Financial Statement and Audit Review for Baltimore County
Introduction
Accounting and administration of finances concerning all revenues and expenditures incurred by a county remain an important aspect in all Maryland counties (Previts and Samson, 2000. p4). Accounting and finance offices are responsible for the compilation of the Annual Comprehensive Financial Report which presents each county’s financial position as of its June 30th fiscal year period end. The published financial statements then are submitted to both the internal and external auditors of the respective county for inspection. This paper analyses the financial statements of Baltimore County together with the audit report and compares the statement to that one provided by City of Austin report. ORDER YOUR PAPER NOW
Publication Method
In these two counties, the comprehensive annual financial report is published at the end of every fiscal period (June 30). The publication method used is easily readable and efficiently organized CAFR. (Previts and Samson, 2000. p40). The budget published meets the economic conditions of the country toward its progress. However, unlike Baltimore County that uses both qualitative and quantitative methods to publish its annual accounts, Austin report describes only quantitative methods to be employed in the comparison preparation of annual reports.
Audit Information of The CAFR
The Austin audit report in the year 2014 on the consolidated financial statements presented a true and fair view. This means that all material respects, the respective balance sheet of the government activities, each major fund, the business activities, and all cashflow were in conformity to accounting and auditing standards (Modlin and Stewart, 2014. p406). In 2015, Baltimore County issued the unqualified audit report. This means that the financial statements from all funds, government, proprietary, and special revenues funds reflected a true and fair view of the county’s state of accounts.
Existence of Internal Audit Function
In the two counties, there exists internal audit function whose role is to provide insight to the Board of Baltimore and Austin counties with the relevant information and recommendations to assist the management in developing an effective program and allocation of resources in the county (Soh and Martinov, 2011. p606).
Analysis of Baltimore County
The financial statements of the board are prepared by Generally Accepted Accounting Principles in the United States, but only applicable to governmental corporations as prescribed by the Governmental Accounting Standards Board (Modlin and Stewart, 2014. p422). The county council is responsible for approving the Boards budget and establishing spending limitations, as well as levying taxes and collecting and distributing the funds to the Board.
The statistical section of the board of education of Baltimore county’s CAFR presents a detailed information in the financial statements, note disclosures, and the required secondary information(Soh and Martinov, 2011. p606). It includes information on economic trends, limited demographic information, and operating information. Unlike the City of Austin’s CAFR report, Baltimore CAFR has no information on revenue capacity presented in the statistical analysis. ORDER YOUR PAPER NOW
Methods Used in Comparing the Budgets
Baltimore County uses the incremental method when comparing and preparing budgets. Maryland law mandates a certain level of state and county funding for the board based on formulas that include prior year per pupil expenditures(Soh and Martinov, 2011. p606). The county is required to provide funding at least to the current year student enrollment multiplied by the counties local appropriation on a per student basis for the prior financial year. This is a requirement by law.
The county also uses a one-time method in comparing its budgets. The items included in one-time funding do not impact the maintenance of effort computations in the future years. This results in the adoption of zero-based budgeting in such circumstances.
Sources of Revenue to Baltimore County
- General property real taxes: The last change to state tax rates was a decrease in property tax rates. This ensures a consistent tax rate for the county currently in the future.
- Income taxes: Is utilized by Baltimore County in varying degrees to generate significant revenues with relatively low levels. People with high incomes levels are taxed higher than people with low incomes.
- Licences and permits: These are issued by the county to businesspeople who are interested in investing in the county. They pay to get licences permitting them to start their business activities.
- Other revenues from other sources include payments from a nonresident, summer school, fees from high school students, interest earned on investments among many others.
- Deferred revenue: Baltimore County government recognizes the liability on unearned revenue as an important product or service useful on the income statement.
Notes to The Basic Financial Statements
- Remedial action notes- This represents the control actions to be taken by the county government when under financial crisis. For example, grants, loans, and fees.
- Capital assets- in the construction of budgets, the board, must be active when it comes to capital assets of the county
- Operating lease- the board has long term commitments as the lease under various non-cancellable operating leases for offices and warehouses.
- Risk management- the county board is exposed to different risks of loss such as theft, damages, destruction of assets, errors and ommissions, illness to employees, and natural disasters.
Information About the General Fund
The general fund revenue comprises of personal income tax, sales and uses tax, corporation taxes and others (Oliff et.al, 2012. p14). The financial board unit of Baltimore County is financially depended on the County Government and the State of Maryland to generate funds for its activities. The county board is entitled to receive 52 percent of its governmental activities funding from the county, and 35 percent from the state.
References
Modlin, S., and Stewart, L., 2014. Determining County Government Fiscal Instability: Independent Audit Report Findings and the Prompting of State Action. Journal of Public Budgeting, Accounting & Financial Management,26(3), pp.405-428.
Oliff, P., Mai, C. and Leachman, M., 2012. New school year brings more cuts in state funding for schools. Washington: Center on Budget and Policy Priorities, pp.1-14.
Previts, G.J. and Samson, W.D., 2000. Exploring the Contents of the Baltimore and Ohio Railroad Annual Reports: 1827-1856. The Accounting Historians Journal, pp.1-42.
Soh, D.S., and Martinov-Bennie, N., 2011. The internal audit function: Perceptions of internal audit roles, effectiveness, and evaluation. Managerial Auditing Journal, 26(7), pp.605-622. ORDER YOUR PAPER NOW