Elements of a Comprehensive Annual Financial Report

March 22nd, 2013 by Whitley Penn

I recently co-presented with Ann Westbrooks, the Assistant Superintendent of Finance at Spring Independent School District, at the 67th Annual Texas Association of School Business Officials (TASBO) Conference in San Antonio, Texas. Our presentation focused on the elements of a Comprehensive Annual Financial Report (CAFR), interpretation, and usefulness of a CAFR. Also, common mistakes made in preparation and practical tips in avoiding them were discussed. The constantly evolving financial reporting standards that are applicable to governmental reporting always open the door for mistakes, errors, and oversights in preparing a CAFR.

Generally accepted accounting principles (GAAP) define for state and local governments the minimum standard of financial reporting:

  • A complete set of basic financial statements,
  • Accompanying note disclosures, and
  • Certain required supplementary information.

However, GAAP does encourage the presentation of the above information within the broader financial reporting model of a CAFR. One major difference between the minimum standard of financial reporting and a CAFR are the inclusion of the items found in the introductory and statistical sections. The introductory section provides general information about the government’s structure and the services it provides. The statistical section provides financial and demographic information useful in assessing a government’s economic condition. The additional information found in a CAFR is extremely useful and valuable to its primary users: citizens, legislative and oversight bodies, and investors and creditors. Please contact us if you have any questions regarding the application of any accounting standards or the preparation of your CAFR. Also, you can view the presentation slides here.

whitleypenn.com

Lupe Garcia, CPA
Manager
Houston Office

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