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OVERVIEW OF ANNUAL FINANCIAL REPORT <br />Management's Discussion and Analysis (MD&A} serves as an introduction to the basic financial <br />statements and supplementary information. The MD&A represents management's examination <br />and analysis of MWMC's financial condition and performance. <br />The financial statements report information about MWMC using the accrual basis of accounting. <br />As such., revenues are recognized when they are earned and expenses are recognized when they <br />are incurred. <br />The financial statements include a comparative statement of net assets; a comparative statement <br />of revenues, expenses, and changes in net assets; a comparative statement of cash flows; and <br />notes to the financial statements. The statement of net assets provides information about the <br />nature and amount of resources and obligations at year-end. The statement of ,revenues, <br />expenses, and changes in net assets presents the results of the business activities over the course <br />of the fiscal year and information on how the net assets changed during the year. The statement <br />of cash flows presents changes in cash and cash equivalents, resulting from operational, <br />financing, and investing activities. This statement presents cash receipts and cash disbursement <br />information, without consideration of the earnings event, when an obligation occurs, or <br />depreciation of capital assets. <br />The notes to the financial- statements provide required disclosures and other information that are <br />essential to a full understanding of material data provided in the statements.' The notes present <br />information about MWMC's accounting policies, ,significant account balances and activities, <br />material risks, obligations, coirunitments and contingencies. <br />The comparative financial statements represent a consolidation of three budget funds: the <br />Regional Wastewater Fund, the Regional Wastewater Capital Fund and the Regional Wastewater <br />System Development Charge Fund. For financial reporting purposes, management considers the <br />activities relating to the operation of wastewater management to be of a unitary nature and they <br />are reported as such. For operational purposes, the accounts of wastewater management are <br />organized on .the basis of funds, each of which is considered a separate accounting entity. <br />Supplementary information comparing the budget to actual revenues and expenses is provided as <br />Supplementary Information. <br />The financial statements were prepared by City of Springfield staff fram the detailed books and <br />records of MWMC. The financial statements were audited during the independent external audit <br />process. <br />Financial Analysis <br />The following comparative condensed financial statements serve as the key financial data and <br />indicators for management, monitoring and planning. <br />6 <br />