A Comprehensive Annual Financial Report is a vital state publication that allows the public to understand how the state authorities are utilizing taxpayer money. Therefore, the Government Accounting Standards Board provides specific accounting standards that every government entity, including states, needs to follow in accounting for expenditures annually. This paper seeks to compare the comprehensive annual financial reports of the towns of Winston-Salem and Cary, fount in the State of North Carolina. Additional features of the revenue sources are also included in the analysis.
Comparison and Contrast of the CAFR of Winston Salem and the Town of Cary, North Carolina
The comprehensive annual financial reports in the two towns are published in similar methods. Both reports are accessible on the individual town websites and open for the public to analyze anytime. The contents of the two reports, however, are dissimilar as they represent entity-specific values. In both reports, the content is systematically grouped into sections which include; the introduction, financial, statistical, and compliance (audit) sections.
Audit and Budget Report of Winston Salem and Cary
Independent auditors did both audit reports for the towns of Winston Salem and Cary in the section identified as compliance. In the town of Winston, the report states compliance with the generally accepted auditing principles and the government auditing standards in the United States. The reports, in line with the GAAP requirements, and the government accounting standards, introduced their financial statements by providing an overview under the Management’s Discussion and Analysis section of the report. From the independent audit reports, the Town of Cary adopted the accrual modified tactic of account in budget presentation. While Winston-Salem reported a budget variance that was negative of the general fund that reported a positive expenditure variance of about $10 million, the Town of Cary reported a positive variance in revenue and expenditure of about $15.5 and $ 22.2million, respectively (Annual Comprehensive Financial Report | Town of Cary, 2022). The general fund balance of the Town of Cary increased as compared to that of the previous year.
Audit Report Type Issued
The auditor’s report provided in Winston Salem’s and Cary’s publications for the year 20201 adhered to the government entities reporting standards of the US government. Both reports focused on the compliance of the content of the individual report; these include each federal and state program, with the government set standards. Additionally, both reports included the schedules of findings and questioned costs, prior year audit findings, state and federal awards expenditures, and the notes of the schedule of the expenditures (Dewi et al., n.d.).
Moreover, in the audit section, the comprehensive annual financial reports for both towns presented unqualified opinions, which implied that the financial statements included in the two reports were fair and appropriate. No omissions were identified from the audit and were concluded to be in line with the Generally Accepted Accounting Principles.
Existence of an Internal Function
The town of Winston Salem has an existing internal audit function and has been used for some time as a consultation branch of the town’s financial management. The internal audit division evaluates the risk management and control functions to add value to the resulting operational choices. The Town of Cary, however, has not mentioned the presence of an internal audit; hence can be considered to be non-existent.
The Town of Winston Salem, North Carolina
As aforementioned, the town of Winston-Salem publishes its annual comprehensive report as required by United States law, and the outline of the report is grouped into four different linked sections. The introductory section includes a general overview of town officials, the community profile, and the organizational chart. The financial section provides the expected financial statements from which the trend, capacity, demographic, economic, and operating information and analysis are developed and reported in the statistical section. The last section provides information regarding audit reports on the federal and state programs and the different audit schedules.
Budget to Actual Report
The budget-to-actual report is presented in several statements, including the statement of revenue, the statement of expenditure, and the statement of changes in fund balance. The resulting variances result from the difference between the original and actual budgets, generally presented as either positive or negative. For the case of Winston Salem 2021, the total revenues and expenditures reported a positive variance that was significant in millions. As expected, the variance of the general fund was also positive at $20 million. From this overview, the budget for the financial year 2021 was favorable because the positive variance indicates the gains. Notably, the status quo improved from the previous financial year, when the town registered a negative budget variance.
The accrual-modified accounting approach, which the town adopts, requires that every transaction be recorded as it occurs.
Taxes, intergovernmental revenues, and charges for sales and services are the town’s primary revenue sources. Revenue was mainly sourced from property taxes, which accounted for almost $140 million, an amount that is more than 50% of the total revenue accrued from taxes only. However, the report shows a notable increase in the general revenue by $ 3 million, which translates to a 7.28% percent growth in the net revenue from the previous year. The utilities sales tax formed the second largest revenue e source for the financial year by earning the town $13.6 million in revenue (“Winston-Salem,” 2022).
Data regarding differed revenue are not provided in the comprehensive report. There are no indications of advanced revenues such that payments are made to the town before any services are offered.
Annual Comprehensive Financial Report | Town of Cary. (2022, June 31). Town of Cary, North Carolina. https://www.townofcary.org/services-publications/plans-publications-reports/financial-reports
Dewi, R., Hoesada, J., Akutansi, M., Buana, U., Raya, J., & Selatan, M. (n.d.). The Effect Of Government Accounting Standards, Internal Control Systems, Competence Of Human Resources, And Use Of Information Technology On Quality Of Financial Statements. http://www.ijiras.com/2020/Vol_7-Issue_1/paper_2.pdf
Winston-Salem. (2022). In Winston Salem, North Carolina. https://www.cityofws.org/DocumentCenter/View/22928/2021-City-of-Winston-Salem-Annual-Comprehensive-Financial-Report?bidId=