Financial Statement/Audit Report Review - Case Study Example

a narrative introduction overview and analysis to entity’s basic financial statements, a schedule of Management’s Discussion and Analysis (MD&A) (Bragg & Bragg, (2007). The analyzed financial statements were presented on a GAAP foundation which reflects accrual basis of accounting. These statements are specifically designed to give the general public an overall look of the City’s finances just like in the case with private- sector enterprises. If the assets exceed liabilities, then surplus will be reported as the City’s net financial position.

If in any case there is an increase or decline in the net position, it is reported immediately to suggest whether the fiscal financial state of the city is deteriorating or improving. Again the use of statement of activities avails net position change for a given period. Other items which are reported in this statement are expenses as well as revenues that have resulted from outlay and inflow respectively. The statements clearly distinguish the principle functionality of a given source of revenue and how they are to be recovered.

These are used to account for near-term outlay and inflows of useable resources. In government, the main operating fund is known as GENERAL FUND, which is normally used for legal purposes. General Fund together with other four groups of funds is collectively referred to as “GOVERNMENTAL FUNDS”. To be specific, these other funds are just the annexes of General Fund being that they are also expensed on agencies within the General fund in financing same services and other vote of counts (Henley, 1989).

In this regard the analysis will cover all governmental funds with the inclusion of general fund under one umbrella. Conclusively, governmental fund consist of General Fund and other group of funds as follows: Special Revenue Funds; these are money restricted by contract, or law, for explicit uses. Atypical example is a motor fuel tax fund which is normally accounted for on a special way