NCJ Number
68241
Date Published
1976
Length
44 pages
Annotation
FINDINGS ARE REPORTED FROM A SURVEY OF THE FINANCIAL OPERATIONS AND REPORTING PRACTICES OF 46 AMERICAN CITIES, AND RECOMMENDATIONS FOR IMPROVEMENTS IN MUNICIPAL DISCLOSURE PRACTICES ARE OFFERED.
Abstract
FINDINGS SHOW THAT AMONG THE CITIES SURVEYED THERE IS A SUBSTANTIAL LACK OF COMPLIANCE WITH CURRENT GENERALLY ACCEPTED PRINCIPLES APPLICABLE TO GOVERNMENTAL BODIES. ABOUT 76 PERCENT OF THE CITIES DO NOT DISCLOSE IN THEIR FINANCIAL REPORTS THE ACTUALLY COMPUTED VALUE OF VESTED BENEFITS OVER THE TOTAL OF THE PENSION FUND AND NET BALANCE SHEET ACCRUALS. VERY FEW CITIES DISCLOSE THEIR ACCRUED VACATION AND SICK LEAVE DOLLAR OBLIGATIONS, AND HALF OF THE CITIES WITH OVERLAPPING DEBT DO NOT DISCLOSE THOSE OBLIGATIONS IN THEIR ANNUAL REPORTS. IMPROPER DISCLOSURE OF CERTAIN GENERAL OBLIGATION BONDS FINANCING SPECIAL ASSESSMENTS AND ENTERPRISE INPROVEMENTS MAKES IT DIFFICULT FOR THE READER OF FINANCIAL STATEMENTS TO DETERMINE THE NATURE OF A CITY'S FINANCIAL OBLIGATIONS. FURTHER, NEARLY HALF OF THE CITIES DO NOT DESCRIBE SUCH FUNDAMENTAL ACCOUNTING POLICIES AS THE METHODS USED TO RECORD FINANCIAL ACTIVITIES. ALTHOUGH MOST CITIES MAINTAIN A NUMBER OF THE FUND TYPES IN COMPLIANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, SUBSTANTIAL NONCOMPLIANCE WAS FOUND. BASED ON THESE FINDINGS, THE UNIFORM ENFORCEMENT OF DISCLOSURE COMPLIANCE FOR THE PROTECTION OF TAXPAYERS AND SECURITY INVESTORS IS RECOMMENDED. ALTHOUGH THE MUNICIPAL FINANCE OFFICERS ASSOCIATION OF THE UNITED STATES AND CANADA CURRENTLY RECOMMENDS COMPLIANCE WITH 'GOVERNMENTAL ACCOUNTING, AUDITING AND FINANCIAL REPORTING,' THE ORGANIZATION ISSUES FEWER THAN 40 CERTIFICATES OF CONFORMANCE EACH YEAR. ACCORDINGLY, LEGISLATION IS RECOMMENDED TO CREATE A MECHANISM TO MONITOR THE FINANCIAL REPORTS OF LOCAL GOVERNMENTS.