Auditing and Assessing Financial Condition Essay

financial condition of a hypothetical town; Swobodaville. The paper analyzes the town's revenue structure, and expenditure profile among others. In addition, paper outlines how public organizations within this town use data from audits and assessments to increase their effectiveness.

Financial Condition

There are several factors that are likely to influence the town's revenue structure. These factors are economic growth, taxations among others. The town has taxation waivers which may have led the increase in revenues from the first to the fifth year. There is a likelihood that the town has been having an increasing revenue base which has led to the increase in revenues. The level of government spending has steadily risen. The increase in government spending on state-provided goods and services including public and merit goods is likely to result in increased revenues for the town's households (Kirchler, 2007). Besides, incorporating revenue neutral individual income tax change that integrates reducing marginal tax rates, eliminating the individual alternative minimum tax and maintaining all tax breaks for saving and investment would provide large tax cuts to most households.This would reduce these households' tax expenditures resulting in increased revenues.

Most households in Swobodaville have increasing expenditures each subsequent year. This can be attributed to changes in consumption levels of the population which is influenced by reduction in product prices. The reduction in prices directly increases households' consumption since their wealth's real value increases. This effect on consumption will finally transmit to the aggregate expenditure, therefore, affecting it positively as witnessed in the past five years. The other cause of the higher expenditure is low interest rates. The lower the interest rates, the higher bank borrowings; thus increase investments and consumption expenditures. This will increase the aggregate expenditure. The level of wealth for households, and in the economy as well, affects the consumption and investment components of aggregate expenditure. Increase in financial wealth increases the consumption and investment expenditure power of….....