Paper Example on San Francisco and Los Angeles CAFR

Introduction

The paper aims at analyzing the comprehensive annual financial report (CAFR) of the significant local governments within the state of California, United States. The local governments selected include San Francisco and Los Angeles. Ideally, San Francisco is a city in northern California whose mission is to provide an attractive, safe and a well-maintained town for all the citizens therein. In this case, it strives to achieve this particular mission goal by delivering excellent customer service to the citizens who are necessitated by the implementation of the capital projects. Furthermore, the city strives to embrace diversity and inclusion among the workers in the community as a way to improve the quality of life therein ("CITY AND COUNTY OF SAN FRANCISCO, CALIFORNIA : Comprehensive Annual Financial Report|CAFR", 2018). On the other hand, Los Angeles is located in southern California. It is the second largest city after the New York and thus has a high population compared to San Francisco. Nevertheless, just like San Francisco is the official city in Northern California, Los Angeles is the center of business, financial, and cultural activities in Southern California ("City of Los Angeles, California: Comprehensive Annual Financial Report| CAFR", 2018). The paper will evaluate the various elements in the CAFR including budgets, the source of revenues, income tax, audit reports and the mode of accounting among others.

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The comprehensive annual financial report (CAFR) refers to the set of financial statements published by the various government institutions within the United States. The financial reports may either be for a state, municipal, or other governmental entities that comply with the Generally Accepted Accounting Standards (GAAP) and all other accounting requirements therein. Moreover, these entities are also promulgated by the Governmental Accounting Standards Board (GASB). Ideally, the GASB outlines the standards that determine the content of the CAFR ("CITY AND COUNTY OF SAN FRANCISCO, CALIFORNIA : Comprehensive Annual Financial Report|CAFR", 2018). These standards are provided in the GASB annual update publication of the Codification of Governmental Accounting and Financial Reporting Standards. In the case scenario in the publication of both San Francisco and Los Angeles CAFR, they conform to the contents of the GASB and the requirements of the GAAP. For instance, the two CAFRs include the GASB contents that include an introductory section, the financial section, and the statistical section. Moreover, both San Francisco and Los Angeles CAFR cover the period for the Fiscal Year ended 30th June 2017 ("City of Los Angeles, California: Comprehensive Annual Financial Report| CAFR", 2018).

In both the San Francisco and Los Angeles CAFR, there is the presentation of an independent auditors report and a budget report. The auditor's report outlines the opinion if the information presented in the financial statements depicts the true and fair view of the entities. The budget report explains the actual and forecasts revenues and expenditures for the entities. Both of the independent auditor's reports audited the governmental activities, the business activities, each of the significant funds, the remaining aggregate funds within the cities for the Fiscal Year ended 30th June 2017 ("CITY AND COUNTY OF SAN FRANCISCO, CALIFORNIA : Comprehensive Annual Financial Report|CAFR", 2018). The audit report also audited the notes to the financial statement for both cities therein. Consequently, in both cities, the auditor presented an unqualified opinion that outlines that the information presented in the financial reports depicts a true and fair view of the entities. Since the auditor's report also test the strength of the internal controls in the two cities, it is clear that there is an existence of the internal audit function in both San Francisco and Los Angeles. In the budget reports, both San Francisco and Los Angeles have an almost similar source of revenues and expenditure. A higher proportion of the revenues are acquired from tax collected in property, sales, franchisees, transient occupancy, and other tax activities in the counties. Other revenues are realized from interest, fines, licenses, rentals, permits, and other inter-governmental revenues therein. On the other hand, the expenditure relates to the wages and salaries paid to the workers including county treasures, attorneys, county council and other public workers. Moreover, the cities venture into capital projects with the aim to enhance the public development therein. In this case, San Francisco operates the Francisco Municipal Transportation Agency (SFMTA) while Los Angeles aims at constructing fire stations and creating employment opportunities ("City of Los Angeles, California: Comprehensive Annual Financial Report| CAFR", 2018).

Furthermore, both San Francisco and Los Angeles CAFR comprise the introduction, financial and statistical sections as required by the GASB ("CITY AND COUNTY OF SAN FRANCISCO, CALIFORNIA : Comprehensive Annual Financial Report|CAFR", 2018). In both cities, the introduction section entails similar items although they are arranged in the same order. These elements include the letter of transmittal, the organization chart, and certificate of excellence, list of principals/officials in the county council or the office of the controller. The financial section majorly comprises of the primary financial statements including the balance sheet, statement of revenues, statement of expenses, statement of cash flows, and the notes to these financial statements therein. Moreover, the financial section also illustrates the source of revenues and how the entities utilize these revenues through the subsequent expenditures. The CAFR shows that San Francisco generated an estimate of 10 million dollars revenue in 2017 which is higher compared to Los Angeles which made an estimate of 7 million dollars in revenue in 2017. Nonetheless, both cities reported an increase in revenue compared to the fiscal years ended 30th June 2016. Lastly, the statistical section provides the data illustrating the historical performance of the cities within a specific period. Both towns present a trend analysis for the last ten years beginning from 2008 to 2017. In the review, there is a positive trend of improvement across the ten years ("City of Los Angeles, California: Comprehensive Annual Financial Report| CAFR", 2018).

Los Angeles provides a budget report that illustrates the actual and the budgeted items including expenditure and revenue. The CAFR analyses the original budgets, the final budgets and the actual amounts utilized in both the revenues and expenditure. Upon comparing the final budgets and the actual amounts, the CAFR provides a variance which depicts the increasing or decreasing amount. In the total revenues and other financing sources, there is an unfavorable variance since the final budget is 6,955,604 dollars while the actual amount is 6,800,583dollars and thus creating a 155,021 dollars variance. It shows that the actual amounts were less than the expected revenues therein. On the other hand, the total expenditure and other financing uses depict a negative variance as the final budget is 6,955,604 dollars while the actual amount is 6,681,824dollars and thus creating a 273,780 dollars variance. It shows that the expenses expenditure was higher than the actual amount ("City of Los Angeles, California: Comprehensive Annual Financial Report| CAFR", 2018).

Conclusion

As mentioned earlier, the Los Angeles CAFR generates revenues from various sources including the government and the business activities within the entity. The governmental activities include property taxes, sales tax, permits, licenses, intergovernmental revenues, deferred revenue and other forms of taxes. Besides, income tax is the primary revenue for the entity. The revenues from the business-type activities include items such as rentals and franchises among others. Based on the ten years of statistical data, Los Angeles shows an improvement in the income tax revenue year by year. Although the city presents a general fund report, it has a zero balance as there are no unallocated funds in the town ("City of Los Angeles, California: Comprehensive Annual Financial Report| CAFR", 2018).

References

CITY AND COUNTY OF SAN FRANCISCO, CALIFORNIA : Comprehensive Annual Financial Report|CAFR. (2018). Retrieved from http://sfcontroller.org/sites/default/files/Documents/Accounting/CCSF%20CAFR%20FY2016-17%20no%20cover%20FINAL%20reduced.compressed.pdf

City of Los Angeles, California: Comprehensive Annual Financial Report| CAFR. (2018). Retrieved from https://d3n8a8pro7vhmx.cloudfront.net/controllergalperin/pages/318/attachments/original/1517444508/FY2017_CAFR.pdf?1517444508