Question

Describe the comprehensive annual financial report (CAFR). What are the sections of the report and which components of the organization should it include? Is a CAFR required?

Answer 1

Solution:

Comprehensive Annual Financial Report (CAFR):

Meaning:

It is a detailed report which describes the government’s financial condition. The government’s activities and balances for each fiscal year are reported in CAFR.

The report is a set of U.S. government financial statements that comply with the requirements of accounting established by GASB (Governmental Accounting Standards Board). The report comprises:

Financial Report Of	A State
	Municipal
	Other Governmental Entity

There are three sections of the CAFR report. They are:

Sections of the report:

1.       Introductory Section: This section guides the user through the report.

2.       Financial Section: This section contains the entity’s basic financial statements, notes to the accounts and also the independent auditor’s report.

3.       Statistical Section: Additional statistical data is provided by this section. The data includes trend analysis. This makes it easy for the user to better understand the state’s activities.

Components in each section:

Section	Components
Introductory	Guidance Letter/Transmittal Letter
Financial	Notes to Accounts
	Discussion and Analysis of Management
	Government-Wide Financial Statements
	Fund Financial Statements
	Independent Auditor's Report
	Schedules
	Supplementary Information
Statistical	Financial Information
	Economic Information
	Demographic Information

Is CAFR required?

Yes, the CAFR report is required because the report provides financial transparency and thus inculcate accountability. This report helps the investors and makes them take an informed decision when a state issue bonds to funds public projects. This report also helps the general public to track the management of the government of how the state manages the public finances.

Purpose	Financial Transparency
	Accountability
	Helps Investors
	Public Can Track The Public Funds Management