Are the revenues declining over the last 5-10 years? If so, what components of revenue are declining?

Project Assignment

Objective

The objective of this project is to apply what you have learned concerning Governmental Accounting and reporting through an analysis of the financial statements of a City.

Research

The Assignment requires to download the latest CAFR(Comprehensive Annual Financial Report) for the City of Seattle WA for 2018.

Assignment Report

1. Format
   1. The report will be a minimum of 10 pages in APA format written in narrative style and double spaced using 12 point font.

2. Report Content

1. Description of the Entity
   1. Provide a description of the City

1. Governmental & Proprietary Funds
   1. How many Funds does the City use?
   2. Which Funds are the major Funds?

1. Quantitative Analysis
2. The quantitative analysis should consider each of the following items. These are the items that you should contemplate when evaluating financial stability of the City. Ratio analysis and financial trends should be selected to help in supporting the analysis.
3. Revenues

• How diverse is the revenue base of the City?
  1. Does the entity rely heavily on one or two major sources?
  2. What Revenue source (s) would be effected in adverse   economic conditions?
  3. Discuss any other observations about Revenues that you may consider important to your analysis.
  4. Are the revenues declining over the last 5-10 years? If so, what components of revenue are declining?

1. Reserves
2. Are the levels of Financial Reserves (e.g. Fund Balances, Contingency Funds, Unrestricted Fund Net Assets, etc.) adequate to meet unforeseen operational requirements or catastrophic events?
3. Expenditures and Expenses
4. What (if any) expenditures are experiencing rapid growth over the last 5-10 years?
5. Are there Budgetary Controls being implemented over expenditures? Please refer to the Budgetary Reports as part of the Financial Statements, or listed in the “Required Supplementary Section” of the CAFR Report.
6. Describe the growth pattern of expenditures compared to revenues over the past few years.
7. Are there any Extraordinary or Special Items listed in the CAFR report?

• Debt Burden
  1. Describe the trend in long term debt burden over the past 5-10 years.
  2. Describe the trend in short term debt burden over the past 5-10 years.
  3. What is your assessment of the debt burden of the City? Does the debt burden pose a material challenge to the financial stability of the City?
  4. Does the City require or retain a “Debt Reserve” in the Debt Service Fund Balance?
  5. Explain & Analyze the Legal Debt Margin for the City

 

• Trends of Government’s Operating Environment:
  1. Describe the trends in the demographic, economic, political and social characteristics of the City.
  2. What is impact of these trends on the City’s infrastructure (capital projects construction), services offered to its citizens, the types of revenues received, and costs expended. (Please refer to the Management Discussion and Analysis Section of the CARF Report, along with the Statistical Section and/ or the Demographic and Economic Information listed)

3. Demographics
   1. Describe the population growth of the City for the past 10 years.
   2. Describe the aging trends, and average age of the citizens of the City.
   3. Describe the citizen’s average income level.
   4. Describe the percent of population below the poverty level.
   5. Describe the average educational level of the citizens.

4. Economic Conditions
   1. List the major businesses that are located in the City or locality.
   2. Describe the trend in the unemployment rate of the entity.
   3. Describe the per capita net worth and average Income levels of the entity’s citizens.
   4. Describe the value of property per capita of the entity’s citizens

5. Political Climate
   1. Describe the hierarchy and structure of the City, State or Local Government
   2. Describe the citizenry satisfaction with the City government.
   3. Describe the City’s relations with State & Federal Government
6. Social Conditions
   1. Describe the trends in the City’s Crime Rate over the past 5-10-year period.
   2. Describe the City’s increase or decrease in care for the elderly

7. Ratio Analysis – Governmental Funds
   1. Liquidity Position
      1. Ratio Calculation – Cash, Investments & Receivables divided by Current Liabilities
      2. This ratio indicates the Government’s ability to meet its short-term obligations
   2. Spending Patterns
      1. Ratio Calculation – Expenditures for Specific Functions divided by Total Expenditures
      2. This Ratio may indicate an increase in expenditures for a specific Function may indicate a change in priority spending

• Examples – Public Safety, Sanitation, General Administration, Streets & Highways, etc.

1. Adequacy of Revenues
   1. Total Revenues divided by Total Expenditures
   2. This Ratio indicates whether Revenues are covering a larger share of Expenditures
2. Stability of Revenues
   1. Property Tax Revenues divided by Total Operating Revenues. Property Tax Revenues are considered a stable source of Revenue. Higher ratios are considered better.

8. Summary & Conclusion
   1. In your opinion assess the overall financial health of the city.
   2. Will the City have the financial strength to provide citizens the services expected of it in the foreseeable future?
   3. In your opinion what are the key risks and uncertainties facing the City that might impair the ability to provide services to the citizenry?

3. Appendix of Financial Information
   1. The project report should contain a listing of financial information referred to in the project report (e.g. trends in revenue, expenses, ratio analysis, per capita income, average age, the city population, educational level, crime levels, poverty levels, etc. for the past 5 – 10 years.

4. References
   1. List all references used in the report analysis. Cite all of the references in the body of the report.
   2. In-Text Citations are required for all References