Project 2: CAFR
1.0 Introduction
This CAFR project examines the comprehensive annual financial report for the County of Santa Clara, State of California for the fiscal year ended June 30, 2014. The County of Santa Clara (“the County”) covers an area of 1,316 square miles and is located at the southern part of the San Francisco Bay. The County named after Mission Santa Clara was established by an act of State legislation in 1850. Over the last two decades the County has grown steadily with its population having increased by 25% in that period. According to population census, the County had a population of 1.9 million people as of mid-2014, which represents 5% of the States total population. Over 95% of the County’s population live in its 15 incorporated cities. The County operates under a Home Rule Charter, and has a County Board of Supervisor (“the Board”) that is responsible for legislation and policy making (County of Santa Clara, 2014).

2.0 Relevant financial policies
The County treats any unassigned General Fund balance at the end of the fiscal year as a one-time source of funding. These funds are channelled towards one-time expenditure needs, but are sometimes used for reorganization activities upon the recommendation of the Board. The Board examines contingency reserves every year, and budgets for the same in the General Fund. The state of contingency funds tends to reflect the economic environment. These funds are used for one-time expenditures arising from unanticipated reduction in grants and aid, economic recession or depression, natural disasters, unbudgeted lease expenses, critical program initiatives and other unforeseen events. With regard to capital project financing, the County has a capital improvement plan (CIP) aimed at identifying project funding plans. . The County uses straight-line depreciation and the useful lives of assets differ from one asset class to another. Infrastructure has a useful life of 20-50 years, equipment and vehicles a3-30 years and buildings and improvements 5-50 years (County of Santa Clara, 2014).

With regard to debt management, the County’s policy specifies objectives and parameters for debt issuance and administration, and is reviewed annually. The County mainly focuses its efforts on issuance of short-term debt aimed at covering cyclical cash flow needs as well as long-term debt for major capital expenditures. Based on the County’s cash position in the 2014 fiscal year, there was no need for issuance of tax and revenue anticipation bonds unlike previous years where the County needed such bonds to fund operations pending collection of tax and other revenues. The County’s pooled cash deposits are governed by the County’s investment policy as well as the California Government Code, and the County periodically reviews its investment policy. Adherence to the policies and statutes are monitored through monthly audits and reports. The County’s cash management policy primarily aims to safeguard principal, maintain liquidity and attainment of a market rate of return while taking cash flow requirements and risk constraints into account (County of Santa Clara, 2014).

3.0 Basis of accounting
The County

Global Co. paid the following for well #1 that was drilled and comp...