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Implementation of Financial Condition Analysis in Local Government

Author: WILLIAM C. RIVENBARK and DALE J. ROENIGK
Published in PAQ, Vol. 35 No. 2

One of the core objectives of financial reporting in local government is to provide information on financial position and condition of an organization. Financial position is accomplished when unqualified annual financial statements are provided to stakeholders at fiscal year end. Two additional steps are required, however, before interpretations can be made concerning the financial condition of a local government. Ratio analysis is conducted to evaluate financial relationships, and comparative analysis is used for building context. When the decision is made in local government to analyze, interpret, and communicate financial condition to elected officials, the next logical inquiry is to explore what management practices facilitate financial condition analysis and how do elected officials use the results for making policy decisions. This article presents three case studies in North Carolina, documenting lessons learned on transitioning from financial position to condition in local government.

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