The report will consist of important information regarding the accounting system and financial details of the City of Providence. Present work also includes the preliminary analysis and a brief description of the responsibilities of municipalities in developing budget and regulation of the financial system. The prime objective of the report is to provide a clear understanding of the action and policies taken by the City of Providence in order to bring improvement in the city and relevant districts. Additionally, report also an emphasis on the financial details of the City of Providence in three fiscal years to compare and demonstrate financial changes over the selected period of time.

A.    Accounting for Municipalities of City of Providence

                The background analysis and primary description of the municipal accounting system are discussed in detail here. Moreover, section accounting for municipalities also provide details about the government structure and different roles of branches.

1)      Government Structure and Accounting of City of Providence

          City level of government has several responsibilities including managing social and financial sectors. The prime duty of the city level government is to manage city expenditures and budgets. Furthermore, the city government also manage financial reporting systems. Provincial authority develop plans for financial budgeting and expenditure regulations which are usually implemented at each city level by municipal councils. Municipality also ensures appropriate financial reporting systems in the local communities.

          Municipality prepares financial reports about the current and previous financial position along with the statement of profit and loss in the fiscal year. Even municipal committee prepare financial reports and manage expenditures in the local communities or at the city level but still, the municipal committee is not fully independent to present information in their style. Municipal authorities have to take into consideration some standards and rules while crafting financial reports for the fiscal year.

          For instance, basic standards of accounting and finance are must to be followed by the municipal committee to entitle the financial statements a source of accurate and authentic information. The municipal committee uses GAAP and IAS as a supportive guide to present financial details in the required manner. Furthermore, municipalities use some modified accrual basis of accounting which is relatively different from the accrual accounting. The prime difference between the accrual accounting system and modified accrual accounting is that modified accrual is made up of accrual basis and cash basis combination.

            In this modified accrual accounting system, revenues are recognized and considered as earned revenue when they are available as well as measurable. Somehow, in this method, municipal measure and record expenditures on an only accrual basis as expenditures can be only measurable after the occurrence. Municipal as city government or local governance measure and record expenditure of the selected geographical area and present that information in the financial reports.

2)      City Providence Budget

          The city providence is responsible for developing the budget for the local community. City providence collects information regarding the overall expenditures, income, and other financial details of the local communities to ensure appropriate planning for future development. City of providence as municipality's providence prepare the budget and suggest development plans regarding education, transportation improvement, healthcare facilities, and resources utilization. These budgets and plans can be implemented in the local communities after getting at least the minimum set out a limit of votes. After the ballot breakout city of providence get the idea whether a plan would be implemented or not as it all depends on the results of voting polls

3)      Recent Events Related to Financial Condition of City of Providence

According to the information presented in the Letter of Transmittal, the new cabinet position of Direct of Economic development was created in 2011 to ensure appropriate management of increasing unemployment rate. In 2013, the mayor announced an action plan of 20-points to support employment opportunities for young people. Local government freeze commercial tax rates and removing barriers to the redevelopment agency in the city.

In October 2012, supported other children education-related program known as Educative Providence Action for Change. In 2012, the city council banned the import and local trade of tobacco products. Besides, the Big Green recycling program was introduced in October 2012. In FY12 City budget largest tax-exempt of the city were invited for contribution in tax revenue for the city. The tax revenue of 9 million contributed to increasing overall revenue and income of the city which was utilized later on educational programs and employment programs.

Furthermore, in 2012 General assembly presented some reforms in the state retirement system to benefit the municipal plans regarding retirement benefits. In Valley and Providence's Olneyville municipal authorities spend huge budgets to enhance green sector jobs. Whereas around 16000 businesses and 20,000 employees were capable to get a direct benefit from this green sector jobs. In addition to reducing congestion and to improve traffic flow work was augmented in the third phase of the project (Downtown circulator project).

Although in 2012, City of the Providence ensures the development of the GTECH computer labs in the libraries and community centers that could benefit at 66 young explorer computers to providence students by IBM. The city of Providence also took active participation in the IBM smarter cities program to bring improvement in the cyber structure and knowledge District. The city of Providence set out a budget to support the loan program for the advancement of creative arts and new technologies. The total set aside budget for this technological advancement worth $ 1 million.

In 2011, around 200 units of houses were established in several areas of the districts with best remediating strategies towards mold and lead. Moreover, these houses were established in such a way that made the houses safe for health and energy inefficiency related hazards. In 2012, City of Providence signed an agreement for pensions. Under this agreement, future coals limited was reinstated in FY2023. While the City of Providence also introduced a new criterion for the pension of accidentally disable a person. According to the new criteria, the City of Providence announced that pension of the accidentally disable person will be calculated based on 66 2/3 percent of the final salary given to the employees during employment.

In 2012, the City of Providence also signed an agreement with the healthcare sector about the improvement of the healthcare system for the public of the city. The medicate settlement was made with the healthcare sector under which City of Providence ordered to move the retire 65 and older to the Medicare. Thus, to benefit the public City of Providence decided that people over the age of 65 would be given funding for the proper healthcare treatment and medication. These benefits and changes increased healthcare budget for retired people by $12 million.

The city of Providence worked with the Tax-Exempt Anchor institution to cover up the structural deficit of $110 million. The city of Providence made a decision to terminate teachers and close some schools in the city because of the $30 million deficit in the providence public school district. Additionally, they all introduced some performance appraisal systems to measure the performance outcomes of the providence schools. Another important event of 2012 is acceptance of fire academy application by the City of Providence.

In more than 6 years it was the first fire academy in the city which organized a test for the 2900 individuals including 500 providence residents. In 2012, the city also spared the worst of Superstorm Sandy. The situation was tackled by the Providence Emergency Management Agency to avoid the negative impact of the storm on the life of the public. In 2013, Panel of independent municipal finances review developed a report for the structural deficit of 110 million dollars in FY2012.

In 2013, City of Providence developed several plans to contribute to the overall success of the city and its structural plans. Increasing taxes and other sources of income enable the City of Providence to generate an additional $48 million. The city of Providence also reduced the unfunded pension-related obligation of the city by $170 million. The city of Providence eliminated high-end coals and increase the pension by 3 percent compounded.

Additionally, a plan was developed about the collection of pensions for retirees. For further development in the economic sector to ensure work on 20 points the economic development action plan City of Providence decided to freeze commercial tax rules and fix the permitting process. Besides, the City of Providence also developed plans to invest in the Storefront Improvement and Historic Preservations. Moreover, the road improvement project was kicked off by the City of Providence in 2013. Under this plan, the City of Providence worked on the improvement and rebuilding of 65 miles roads under the budget of $40 million.

Preliminary Analysis of City of Providence

4)      Financial Details and Trends of City of Providence

The section will cover information about financial details and trends recorded by the City of Providence in three years (2011, 2012, and 2013). In the presented below table financial details including total assets, total liabilities, total revenue, total expenditures, net assets, unrestricted assets, and net change in the assets are projected.

The city of providence financial reports also provide information about financial position of the city in 2011, 2012, and 2013. According to this information total assets and total liabilities both are decreased from 2011 to 2012. Somehow, in 2013 trends are going towards minor increase.

Figure 1 City Providence Total Assets and Total Liabilities

           The presented below trend lines show information about the unrestricted assets, net assets and changes in the net assets in the fiscal year. Unrestricted asset and change in the net asset both are presented same trend while net assets shows relatively a stable trend. 

Figure 2 Financial Changes in City of Providence

           The negative values presented in the above-mentioned graph shows that changes made in the assets of next year are greater than the changes of previous years. City of Providence make changes in the assets to different purposes including liquidation. Selling plant and fixed assets to support other organizational operations and to meet the short term liabilities are the key reasons for sizable changes in the net assets. 

Figure 3 Total Revenue and Total Expense

In accordance with the above graph, the financial performance of the city is changing consistently. The total revenue trend is going towards decline. In 2011, total revenue recorded in the city was more than the revenue recorded later in 2012 and 2013. Somehow, at the same time, the total expense is showing a positive trend. Increasing expenditure and unstable revenue can cause a problem for the city if not managed properly. Increase in cost and expenses over the period of time is a clear indicator of the managerial inefficiency as it can cause to decrease profit margin for the city.

         The city of Providence has to deal with the educational, technological, healthcare, and employment development sector. Increasing cost of operations and reducing profit margin will make the City of Providence unable to afford sizable budgets of educational development and technological development. According to the records, total revenue earned by the City of Providence in 2011, 2012, and 2013 was recorded as 699717, 720534, and 747339. While on the other hand, total expense over the three years is recorded as 757882 (2011), 738927 (2012) and 749929 (2013).

5)      Ratios Analysis of City of Providence

           Ratio analysis of current ratio and debt ratios are projected below in the table. In accordance with the analysis of current ratios for all these years are greater than 1 (the minimum limit). Analysis indicates that the city has enough strength to pay off its short term liabilities and obligations through the use of current assets only rather than liquidating the fixed and non-current assets. Furthermore, decrease debt ratio from 0.89 to 0.71 indicate that city has low risk related to the payment of loans and long-term debt. In other words, the city has assets more than liabilities, therefore, default risk is under the control of municipal authorities in the city.

           Above mentioned table explain that current ratio for 3 years were calculated as 1.4 (2011), 1.2 (2012), and 1.3 (2013). Additionally, debt ratio calculated by dividing up total liabilities by the total assets are 0.8, 0.81, and 0.719 in 2011, 2012, and 2013 respectively.

  Conclusion on City of Providence

           The whole discussion concludes that the City of Providence is working as a regulatory and controlling authority or municipal committee which has responsibilities to keep the financial sector of the city under control and to develop budgets for the improvement and betterment of the society and its systems. The financial performance of the City of Providence is fluctuating over the period of time, therefore, development plans are also getting change. The city of Providence also faced structural deficit and financial crisis during this period of time but through effective strategies, such issues were tackled. Summarizing the information gained from the letter of transmittal it can be said that the City of Providence is spending huge budgets on healthcare sectors and technological advancement in the city. Although, housing and employment-related areas are also underdevelopment still there is room for further development and improvement.           

Recommendations of City of Providence

           Considering the information presented in the financial analysis sections and Preliminary Analysis of City of Providence some limitations and areas of improved are discovered. The following recommendations cover these areas for long term success.

1.      City of providence needs to control the cost of operations. Wastage of financial resources causes future issues in development. Therefore, the city of providence should concentrate on new strategies developed to control the increasing cost.

2.      Tax exemption should be reduced to promote tax revenue for the city which will benefit in future progress.