx? assetMetaId=a89920bb-8e04-4cd3-bb43-6fc9358dbce9&assetDataId=b8792931-36bf-44f8-8666-81ede819e563.

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Comprehensive Annual Financial Report Breifing. (2017, Dec 24). Retrieved from https://phdessay.com/comprehensive-annual-financial-report-breifing/

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