Financial Statement/Audit Report Review (1) - Essay Example

Harris County Texas Finance and Accounting The Harris County Government’s sources of income can be summarized into three namely: - Charges from services offered, Operating grants and Capital grants and contributions. The accounting methods used for the government funds in the Harris county financial report is the accrual method. This is the main method of accounting used on all funds this is mainly because most of the expenditures and transactions are done over a given period of time and no definite dates can be quoted as would be the case in cash method.

The county government adheres to government regulations and has since and that has enabled them to a couple of accounting awards. The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the County for its Comprehensive Annual Financial Report (CAFR) for the fiscal year ended February 28, 2010. It therefore attests to the high levels of accounting standards that they adhere to. The auditing was done by an independent auditing farm namely Deloitte and Touche, which is actually one of the requirements by the federal government.

GASB statement 34 has been applied and complied with; this is very evident from the report. The report captures among other things the increase in asset value of government investments in the county. It also gives a clear estimate as o weather the current estimates and available balances are sufficient for the delivery of current services to the citizenry. The report gives various other additional information’s that are equally important to the citizenry; these are some of the guidelines contained in GASB statement 34.

Some of the decisions made by the management board that torch on the finances of the county have also been included. State and local government analysis reports of each of the funds also feature strongly in the report. The management discussion and analysis section opens with an overview of the financial position of the county government. The total government-wide assets of the County exceeded the liabilities at February 28, 2011 by $10,362,454,916. This is a decrease of $87,624,282 from the previous year when assets exceeded liabilities by $10,450,079,198.

This is very good news for not only the citizenry but also the county government itself because it portrays an image of sound financial health. According to the Governmental Fund Financial Statements As of February 28, 2011, Harris County governmental funds reported a combined fund balances of $955,353,432. This reflects an increase of $42,389,239 from the 2010 fiscal year; this was mainly due to an increase in commercial paper issuance and moneys reserved for Mobility in the current year. Combined unreserved fund balances of $365,152,928 for fiscal year 2011 shows an increase of $43,913,109 from the previous year.

During the 2011 fiscal year, the Harris County Toll Road Authority remitted $120 million of surplus toll road revenue to the mobility program which is accounted for within the General Fund. Mobility program monies are restricted by Section 284.0031 of the Texas Transportation Code for the study, design, construction, maintenance, repair or operation. This money will be made available for the improvement of the road conditions across the county. According to GAAP and GASB guidelines, the financial reporting is supposed to be composed of the primary government and its component units some are referred to as blended units.

The primary government here being the county government doing the reporting while the component units refers to the departments which form part of the county government. The county government discharges its duties through these component departments. The following blended component units are in operation as Harris County: - They are the Harris County Flood Control District, the Harris County Juvenile Board, and the Harris County Sports & Convention Corporation. Others are referred to as discreet component units; they are legally independent from the county’s control but they get their funds through the county government.

They include the hospital district, housing finance corporation, mental heal and mental retardation authority, industrial development corporation and the children’s assessment center foundation, health facilities development corporation, cultural education finance corporation and friends of county pets. Financial data from each of these implementation components is collected by the relevant finance departments and relayed the county government for analysis and reporting. They are reported together with the financial statement of the primary government but on separate columns.

Some of the information that is missing from this report that I feel should have been included is the asset base of some of these components. Most of these components own assets that can have commercial benefit to the county government but from the report it’s not indicated whether the primary realizes any financial benefits from those assets. This is an issue that should be looked into in future reporting; those components however independent they are must be compelled to disclose how much revenue the raise from these assets and what they do with the collected revenue.

The financial position of the Harris County Government improved over the time covered by the report and this can be credited to the prudent management of the funds given by the federal government. In order to realize more growth, the County Government ought to monitor the components more closely. References Warren Ruppel (2005) Government accounting made easy, page 240 John Wiley & Sons Inc, New Jersey. http://www.harriscountytx.gov/CmpDocuments/66/CAFR_Reports/Harris%20County%202011.pdf Malcolm Smith (2011) Research Methods in Accounting page 106, Sage publishers, London.

 By Clyde P. Stickney, Roman L. Weil, Katherine Schipper, Jennifer Francis Financial Accounting: An Introduction to Concepts, Methods, and Uses, page 250 Cengage learning, New York.