Annual Comprehensive Financial Report (ACFR) – City of Fairfax, Virginia

Annual Report Analysis
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Annual Report Analysis
Exercise 2-15
A
The titles of the two government-wide statements presented in the City of Fairfax, Virginia Comprehensive Annual Financial Report (CAFR) are the Statement of Net Position and the Statement of Activities. The total assets for governmental activities at US$ 338,415,382 were larger than the total assets for business-type activities at US$ 46,665,576. Education had the highest total net costs at US$ 43,500,973. The types of general revenues that cover the net cost of governmental activities were general property taxes, local sales, and use taxes, business license taxes, consumer utility taxes, meals tax, franchise tax, other local taxes, unrestricted revenues from the use of money and property, contribution from city, grant, and contribution not restricted to specific programs, and miscellaneous revenues. The business-type activities were not profitable as the expenses were more than the revenues.
B
The statement notes that the modified accrual basis of accounting and reporting is used in a government fund, where the measurement focus is determining the financial position and changes in financial position. Consequently, the government fund balance sheet includes current assets such as cash and cash equivalents at hand, cash and cash equivalents held by others, receivables, inventories, prepaid items, due from other funds, due from other government, and due from components units. In the same vein, the balance sheet of the government fund contains current liabilities such as reconciled overdraft, accounts payable, retainage payable, customer deposits and other liabilities, dues to other funds, dues to components units, and unearned revenues. The deferred inflow of resources included in the balance sheet is unavailable revenues. The deferred outflow of resources includes a deferred charge on refunding, OPEB-related items, and pension-related items. Notably, the reporting is consistent with the modified accrual basis of accounting as the balance sheet only contains the current financial resources measurements making it easy to determine the financial positions of the funds.
C
The general fund and the general capital projects funds are major funds for financial reporting services. Some of the non-major funds include the Stormwater Fund, Commercial Transportation Tax Fund, the Legacy for Fairfax Fund, and Old Town Fairfax Fund. The fund balance categories used are non-spendable, restricted, assigned, and unassigned.
D
The proprietary funds included in the report are the wastewater fund, transportation fund, and water utility fund. In the financial statement, it is evident that the funds use accrual accounting as the revenue is recognized once they are earned and expenses are reported when liabilities are incurred.
E
The two types of fiduciary funds included in the annual reports are the city supplemental pension trust fund and the City Firefighters, Policemen, and Policewomen Pension Trust Fund. Both of them are pension trust funds and the statement indicates the modified accrual basis of accounting.
F
The accounting policies that are discussed in the first notes are the Generally Accepted Accounting Principles (GAAP) and Governmental Accounting Standards Boards (GASB). The note does not contain a definition of the term available for paying current period obligation, but revenue is recognized when it is earned without considering whether the cash has been received or disbursed.
Exercise 3-11
A
From the review of activities, only wastewater business-type activities report net revenues. The fact that most activities show a net expense is a problem given that it raises questions about the financial sustainability of the City of Fairfax. In addition, the result may be an indication of existing inefficiencies in how the city operations are run.
B
There are no indirect expenses reported as separate line items.
C
The total amount reported as property taxes in the government-wide statement of activities is US$ 83,891,346. In the Statement of Revenues, Expenditures, and Changes of the Government Fund, the total amount of general property taxes is US$ 83,717,767. There is a slight difference between the two amounts. A potential reason for the explanation is a difference in the accounting basis for the two statements. The government fund uses a modified accrual basis, while the government-wide financial statements are based on an accrual basis.
D
The total amount reported as expenditure in the government-wide statement of activities is US$ 147,415,920 while the amount of expenditure in the statement of revenues, expenditures, and changes in the government fund is US$ 150,479,432. The extra expenses reported in the Government fund could be due to expenses owed to other funds for capital projects due the next financial year. For example, there is a significant difference in the amount entered for public works in the government fund and the amount in the government-wide statements of activities.
E
There is no special line of expenses or revenue reported in the two statements.
Exercise 3-15
A
The most costly government function operated by the government is education at US$ 43,500,973. The entire cost was borne by the taxpayers as the program did not generate any revenue for the entity. The entity increased its governmental activities' unrestricted net position by lowering the deficit from US$ 42.3 million to US$ 36.0 million. On the other hand, the entity decreases its unrestricted net position from US 0.8 million to a deficit of $ 1.9 million.
B
1
The three classifications for the revenues generated by the entity are general fund, general capital projects fund, and other governmental funds. The three most important sources of revenue for the general fund are general property taxes, other local taxes, and the Commonwealth. Of these, general property taxes provide more than a third of the General Fund revenues. The federal government is the main source of revenue for the General Capital Projects Fund, with other local taxes being the largest source of revenue for Other Governmental Funds. Property taxes account for 56.08 percent of revenues generated by the government fund. The statistics section presents a table detailing the change in revenue sources over time. From 2012 to 2021, the amount of property taxes collected increased by 44.54 percent (Hodgkins & Moran, 2021).
2
The level of classification used for expenditures funds. The three largest expenditures in the general fund are education, public safety, and public works. The largest expenditure in General Capital Expenditure Fund is public works, while the largest expenditure in Other Governmental Funds is public works. The supplementary section of the table presents a general change in the expenditure for the last ten years. The significant increase in expenses has been notable in public safety and planning and community development categories. The changes can be attributed to changes in population with time.
3
Other financing sources (uses) are reported in a different section of the statement below the expenditure and revenues section. The specific revenue sources and uses are indicated.
4.
There are no extraordinary items listed in the statement of revenues, expenditures, and changes in fund balances.
C
The budgetary comparison is provided as a part of the basic governmental fund...