City and County of Denver, Colorado

Introduction

The City is located at the eastern base of the Rocky Mountains in the north-central part of

Colorado, encompassing 154.63 square miles. The City is the capital of the state, and it is also

the cultural, distribution, entertainment, financial, service and transportation hub. With an

elevation of 5,280 feet the “Mile High City” has a cool, dry, sunny climate that makes it a

magnet for health seekers and those enjoying outdoor recreation all year round. In 2015, Denver

had an estimated population of 682,545 for the core City and County. It is estimated that over 3

million people reside in the Denver metro area, which includes the suburban counties of Adams,

Arapahoe, Boulder, Broomfield, Douglas and Jefferson. Denver was founded November 22,

1858, after a gold discovery at the confluence of Cherry Creek and the South Platte River. Town

founder William H. Larimer, Jr. named the city for James W. Denver, Governor of Kansas

Territory, of which east central Colorado was then a part.

Numerous gold discoveries sparked a mass migration of some 100,000 in 1859-1861, leading the

federal government to establish Colorado Territory in 1861. The City was incorporated on

November 7, 1861 by a special act of the first session of the Legislative Assembly of Colorado

Territory. In 1867 the City became the Capital of Colorado Territory and remained the capital

after Colorado became a state on August 1, 1876. Denver became a City and County with home

rule when Article XX was added to the Colorado Constitution in 1902. The City’s charter was

enacted on March 29, 1904 establishing a strong mayor/city council form of government and an

independent, elected city auditor.

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The mayor and thirteen-member council, elected in non-partisan elections govern the City. The

Mayor is the chief executive, exercising all administrative and executive powers granted to the

City, except as otherwise delegated by the City Charter. The legislative powers of the City are

vested in the City Council. The City has an elected Auditor and an elected Clerk and Recorder.

All elected officials’ terms are concurrent and last four years and each position is subject to term

limits of twelve years.

Achievements Of the City

1. Outstanding Achievement for Excellence in Financial Reporting

The Government Finance Officers Association of the United States and Canada (GFOA)

awarded a Certificate of Achievement for Excellence in Financial Reporting to the City and

County of Denver for its Annual Report for the fiscal year ended December 31, 2014.

2. Outstanding Achievement in Popular Annual Financial Reporting

The GFOA has given an Award for Outstanding Achievement in Popular Annual Financial

Reporting to the City and County of Denver for its Popular Annual Financial Report for the

fiscal year ended December 31, 2014. The Award for Outstanding Achievement in popular

Annual Financial Reporting is a prestigious national award recognizing conformance with the

highest standards for preparation of state and local government popular reports.

3. Distinguished Budget Presentation Award

The GFOA presented a Distinguished Budget Presentation Award to the City and County of

Denver for its annual budget for the fiscal year beginning January 1, 2015. In order to receive

this award, a governmental unit must publish a budget document that meets program criteria as

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policy document, as an operations guide, as a financial plan, and as a communications device.

This award is valid for a period of one year only.

Financial Performance

a. The City’s assets and deferred outflows of resources exceeded its liabilities and deferred

inflows of resources at the close of the fiscal year by $3,001,355,000 (net position). Of

this amount, $248,585,000 (unrestricted net position) may be used to meet the City’s

ongoing obligations.

b. The City’s total net position decreased by $402,240,000, or 11.8%, over the prior year

resulting from a restatement of beginning net position due to the implementation of

GASB Statement No. 68, Accounting and Financial Reporting for Pensions. The City’s

net position prior to the GASB 68 restatement increased $363,352,000 or 10.7%.

c. As of close of the current fiscal year, the City’s governmental funds reported combined

ending fund balances of $962,419,000, an increase of $108,213,000 from the prior year.

Approximately 30.5% or $293,104,000 of the fund balance (unassigned fund balance) is

available for spending at the government’s discretion.

d. At the end of the current fiscal year, unassigned fund balance of the General Fund was

$293,476,000 which represents 24.9% of total General Fund expenditures, including

transfers out.

e. The City’s total bonded debt decreased by $246,520,000 during the year. Decreases

occurred in the general obligation bonds and revenue bonds.

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 Chapter # 2 Exercise and Problems (2-14)

Government-wide Statements:

What are the titles of the two government-wide statements?

The two government wide statements are “Statement of Net Position” and “Statement of

Activities “ on see page 27 and 28 respectively.

Are total assets larger for governmental activities or business-type activities?

According to the statement of net position (see page 27), the total assets of Business type

activities are much larger than governmental activities. Business type activities total assets are $

6,056,207,000 and governmental type activities assets are $ 4,475,154,000.

Which function or program has the highest net cost?

The public safety program has the highest net cost totaling $ 465,802,000 (see page 28).

What kinds of general revenues are available to cover the net cost of governmental

activities?

The available general revenues (see page 28) are majority from different type of taxes which are

as follows:

a. Facilities development admissions

b. Lodgers

c. Motor vehicle ownership fee

d. Occupational privilege

e. Property

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 f. Sales and use

g. Specific ownership

h. Telephone

i. Investment and interest income

j. Other revenues

k. Transfers

Were business-type activities “profitable”? That is, is the excess of revenues over expenses

positive?

The business type activities are profitable with the profit of $ 92,839,000.

Governmental Funds:

Does the report state the basis of accounting used for the General Fund?

No, the report does not state any basis of accounting for general funds.

What types of assets and liabilities are included on the governmental funds balance sheet?

The assets of governmental funds balance sheet includes Cash on hand ,Cash and cash

equivalents, Receivables, Inter fund receivables, due from other governments, prepaid items and

other assets, Assets held for disposition. Liabilities includes Vouchers payable , Accrued

liabilities, Due to taxing units , Inter fund payable , Unearned revenue , Advances , Compensated

absences as per balance sheet (see page 30).

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Is this reporting consistent with the basis of accounting being followed?

The reporting is consistent with the basis of accounting as no objection is highlighted in auditor’s

report (see page 1, 2).

Identify which of the major funds, if applicable, are special revenue funds, debt service

funds, capital projects funds, and permanent funds. Are you able to determine which funds

are considered non major? (Hint: look for supplementary information.)

The non major funds are as follows:

a. Special Revenue Funds (see page 119)

b. Debt Service Funds (see page 119)

c. Capital Projects Funds (see page 119)

d. Permanent fund (see page 119)

What fund balance categories are being used?

In accordance with GASB Statement No. 54, fund balances are classified as non spendable,

restricted, committed, assigned or unassigned. (See page 83)

Proprietary Funds:

List the names of the proprietary fund types included in the financial statements. Do the

financial statements provide evidence that all proprietary funds use accrual accounting?

There are two type of proprietary funds used in this financial statements one is Enterprise funds

and second is Internal service funds (see page 18). Governmental fund financial statements are

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reported using the current financial resources measurement focus and the modified accrual basis

of accounting.

Fiduciary Funds:

List the names of the fiduciary funds included in the fund financial statements. Identify

whether each of these is an agency fund, investment trust fund, pension (and other

employee benefit) trust fund, or private-purpose trust fund.

Pension, Health, and Other Employee Benefits Trust Funds (see page 144)

a. Pension Benefits Trust Funds

b. Health Benefits Trust Funds

c. Deferred Compensation

Agency Funds (see page 145)

a. Employee Salary Redirect Plan

Do the financial statements provide evidence as to what basis of accounting these funds

use?

Yes, the statements provide the evidence as the basis of accounting is written along with each

fund.

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Notes to the Financial Statements:

What significant accounting policies are discussed in the first note?

In first note the significant policy of “Reporting entity” is discussed. (See page 50)

With regard to revenue recognition, how do the notes define the term available for paying

current period obligations?

There is no information available in this CAFR regarding “available for paying current period

obligations”.

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 Chapter # 3 Exercises and Problems (3-16)

Statement of Activities at the Government-wide Level:

Has the government prepared statements in compliance with the GASB financial reporting

model?

Yes the government prepared the statements in compliance with GASB statement no. 39, 14, 61

and 34 financial reporting models (see page 50).

Does the statement of activities appear on one page or two pages?

The statement of activities appears on one page. (See page 27 of CAFR)

What is the most costly governmental function or program operated by the government?

The most costly government function is public safety program which have net cost of $

465,802,000.

How much of the cost of governmental activities was borne by taxpayers in the form of

general revenues?

The governmental activities were born $ 1,234,525,000 by taxpayers in the form of general

revenues. (See page 29)

Did the entity increase or decrease its governmental activities unrestricted net position this

year?

The entity increased its unrestricted net position this year from $ 1,437,118,000 to $

1,654,647,000 (see page 29).

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Did the entity increase or decrease its business-type activities unrestricted net position this

year?

The entity increased its business type activities from $ 1,200,885,000 to $ 1,346,708,000.

Statement of Revenues, Expenditures, and Changes in Fund Balances for Governmental

Funds:

What system of classification of revenues is used in the governmental fund financial

statements?

The following system of classification was used:

1. Charges for services

2. Program-specific operating grants and contributions

3. Program-specific capital grants and contributions

List the three most important sources of General Fund revenues and the most important

source of revenue for each major governmental fund. Does the reporting entity depend on

any single source for as much as one-third of its General Fund revenues?

The City’s main source of revenue for operating expenditures is sales, Lodgers taxes and use

taxes, which makes up 51.0% of total General Fund revenues. (See page 4)

What proportion of revenues is derived from property taxes?

The CAFR indicates the receipts from property taxes are $ 1,478,924. (See page 157)

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Do the notes clearly indicate recognition criteria for primary revenue sources?

The revenue recognition criteria are clearly mentioned in Note C - Measurement Focus, Basis of

Accounting, and Statement Presentation (see page 54).

Are charts, graphs, or tables included in the statistical section of the CAFR that show the

changes over time in reliance on each revenue source?

The tables and charts are included in statistical section of the CAFR (see page 20, 21).

Expenditures:

What level of classification of expenditures is used in the governmental fund financial

statements (e.g., fund, function or program, organization unit, activity, character, object)?

The expenditures are divided into General, human services and other governmental funds.

List the three largest categories of General Fund expenditures; list the largest category of

expenditure of each major governmental fund.

In General fund expenditures the largest category for expense is public safety which have a cost

of $ 518,000,000. In government category, the largest expenditure is of General government of $

101,766,000.

Are charts, tables, or graphs presented in the statistical section of the CAFR to show the

trend of General Fund expenditures, by category, for a period of 10 years?

No such tables or graphs presented in statistical section of CAFR.

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Is expenditure data related to nonfinancial measures such as population of the government

or workload statistics (e.g., tons of solid waste removed or number of miles of street

constructed)?

No, the most of the expenses relates to financial measures like public safety, human services and

health.

Other Financing Sources (Uses).

Are other financing sources and uses reported in a separate section of the statement of

revenues, expenditures, and changes in fund balances, below the revenues and

expenditures sections?

Yes the other financing sources and uses are reported in a separate section. (See page 32)

Do the line items indicate the nature of each financing source or use?

Yes each line item indicates the nature of each financing sources or uses like issuances of capital

leases. (See page 32)

Budgetary Comparison Schedule or Statement:

Does the government present budgetary comparisons as a basic governmental fund

financial statement, or as required supplementary information (RSI) immediately

following the notes to the financial statements?

The government presents the budgetary comparison in the section “Required Supplementary

Information Budgetary Comparison Schedule - General Fund and Human Services Special

Revenue Fund”. (See page 110)

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Is the budgetary comparison title a schedule rather than a statement?

The budgetary comparison tilted is “Required Supplementary Information Budgetary

Comparison Schedule - General Fund and Human Services Special Revenue Fund” which clearly

indicates that it is a schedule not a statement. (See page 110)

Does the budgetary comparison present the original budget and the final amended budget?

The budgetary comparison presents the both budgets (original and final amended budget). (See

page 110)

Does the budgetary schedule present actual data using the budgetary basis of accounting?

The budgetary schedule presents the actual data using the budgetary basis of accounting.

Has the government presented one or more variance columns?

The government presented only one variance column. (See page 110)

Does the CAFR indicate that budgetary reporting practices differ from GAAP reporting

practices? If so, does it explain how the practices differ?

Yes, the CAFR indicates that the budgetary reporting practices differ from GAAP. (See page 112

Point # 1, 2, 3, 4, 5)

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 Chapter # 4 Exercises and Problems (4-15)

Governmental Activities, Government-wide Level:

Are governmental activities reported in a separate column from business-type activities in

the two government-wide financial statements?

Yes, they are separated under the heading Function/Program PRIMARY GOVERNMENT. (See

page 27, 28)

Are assets and liabilities reported either in the relative order of their liquidity or on a

classified basis on the statement of net position?

The assets and liabilities are reported on liquidity basis instead of classified basis. (Page 34, 36)

Is information on expenses for governmental activities presented at least at the functional

level of detail?

Yes it is presented at the functional level of details.

Are program revenues segregated into (a) charges for services, (b) operating grants and

contributions, and (c) capital grants and contributions on the statement of activities?

Yes program revenues segregated into charges for services, operating grants and contributions.

(See page 28)

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General Fund:

What statements and schedules pertaining to the General Fund are presented?

The Balance Sheet, Statement of revenues, Expenditures and Changes in Fund Balances are

pertaining to the General Fund.

What purpose is each statement and schedule intended to serve?

The each statement gives a general breakdown of each fund within the city limits. The statements

function the same way that they do in real accounting. The balance sheets show the assets,

liabilities and fund balances (instead of owner’s equity). The statement of revenues,

expenditures, and changes in fund balance functions like how the income statement functions. It

reports the revenues, expenditures, and changes in fund balance (net income). Each statement is

very detailed and laid out in categories. The statements accomplish its intended purpose very

well.

Are any noncurrents or non liquid assets included in the General Fund balance sheet? If

so, are they offset by equal amounts classified as “non spendable” fund balances?

There are no noncurrent or non liquid assets included in the General fund balance sheet. (See

page 30)

Are any noncurrent liabilities included in the General Fund balance sheet? If so, describe

them.

No there is no noncurrent liabilities included in the General fund balance sheet. (See page 30)

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Are revenue classifications sufficiently detailed to be meaningful?

Yes, revenue classifications sufficiently detailed to be meaningful such as: taxes, inter

governmental, and licenses.

Has the government refrained from reporting expenses rather than expenditures?

Yes, the government only reports expenditures rather than expenses.

Special Revenue Funds:

What statements and schedules pertaining to the special revenue funds are presented?

Statements of revenue funds: (1) combining balance sheet, and (2) combining statement of

revenues, expenditures, and changes in fund balances. (See page 120,121)

Are these only combining statements, or are there also statements for individual special

revenue funds?

These are only combining statements.

Are expenditures classified by character (i.e., current, intergovernmental, capital outlay,

and debt service)?

The Expenditures (see page 121) are classified by character: Current and debt service.

Are current expenditures further categorized at least by function?

Current expenditures (See page 121) are categorized by function: general government, public

safety, public works, health, Parks and recreation, Cultural activities, Community development,

Economic opportunity, and culture and recreation.

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 Chapter # 5 Exercises and Problems (5-15)

Reporting of Capital Assets:

Are capital assets reported as a line-item in the government-wide statement of net

position?

The capital assets are reported as line items in the following order: (See page 27)

Capital assets:

Land and construction in progress

Buildings, improvements, infrastructure, collections,

and equipment, net of accumulated depreciation

Are non depreciable capital assets reported on a separate line from depreciable capital

assets, or are they separately reported in the notes to the financial statements?

The non depreciable capital assets are reported separately in the notes to the financial statement

in Note D - Capital Assets. (See page 70)

Do the notes include capital asset disclosures, such as those for the City and County of

Denver shown in Illustration 5–2?

Yes the notes include the disclosures for capital assets. It is presented at page # 70, 71, and 72.

Does the disclosure show beginning balances, increases and decreases, and ending balances

for each major class of capital assets, as well as the same information for accumulated

depreciation for each major class?

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Yes, the disclosures show the beginning balances, increase and decrease and ending balances for

each major class of capital assets (see page 70).

Are these disclosures presented separately for the capital assets of governmental activities,

business-type activities, and discretely presented component units?

Yes these disclosures are presented separately for governmental activities and business type

activities (see page 70, 71)

Do the notes specify capitalization thresholds for all capital assets, including

infrastructure?

Yes the notes specify the capitalization thresholds of $ 5,000 except for software which have the

threshold of $ 50,000 in point 9 of page 57.

Do the notes show the amounts of depreciation expense assigned to each major function or

program for governmental activities at the government-wide level?

The notes clearly show the depreciation expense assigned to each category in point 4 Table 19

(see page 71).

Are the depreciation policies and estimated lives of major classes of depreciable assets

disclosed?

Yes the policies and estimated lives are disclosed in the notes which are as follows: (See Point 9,

Page 57).

Buildings and improvements 5 to 100 years

Motor vehicles and motorized equipment 5 to 20 years

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Furniture, machinery, and equipment 3 to 20 years

Collections, excluding library books 15 years

Library books 4 years

Infrastructure 6 to 50 years

Intangibles 3 to 5 years

Do the notes include the entity's policies regarding capitalization of collections of works of

art and historical treasures?

Yes such policies are presented in notes. (See Point # 9, Page 57)

If collections are capitalized, are they depreciated?

The collections are capitalized and also depreciated (See Point # 9, page 57).

Are accounting policies disclosed for assets acquired under capital leases?

Yes the notes disclose the policies for assets under capital leases in Note E - Lease Obligations

(See Point 1, page 72)

Other:

Is the accumulated cost of construction work in progress recorded as an asset anywhere

within the financial statements or notes?

Yes the accumulated cost of construction work in progress is recorded as an asset in statement of

net position – proprietary funds (See page 34), Statement of not position – component units (See

page 46).

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Which fund, or funds, account for cash received, or receivables created, from sales of

general capital assets?

The General fund created the cash for sale of capital assets.

Are the proceeds of sales of general capital assets reported as another financing source or

as revenue?

Yes the sale of general capital assets is reported as another financing source as presented in

Required Supplementary Information Budgetary Comparison Schedule - General Fund and

Human Services Special Revenue Fund. (See page 110)

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 Chapter # 7 Exercises and Problems (7-15, Part b)

Use of Funds:

What activities of the government are reported as being administered by enterprise funds?

The government reported the following activities:

Environmental Services: To account for the operation and activity of the City’s chemical waste

disposal, phase out of hazardous materials disposal sites, and litter prevention.

Golf Course: To account for the administration, operation, maintenance and improvement of

City-owned golf facilities.

Does the government own and operate its water utility? Electric utility? Gas utility?

Transportation system?

The government has the transportation system only under the authority named “Denver Union

Station Project Authority (DUSPA)” (See page 51).

Are combining statements presented in the financial section of the CAFR for all enterprise

funds, or are separate statements presented for each enterprise fund?

Yes, the government presented the combining statements in the financial section of CAFR. (See

page 137)

Do all enterprise funds use accrual accounting?

Yes all enterprise funds used accrual accounting.

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Are all funds in this category earning revenues at least equal to costs and expenses? If not,

how is the operating deficit being financed?

All funds in this category are earning revenues which are more than its expenses. These funds

earned net income of $ 5,838,000 in the year 2015. (See Page 138)

Do the notes include segment information on individual enterprise funds where applicable

(see “Required Segment Information” section of this chapter)?

No segment wise information included in the notes.

Are sales to other funds or other governments separately disclosed?

Yes the sales to other funds are separately disclosed with the name sales and use. (See page 32)

Are there receivables from other funds or other governments?

Yes there are receivables from others funds which are mentioned in Note C– Inter fund

Receivables, Payables, and Transfers (see page 69).

How are receivables from component units, if any, disclosed?

No receivables from component units are disclosed separately.

Is there any evidence that enterprise funds contribute amounts to the General Fund in lieu

of taxes to help support services received by the enterprise?

No, there is not any evidence that enterprise funds contribute amounts to the General Fund in

lieu of taxes to help support services received by the enterprise

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Is there any evidence that enterprise funds make excessively large contributions to the

General Fund or any other funds?

No, there is not any evidence that enterprise funds make excessively large contributions to the

General Fund or any other funds.

Utility Fund:

Is it possible to tell from the report whether utilities of this government are subject to the

same regulations as investor-owned utilities in the same state?

No, it is not possible to tell from the report whether utilities of this government are subject to the

same state. There is not utility fund or utility fund statement.

(If the utility statements use account titles prescribed by the NARUC and the FERC, as

described in this chapter, there is a good chance that the governmentally owned utilities are

subject to at least some supervision by a state regulatory agency.) What rate of return on

sales (or operating revenues) is being earned by each utility fund?

The rate of return on sales (or operating revenues) is being earned by each utility fund is N/A.

There is not utility fund or utility fund statement.

What rate of return on total assets is being earned by each utility fund?

The rate of return on total assets is being earned by each utility fund is N/A. There is not utility

fund or utility fund statement.

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Is depreciation taken on the utility plant?

Depreciation taken on the utility plant is N/A.

Are accounting policies and accounting changes properly disclosed? If so, what method of

depreciation is being used?

The Accounting policies and accounting changes are not properly disclosed in this regard.

Does each utility account for its own debt service and construction activities in the manner

described in this chapter?

There are no utility accounts.

What special funds or restricted assets are utilized by each utility?

There are no special funds or restricted assets that are used by utility.

Government-wide Financial Statements:

What proportion of the net position of the business-type activities are reported as net

investment in capital assets, restricted, and unrestricted?

The portion of net position of the business type activities in 2015 as follows: (See page 19, Table

1).

Net investment in capital assets $ (81,930)

Restricted $ 675,863

Unrestricted $ 752,775

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Were the business-type activities profitable; that is, did revenues exceed expenses?

Yes the business type activities are profitable by $ 92,839,000 in the year 2015 as per statement

of activities (See page 28).

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