What Does CAFR Stand For in Governmental Accounting?

A Comprehensive Annual Financial Report (CAFR) is a detailed financial publication issued by state and local governments. This report provides a complete picture of a governmental entity’s financial activities and overall financial health for a given fiscal year. It goes beyond basic financial statements to offer extensive information.

It is important to note that the Governmental Accounting Standards Board (GASB) changed the name of this report to the Annual Comprehensive Financial Report (ACFR) in 2021 due to concerns that the former acronym sounded like an offensive term. While the name has changed, the structure and content of the report remain the same.

What a CAFR Is

A CAFR is an extensive financial report prepared annually by state and local government entities. It presents a thorough and transparent account of the government’s financial condition and operations, detailing how public funds were managed and spent over the past year.

The Governmental Accounting Standards Board (GASB) establishes the accounting principles and standards that govern the content of these reports, setting generally accepted accounting principles (GAAP) specifically for state and local governments. An independent auditor audits these reports to ensure accuracy and completeness before publication.

Components of a CAFR

A CAFR is structured into three distinct sections, each serving a specific purpose in presenting the governmental entity’s financial information. The introductory section provides general information about the government’s structure, services, and operational environment. This part often includes a table of contents, a letter of transmittal from the chief financial officer, and an organizational chart.

The financial section forms the core of the report, containing the entity’s basic financial statements and the independent auditor’s report. These statements, which include government-wide financial statements and fund financial statements, adhere to GAAP as established by GASB. Notes to the financial statements provide additional explanations and disclosures about accounting policies, long-term debt, and pension obligations.

The statistical section offers broader financial and non-financial data. This includes information on financial trends, revenue capacity, debt capacity, and demographic and economic data. This long-term data provides context, helping readers understand changes over time and offering a more complete picture of the government’s financial standing.

Importance of a CAFR

A CAFR promotes financial transparency and accountability for governmental entities. It offers a comprehensive view of how public funds are acquired, managed, and expended. This detailed reporting fosters trust by allowing citizens and taxpayers to assess how their money is being utilized.

These reports serve a wide range of stakeholders, including citizens, bondholders, investors, and oversight bodies. They provide information for evaluating the government’s financial health, assessing management performance, and ensuring compliance with financial regulations. By offering reliable financial data, a CAFR aids in making informed decisions about public finance and investments.

Accessing a CAFR

CAFRs, now officially referred to as ACFRs, are public documents. The most direct way to locate these reports is by visiting the official websites of state, county, or city governments. These documents are commonly found under sections such as “Finance,” “Treasurer,” “Auditor,” or “Investor Relations.”

Alternatively, some organizations, like the Government Finance Officers Association (GFOA), maintain databases or resources for finding these reports. When searching online, using the full name “Annual Comprehensive Financial Report” or “Comprehensive Annual Financial Report” can yield better results, especially for older documents. If direct online access is not immediately apparent, contacting the government’s finance department can provide guidance on obtaining a copy.