The letter goes on to discuss the financial condition of the state of Texas under the heading “Economic Outlook” on page 4. The outlook is one of growth that exceeds national standards. Real gross state product, personal income, population, and job growth are all expected to increase. More specific information regarding the net position and proposed changes to fiscal policy are discussed in the Management Discussion & Analysis (MD&A). The letter does not discuss the most significant changes in financial condition in the fiscal year, which is discussed in the MD&A. Increases in revenue are cited as resulting from increased tax revenue and a large amount of funds being reclassified as unrestricted. The letter does, however, allude to some major issues facing the government: a water shortage, aging workforce, student loan debt, providing for an “underserved population,” and a desperate need for infrastructure development. Many of these issues are referred to in the MD&A, which focuses on an analysis of financial performance (page 23). For example, in November 2014, Texans will vote on an allocation of “rainy day funds” to the State Highway Fund. As the population has grown, road maintenance has not kept up. Texas did not reach its target condition levels for interstate, non-interstate, and the Central Texas Turnpike System in 2013 (page 33).
In addition to the transmittal letter and MD&A, the introductory section of the 2013 Texas CAFR includes a GFOA Certificate of Achievement for Excellence in Financial Reporting, list of elected officials, and an organization chart of the executive, legislative, and judicial branches of the government.
b. (1) The state auditor’s audit report is included in the CAFR, and an additional report is issued separately by KPMG. The state auditor’s report states that it is management’s responsibility to prepare the financial statements in accordance with GAAP and to maintain internal controls. The state auditor issued an unqualified opinion, and