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Forensic Accounting, Forensic Techniques, and Fraud Detection Copyrighted 2001 D. Larry Crumbley, ... - page 338 / 352

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© D.L. Crumbley

Office of New York State Comptroller

Indicator 4: Operating Surplus/Deficit

a.

Gross Revenues – Gross Expenditures

Gross Expenditures

Gross Revenues – Gross Expenditures – One-Time Revenues

Gross Expenditures

Negative Trend: Percentages decreasing over time.

Indicator 5: Unreserved Fund Balance and Appropriated Fund Balance

Unreserved Fund Balance

    Gross Expenditures

Appropriated Fund Balance

     Gross Expenditures

Negative Trend: Percentages decreasing over time.

Deficits in major funds in excess of 1.5% of fund expenditures or $50,000 (whichever is greater) are generally causes for concern. Some analysts use a variation of this ratio: the budgetary cushion. Here the fund balance is compared to revenues. The greater the fund balance as a percentage of revenues, the more likely a local government may weather hard times. A good rule of thumb is that a fund balance should be at least 5% of revenues.[1] [1] J.R. Razek et. al, op. cit., p. 411.

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