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CITY OF SAN MARCOS, TEXAS <br />COMPREHENSIVE ANNUAL FINANCIAL REPORT <br />YEAR ENDED SEPTEMBER 30, 2007 <br />Page <br />INTRODUCTORY SECTION <br />Principal Public Officials ............................................................... ............................... i <br />Certificate of Achievement ............................................................ ............................... ii <br />Letter of Transmittal ...................................................................... ............................... iii - viii <br />OrganizationChart ......................................................................... ............................... ix <br />FINANCIAL SECTION <br />Independent Auditors' Report ........................................................ ............................... 1 — 2 <br />Management's Discussion and Analysis ....................................... ............................... 3-12 <br />Basic Financial Statements <br />Government -wide Financial Statements <br />Statementof Net Assets ........................................................... ............................... 13 <br />Statement of Activities ............................................................. ............................... 14-15 <br />Fund Financial Statements <br />Balance Sheet — Governmental Funds ..................................... ............................... 16 <br />Reconciliation of the Governmental Funds Balance Sheet <br />to the Statement of Net Assets .............................................. ............................... 17 <br />Statement of Revenues, Expenditures and Changes in <br />Fund Balances — Governmental Funds ................................. ............................... 18 <br />(continued) <br />