Master’s Degree Project
Summer 2012
ACC607 Governmental Accounting
Professor Kimball
Analysis of the City of Henderson’s CAFR Footnote
Regarding Its Nonmajor Financial Stabilization Special Revenue Fund
Established Under NRS 354.6115
Preliminary draft due Monday June 18
Final copy due Monday June 25
This is an exercise in interpreting governmental accounting terminology found in a
current CAFR, emphasizing the new equity section terminology. It demonstrates how
governmental accountants must understand both the accounting standards of the GASB
as well as the civil laws that bear on accounting procedures, in this case NRS 354.6115.
This project also illustrates incorporation of government policies into its accounting
statements, in this case a policy on financial stabilization.
1.
Locate the CAFR (Comprehensive Annual Financial Report) for fiscal year ended
June 30, 2011 of the City of Henderson (COH) on-line at
http://www.cityofhenderson.com/finance/cafr.php. Click on Financial Section. The
CAFR’s Financial Section is 142 pages long in Adobe Acrobat pdf format on my
computer. Save it to your computer for future reference. You may have more or less
pages than my computer has.
2.
This CAFR is a long and complex document. I do not expect you to read it in its
entirety. Just read the sections prescribed below.
3.
Find the Notes to the Financial Statements section of the Financial Section at p.
19 (pdf 19/142). Find Note 1. Summary of Significant Accounting Policies and go to
item D. Assets, Liabilities and Equity. Find and read Note 1. D. 10. Equity
Classifications. It starts at page 27 (pdf 45/142) and ends on page 29 (pdf 47/142).
The final paragraph of Note 1. D. 10. e. states as follows and is the basis for this project.
Your responses to the questions below must use professional terminology as found in
your governmental textbook and the COH CAFR. Every declarative statement you write
must be supported by citation to information from the COH CAFR or NRS. Statements
not supported by citation are not acceptable and will not receive credit, because at this
stage in your career you should always be prepared to cite to authority for your
accounting assertions.
Use “Copy/Paste” to insert verbatim material from the COH CAFR or NRS into your
paper as support for your data sources. Italicize and indent at both margins the text of
your quoted material so that it is clearly distinguishable from your own words. Attribute
quoted material to your source by citation using accepted rules for electronic data
citation.
QUESTIONS:
1. Find NRS (Nevada Revised Statutes) 354.6115 in the State of Nevada website,
Legislative section. http://search.leg.state.nv.us/NRS/NRS.html Insert a search term in
the search box from the following to find statute NRS 354.6115:
NRS 354.6115 Fund to stabilize operation of local government and
mitigate effects of natural disaster.
Look at the line marked 6. It states auditor duties. Has the auditor for the COH CAFR in
2011 fulfilled its duties under this requirement? See COH CAFR 2011 Financial Section,
pp. 1 and 2 (pdf 2 and 3/142). Also examine the Compliance Section of the CAFR.
2. In the above Note 1. D. 10. e., the COH proposes to segregate 0.25% of property tax
revenue for financial stabilization. Calculate this amount for fiscal 2011. See p. 11 (pdf
27/142). Show your calculation.
3. In the above Note 1. D. 10. e., 0.25% of property tax revenue is to be “recorded
directly in the nonmajor Financial Stabilization Special Revenue Fund (the Stabilization
Fund)”. Use your answer to Question 2. Determine if COH recorded this amount
directly in the nonmajor Financial Stabilization Special Revenue Fund. See p. 62 (pdf
83/142).
4. In the above Note 1. D. 10. e., it states that COH will maintain the Financial
Stabilization Special Revenue Fund at “a balance of 8.3% of General Fund revenue”.
Find the amount of General Fund revenue for fiscal 2011. See p. 11 (pdf 27/142).
Calculate 8.3% of the revenue. Verify if COH maintained its Financial Stabilization
Special Revenue Fund balance at the level of 8.3% of GF revenue as of June 30, 2011.
See p 61 (pdf 82/142).
5. In the above Note 1. D. 10. e., it also states… “By policy, unassigned fund balance in
the General Fund is to be maintained at no less than 8.3% of General fund revenue”.
Determine if COH has maintained its Unassigned General Fund balance at or above the
amount required by policy. See p. 6 (pdf 22/142).
6. For what uses will COH spend its Financial Stabilization Special Revenue Fund? See
the unnumbered page following p. 58 (pdf 77/142). Who must authorize expenditures?
7. Why is the Financial Stabilization Fund classified as a special revenue fund?
8. Why is the Financial Stabilization Fund a “nonmajor” fund instead of a “major” fund?
See your textbook Ch 13 pp. 512-520.
Use memo format for your report. The clarity and the accuracy of your presentation are
important. Provide pictures from the CAFR and NRS to support your data and assertions.