NEW ROCHELLE, NY — The Certificate of Achievement for Excellence in Financial Reporting (CAFR) has been awarded to the City of New Rochelle by the Government Finance Officers Association (GFOA) of the United States and Canada for its Fiscal Year 2011 financial report. This is the twenty-second consecutive year New Rochelle has received the award, the highest form of recognition in the area of government accounting and financial reporting.
“We commend our Finance Department for once again receiving such a distinguished honor,” said City Manager Charles Strome. “This award is a tribute to their professionalism and integrity.” Finance Commissioner Howard Rattner noted, “The Certificate of Achievement recognizes the fine work of our entire staff.”
The GFOA is a nonprofit association serving approximately 17,500 government finance professionals with offices in Chicago, Illinois and Washington, D.C. The CAFR has been judged by an impartial panel to meet the high standards of the program, including demonstrating a constructive “spirit of full disclosure” to clearly communicate its financial story; and motivate potential users and user groups to read the CAFR.
The CAFR can be found on the City’s website www.newrochelleny.com, at the City Clerk’s office in City Hall, or in the New Rochelle Public Library.
CAFR notes for review
Winning the GFOA award for 22-years is a good thing but the public reviewing tactics used in CAFR accounting for the City, County, School Districts, and state CAFRs is a good thing also.
Up until 1999 the CAFR showed the “gross” standing balances of income and investment fund balances. Then with onset of disclosure by CAFR1.com and the public now looking for the first time http://GASB.org (a 100% private association) who oversees the accounting guidelines of the CAFR, changes were made starting with transmittal letter-31 (up to 90 now) changing the showing in the CAFR from that of gross balances to a showing of “net” balances. Many games are played there so it is very important now to look through the “notes to the financial section” to spot or be directed to many of the specialty advance liability actual fund balances.
Government was NOT supposed to operate at a profit. How did they get around this restriction? ANSWER: If for example a city had a 100-million dollar profit for the year from any of its operations, at a stroke of a pen they create a “liability fund” and poof, there goes the profit re-designated now as a liability.
A personal example would be:
If you and I ran a business for the last twenty years and we now had 1-billion dollars clear. We decide we are going to retire in five-years and want to buy an island in the Bahamas for 700-million dollars. So we create an advance liability fund, move 700-million dollars into it and now our “net” balance on our books is 300-million dollars. Now if with drafted a “Budget” for our business operations (projection of expenses for the upcoming year) of say 325-million dollars, that budget would show us to be 25-million dollars in the red. If we now actually spent 200-million for the upcoming year, gee, we now have 125-million we can move into our “buy an island liability fund in the Bahamas” zero out our profit, have the ability to buy a bigger island now with 825-million in our fund, and start the process all over again for next year.
Now catch this point: On our accounting of the “buy an island fund’, our liability if we left the price at 700-million and the fund balance was 825-million, the “net” balance of the fund is now 125-million dollars. (700-million of the funds balance is a liability to pay). If we modified the liability to 825-million then our “net” fund balance is zero. 825 – 825 = 0.
One other tactic we could use as a mask of our true funds held would be to take the 825-million, deposit it with some financial institution domestic or international and arrange a loan or investment from that same financial institution of 825-million using our own capital through that financial institution to give the impression the 825-million was 100% a debt for repayment to whatever X financial institution we were using in that shell game of appearance. AGAIN why it is important to carefully look at the notes to the financial section of the CAFR.