The Office of the Auditor of State of Ohio (Auditor) has compiled a document called the Financial Indicators Report to help determine if a governmental entity is experiencing fiscal stress. The report consists of 17 financial health indicators which “are a series of financial information, percentages, and ratios gathered from annual financial statements, filed by local governments, which are useful in predicting financial stability.” The report instructs the reader to consider all of the indicators and analyze those that might present an issue. The report should be read in conjunction with the Frequently Asked Questions (FAQ) document written by the Auditor’s staff and available to the public on the Auditor’s website. The answers to these questions are helpful in understanding various aspects of the report and what they mean.
For each of the FHI, the report uses three categories to characterize whether the trend in the data represents a positive outlook, cautionary outlook, or critical outlook. In the report, these three categories are identified by the colors green, yellow or red, respectively. The report states, “FHI will be used to recognize early signs of fiscal stress at specific local governments and take a proactive approach to monitoring or assisting these local governments” to identify and correct negative financial trends before the negative trends lead to more serious fiscal distress.
What are Financial Health Indicators? Find out more.