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are accounted for in governmental funds. These funds focus on how assets can readily be converted into
<br />cash flow in and out, and what monies are left at year -end that will be available for spending in the next
<br />year. Governmental funds are reported using an accounting method called modified accrual accounting
<br />which provides a current financial resources focus. As a result, the governmental fund financial
<br />statements give the reader a detailed short -term view that helps him or her determine if there are more or
<br />less financial resources available to finance the County's programs. The relationship between
<br />government activities (reported in the Statement of Net Assets and the Statement of Activities) and
<br />governmental funds is described in a reconciliation that is a part of the fund financial statements.
<br />Cabarrus County adopts an annual budget for its General Fund, as required by the General Statutes.
<br />The budget is a legally adopted document that incorporates input from the citizens of the County, the
<br />management of the County, and the decisions of the Board about which services to provide and how to
<br />pay for them. It also authorizes the County to obtain funds from identified sources to finance these
<br />current period activities. The budgetary statement provided for the General Fund demonstrates how well
<br />the County complied with the budget ordinance and whether or not the County succeeded in providing the
<br />services as planned when the budget was adopted. The budgetary comparison statement uses the
<br />budgetary basis of accounting and is presented using the same format, language, and classifications as
<br />the legal budget document. The statement shows four columns: 1) the original budget as adopted by the
<br />board; 2) the final budget as amended by the board, 3) the actual resources, charges to appropriations,
<br />and ending balances in the General Fund; and 4) the difference or variance between the final budget and
<br />the actual resources and charges.
<br />Proprietary Funds — Cabarrus County has two kinds of proprietary funds. Enterprise Funds are used to
<br />report the same functions presented as business -type activities in the government -wide financial
<br />statements. Cabarrus County uses an enterprise fund to account for solid waste and recycling
<br />operations. This fund is the same as those functions shown in the business -type activities in the
<br />Statement of Net Assets and the Statement of Activities. Internal Service Funds are used to account for
<br />operations that provide services to other departments on a cost - reimbursement basis. Cabarrus County
<br />uses internal service funds to account for workers compensation and self- insured hospitalization
<br />activities.
<br />Fiduciary Funds — Fiduciary funds are used to account for resources held for the benefit of parties
<br />outside the government. Cabarrus County has ten fiduciary funds, one of which is a pension trust fund,
<br />two private purpose trust funds and seven of which are agency funds.
<br />Notes to the Financial Statements — The notes provide additional information that is essential to a full
<br />understanding of the data provided in the government -wide and fund financial statements. The notes to
<br />the financial statements can be found beginning on page 37 of this report.
<br />Other Information — In addition to the basic financial statements and accompanying notes, this report
<br />includes certain required supplementary information concerning Cabarrus County's progress in funding its
<br />obligation to provide pension benefits to its employees. Required supplementary information can be
<br />found beginning on page 75 of this report.
<br />Government -Wide Financial Analysis
<br />While total net assets are often considered a useful indicator of a government's financial position, it does
<br />not adequately reflect the County's position. As noted above the liabilities of Cabarrus County exceeded
<br />the assets by $76,049,523 at June 30, 2011. In accordance with the North Carolina General Statutes, the
<br />County is the issuer and payer of debt for capital purposes for the Cabarrus County Schools, Kannapolis
<br />City Schools and the Rowan - Cabarrus Community College. This debt, which totals $306,883,150 at June
<br />30, 2011 and totaled $309,119,032 at June 30, 2010, is recorded in long -term liabilities with no offsetting
<br />capital assets recorded, as the assets are owned by the agencies. The agencies use the debt proceeds
<br />to acquire or construct capital assets. The effect of this accounting distorts net assets of the County,
<br />creating a large deficit in unrestricted net assets. Net Assets of $112,528,290 at June 30, 2011 and
<br />$112,959,895 at June 30, 2010 are invested in capital assets, net of any related outstanding debt of those
<br />assets. Capital assets include land, buildings, vehicles, equipment and other machinery used in providing
<br />services to residents. Also, net assets of $46,892,224 at June 30, 2011 and $57,497,847 at June 30,
<br />2010 are reserved by law for specific purposes. The net decrease in the deficit unrestricted net assets,
<br />17 Attachment number 1
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