Homework

Week 2 CAFR

8/27/2020

Introductory /Financial Section

1. Yes. The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the State of Maryland for its Comprehensive Annual Financial Report for the fiscal year ended June 30, 2018.

2. SB & Company LLC audited the financial statements of the State of Maryland. The auditor’s opinion on the financial statements was that the statements were free from material misstatements, were prepared in accordance to the accounting principles accepted in the United States, and they presented a true and fair view of the State’s performance and position for the year ended June 30,2019.

3. The auditor did mention internal controls in their report. The auditor however did not give an opinion on the entity’s internal controls. Instead, they gave a disclaimer that they only considered the internal controls to help in developing appropriate audit procedures and not to give an opinion on them.

4. Yes. An organizational chart was provided. The voters of Maryland were at the top of the chart.

Government Funds

1. Two Government Funds have been presented as major funds on the financial statements. They include the General Fund and the Special Revenue Fund.

2. The total assets amount on the Governmental Funds balance sheet is $ 8,759,967.

3. For Government Funds, Federal Revenue accounted for the largest source of revenue at $ 12,378,980, 000.

4. For Government Funds, Health and Mental Hygiene accounted for the largest expenditure at $ 14, 295,022,000.

5. Yes. The entity has special revenue funds presented on the financial statements as major governmental fund.

6. The State of Maryland maintains 5 government funds.

7. Yes. The State maintains permanent funds.

8. The total fund balance on the Governmental Funds Balance Sheet was $ 8,759,967,000.

Statistical Section

1. The largest employer of the State of Maryland in 2019 was the Anne Arundel County Board of Education.

2. The unemployment rate for the State of Maryland in 2019 was 3.9% and the per capital income was $ 62,914. The total population in 2019 was 6,042,718 and the school enrollment was 1,019,971.

Reference 

https://www.marylandtaxes.gov/forms/CAFR/cafr2019.pdf

If you need assistance finding a not-for-profit, check out “Charity Navigator”.

http://www.charitynavigator.org/

The 990’s can be found at  http://foundationcenter.org/findfunders/990finder/

Or at http://www.guidestar.org/

Week3 CAFR

9/8/2020

Question No: 1

Enterprise fund are Government-Owned fund aims to provide goods and services in exchange of fee Maryland government has Total Six enterprises fund, out of which  four are Major enterprise fund. Name of these funds are The employment loan program, Economic development program, the Maryland lottery and Gaming control agency and the Maryland transportation authority.

Question No: 2

Operating income of all enterprise funds are positive except economic development loan program. Economic development loan program has negative operating income worth ($8,407,000), unemployment loan program has positive operating income worth $36,203,000, Maryland lottery and gaming fund had positive operating income worth $1,319,016,000, Maryland transportation authority has positive operating income worth $862,534,000.

Question No: 3

Yes there are three major and four non major internal services fund (ISF). Major internal services fund includes Maryland higher education Activities, Maryland Prepaid College trust and Maryland Stadium Authority and Non Major includes Maryland Food center, Maryland environmental services, Maryland industrial development financing authority, and Maryland technology Development Corporation.

Question no: 4

Yes there is cash flow statement of proprietary fund at page no 37 of Maryland financials 2019 report. They used indirect method in cash flow statement.

Question no: 1 & 2

Maryland offers all 4 types of Fiduciary fund. Fiduciary fund are use to provide resources for the wellbeing of other parties outside the government jurisdiction. Fiduciary fund include pension fund, employee benefit Trust fund, investment trust fund, and agency fund. Maryland pension and employee benefit trust fund are Retirement and pension fund system, the Maryland transit administration pension plan, the postretirement health benefit and the deferred compensation plan. The investment trust fund Consist on transaction assets, liabilities and net position of an external investment pool. Agency funds account for the Assets held for distribution by the state agent for the other organization.

 

Question No: 1 other

 Condition of government is estimated by the income from all sources minus expenditure. Maryland government revenue in 2019 is $38,214,220 governments have generated additional 7% revenue comparatively last year 2018 it was $35,413,019. In term of expense Maryland expenditure in 2019 are 40,060,785 which were 38,413,090 in 2018. It reveals that Maryland generated 7 Percent additional revenue by just increase four percent in expenditure side we can say that government performance is quite better than 2018. Budge revenue Collection was expected in 2019 $17,762,928 and actual revenue collection is 18,186,189 which is 2% more than expected revenue. Expected budgetary expenditure in 2019 are $18,049,565 actual expenditure in 2019 was $17,686,333. Which indicate that government has reduce it 2% of its expenditure than estimated expenditures.

 

 Reference

https://www.marylandtaxes.gov/forms/CAFR/cafr2019.pdf 

Week4 CAFR Auditing Financial reports

9/22/2020

If the auditor’s fee is paid from the entity being audited, there will be a conflict of interests that may lead to a lack of objectivity. It is because the accounting objectivity principle asserts that the accountancy data and financial reporting must be autonomous and braced with unbiased evidence. Regarding this, the audit fee, when paid by the firm being audited, will demonstrate a conflict of interest where somebody might manipulate the auditor, and the audit outcomes may become unreliable. In respect to this, there should be a boundary between the auditor and the client if the audit outcomes are to be reliable. Therefore, the audit firm should pay its auditors but not the responsibility of the client being audited (Machan, 2017).

On the other hand, I firmly have confidence that the CPA cannot be justifiably sovereign when reimbursement of payments is reliant on the client. It is because, after accepting an appointment from a client and the CPA professional realizes the client’s business is more technical than he anticipated. He is not experienced in some areas of operations, this may lead to loss of trust among the two parties, and hence the independence of the CPA can be compromised. For this reason, the CPA should be able to pay its auditors before receiving reimbursement from the client.

The most significant impact Information Technology has made on accountancy is the capability of corporations to advance and use electronic schemes to the trail their fiscal dealings. Information technology has reduced the time required by auditors to formulate and present financial data to an organization. But this does not mean accountants will no longer be necessary for organizations. Auditor's future is optimistic, with an anticipated 10% increase in demand for auditors and accountant employment between 2016 and 2030. Nevertheless, because the industry is rapidly evolving, accountants need to be adjustable to keep up with the changing industry (Dai& Vasarhelyi, 2017). This includes embracing new methods of doing their duties and pay attention to the technology modifications reforming the world around us. Additionally, accountants should find new methods to embrace machine learning, artificial discernment, cloud resolutions, and an excellent client understanding.

. A written code of conduct lays out the rules and behaviors required in any given organization and provide the groundwork for a proactive warning. Therefore, having a printed code of action will reduce dishonesty and other deceitful performances in an organization. It is because of fear of the consequences that may be imposed on employees for failure to follow the guidelines stated in the code of conduct that preserves morality in an organization. The fact that every employee will be accountable for his or her own mistakes; everyone will have no choice but follow policies, as stated in the code of conduct in fear of revocations (Schmidt et al., 2017).  The code of conduct will ensure all staff members perform their duties under adherence to certain guidelines and thus lay a good foundation of organizational culture.

Refences

Dai., & Vasarhelyi, M.A (2017). Toward blockchain-based accounting and assurance.

       Journal of  information Systems,31(3), 5-21.

Machan,T.R. (2017) Objectivity: recovering determinate reality in philosophy, science, and everyday life. Routledge.

Schmidt, B.J., MacWilliams, B.R.,& Neal-Boylan, L.(2017). Becoming inclusive: a code of conduct for inclusion and diversity. Journal of Professional Nursing, 33(2), 102-107.

Week5 NFP

10/6/2020

Audit/preparer

Question one

The public accounting organization that performed the auditing of the financial statements of the entity was the Deloitte Tax LLP public accounting firm. The location of the auditing firm is Two Jericho Plaza Jericho, NY 11753.It was involved in carrying audits for the accompanying and combined financial statements of the Make-A-Wish Foundation of America as well as the associated entities. The statements comprised the combined statements of the financial position of this organization as of the date ending 31st August 2017 and 2016. It was also involved in auditing the combined statements of the activities that were carried out, functional expenses, cash flows for the years that ended and also audited the associated notes to the combine statements regarding the finances of the foundation

Question two

It is also possible to identify the firm that had been involved in preparing the form 990. In this case, it can be argued that the auditing firm has to give its credentials especially the auditing firm and its location as well as the other important and relevant information that might be involved in the preparation of the auditing firm. As a result, it can be argued that it is the Deloitte Tax LLP that was involved in the auditing and the preparation of form 990. When it comes to the issue of the preparation of the two documents, i.e., the 990 and the audited financials, it is important to argue that the two documents were prepared by different parties in that the 990 form was prepared by its auditor mentioned above while the audited financials’ form was prepared by an independent auditor, i.e., Clifton Larson Allen auditing firm. According to Hua et. al., (2010), the independence of the auditing body also needs to be assured. Therefore, an auditing body whose independence might be compromised is not deemed to be a credible auditing body.

Question three

Form 990 has a schedule A status. The schedule implies that it is only the auditing organization that might access the information and is not allowed to be disclosed to any unauthorized organization or individual. In other words, the privacy and confidentiality of the report and its information needs to be assured and only used for auditing purposes. Schedule A that is contained in the form also has a reason to do with the charity status. The reason is that the charity of the organization and its resources need to be secured. The situation means that the form should not jeopardize the charity of the involved organization or its resources.

Financials

Question one

Concerning the audited financials, the program that accounted for the largest expense in the accounting process was the combined statement of the financial position of the organization. The above program was responsible for being accounted using the largest expense because identifying the financial position of an organization is an activity that involves numerous operations and finances. As an example, all the assets of an organization have to be considered and they include the assets of an organization both the current assets, long-term and short-term assets as well as the stocks of the organization and all of these are in terms of money. The liabilities of the firm also have to be considered. As a result, it was not a surprise that this was the program that incurred the largest expense. The incurring of large expense was also as expected because of the various aspects that are considered in the evaluation of this program.

Question two

In the Make-a-Wish foundation, there are the donor-restricted and without the donor-restricted net assets. The above net assets also have their nature. When it comes to the donor-restricted net asset, its nature is that it is subjected or still attached to the donor. The situation implies that the donor has a say on the manner that such net assets will be used by the organization as the donor anticipates that the utilization of such an asset will be in a way that the donor will benefit, (Dassen, et. al., 2016). The nature of the without the donor restriction net asset is that the donor may not dictate the manner that such assets will be used.

Ratios/performance

Question one

By using the form 990 and also the audited financials, the ratio of the program expense of the organization might be calculated. In this case, the program expense ratio = the program service expense divided by the total expenses. Therefore, the two ratios might be calculated and later compared to identify the association.

As for the form 990

Program Expense Ratio =73,545,492/94693870 = 0.7767. It can also be best described in % by multiplying the value by 100 and it becomes 77.67%.

When it comes to the audited financials

Program expense ratio = 347971090/348017899 =0.999. As a percentage, it will be 99.98%.

Conclusion. The program expense ratios are different as illustrated above. The reason is that different program service expenses and total expenses were incurred differently for form 990 and audited financials.

Question two

Moreover, the proportion of the resources that are used in the activities of fundraising can be calculated and this can be done for form 990 and audited financials. As for form 990, the values are as follows; 11,893,505 for the fundraising expenses and 94693870 as the total expenses. The proportion thus becomes 11893505/94693870 = 0.1255. When it comes to audited financials, the values are 61422043 as the fundraising expenses and 348017899 as the total expenses and the proportion is 61422043/348017899=0.1764.

Question three

The individual’s thoughts regarding the financial situation of the involved organization are that it is at a point of continuing its operations. The reason is that after catering to all its expenses, the firm still has some resources left behind that might be regarded as profits. Simply, the income exceeds the expenses and the firm is operating positively. The entity is also gaining its revenue and support even from the donors and sponsors and when it comes to the other fiscal resources, the organization has enough assets especially from donors and this brings about the donor-restricted asset and without-the-donor restricted assets.

 

 References

Lan Wan Hua, Georgio Georgakopoulos and Galanou Ekaterini. (June 2010). Main principles and practices of auditing independence. A multi-faceted discussion.