CAFRMAN'S REVIEW GUIDE | |||
Rev1 - Basic Review Form |
This is the basic review form of the review process and is used for all reviews. If Rev2 is not required, then this is the complete review process, one form - one piece of paper. There are two parts to this form: (1) Investment Accounts Identification and (2) recording potential surpluses by fund/subfund.
Investment Account Identification
To get the investment accounts used in a particular CAFR, a person needs to review the schedule called the Combined Balance Sheet - All Funds, Account Groups and Component Units or something very similar. Usually it is the first major schedule in the CAFR. Here is a portion of an actual schedule taken from the Kentucky 1999 CAFR:
The investment accounts in the above schedule are:
Here we provide the actual investment account names for all the investment accounts we used in the nine State CAFRs we reviewed.
Amounts available for
retirement of long-term debt
Amount available in Debt Service
Fund
Amounts available for debt service
Amounts on deposit with U.S.
Treasury Assets available for future debt service
Cash and cash equivalents
Cash and Investments
Cash and pooled investments
Cash and securities
held in trust
Cash and temporary investments
Cash equity with
Treasurer
Cash held by trustee
Cash on deposit with agents
Cash with
fiscal agents
Collateral on lent securities
Dedicated Investments
Investment in [certain fund or project]
Investments Investments held by
trustee
Investments net amortization
Investments, noncurrent
Net
investment in direct financing assets
Other assets
Pooled Investments
with State Treasury
Securities lending cash collateral
Restricted cash
and cash equivalents
Restricted investments
Once the investment accounts have been identified, these accounts are entered on Rev1-Basic Review Form, in rows 1 through 10. Here is what we entered on our Kentucky article/report at the top of Exhibit A.
CAFR Page | INVESTMENTS METHOD (In Thousands) |
Incl. | Total Investments | Notes |
23-25 | INVESTMENTS SHOWN ON COMBINED BALANCE SHEET | |||
25 | Cash and Cash Equivalent | 3,259,157 | ||
25 | Cash With Fiscal Agents | 308,184 | ||
25 | Cash On Deposit w/Fed Govt | 674,330 | ||
25 | Restricted Cash | 149,153 | ||
25 | Investments Net Amortization | 29,899,134 | ||
25 | Amounts available for debt service | 351,479 | ||
25 | Other Assets | 282,478 | ||
Total Investments | 34,641,437 |
If you have any questions on what to consider an investment account, please provide CAFRman a list of all asset names from the Combined Balance Sheet - All Funds, Account Groups and Component Units or something very similar and we will try to help in making this determination.
Recording Funds/Subfunds and Potential Surpluses:
The next step is to list the fund and subfund types used in the CAFR. What are funds and subfunds? We provide a list of funds/subfunds for the State of California which is a pretty good list and explanation of each fund. We also provide the page number in the California Comprehensive Annual Financial Report (CAFR) where the major funds and subfunds can be located.
State of California funds/subfunds .
Here is an example from the Kentucky FY 1999 CAFR:
CAFR Page | Investments By Fund | Incl. | Potential Surpluses | Notes |
24 | Government Fund Types: | |||
24 | General | x | 312,916 | |
98 | Special Revenue: | |||
99 | Transportation Fund | x | 696,163 | |
99 | Federal Fund | x | 86,402 | |
99 | Agency Revenue Fund | x | 227,954 | |
99 | Other Special Revenue Fund | x | 375,416 | |
24 | Debt Service | x | 348,029 | |
24 | Capital Projects | x | 472,594 | |
25 | Proprietary Fund Types: | |||
119 | Enterprise: | |||
120 | State Parks Fund | x | 10,721 | |
120 | Kentucky Lottery Corporation | x | 380,897 | |
120 | Industries for the Blind | x | 412 | |
120 | State Horse Park Fund | x | 594 | |
120 | Insurance Administration | x | 527,706 | |
127 | Internal Service: | |||
128 | Fleet Management Fund | x | 9,328 | |
128 | Computer Services Fund | x | 3,887 | |
129 | Prison Industries Fund | x | 5,738 | |
129 | Central Printing Fund | x | 483 | |
129 | Property Management Fund | x | 2,209 | |
129 | Risk Management Fund | x | 24,925 | |
136 | Fiduciary Fund Types: | |||
136 | Trust and Agency: | |||
136 | Expendable Trust Funds: | |||
138 | Unemployment Compensation Fund | x | 674,334 | |
138 | Special Benefits Fund | x | 50,445 | |
139 | Pension Trust Funds | |||
139 | Agency Funds: | |||
139 | Kentucky Health Purchasing Alliance | x | 714,349 | |
139 | Commonwealth Choice | x | 9,753 | |
139 | County Sinking Fund | x | 351 | |
139 | Special Deposit Trust Fund | x | 161,039 | |
24 | Account Groups: | |||
24 | General Fixed Assets | |||
24 | General Long-Term Debt | x | 351,479 | |
154 | Component Units: | |||
Governmental Funds: | ||||
157 | Bluegrass State Skills Corporation | x | ||
157 | Kentucky School Facilities Construction Commission | x | 21,431 | |
Propriety Funds: | ||||
Enterprise Funds: | ||||
159 | Kentucky State Fair Board | x | 5,213 | |
159 | Kentucky Center for the Arts | x | 6,645 | |
159 | Kentucky Educational Television Authority | x | 7,804 | |
159 | Kentucky Economic Development Finance Authority | x | 16,342 | |
159 | Kentucky Higher Education Assistance Authority | x | 54,980 | |
160 | Kentucky Higher Education Student Loan Corporation | x | 239,857 | |
160 | Kentucky Educational Savings Plan Trust | |||
160 | Kentucky Housing Corporation | x | 336,566 | |
160 | Kentucky Infrastructure Authority | x | 129,799 | |
160 | Kentucky Agricultural Finance Corporation | x | 511 | |
160 | Kentucky Grain Insurance Corporation | x | 5,162 | |
160 | Kentucky Local Correctional Facilities Construction Authority | x | 14,893 | |
157 | University and College Funds | x | 1,556,363 | |
Unknown variance | x | 795,681 | ||
Total Investments | 8,639,371 | |||
Add: | ||||
Pension Trust: Surpluses Only From Sch D | 796,634 | |||
Total Potential Surpluses | $ 9,436,005 | |||
Per Capita | $ 2,366 | |||
Family of 4 | $ 9,464 |
Determine What Funds Have Potential Surpluses
The next step is to determine, based on a review of the revenue source for each fund/subfund, whether the investments above should be considered potential surpluses. Here is a list of items that are not potential surpluses except where indicated:
Retirement/Pension Funds - We will cover the surpluses or excesses
in the government employees' retirement plans separately in Ret1 Form and Ret2
Form. Colleges and Universities. All endowment and similar-type funds should not be included as potential surpluses. Sometimes these funds are combined with other college/university funds. We are interested in potential surpluses, so in these cases the total amount should not be included; however, there should be a Note that states some of these funds are potential surpluses. Funds in which the revenues/contributions are 100% held for another government.
Funds that are required by law in which a bank, financial institution, insurance companies, etc. are required to deposit with the government a certain amount for insurance against the entity going bankrupt. These are not taxpayers' money. Employee health and benefit funds (not retirement) and risk management funds (unemployment compensation, liability coverage, etc.) we usually consider potential surpluses. My experience of 15 years working with State and local government financial data has shown that these funds tend to be over funded. We'll let on-site auditors determine the exact amount, if any, that should be held in these funds. It depends on the budgeting for these items. There are others but they have to be covered on a case-by-case basis. So if you read the revenue source for a fund or it is not stipulated its funding or what it does, then type it up and send it to us and we will help you make a determination. |
As you read the revenue source for each fund/subfund place an "x" in Column D, under "Incl", Rev1 Form, next to those that have potential surpluses. This will help when you go to the individual schedules for each fund to know which funds you need to add up the investment accounts for and enter on the form.
Adding the Potential Surpluses for each Fund
The next step is to list the potential surplus amounts on the Rev1 and/or Rev2 Forms or spread sheet that you have prepared. Here is how we do it. We will use the General Fund as a example, but it is the same for all funds. You should see the General Fund column on the two-pager Combined Balance Sheet-All Funds and Account Groups. However, for the other funds you will find the same type of schedule for each fund with the subfund as the heading for the column and the left side starts out with "Assets:" In the subfunds, not all of the accounts listed below will be on the schedule. This is because not all of the accounts listed below are applicable to every fund or subfund. However, the ones you are looking for are the "Investment Accounts" listed above.
Assets: | General Fund | Potential Surpluses | ||
Cash and Cash Equivalents (Note 5) | 58,178 | 58,178 | ||
Cash with Fiscal Agents | Note 1 | |||
Cash on Deposit with Federal Government | Note 1 | |||
Restricted Cash | Note 1 | |||
Investments, Net of Amortization (Note5) | 254,738 | 254,738 | ||
Receivables, Net (Note 1) | 514,569 | |||
Interfund Receivables (Note 7) | 339,137 | |||
Due from Component Units | ||||
Inventories | 12,451 | |||
Prepaid Expenses | ||||
Deferred Charges | ||||
Restricted Assets | ||||
Land | ||||
Improvements Other Than Buildings | ||||
Buildings | ||||
Machinery and
Equipment: Less: Accumulated Depreciation |
||||
Construction in Progress | ||||
Other Assets | Note 1 | |||
Amounts available for debt service | Note 1 | |||
Amount to be provided in future years for long-term debt | ||||
Amounts to be provided in future years for retirement of general long-term obligations | ||||
Total Potential Surpluses for the General Fund... | 312,916 |
Note 1: These are investment accounts and will be shown and used in other funds and subfunds as potential surpluses.
If you look at the "Recording Funds/Subfunds and Potential Surpluses" section above you will see we enter only one figure in the General Fund category.
The above computations are repeated for each fund/subfund in which you determine there are potential surpluses. This is one reason we provide a calculator so that these additions can be done in the computer program and pasted directly to the appropriate cell.
DE = Data Entry. The cells with this designation are cells that a user should enter the appropriate data.
An "-A" at the end of a cell designation means that in the computer program this cell is completed by the computer program and user data entry is not necessary. For example, C9-A means that in Column "C" and Row "9" the entry in that cell (C9) is automatically entered by the program.
Here is what the Rev1 Form looks like:
For all users, the following table lists the entries/formulas in the appropriate cells on the form corresponding to the picture of the form above.
REV1 - BASIC REVIEW FORM | |||
DE-1 | Type of Government | ||
DE-2 | File Page Number | ||
DE-3 | Name of Government or Organization | ||
DE-4 | Abbreviated Organization Name | ||
C1 | - | C10 |
List the investment accounts identified in the Combined Balance Sheet-All Fund Types, Account Groups, and Discretely Presented Component Units |
E1 | - | E10 | Amounts shown in the total column including Component Units |
E11-A | Total Investments- [Sum of E1-E10] | ||
C13 | - | C29 | List of Funds and Subfunds in the CAFR |
D13 | - | D29 | An "X" annotation if the fund has potential surpluses |
E13 | - | E29 | The amount of potential surpluses for the fund |
E30-A | Total This Page - [Sum of E13-E29] | ||
Retirement Surpluses should be added to the above. However, it is not known where in the C13-C29 above or on the Rev2 Form, C2-C29, the retirement plans will be listed. Only the retirement surpluses should be entered and these surpluses are shown on Form Ret1 or Ret2: |
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If from Form Ret1, use the [Sum of E9-E16-A] | |||
If from Form Ret2, then use either [F4-A] OR the [Sum of D14-A - D20-A] |
NOTE:
If Form Rev2 is needed then the amount in Total This Page [E30-A] needs to be copied to Form Rev2, E1, called Total From Previous Page.
If Form Rev2 is not needed then the amount in Form Rev1, Total This Page [E30-A], needs to be copied to Form Sum1.