CAFRMAN'S REVIEW GUIDE  
    Rev1 - Basic Review Form  
    Introduction Back to Main Menu
    Investment Account Identification  
    Recording Funds/Subfunds and Potential Surpluses  
    Determine What Funds Have Potential Surpluses  
    Adding the Potential Surpluses for each Fund  
    Data Entries on the Form  

Introduction

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:

Kentucky

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.

  Abbreviated Review of The State of Kentucky (S1)- FY 1999
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.

Deferred compensation plans for employees. These are plans in which the employee contributes to his/her retirement over and above the normal employee retirement contribution.

Any fund that is 100% supported by donations, gifts, endowments, etc. The taxpayers do not participate in these funds.

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.

However, what they usually do though is include a catch-all type fund that includes funds held for other governments, organizations, and/or other funds. We would consider this a potential surplus because it includes apples, oranges, and lemons, all in one fund.

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.

Data Entries on the Form

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:

Rev1

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:

      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.

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