Essay Example: Morrisville Comprehensive Annual Financial Report

The city of Morrisville was incorporated in the year 1875 and is one of the most thriving cities in North Carolina. This region has been ranking highly regarding the most favorable places to live, raise a family, work or retire. As such, one of the unique aspects of this city is that high revenues are arising from property taxes because of the affinity for people to live here. With at least $14.7 million out of the possible $35.2 million in revenues that the city got in the latest financial report could be attributed to property taxes, showing the uniqueness of this city with regards to property ventures. Moreover, the largest part of the town's investment in capital assets includes investment in the area of property development, for example, land acquisition, machinery and the necessary land development equipment and buildings. Having access to major transport hubs such as the Raleigh International Airport, the state capital and the Interstate highways, the city is rightly placed for extensive investments in this area.

Challenges to Planning

The assets belonging to the town exceed the liabilities in 2015 by $124.5 million. Therefore, the town's net position has increased by $9.2 million. As earlier indicated earlier, the largest portion of the assets is used directly in the course of property development in the town, meaning that they cannot be liquidated to offset any increased debts for the town. This, in fact, means that the assets in the town are not available for future spending. Therefore, the town faces the challenge that in the face of increasing debts, the assets that it owns may not be used to service those debts. Other sources of revenue must be used to offset any imbalances in the finances of the town. Nonetheless, there exists a $19 million balance of the town's net position whose use is unrestricted. This may be used to meet any of the town's obligations including services to citizens.

Financial Statements Presentation

Financial reporting for cities makes provision for both governmental and business-type activities that the local government has been engaging in to finance the city's projects. As such, the financial presentation takes notice of the role of both the private sector and the public sector as contributors to the city's finances. As such, the presentation will include the share given by both sectors in the course of the financial year. It is important to note that GASB Rule No. 34 applies here as it relates to the financial analysis of local and state governments. This requirement enables the government to report on the revenues and expenditures gained from the government ventures that the organization is engaging in. Additionally, the managers of the governmental institutions are tasked to give their insights on the finances of the state or local government (GASB, 2014).

Furthermore, the GASB Rule No. 117 provides the directions for the presentation of financial statements for non-profit organizations such as the government. It is important to note that though the government may have an increasing net position; it is not operated on profits. Therefore, this provision works for the presentation of such an organization. This rule requires that the organization give a statement of its financial position, activities and cash flows. This is provided below as adopted from the 2013 Financial Reports (Morrisville, 2015):

GOVERNMENTWIDE FINANCIAL ANALYSIS

Governmental Businesstype Activities Activites Total

20152014 20152014 20152014

Current and other assets$29,254,073$27,388,610 $1,239,024$1,378,286 $30,493,097$28,766,896

Capital assets110,682,301103,717,771 805,551805,551 111,487,852104,523,322

Total assets139,936,374131,106,381 2,044,5752,183,837 141,980,949133,290,218

Longterm debt outstanding 12,912,449 13,142,159 155,000 12,912,449 13,297,159

Other liabilities 2,382,765 4,670,073 2,337 2,382,765 4,672,410

Deferred inflows of resources 2,825,466 4,931 2,825,466 4,931

Total liabilities 18,120,680 17,817,163 157,337 18,120,680 17,974,500

Net position: Net investment in capital assets 99,549,312 93,088,451 805,551 650,551 100,354,863 93,739,002

Restricted 5,131,025 5,701,761 5,131,025 5,701,761

Unrestricted 17,799,963 14,499,006 1,239,024 1,375,949 19,038,987 15,874,955

Total net position $ 122,480,300 $ 113,289,218 $2,044,575 $2,026,500 $ 124,524,875 $ 115,315,718

Fig 1: Morrisville Financial Analysis

Below represents the towns change in net position:

Governmental Activities

Businesstype

ActivitiesTotal

Revenues:

Program revenues:

201520142015201420152014

Charges for services $3,266,803 $2,989,395 $ $ $3,266,803 $2,989,395

Operating grants and contributions 508,875 497,609 508,875 497,609

Capital grants and contributions 7,627,332 5,305,670 7,627,332 5,305,670

Property taxes 14,745,618 14,577,176 14,745,618 14,577,176

Other taxes and licenses 1,724,212 1,753,968 1,724,212 1,753,968

Unrestricted intergovernmental 6,563,000 5,574,758 6,563,000 5,574,758

Unrestricted investment earnings 22,745 27,487 21,615 15,482 44,360 42,969

Miscellaneous 296,522 224,459 1,885 298,407 224,459

Parkland payment in lieu 551,487 551,487

Gain (Loss) on disposal of capital assets (41,118) 127,227 (41,118) 127,227

Total revenues 35,265,476 31,077,749 23,500 15,482 35,288,976 31,093,231

General revenues:

Expenses:

General Government 5,724,056 6,105,290 5,724,056 6,105,290

Development Services 2,900,259 2,552,421 2,900,259 2,552,421

Public Safety 9,274,703 8,324,497 9,274,703 8,324,497

Public Works Streets & Sanitation 4,805,597 3,768,812 4,805,597 3,768,812

Cultural and recreation 2,315,218 2,086,939 2,315,218 2,086,939

Interest on longterm debt 379,060 419,214 379,060 419,214

Water and sewer 5,425 13,606 5,425 13,606

Total expenses 25,398,893 23,257,173 5,425 13,606 25,404,318 23,270,779

Increases (decreases) in net position before

special items9,866,5837,820,57618,0751,8769,884,6587,822,452

Special items:

Transfer capital assets to the Town of Cary

Increases (decreases) in net position after

special items9,866,5837,820,57618,0751,8769,884,6587,822,452

Net position, July 1 113,289,218 105,468,642 2,026,500 2,024,624 115,315,718 107,493,266

Prior period adjustment(1,593,556)(1,593,556)

Prior period adjustment 918,055 918,055

Net position, June 30

$ 122,480,300 $ 113,289,218

$ 2,044,575

$ 2,026,500

$ 124,524,875

$ 115,315,718

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Let us consider a tabular representation:

GOVERNMENT AND NONPROFIT ACCOUNTING

SUMMARY OF GOVERNMENT ORGANIZATIONS PROJECTS

Criteria City of Morrisville

Types of Funds (e.g. Governmental, Proprietary, Fiduciary Governmental funds

Proprietary funds

Fiduciary funds

# Major Governmental Funds (name) Ten (10)

General Fund

Capital Projects Funds (9)

# Major Enterprise Funds (name)

One (1)

Water and Sewer

Activity of Enterprise Funds (e.g. utility)

Minimal activity due to a merger of the water and sewer activities with the Town of Cary

# Internal Service Funds Zero (0)

Activity of Internal Service Funds (examples)

N/A

# Major Component Units

Zero (0)

Activity of Component Units N/A

Component Unit presentation in Financial Statements

Not included in the report

# Minor Special Revenue Funds Zero (0)

Special Revenue Fund is included in the General Fund (GASB 54)

# Minor Capital Project Funds Eight (8)

# Minor Debt Service Funds Zero (0)

# Minor Permanent Funds Zero (0)

# Minor Enterprise Funds Zero (0)

Types of Fiduciary Funds which types and example of activity Pension Trust Fund

Retirement Health Care Trust Fund

Total General Fund Actual Revenues for fiscal year per fund financial statement $27,204,615

Main sources of revenue top 3 Ad valorem taxes ($14,784,833)

Unrestricted intergovernmental ($6,563,000)

Permits and fees ($2,100,027)

Main types of expenditures Public safety ($8,484,213)

Public works ($4,869,772)

General government ($3,115,978)

Total Enterprise Fund Revenues $18,075

Are Enterprise Funds self-supporting? No

Amount and type of Other Financing Sources (Uses) total all funds Four (4)

Transfers

Installment debt issuance proceeds

Claims and settlements

Fund balance appropriated

Amount of Federal $ received total all funds $315,110

Required Supplementary Information what information? Law Enforcement Officers Special Separation Allowance

Other Postemployment Benefits

Local Government Employees Retirement System

Firefighters and Rescue Squad Workers Pension

Statistical Section what type of information different than State of NC Government-wide Revenues

Assessed Valued of Taxable Property

Computation of Legal Debt Margin

New Commercial and Residential Activity

Unique Items items which were not noted in the State of NCs CAFR or not noted in class.

References

GASB. (2014). SUMMARY OF STATEMENT NO. 34. Retrieved April 21, 2016, from GASB: http://www.gasb.org/st/summary/gstsm34.html

Morrisville. (2015). Morrisville Comprehensive Annual Financial Report. Retrieved April 21, 2016, from http://www.ci.morrisville.nc.us/DocumentCenter/View/10452