Opening balance sheet: City of Chemnitz is worth almost 2.5 billion euros

The opening balance sheet serves to present the asset situation as at 1 January 2011 and to inform the public. All Saxon municipalities, cities and districts are obliged to switch to double-entry accounting from the 2013 financial year. The City of Chemnitz decided to switch to double-entry accounting earlier, on 1 January 2011, enabling the first budget for 2011 to be adopted by the City Council in February 2011 in accordance with the rules of double-entry accounting in municipalities. The opening balance sheet was prepared by September 2012. In the period up to July 2013, necessary audit-related corrections to the opening balance sheet were initiated on the basis of the RPA's recommendations.

As a result of its audits, the Audit Office found that the opening balance sheet gives a true and fair view of the financial position of the City of Chemnitz in accordance with generally accepted accounting principles.

The audited opening balance sheet was presented to the city councillors in the Administration and Finance Committee on 12 December 2013 and confirmed by the City Council on 18 December 2013. It shows total assets of 2.498 billion euros.

Property, plant and equipment worth around 1.3 billion euros

With a value of 1.307 billion euros, property, plant and equipment, which primarily comprises buildings and infrastructure assets, is a key component of the assets shown in the balance sheet. This includes around 1,156 buildings, 3,714 plots of land with around 10,500 parcels, 4,814 green spaces/parking facilities and 5,165 road sections. In total, more than 60,000 individual assets had to be recognised and valued during the several months it took to prepare the opening balance sheet.

The most "expensive" building at present is the town hall at around 16.8 million euros. The 835 kilometres of roads, paths, squares and associated facilities such as 226 traffic lights are worth around 519 million euros, while bridges and tunnels are valued at 115 million euros.

Valuation is not always straightforward, so simplifications have to be made in some cases. For example, architectural monuments such as the Karl Marx Monument, which were erected before 1990, are recorded in the books at a memorial value of one euro. The animals in the zoo were also recorded in a simplified manner using inventory lists and recognised at a fixed value of around 19,000 euros. Animals that came to the zoo through exchanges or donations were recognised at one euro, including Malik the lion, probably the most prominent resident.

One billion euros in financial assets

Another important asset item is financial assets totalling 1.023 billion euros. This item essentially includes the city's shares in its own companies/own operations and municipal holdings, which are valued at more than 802 million euros. The largest individual items are the City of Chemnitz's 100 per cent shareholdings in GGG (around 493 million euros), Klinikum Chemnitz (around 229 million euros), VVHC (60 million euros), ESC (just under 54 million euros) and ASR (around 22 million euros).

The opening balance sheet also shows the composition of equity and debt capital. The equity ratio, i.e. the share of equity in the balance sheet total of 2,498 million euros, is 62 per cent. This clearly shows that the majority of the city's assets were financed from the city's own funds. This corresponds with the relatively low loan ratio of 11% of the balance sheet total. This shows that due to the gradual reduction in debt over the past few years, only a small proportion of the city's assets were created using borrowed funds.

First double-entry annual financial statements in progress

City Treasurer Berthold Brehm emphasised that the opening balance sheet has laid the foundation for further work in the double-entry accounting system and, building on this, work is currently underway on the first annual financial statements in accordance with the rules of commercial accounting.