Financial Examination Essay

Financial Examination

The overall examination of financial documents is integral to the proper functioning of government entities. For one, examinations help to prevent budgetary shortfalls that may jeopardize the economic viability of governments. Stress tests, are particular useful as they provide outlooks contingent of varying macroeconomic situations. These stress test and examinations, when done correctly, allow stakeholders to make proper assessments as to the financial stability of their government. Without these assessments, unexpected events may cause policy changes that harm society overall. Aspects such as the budget cuts currently underway in many of the nation's largest states are a direct result of lackluster financial examinations. Consequently, the individuals will have to sacrifice in the form of higher taxes and lower benefits (McKenna, 2006).

When evaluating Swobodaville's financial condition based on the partial list of factors given, a number of elements cause concern. First, the low income, sales tax exempt households, as a percentage of the total population has increased every year for the past 5 years. This is particularly troublesome as sales tax revenue has remained relatively stagnant.This may indicate that the overall tax burden is being supported fewer individuals in society. As such, a decreasing amount of citizens are paying a greater proportion of the cities taxes. In addition, economic impacts may be creating a larger proportion of low income families. High unemployment, high levels of individual's debt, or stagnating wages may have increased the proportion of individuals considered "low -- income" As these individuals are exempt from sales tax, the government, to increase revenue may need to reevaluate what it considers "low-income." In addition, it may need to charge low income earnings a smaller sales tax as oppose to simply providing an exempt status (Guthrie, 2011).

In addition, sales tax as a percentage of total revenue has declined every year for the past 5 years. This correlates directly with the argument presented above. Fewer individuals are paying a greater proportion of the sales taxes ultimately lowering the cities sales tax revenue. A declining percentage of sales tax revenue as percentage of total revenue isn't necessarily a negative. Diversity in….....