ch10 - Chapter 10 Analysis of Governmental Financial...

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Chapter 10 - Analysis of Governmental Financial Performance 10-1 CHAPTER 10: ANALYSIS OF GOVERNMENTAL FINANCIAL PERFORMANCE OUTLINE Number Topic Type/Task Status (re: 14/e) Questions: 10-1 Causes of municipal financial crises Explain Same 10-2 Financial position, financial condition, economic condition Compare 10-2 revised 10-3 Financial condition Describe New 10-4 Financial Trend Monitoring System and citizens Describe 10-4 revised 10-5 Solvency and government-wide statements Describe Same 10-6 Unrestricted net assets and unreserved fund balance Compare, explain Same 10-7 Organizational factors in the FTMS Explain 10-8 10-8 Pension plan funding Explain New 10-9 Financial indicators and short-term financial position. Identify, explain Same 10-10 Credit or bond analysts Identify New Cases: 10-1 NASRA and GASAC Research New 10-2 Municipal credit analysts and bond ratings Internet 10-2 revised 10-3 Financial trends Internet 10-3 revised 10-4 Analysis of overall performance Calculate, analyze 10-4 revised Exercises/Problems: 10-1 Examine the CAFR Examine Same 10-2 Various Multiple Choice 10-2 revised 10-3 Financial condition Matching 10-3 revised 10-4 Benchmarks Calculate, analyze Same 10-5 Financial Trend Monitoring System Assess 10-5 revised 10-6 Factors affecting financial condition Write memo 10-6 revised 10-7 Government-wide financial analysis Analyze 10-7 revised 10-8 City of Arborland financial ratios Analyze Case 10-1
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Chapter 10 - Analysis of Governmental Financial Performance 10-2 CHAPTER 10: EVALUATION OF GOVERNMENTAL FINANCIAL PERFORMANCE Answers to Questions 10-1. The primary cause of municipal financial crises is the failure of management to revise management practices appropriately in response to adverse environmental factors (see Illustration 10-1). Although adverse environmental factors, such as a declining economy, a natural disaster, or politicians who are unwilling to make politically unpopular decisions, may be major contributing factors, such factors do not have to lead to a financial crisis if management makes sound decisions in response to such factors. On the other hand, environmental factors are sometimes so severe that a financial crisis is unavoidable. In such cases, sound financial management can at least reduce the severity of the crisis and establish a long-term plan for financial recovery. An effective system for monitoring its financial condition will permit management to identify unfavorable financial trends in sufficient time to take preventive action to avoid financial distress. A monitoring system, such as the Financial Trends Monitoring System (FTMS), developed by the ICMA draws management’s attention to the factors and indicators that provide information about the financial condition of a government. Armed with this information, government managers can be proactive in addressing
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This note was uploaded on 11/29/2009 for the course ACCT 341 taught by Professor Burdan during the Fall '08 term at American.

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ch10 - Chapter 10 Analysis of Governmental Financial...

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